<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): APRIL 12, 1999
UNITED AUTO GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-12297 22-3086739
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
375 PARK AVENUE, NEW YORK, NEW YORK 10152
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 223-3300
<PAGE>
ITEM 5. OTHER EVENTS.
On April 12, 1999, United Auto Group, Inc., a Delaware corporation (the
"Company") and International Motor Cars Group I, L.L.C. and International Motor
Cars Group II, L.L.C., Delaware limited liability companies controlled by
Penske Capital Partners, L.L.C. (together, the "Purchaser"), entered into a
Securities Purchase Agreement pursuant to which, subject to the satisfaction of
certain closing conditions, the Purchaser will purchase (i) an aggregate of
7,903.124 shares of the Company's Series A Convertible Preferred Stock, par
value $0.0001 per share (the "Series A Preferred Stock"), (ii) an aggregate of
396.876 shares of the Company's Series B Convertible Preferred Stock, par value
$0.0001 per share (the "Series B Preferred Stock"), and (iii) warrants (the
"Warrants") to purchase (a) 3,898,665 shares of the Company's voting Common
Stock, par value $0.0001 per share (the "Common Stock"), and (b) 1,101,335
shares of the Company's non-voting Common Stock, par value $0.0001 per share
(the "Non-Voting Common Stock"). The shares of Series A Preferred Stock and
Series B Preferred Stock will entitle the Purchaser to dividends at a rate of
6.5% per year, payable in kind for the first two years. The Series A Preferred
Stock is convertible into an aggregate of 7,903,124 shares of Common Stock and
the Series B Preferred Stock is convertible into an aggregate of 396,876 shares
of Non-Voting Common Stock. The Series A Preferred Stock and the Series B
Preferred Stock may be converted at an average price of $10 per share.
Following conversion of the Series A Preferred Stock and the Series B
Preferred Stock and exercise of the Warrants, the Purchaser will own
approximately 38% of the Company's Common Stock and Non-Voting Common Stock, on
a fully diluted basis. The purchase price paid by the Purchaser for the Series
A Preferred Stock, the Series B Preferred Stock and the Warrants will equal
$83,000,000. Pursuant to the Securities Purchase Agreement, the Company has
agreed that, subject to certain conditions, its Board of Directors will
recommend that the Company's stockholders vote in favor of the election to the
Board of Directors of such number of the Purchaser's designees as will
constitute a majority of the Board of Directors.
The transaction will be consummated in two steps: first, the acquisition
of approximately $33.5 million of the Series A Preferred Stock and, second, the
acquisition of approximately $49.5 million of the Series A Preferred Stock, the
Series B Preferred Stock and the Warrants. The first step of the transaction is
subject to customary closing conditions, including receipt of regulatory
approvals and third-party consents. The second step of the transaction is also
subject to customary closing conditions, including approval by a majority of
the Company's stockholders and receipt of third-party consents. There can be no
assurance when or whether either step of the transaction will occur. If the
first step of the transaction is completed, but the second step does not occur
by December 31, 1999, the Company may be required to repurchase from the
Purchaser the investment made in the first step; if not the conversion price of
the Series A Preferred Sock and the Series B Preferred Stock will be $9.00 per
share.
Reference is made to the press release of the Company, dated April 12,
1999, attached hereto as an Exhibit and incorporated herein by reference.
<PAGE>
This Current Report contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included in this Current Report or
incorporated herein by reference regarding the Company's financial position and
business strategy may constitute forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results
to differ materially from the Company's expectations, include the following:
(i) the Company is subject to the influence of various manufacturers whose
franchises it holds; (ii) the Company is leveraged and subject to restrictions
imposed by the terms of its indebtedness; (iii) the Company's growth depends in
large part on the Company's ability to manage expansion, control costs in its
operations and consummate and consolidate dealership acquisitions; (iv) many of
the Company's franchise agreements impose restrictions on the transferability
of the Company's Common Stock; (v) the Company will require substantial
additional capital to acquire automobile dealerships and purchase inventory;
(vi) unit sales of motor vehicles historically have been cyclical; (vii) the
automotive retailing industry is highly competitive; (viii) the automotive
retailing industry is a mature industry; (ix) the Company's success depends to
a significant extent on key members of its management; and (x) the Company's
business is seasonal. In light of the foregoing, readers of this Current Report
are cautioned not to place undue reliance on the forward-looking statements
contained or incorporated by reference herein.
ITEM 7. Financial Statements and Exhibits
10.20.1 Securities Purchase Agreement, dated as of April 12, 1999, among
the Company and the Purchaser.
10.20.2 Stockholder Voting Agreement, dated April 12, 1999, between Trace
International Holdings, Inc. and the Purchaser.
10.20.3 Stockholder Voting Agreement, dated April 12, 1999, between Aeneas
Venture Corporation and the Purchaser.
10.20.4 Stockholder Voting Agreement, dated April 12, 1999, between AIF
II, L.P. and the Purchaser.
99.5 Press Release, dated April 12, 1999, issued by United Auto Group,
Inc.
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 15, 1999
UNITED AUTO GROUP, INC.
By: /s/ James R. Davidson
-------------------------
Name: James R. Davidson
Title: Executive Vice President -
Accounting and Treasurer
-3-
<PAGE>
EXHIBIT 10.20.1
SECURITIES PURCHASE AGREEMENT
by and among
UNITED AUTO GROUP, INC.,
and
INTERNATIONAL MOTOR CARS GROUP I, L.L.C.
and
INTERNATIONAL MOTOR CARS GROUP II, L.L.C.
dated as of
April 12, 1999
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Page
<S> <C> <C>
ARTICLE I ISSUANCE AND SALE OF PREFERRED STOCK AND WARRANTS...................................1
1.1. Issuance, Purchase and Sale................................................1
1.2. The Closing; Deliveries....................................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................3
2.1. Organization; Subsidiaries.................................................3
2.2. Due Authorization..........................................................4
2.3. Capitalization.............................................................5
2.4. SEC Reports................................................................6
2.5. Financial Statements.......................................................6
2.6. Absence of Certain Changes.................................................7
2.7. Litigation.................................................................7
2.8. Title to Properties; Insurance.............................................8
2.9. Consents, No Violations....................................................9
2.10. Holding Company Act and Investment Company Act.............................9
2.11. Taxes.....................................................................10
2.12. Employee Benefit Plans....................................................10
2.13. Intellectual Property.....................................................13
2.14. Compliance with Laws......................................................14
2.15. Commitments...............................................................16
2.16. Acquisitions..............................................................17
2.17. Brokers or Finders; Opinion of Financial Advisor..........................18
2.18. Proxy Statement...........................................................18
2.19. Suppliers.................................................................19
2.20. Related Party Transactions................................................19
2.21. Products..................................................................19
2.22. Section 203 of the DGCL; Takeover Statute.................................19
2.23. Disclosure................................................................20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER....................................20
3.1. Acquisition for Investment................................................20
3.2. Restricted Securities.....................................................20
3.3. No Brokers or Finders.....................................................20
3.4. Accredited Investor.......................................................20
3.5 Organization..............................................................20
3.6. Due Authorization.........................................................20
-i-
<PAGE>
3.7. Consents, No Violations...................................................21
3.8. Availability of Funds.....................................................21
3.9 Due Diligence.............................................................21
ARTICLE IV COVENANTS..........................................................................22
4.1. Conduct of Business by the Company Pending the Closings...................22
4.2. No Solicitation...........................................................24
4.3. Press Releases; Interim Public Filings....................................25
4.4. HSR Act...................................................................25
4.5. Proxy Statement; Stockholders Meeting.....................................26
4.6. Consents; Approvals.......................................................26
4.7. Listing...................................................................27
4.8. Intentionally Omitted.....................................................27
4.9. Certificates of Designation; Amendment to Certificate of Incorporation....27
4.10. Cooperation...............................................................28
4.11. Access to Property; Records...............................................28
4.12. Reserve Shares............................................................28
4.13. Notice of Breach..........................................................28
4.14. Transfer Taxes............................................................29
4.15. Indemnification...........................................................29
4.16. Certain Limitations.......................................................29
4.17. Acquisition Entities......................................................29
ARTICLE V CONDITIONS.........................................................................29
5.1. Conditions to Obligations of the Purchaser and the Company................29
5.2. Conditions to Obligations of the Purchaser................................30
5.3. Conditions to Obligations of the Company..................................32
ARTICLE VI TERMINATION........................................................................33
6.1. Termination...............................................................33
6.2. Effect of Termination; Termination Fee....................................34
ARTICLE VII SURVIVAL; CERTAIN REMEDIES.........................................................35
7.1. Survival..................................................................35
7.2. Right to Require Repurchase...............................................35
7.3. Sole and Exclusive Remedy.................................................36
7.4. Termination Following Initial Closing.....................................36
ARTICLE VIII MISCELLANEOUS......................................................................38
8.1. Defined Terms; Interpretations............................................38
-ii-
<PAGE>
8.2. Fees and Expenses.........................................................46
8.3. Public Announcements......................................................46
8.4. Restrictive Legends.......................................................46
8.5. Further Assurances........................................................47
8.6. Successors and Assigns....................................................47
8.7. Entire Agreement..........................................................47
8.8. Notices...................................................................47
8.9. Amendments................................................................48
8.10. Counterparts..............................................................49
8.11. Headings..................................................................49
8.12. Nouns and Pronouns........................................................49
8.13. GOVERNING LAW.............................................................49
8.14. Submission to Jurisdiction................................................49
8.15. WAIVER OF JURY TRIAL......................................................49
8.16. Severability..............................................................50
</TABLE>
-iii-
<PAGE>
EXHIBITS
Exhibit 1.2(b) Forms of Warrant
Exhibit 2.2 Forms of Certificates of Designation
Exhibit 4.5 Form of Certificate of Amendment
Exhibit 5.1(a)(iii) Consents (Initial Closing)
Exhibit 5.1(b)(ii) Consents (Second Closing)
Exhibit 5.2(a)(iv) Form of Stockholders Agreement
Exhibit 5.2(a)(v) Form of Registration Rights Agreement
Exhibit 5.2(a)(viii) Form of Opinion of Willkie Farr & Gallagher
-iv-
<PAGE>
INDEX OF DEFINED TERMS
SECTION
1998 Balance Sheet..........................................................2.5
1998 Financial Statements...................................................2.5
Affiliate...................................................................8.1
Agreement..............................................................preamble
Alternative Transaction.....................................................8.1
Board of Directors..........................................................8.1
Certificate of Amendment....................................................4.9
Certificate of Designation..................................................2.2
Closing..................................................................1.2(a)
Closing Date.............................................................1.2(a)
Closings.................................................................1.2(a)
Code........................................................................8.1
Commitments................................................................2.15
Common Stock...........................................................recitals
Company................................................................preamble
Company Affiliates..........................................................4.2
Company Fiduciary Out.......................................................4.2
Compensation and Benefit Plans..............................................8.1
Confidentiality Agreement..................................................4.11
Consents....................................................................4.6
DGCL........................................................................8.1
Encumbrances.............................................................2.1(b)
Environmental Laws..........................................................8.1
Environmental Matter........................................................8.1
Environmental Permits...............................................2.14(d)(ii)
ERISA.......................................................................8.1
ERISA Affiliate.............................................................8.1
Exchange Act................................................................8.1
GAAP........................................................................2.5
Governmental Entity.........................................................8.1
Hazardous Substances........................................................8.1
HSR Act.....................................................................8.1
IMCG-I.................................................................preamble
IMCG-I Initial Closing Purchase Price.......................................1.1
IMCG-I Second Closing Purchase Price........................................1.1
IMCG-II................................................................preamble
Independent Directors......................................................4.16
Initial Closing..........................................................1.2(a)
-v-
<PAGE>
Initial Closing Purchase Price..............................................1.1
Initial Purchase............................................................1.1
Intellectual Property.......................................................8.1
IRS.........................................................................8.1
Knowledge...................................................................8.1
Laws........................................................................8.1
Leased Real Property........................................................8.1
Licenses................................................................2.14(a)
Litigation...............................................................2.7(a)
Losses......................................................................8.1
Major Suppliers............................................................2.19
Material Adverse Effect.....................................................8.1
Multi-Employer Plan.....................................................2.12(c)
Non-Voting Common Stock................................................recitals
NYSE........................................................................8.1
Owned Real Property.........................................................8.1
PCBs........................................................................8.1
Permitted Encumbrances......................................................8.1
Person......................................................................8.1
Preferred Stock........................................................recitals
Products...................................................................2.21
Proxy Statement............................................................2.18
Purchase Price.........................................................recitals
Purchaser..............................................................preamble
Purchaser Designees.........................................................4.5
Purchaser Expenses..........................................................8.2
Real Property......................................................2.14(d)(iii)
Registration Rights Agreement.........................................5.2(a)(v)
Related Parties.............................................................8.1
Release.....................................................................8.1
Return......................................................................8.1
SEC.........................................................................8.1
SEC Reports.................................................................2.4
Second Closing...........................................................1.2(a)
Second Closing Failures..................................................5.2(a)
Second Closing Purchase Price...............................................1.1
Second Purchase.............................................................1.1
Section 7.2 Put Price.......................................................7.2
Section 7.4 Put Price.......................................................7.4
Securities Act..............................................................8.1
Series A Preferred Stock...............................................recitals
Series B Preferred Stock...............................................recitals
-vi-
<PAGE>
Shares......................................................................8.1
Significant Shareholders....................................................8.1
Stockholders Agreement...............................................5.2(a)(iv)
Stockholders Meeting.......................................................2.18
Subsidiaries.............................................................2.1(b)
Subsidiary...............................................................2.1(b)
Takeover Proposal...........................................................8.1
Tax........................................................................ 8.1
Taxes.......................................................................8.1
Terminating Breach.......................................................6.1(d)
Third Party.................................................................8.1
Transaction Documents.......................................................8.1
Warrants...............................................................recitals
-vii-
<PAGE>
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
April12, 1999, by and among UNITED AUTO GROUP, INC., a Delaware corporation
(the "Company"), INTERNATIONAL MOTOR CARS GROUP I, L.L.C. ("IMCG-I") and
INTERNATIONAL MOTOR CARS GROUP II, L.L.C. ("IMCG-II"), each a Delaware limited
liability company (IMCG-I and IMCG-II collectively, the "Purchaser").
W I T N E S S E T H :
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, the Company wishes to sell to the Purchaser, and the Purchaser
wishes to purchase from the Company, an aggregate of 7,903.124 shares of
SeriesA Convertible Preferred Stock, par value $0.0001 per share (the "Series A
Preferred Stock"), an aggregate of 396.876 shares of Series B Convertible
Preferred Stock, par value $0.0001 per share (the "Series B Preferred Stock",
and together with the Series A Preferred Stock, the "Preferred Stock") and
warrants (the "Warrants") to purchase an aggregate of (i)3,898,665 shares of
the Company's voting Common Stock, par value $0.0001 per share (the "Common
Stock"), and (ii)1,101,335 shares of the Company's non-voting Common Stock, par
value $0.0001 per share (the "Non-Voting Common Stock"), in two separate
installments for an aggregate purchase price of $83,000,000 in cash (the
"Purchase Price");
WHEREAS, concurrently with the execution and delivery of this Agreement,
each of the Significant Shareholders are executing and delivering a voting
agreement with the Purchaser; and
WHEREAS, the Purchaser and the Company desire to provide for the purchase
and sale of the Preferred Stock and the Warrants and to establish certain
rights and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
ISSUANCE AND SALE OF PREFERRED STOCK AND WARRANTS
1.1. Issuance, Purchase and Sale. Upon the terms set forth herein,
<PAGE>
(a) at the Initial Closing, (i)the Company shall sell to IMCG-I, and
IMCG-I shall purchase from the Company, 2,906.743shares of Series A Preferred
Stock for an aggregate purchase price of $26,160,687.92 in cash (the "IMCG-I
Initial Closing Purchase Price"), subject to the conditions set forth in
Sections 5.1(a), 5.2(a) and 5.3, and (ii)the Company shall sell to IMCG-II, and
IMCG-II shall purchase from the Company, 821.1266 shares of Series A Preferred
Stock for an aggregate purchase price of $7,390,139.41 in cash (such amount
together with the IMCG-I Initial Closing Purchase Price, the "Initial Closing
Purchase Price"), subject to the conditions set forth in Sections5.1(a), 5.2(a)
and 5.3 (the transactions to occur at the Initial Closing, the "Initial
Purchase"), and
(b) at the Second Closing, (i)the Company shall sell to IMCG-I, and IMCG-I
shall purchase from the Company, 3,565.04096shares of SeriesA Preferred Stock
and Warrants to purchase 3,898,665 shares of Common Stock for an aggregate
purchase price of $38,557,152.74 in cash (the "IMCG-I Second Closing Purchase
Price"), subject to the conditions set forth in Article V, and (ii)the Company
shall sell to IMCG-II, and IMCG-II shall purchase from the Company, 610.214
shares of Series A Preferred Stock, 396.876 shares of Series B Preferred Stock
and Warrants to purchase 1,101,335 shares of Non-Voting Common Stock, for an
aggregate purchase price of $10,892,019.93 in cash (such amount together with
the IMCG-I Second Closing Purchase Price, the "Second Closing Purchase Price"),
subject to the conditions set forth in Article V (the transactions to occur at
the Second Closing, the "Second Purchase").
1.2. The Closing; Deliveries. (a) The closing of the Initial Purchase (the
"Initial Closing") and the closing of the Second Purchase (the "Second
Closing", and together with the Initial Closing, individually, a "Closing" and
collectively, the "Closings") shall take place at the offices of Fried, Frank,
Harris, Shriver& Jacobson, One New York Plaza, New York, New York10004 at
9:00a.m. on the fourth business day following the satisfaction or waiver of the
conditions to each such Closing set forth in ArticleV (other than those
conditions that by their nature are to be satisfied at such Closing, but
subject to the satisfaction or waiver of those conditions) or on such other
place, time and/or date as shall be mutually agreed by the Company and the
Purchaser (the date of such Closing, a "Closing Date").
(b) At each Closing, the Company shall deliver to the Purchaser
certificates representing the shares of Preferred Stock and the Warrants being
purchased by the Purchaser at such Closing, each registered in the name of the
Purchaser or its nominee or designee in such amounts as Purchaser shall inform
the Company prior to such Closing. Delivery of such certificates shall be made
against receipt by the Company of the portion of the Purchase Price payable in
connection with such Closing, which shall be paid by wire transfer of
immediately available funds to an account designated at least three business
days prior to the applicable Closing Date by the Company. The Warrants shall be
in the forms of Exhibit 1.2(b).
-2-
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser, as of the
date hereof and as of each Closing Date, as follows:
2.1. Organization; Subsidiaries. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to carry on its
business as it is now being conducted. The Company is duly qualified and
licensed as a foreign corporation to do business, and is in good standing (and
has paid all relevant franchise or analogous taxes), in each jurisdiction where
the character of its assets owned or held under lease or the nature of its
business makes such qualification necessary, except where the failure to so
qualify or be licensed could not individually or in the aggregate reasonably be
expected to have a Material Adverse Effect. The minute books (containing the
records of meetings of stockholders, the Board of Directors, and any committees
of the Board of Directors), stock record books and certificate books of the
Company contain true, complete and accurate records in all material respects of
all corporate actions taken at any such meetings and other corporate governance
matters, the stock ownership of the Company and the transfer of the shares of
its capital stock since the date of inception of the Company. Complete and
correct copies of all of the foregoing (other than, as of the date hereof, the
minutes of the meeting of the Board of Directors on April9, 1999, which have
not yet been approved) have previously been made available to the Purchaser.
(b) Schedule2.1(b) sets forth a complete and correct list of each
corporation, limited liability company, partnership, business association or
other Person with respect to which the Company has, directly or indirectly,
ownership of or rights with respect to securities or other interests having the
power to elect a majority of such Person's board of directors or analogous or
similar governing body, or otherwise having the power to direct the management,
business or policies of that corporation, limited liability company,
partnership, business association or other Person (each, a "Subsidiary" and,
collectively, the "Subsidiaries") that is required to be included in Exhibit 21
to the Company's Annual Report on Form 10-K for the period ended December31,
1998. Except as set forth on Schedule2.1(b), the Company owns, either directly
or indirectly through one or more Subsidiaries, all of the capital stock or
other equity interests of the Subsidiaries free and clear of all liens,
charges, claims, security interests, restrictions, options, proxies, voting
trusts or other encumbrances ("Encumbrances"), other than transfer restrictions
imposed by applicable federal and state securities Laws. All of the issued and
outstanding shares of capital stock or other equity interests of each
Subsidiary held directly or indirectly by the Company have been duly authorized
and are validly issued, fully paid and nonassessable. No shares of capital
stock or other equity interests of any Subsidiary are entitled to preemptive
rights. Except as set forth on
-3-
<PAGE>
Schedule2.1(b) or disclosed in the SEC Reports, there are no outstanding
subscription rights, options, warrants, convertible or exchangeable securities
or other rights of any character whatsoever relating to issued or unissued
capital stock or other equity interests of any Subsidiary, or any Commitments
of any character whatsoever relating to issued or unissued capital stock or
other equity interests of any Subsidiary or pursuant to which the Company or
any Subsidiary is or may become bound to issue or grant additional shares of
its capital stock or other equity interests or related subscription rights,
options, warrants, convertible or exchangeable securities or other rights, or
to grant preemptive rights. Except as set forth on Schedule2.1(b) or disclosed
in the SEC Reports, there are no voting trusts, stockholders agreements,
proxies or other Commitments or understandings to which any Subsidiary is a
party with respect to the voting or transfer of any capital stock or other
equity interest of any Subsidiary. Except for (i)the Subsidiaries, (ii)assets
held in benefit plans, (iii)corporate treasury transactions and (iv)as set
forth on Schedule2.1(b), the Company does not own, directly or indirectly, any
interest in any corporation, limited liability company, partnership, business
association or other Person.
(c) Each Subsidiary is a corporation, limited liability company,
partnership, business association or other Person duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization and has the requisite power and authority to carry on its business
as it is now being conducted. Except as set forth on Schedule 2.1(c), each
Subsidiary is duly qualified and licensed to do business, and is in good
standing (and has paid all relevant franchise or analogous taxes), in each
jurisdiction where the character of its assets owned or held under lease or the
nature of the business conducted by it makes such qualification necessary
except where the failures of all of such Subsidiaries to so qualify or be
licensed individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect. The minute books or other records (containing
the records of meetings of stockholders or other holders of other equity
interests, the board of directors or other similar governing body, and any
committees thereof), the stock ownership or analogous records and the
certificate books of each of UnitedAuto Finance, Inc., UnitedAuto Care, Inc.
and UnitedAuto Care Products, Inc. contain in all material respects true,
complete and accurate records of all actions taken at any such meetings and
other governance matters, the stock or other equity ownership of each of such
Subsidiaries and the transfer of the shares of its capital stock or other
equity interest since the date of inception of each such Subsidiary. Complete
and correct copies of all of the foregoing have previously been made available
to the Purchaser.
2.2. Due Authorization. The Company has all right, corporate power and
authority to enter into this Agreement and each of the other Transaction
Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Company of
this Agreement and each of the other Transaction Documents to which it is a
party, the issuance and sale of the Preferred Stock and the Warrants by the
Company and the compliance by the Company with each of the
-4-
<PAGE>
provisions of this Agreement and each of the other Transaction Documents to
which it is a party (including the reservation and issuance of the Shares and
the consummation by the Company of the transactions contemplated hereby and
thereby) (a)are within the corporate power and authority of the Company and
(b)have been duly authorized by all requisite corporate proceedings on the part
of the Company, except for the approval by the stockholders of the Company
referenced in Section 4.5. The Board of Directors has determined that it is
advisable and in the best interest of the Company's stockholders for the
Company to consummate the issuance and sale of the Preferred Stock and the
Warrants upon the terms and subject to the conditions set forth in this
Agreement, and has unanimously recommended that the Company's stockholders
approve and adopt this Agreement and the other transactions referenced in
Section 4.5; provided, however, any such recommendation of the Board of
Directors may be withdrawn, modified or amended to the extent permitted by
Section 4.5 of this Agreement. This Agreement has been, and each of the other
Transaction Documents to which the Company is a party when executed and
delivered by the Company will be, duly and validly executed and delivered by
the Company, and this Agreement constitutes, and each of such other Transaction
Documents when executed and delivered by the Company will constitute, a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms, except as enforceability against the Company may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws now or hereafter in effect relating to the rights of creditors
generally and by legal and equitable limitations on the enforceability of
specific remedies (regardless of whether enforcement is considered in a
proceeding in equity or at law). The Shares have been validly reserved for
issuance, and upon payment of the Purchase Price and issuance in accordance
with the Certificates of Designation, or the Warrant, as the case may be, will
be duly and validly issued and outstanding, fully paid, and nonassessable. The
terms, designations, powers, preferences and relative participation, optional
and other special rights, qualifications, limitations and restrictions of the
Series A Preferred Stock and the Series B Preferred Stock will be set forth in
the Certificate of Designation of the Series A Preferred Stock and the
Certificate of Designation of the Series B Preferred Stock, respectively
(collectively, the "Certificates of Designation"), the forms of which are
attached as Exhibit 2.2.
2.3. Capitalization. The authorized capital stock of the Company consists
of (i)40,000,000 shares of voting Common Stock, par value $0.0001 per share, of
which, as of March 24, 1999, 21,289,619 shares are issued and outstanding;
(ii)1,125,000 shares of Non-Voting Common Stock, of which, as of March 24,
1999, 605,454 shares are issued and outstanding; (iii)20,000,000 shares of
Class C Common Stock, par value $0.0001 per share, of which, as of the date
hereof, no shares are issued and outstanding; and (iv)100,000 shares of
preferred stock, par value $0.0001 per share, of which, as of the date hereof,
no shares are issued and outstanding. There have been no changes in such
numbers since March 24, 1999, except as a result of the transactions
contemplated by the Transaction Documents, and the issuance of Common Stock
upon the exercise of rights to acquire Common Stock and Non-Voting Common Stock
set forth
-5-
<PAGE>
on Schedule2.3. All of the issued and outstanding shares of Common Stock and
Non-Voting Common Stock have been duly authorized and are validly issued, fully
paid and nonassessable. No shares of capital stock of the Company are entitled
to preemptive rights. Except as set forth on Schedule2.3 or disclosed in the
SEC Reports, there are no outstanding subscription rights, options, warrants,
convertible or exchangeable securities or other rights of any character
whatsoever relating to issued or unissued capital stock of the Company, or any
Commitments of any character whatsoever relating to issued or unissued capital
stock of the Company or pursuant to which the Company or any of the
Subsidiaries is or may become bound to issue or grant additional shares of its
capital stock or related subscription rights, options, warrants, convertible or
exchangeable securities or other rights, or to grant preemptive rights. Except
as set forth on Schedule2.3 or disclosed in the SEC Reports, (i)the Company has
not agreed to register any securities under the Securities Act or under any
state securities law or granted registration rights to any Person or entity and
(ii)there are no voting trusts, stockholders agreements, proxies or other
Commitments or understandings in effect to which the Company is a party or of
which it has Knowledge with respect to the voting or transfer of any of the
shares of Common Stock or Non-Voting Common Stock. To the extent that any
options, warrants or any of the other rights described above are outstanding,
neither the issuance and sale of the Preferred Stock and the Warrants nor any
issuance of Shares will result in an adjustment of the exercise or conversion
price or number of shares issuable upon the exercise or conversion of any such
options, warrants or other rights.
2.4. SEC Reports. The Company has timely filed all proxy statements,
reports and other uments required to be filed by it with the SEC under the
Exchange Act from and after October23, 1996 (collectively, the "SEC Reports").
Each SEC Report was on the date of its filing in compliance as to form in all
material respects with the requirements of its respective report form and did
not on the date of filing 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, in the light of the circumstances under which they
were made, not misleading.
2.5. Financial Statements. The audited consolidated balance sheet of the
Company and the Subsidiaries as of December31, 1998 (the "1998 Balance Sheet")
and the related consolidated statements of operations, changes in stockholders'
equity (deficit) and cash flows for the 12-month period then ended, including
the notes thereto (collectively, the "1998 Financial Statements"), and all of
the financial statements (including any related schedules and/or notes)
included in the SEC Reports, have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") consistently followed
throughout the periods involved, except as may be noted therein, and fairly
present in all material respects the consolidated financial condition, results
of operations and changes in stockholders' equity of the Company and the
Subsidiaries as of the respective dates thereof and for the respective periods
then ended (in each case subject, as to interim statements, to changes
resulting from year-end
-6-
<PAGE>
adjustments). A complete and correct copy of the 1998 Financial Statements is
set forth on Schedule2.5. Except as set forth on Schedule2.5 or disclosed in
the SEC Reports, neither the Company nor any Subsidiary has any liability or
obligation (whether accrued, absolute, contingent, unliquidated or otherwise,
whether known or unknown, whether due or to become due and regardless of when
asserted), except (i)liabilities and obligations in the respective amounts
reflected or reserved against in the 1998 Balance Sheet, (ii)liabilities and
obligations incurred in the ordinary course of business since December31,1998
which individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect, (iii)under Commitments in accordance with the terms
and conditions thereof which are not required by GAAP to be reflected on the
1998 Balance Sheet except Commitments that are required to be disclosed
pursuant to Section 2.15 and are not so disclosed, (iv)in respect of any Loss
relating to any Environmental Matter except to the extent required to be
disclosed on Schedule 2.14 and not so disclosed, or (v)arising out of or in
connection with any claim by Person in respect of any product sold, rented,
leased, designed, distributed or marketed at any time by the Company or its
Subsidiaries resulting from an alleged defect in the design or manufacture
thereof, or any alleged failure to warn with respect thereto, but only to the
extent not subject to indemnification or reimbursement by financially solvent
entities.
2.6. Absence of Certain Changes. Except as set forth on Schedule2.6, as
disclosed the SEC Reports, or pursuant to the transactions contemplated by this
Agreement and the other Transaction Documents, since December 31, 1998: (i)the
business of the Company and the Subsidiaries taken as a whole has been
conducted in the ordinary course of business consistent with past practice,
(ii)the Company and its Subsidiaries have not (a)suffered any change, event or
development or series of changes, events or developments which individually or
in the aggregate has had or could reasonably be expected to have a Material
Adverse Effect, (b)suffered any damage, destruction or casualty loss to its
physical properties (whether or not covered by insurance) which individually or
in the aggregate has resulted or could reasonably be expected to result in a
Material Adverse Effect or (c)been the subject of any material Litigation or
threatened or commenced investigation by a Governmental Entity, and (iii)there
has not been any transaction, act, development, circumstance or event that if
it had occurred on or after the date of this Agreement without the prior
consent of the Purchaser would constitute a breach of Section 4.1.
2.7. Litigation. (a) Except as set forth on Schedule2.7(a) or as disclosed
in the SEC Reports, there is no material claim, action, suit, investigation or
proceeding ("Litigation") pending or, to the Knowledge of the Company,
threatened against the Company or any of the Subsidiaries or involving any of
their respective properties or assets by or before any court, arbitrator or
other Governmental Entity.
(b) Except as set forth on Schedule 2.7(b) or as disclosed in the SEC
Reports, neither the Company nor any of the Subsidiaries is in default under or
in breach
-7-
<PAGE>
of any order, judgment or decree of any court, arbitrator or other Governmental
Entity, and neither the Company nor any of the Subsidiaries is a party or
subject to any order, judgment or decree of any court, arbitrator or other
Governmental Entity, which has had or could reasonably be expected to have a
Material Adverse Effect.
2.8. Title to Properties; Insurance. (a) Except as set forth on
Schedule2.8(a), the Company and the Subsidiaries have good and valid title to,
or, in the case of property leased by them, a valid and subsisting leasehold
interest in, their respective material properties and assets, free of all
Encumbrances except for Permitted Encumbrances.
(b) Schedule2.8(b) sets forth the address of all Owned Real Property. With
respect to the Owned Real Property, (i)the Company and its Subsidiaries have
good and marketable title in fee simple to the Owned Real Property, free and
clear of all Encumbrances except for Permitted Encumbrances, (ii)there are no
outstanding options or rights of first refusal in favor of any other Person to
purchase the Owned Real Property or any portion thereof or interest therein,
and (iii)there are no leases, subleases, licenses, options, rights, concessions
or other Commitments affecting any portion of the Owned Real Property.
(c) Schedule2.8(c) sets forth a complete and correct list of all material
Leased Real Property. With respect to the Leased Real Property, the Company and
the Subsidiaries have good and valid leasehold estates in the Leased Real
Property, free and clear of all Encumbrances except for Permitted Encumbrances
and Encumbrances set forth on Schedule2.8(a). Except as set forth on
Schedule2.8(c), (A)each lease or sublease relating to the Leased Real Property
is legal, valid, binding and enforceable and in full force and effect and
(B)the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement will not cause a breach or require
any third party consent or notification under any such lease or sublease. The
information set forth on Schedule2.8(c) regarding the Leased Real Property is
true and correct in all material respects.
(d) [Intentionally omitted]
(e) Schedule2.8(e) sets forth a complete and correct list of all insurance
coverage carried by the Company and the Subsidiaries, including for each policy
the type and scope of coverage, the carrier and the amount of coverage. All of
the assets of the Company and the Subsidiaries and all aspects of the Company's
and the Subsidiaries' businesses that are of insurable character are covered by
insurance with reputable insurers against risks of liability, casualty and fire
and other losses and liabilities customarily obtained to cover comparable
businesses and assets in amounts, scope and coverage (and with deductibles)
which are consistent with prudent industry practice. Neither the Company nor
any of the Subsidiaries is in default in a material respect with respect to any
-8-
<PAGE>
of its obligations under any insurance policy maintained by it. All such
policies are in full force and effect and no premiums with respect thereto are
past due and owed. Except as set forth on Schedule2.8(e), there are no claims
by the Company or any of the Subsidiaries under any of such policies to which
any insurance company is denying liability or defending under a reservation of
rights or similar clause. Except as set forth on Schedule2.8(e), neither the
Company nor any of the Subsidiaries has received notice of any pending or
threatened termination of any of such policies or any premium increases for the
current policy period with respect to any of such policies, and the
consummation of the transactions contemplated by this Agreement or any of the
other Transaction Documents will not result in any such termination or premium
increase. The Company maintains a Directors' and Officers' insurance policy
with National Union Fire Insurance Company, a complete and correct copy of
which has previously been delivered to the Purchaser.
2.9. Consents, No Violations. Except as set forth on Schedule2.9, neither
the execution, delivery or performance by the Company of this Agreement or any
of the other Transaction Documents to which it is a party nor the consummation
of the transactions contemplated hereby or thereby will (a)conflict with, or
result in a breach or a violation of, any provision of the certificate of
incorporation or by-laws of the Company; (b)constitute, with or without notice
or the passage of time or both, a breach, violation or default, create an
Encumbrance, or give rise to any right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration,
under (i)any Law or (ii)any Commitment to which the Company or any of the
Subsidiaries is a party or pursuant to which any of them or any of their assets
or properties is subject, except, with respect to the matters set forth in this
clause(b), for breaches, violations, defaults, Encumbrances, or rights of
termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration, which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect or adversely
affect the ability of the Company to consummate the transactions contemplated
by this Agreement or any other Transaction Document to which it is a party; or
(c)except for any required filing under the HSR Act or with respect to any
Environmental Permits, require any consent, approval or authorization of,
notification to, filing with, or exemption or waiver by, any Governmental
Entity or any other Person on the part of the Company or any of the
Subsidiaries.
2.10. Holding Company Act and Investment Company Act. Neither the Company
nor any of the Subsidiaries is: (i)a "public utility company" or a "holding
company," or an "affiliate" or a "subsidiary company" of a "holding company,"
or an "affiliate" of such a "subsidiary company," as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended, or (ii)a "public
utility," as defined in the Federal Power Act, as amended, or (iii)an
"investment company" or an "affiliated person" thereof or an "affiliated
person" of any such "affiliated person," as such terms are defined in the
Investment Company Act of 1940, as amended.
-9-
<PAGE>
2.11. Taxes. (a) Except as disclosed in Schedule 2.11(a), the Company and
each of the Subsidiaries has timely filed all Returns required by Law to have
been filed by it and has paid all Taxes shown to be due thereon or which are
otherwise due and payable (or made adequate provision in accordance with GAAP
for all such Taxes on the 1998 Balance Sheet) including, without limitation,
any Tax levied upon any of its properties, assets, income or franchises. All
such Returns were complete and correct in all material respects. All amounts
required to be collected or withheld by the Company and each of the
Subsidiaries has been collected or withheld and any such amounts that are
required to be remitted to any taxing authority have been duly remitted. The
accruals and reserves for Taxes on the 1998 Balance Sheet are complete and
adequate in all material respects to cover any liability of the Company and
each of its Subsidiaries for Taxes for periods through December 31, 1998. The
accruals and reserves for deferred tax liabilities on the 1998 Balance Sheet
are adequate to cover any such liability in accordance with GAAP.
(b) Schedule 2.11(b) contains a list of states, territories and
jurisdictions (whether foreign or domestic) in which the Company or any of the
Subsidiaries currently file an income, franchise, sales or use Return. Except
as set forth on Schedule2.11(b), (i)neither the IRS nor any other taxing
authority has asserted in writing any claim involving a material amount of
Taxes, or to the Knowledge of the Company, is threatening to assert any claims
involving a material amount of Taxes, against the Company or any of the
Subsidiaries, (ii)neither the Company nor any of the Subsidiaries has been a
member of a consolidated, combined or unitary group for federal or state income
tax purposes that included any member other than the current members of the
consolidated federal income tax group of which the Company is the common
parent, (iii)neither the Company nor any of the Subsidiaries is or has been a
party to any Tax sharing agreement (except for agreements with Subsidiaries
providing for the sharing of liabilities on a pro rata basis) that will remain
in effect and under which the Company or any such Subsidiary could have any
material liability for Taxes, (iv) there are no liens for Taxes upon any assets
of the Company or any of the Subsidiaries (other than liens for Taxes not yet
due and payable), except for liens which individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect, (v)neither the
Company nor any of the Subsidiaries has agreed or is required to include in
income during the current year or any future taxable period any material
adjustment pursuant to Section 481 of the Code (or similar provisions of
foreign, state or local law) by reason of a change in accounting method or
otherwise, and the IRS has not proposed any such adjustment, and (vi) complete
copies of all income Tax Returns filed by the Company and each of the
Subsidiaries for taxable periods commencing on or after January 1, 1993 have
been provided to, or made available to, the Purchaser.
2.12. Employee Benefit Plans. (a) Schedule2.12 sets forth a complete and
correct list of (i)all of the Compensation and Benefit Plans that are intended
to qualify with the applicable requirements of Article401(a) of the Code and
(ii)all
-10-
<PAGE>
employment, severance and change of control agreements with employees, former
employees, officers, former officers, directors, former directors or the
beneficiaries of any of the foregoing or pursuant to which the Company or any
Subsidiary has or may have any liability in excess of $200,000. Except with
respect to any Multi-Employer Plans, the Company has heretofore delivered or
made available to the Purchaser true and complete copies of all Compensation
and Benefit Plans and any amendments thereto (or if a Compensation and Benefit
Plan is not in written form, a written description thereof), any related trust
or other funding agreement or vehicle, the most recent reports or summaries
required under ERISA or the Code and, with respect to each Compensation and
Benefit Plan intended to qualify under Article 401 of the Code, the most recent
determination letter received from the IRS.
(b) Except where the failure to do so could not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect, the Company
and each Subsidiary have performed all obligations required to be performed by
them under each Compensation and Benefit Plan and neither the Company nor any
Subsidiary is in default under or in violation of, any Compensation and Benefit
Plan. Except with respect to any Multi-Employer Plans or as otherwise set forth
on Schedule2.12, each Compensation and Benefit Plan has in all material
respects been established, operated, maintained and administered, as the case
may be, in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including, but not limited to,
ERISA and the Code.
(c) With respect to each Compensation and Benefit Plan which is a
"multi-employer plan" within the meaning of Sections 3(37) or 4001(a)(3) of
ERISA (a "Multi-Employer Plan"): (i) neither the Company, any Subsidiary nor
any ERISA Affiliate has been required to contribute to, or incurred any
withdrawal liability (within the meaning of Section 4201 of ERISA) to any such
plan which liability has not been fully paid as of the date hereof; (ii) as of
the Closing Date, the Company, each Subsidiary and each ERISA Affiliate will
not have completely or partially withdrawn from any such plan and will not be
subject to any withdrawal liability as described in Section 4201 of ERISA for
withdrawals that have occurred on or prior to the Closing Date (including,
without limitation, any withdrawal deemed to have occurred as a result of the
transactions contemplated by this Agreement); (iii) no event has occurred which
could result in a "partial withdrawal" under Section 4205 of ERISA with respect
to any such plan and neither the Company, Parent, any Subsidiary nor any ERISA
Affiliate has any contingent liability under Section 4204 of ERISA; (iv) if the
Company, each Subsidiary and each ERISA Affiliate were to incur a complete
withdrawal (as described in Section 4203 of ERISA) from each such plan as of
the Closing Date, no withdrawal liability, as determined under Section 4201 of
ERISA, could be incurred with respect to all such plans that would individually
or in the aggregate have a Material Adverse Effect; and (v)neither the Company,
any Subsidiary nor any ERISA Affiliate has knowledge that any such plan fails
to qualify under Section 401(a) of the Code, has been terminated, is
-11-
<PAGE>
insolvent or is in reorganization within the meaning of Part 3 of Subtitle E of
Title IV of ERISA and, to the knowledge of the Company, no condition exists
which presents a risk of any such plan being terminated, becoming insolvent or
going into reorganization.
(d) Neither the Company, any Subsidiary, nor any ERISA Affiliate presently
sponsors, maintains or contributes to, nor is the Company, any Subsidiary or
any ERISA Affiliate required to sponsor, maintain or contribute to, nor has the
Company, any Subsidiary or any ERISA Affiliate (other than where the Company,
such Subsidiary or such ERISA Affiliate has no continuing material obligation
or liability) ever sponsored, maintained, contributed to or been required to
contribute to, any Compensation and Benefit Plan (other than a Multi-Employer
Plan) which is an "employee pension benefit plan" within the meaning of Article
3(2) of ERISA and which is subject to Title IV of ERISA.
(e) Neither the Company, any Subsidiary nor any ERISA Affiliate
(i)maintains or contributes to any Compensation and Benefit Plan which
provides, or has any liability to provide, life insurance, medical or dental
benefits to any employee upon his retirement or termination of employment,
except as may be required by Article 4980B of the Code or as would not
reasonably be expected to have individually or in the aggregate a Material
Adverse Effect; or (ii)has ever represented to, promised or contracted with
(whether in oral or written form) any employee (either individually or to
employees as a group) that such employee would be provided with life insurance,
medical or dental benefits upon retirement or termination of employment, except
to the extent required by Article 4980B of the Code or as would not reasonably
be expected to have individually or in the aggregate a Material Adverse Effect.
(f) There are no pending, or to the Knowledge of the Company, threatened
claims by or on behalf of any Compensation and Benefit Plan by any employee or
beneficiary covered under any such Compensation and Benefit Plan, or otherwise
involving any such Compensation and Benefit Plan, that individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
(g) Except as otherwise set forth on Schedule2.12(g), there is no
Commitment covering any employee or former employee of the Company or any
Subsidiary that, individually or in the aggregate, would be reasonably likely
to give rise to the payment of any amount that would result in a material loss
of tax deductions pursuant to the terms of Article 162(m) of the Code.
(h) Except where the failure to do so could not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect, the Company
and each Subsidiary (i) is in compliance with all applicable federal, state and
local laws, rules and regulations (domestic and foreign) respecting employment,
employment practices, labor, terms and conditions of employment and wages and
hours, in each case, with
-12-
<PAGE>
respect to employees; (ii) has withheld all amounts required by Law or by
Commitment to be withheld from the wages, salaries and other payments to
employees; (iii)is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing; and (iv)is not liable
for any payment to any trust or other fund or to any Governmental Entity with
respect to unemployment compensation benefits, social security or other
benefits for employees.
(i) No work stoppage or labor strike against the Company or any Subsidiary
by employees is pending, or to the knowledge of the Company, threatened. Except
for such matters that could not individually or in the aggregate reasonably be
expected to have a Material Adverse Effect, neither the Company nor any
Subsidiary (i)is involved in, or to the knowledge of the Company, threatened
with any labor dispute, grievance, or Litigation relating to labor matters
involving any employees, including, without limitation, violation of any
federal, state or local labor, safety or employment laws (domestic or foreign),
charges of unfair labor practices or discrimination complaints or (ii)has
engaged in any unfair labor practices within the meaning of the National Labor
Relations Act or the Railway Labor Act.
(j) Except as set forth in Schedules2.9, 2.12 and 2.15, the execution,
delivery and performance by the Company of the transactions contemplated by
this Agreement and the other Transaction Documents to which it is a party will
not (either alone or upon the occurrence of any additional or subsequent
events)constitute an event under any Compensation and Benefit Plan, trust or
loan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
employee. No payment or benefit which will or may be made by the Company, any
Subsidiary, the Purchaser or any of their respective Affiliates in connection
with the transactions contemplated by this Agreement or any of the other
Transaction Documents with respect to any employee will be characterized as an
"excess parachute payment" within the meaning of Article 280G(b)(1) of the
Code.
2.13. Intellectual Property. (a)Except as disclosed on Schedule2.13(a),
(i)the Company or a Subsidiary owns or has the right to use pursuant to a valid
license, sub-license or other agreement all of the Intellectual Property used
by it, except where the absence of any thereof could not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect and
(ii)neither the Company nor any of the Subsidiaries has interfered with,
infringed upon or misappropriated any Intellectual Property rights of third
parties, except for interferences, infringements and misappropriations which
could not individually or in the aggregate reasonably be expected to have a
Material Adverse Effect, and neither the Company nor any Subsidiary has
received any written claim, demand or notice alleging any such interference,
infringement or misappropriation. To the Knowledge of the Company, no third
party has interfered with, infringed upon or misappropriated any Intellectual
Property rights of the
-13-
<PAGE>
Company or any Subsidiary, except for interferences, infringements and
misappropriations which could not individually or in the aggregate reasonably
be expected to have a Material Adverse Effect.
(b) The disclosure contained under the heading "IMPACT OF YEAR 2000" in
the Company's Annual Report on Form 10-K for the period ended December31, 1998
is true, correct and complete in all material respects.
2.14. Compliance with Laws. (a)Except as set forth on Schedule2.14(a) or
as disclosed in the SEC Reports, the Company and the Subsidiaries are in
compliance in all material respects with all Laws, and since January1, 1996,
neither the Company nor any Subsidiary has received any notice of any alleged
violation of Law applicable to it. The Company and the Subsidiaries have all
material licenses, franchise permits, consents, registrations, certificates,
and other governmental or regulatory permits, authorizations or approvals
required for the operation of the business as presently conducted and for the
ownership, lease or operation of the Company's and its Subsidiaries' properties
(collectively, "Licenses"). Except as set forth on Schedule2.14(a), the Company
and the Subsidiaries have all Licenses, and all of such Licenses are valid and
in full force and effect, and the Company and the Subsidiaries have duly
performed and are in compliance in all material respects with all of their
obligations under such Licenses. No event has occurred with respect to any of
such Licenses that allows, or after notice or lapse of time or both would
allow, the suspension, limitation, revocation, non-renewal or termination
thereof that, individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect, and no terminations of any License
or proceedings to suspend, limit, revoke or terminate any License have been
threatened. The Company has made available for inspection by the Purchaser
copies of all material correspondence between the Company or any of the
Subsidiaries, on the one hand, and the SEC on the other hand.
(b) Without limiting the generality of foregoing, except as set forth on
Schedule2.14(b), the Company, the Subsidiaries and, to the extent the Company
or any Subsidiary would have any liability with respect thereto, each of their
respective employees, are in compliance in all material respects with all
material Laws relating to consumer financing and leasing (including, without
limitation, the financing and leasing of vehicles and other consumer products),
including, without limitation, (i)the rules and regulations of any Governmental
Entity, (ii)any applicable federal, state, local or foreign Laws, and any rules
or regulations promulgated thereunder pertaining to unlawful discrimination in
lending (including, without limitation, equal credit opportunity, retail
installment sales, and fair credit reporting), truth-in-lending,
truth-in-leasing or consumer credit (including, without limitation, the Federal
Consumer Credit Protection Act, Federal Truth-in-Lending Act and RegulationZ
thereunder, and the Federal Equal Credit Opportunity Act and RegulationB
thereunder), and (iii)all applicable usury and interest limitations Laws.
-14-
<PAGE>
(c) Neither the Company nor any Subsidiary has offered or agreed to offer
anything of value to any government official, political party or candidate for
governmental or political office (or any person that the Company knows or has
reason to know, will offer anything of value to any governmental official,
political party or candidate for governmental or political office), such that
the Company or any of the Subsidiaries have violated the Foreign Corrupt
Practices Act of 1977, as amended.
(d) To the Knowledge of the Company:
(i) Except as set forth on Schedule2.14(d), the Company and the
Subsidiaries have at all times been operated, and are currently operated, in
compliance in all material respects with all Environmental Laws.
(ii) Except as set forth on Schedule2.14(d), the Company and the
Subsidiaries (1)have obtained, and are in compliance in all material respects
with, all material permits, licenses, authorizations, registrations and other
governmental consents required by Environmental Laws ("Environmental Permits"),
and (2)have made all appropriate filings for the issuance or renewal of such
Environmental Permits (other than in connection with the transactions
contemplated hereby).
(iii) Except as set forth on Schedule2.14(d), all of the Owned Real
Property and Leased Real Property (collectively, "Real Property") is free of
any material contamination arising out of, relating to, or resulting from the
Release by the Company or any of the Subsidiaries of any Hazardous Substances,
and there has been no material Release at any time of any Hazardous Substances
at, on, about, under or within any Real Property or, to the Knowledge of the
Company, any real property formerly owned, leased, operated or controlled by
the Company or any of the Subsidiaries or any predecessor of any of the
foregoing (other than pursuant to and in accordance with Environmental
Permits).
(iv) Except as set forth on Schedule 2.14(d), there are no material
claims, notices (including, without limitation, notices that the Company or any
of the Subsidiaries (or any predecessors thereof) is or may be a potentially
responsible person or otherwise liable in connection with any waste disposal or
other site containing Hazardous Substances), civil, criminal or administrative
actions, suits, hearings, investigations, inquiries or proceedings pending or,
to the Knowledge of the Company, threatened that are based on or related to any
Environmental Matters (including, without limitation, the failure to comply
with any Environmental Law or the failure to have, or to comply with, any
Environmental Permits).
(v) Except as set forth on Schedule 2.14(d), there are no present or
past conditions, events, circumstances, facts, activities, practices,
incidents, actions, omissions or plans: (1)that are reasonably likely to
interfere with or prevent, in any material respect, continued compliance by the
Company or any of the Subsidiaries with
-15-
<PAGE>
Environmental Laws or the requirements of Environmental Permits, or (2)that are
reasonably likely to give rise to any material liability under any
Environmental Laws, or (3)that are reasonably likely to form the basis of any
material claim, action, suit, proceeding, hearing, investigation or inquiry
against or involving the Company or any Subsidiary based on or related to any
Environmental Matter.
(vi) Except as set forth on Schedule2.14(d), there are no material
Releases or material liabilities arising out of, relating to or resulting from
any underground or aboveground storage tanks, incinerators or surface
impoundments currently or formerly at, on, about, under or within any Real
Property.
(vii) Except as set forth on Schedule2.14(d), neither the Company nor
any of the Subsidiaries (nor any predecessors thereof) have used any waste
disposal site, or otherwise disposed of, transported, or arranged for the
transportation of, any Hazardous Substances to any place or location that is
now, or was in the past, listed on the National Priorities List of Superfund
Sites or any analogous state lists.
(viii) Except as set forth on Schedule2.14(d), no Encumbrance other
than Permitted Encumbrances exists, and no condition exists which could
reasonably be expected to result in the filing of an Encumbrance other than
Permitted Encumbrances, against any Real Property under any Environmental Law
or relating to any Environmental Matter.
(e) The Company has delivered or made available to the Purchaser true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring in the possession of the Company or any of the Subsidiaries, in each
case relating to any Environmental Matters with respect to the Company or any
of the Subsidiaries (including without limitation any Hazardous Substances at,
on, about, under or within any Real Property or any real property formerly
owned, leased, operated or controlled by the Company or any of the Subsidiaries
or any predecessor of any of the foregoing).
2.15. Commitments. Schedule2.15 sets forth a complete and correct list of
each written and, if material, oral contract, agreement, understanding,
arrangement and commitment of any nature whatsoever, including all amendments
thereof and supplements thereto ("Commitments") of the following types to which
the Company or any Subsidiary is a party or by or to which the Company or any
Subsidiary or any of their properties may be bound or subject as of the date
hereof: (i)Commitments or related series of Commitments which are service
contracts or equipment leases involving payments by the Company or any
Subsidiary of more than $1,000,000 per year, (ii)Commitments containing
covenants purporting to limit the freedom of the Company or any Subsidiary to
compete in any line of business in any geographic area or to hire any
individual or group of individuals, (iii)Commitments or related series of
Commitments
-16-
<PAGE>
relating to capital expenditures in excess of $1,000,000, (iv)(x)Commitments or
related series of Commitments relating tothe lease or sublease of or sale or
purchase of personal property involving any annual expense or price in excess
of $1,000,000, and (y) each material lease or sublease of real property or
Commitments relating to the sale or purchase of material real property,
(v)Commitments relating to indentures, mortgages, promissory notes, loan
agreements, guarantees, letters of credit or other agreements or instruments of
the Company or any Subsidiary or Commitments for or relating to the borrowing
or the lending of money by or to the Company or any Subsidiary in excess of
$100,000 or providing for any right of first refusal or the creation of any
Encumbrance upon any of the assets or properties of the Company or any
Subsidiary, (vi)Commitments with or relating to any automobile or other vehicle
manufacturer, including, without limitation, franchise and other dealership
agreements, (vii)Commitments relating to the acquisition or disposition of any
operating business or the capital stock of any Person that has not been
consummated or that has been consummated but contains representations,
warranties, covenants, guarantees, indemnities or other obligations that remain
in effect, (viii)Commitments relating to any material Litigation,
(ix)Commitments under which the Company or any Subsidiary agrees to indemnify
any Person, (x)Commitments in respect of any joint venture, partnership or
other similar arrangement, (xi)Commitments with any Governmental Entity;
(xii)other Commitments or related series of Commitments which involve payments
of over $1,000,000, and (xiii)other Commitments which are otherwise material.
All such Commitments are valid and binding obligations of the Company and each
Subsidiary, as the case may be, and, to the Knowledge of the Company, are the
valid and binding obligation of each other party thereto except such
Commitments which if not so valid and binding individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any Subsidiary nor, to the Knowledge of the Company, any other
party is in material violation of or in material default in respect of, nor has
there occurred an event or condition which with the passage of time or giving
of notice (or both) would constitute a material default under, any such
Commitment which in the judgment of the management of the Company would
adversely affect the Company's or any Subsidiary's ability to retain, renew or
otherwise continue the Company's or Subsidiary's contractual relationship with
the parties thereto, except for the loss of contractual relationships which
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
2.16. Acquisitions. Schedule 2.16 sets forth a list of all acquisitions
(by purchase of assets, purchase of stock, merger or otherwise) of any Person
or any businesses, business lines or material assets pending or consummated or
agreed to be consummated by the Company or any of the Subsidiaries since
December31, 1998 or earlier to the extent the Company or any Subsidiary has
continuing liabilities or obligations with respect to any acquisition. For each
such acquisition, Schedule 2.16 also lists the consideration remaining to be
paid in connection with such acquisition (and the form or forms of such
consideration), the amount and a summary of the terms of any earn-out,
claw-back, make-whole or similar provision, the amount and a summary of
-17-
<PAGE>
the terms of any note payable issued by the Company or any Subsidiary in
connection therewith and the amount of any consideration held in escrow on the
date hereof. All continuing material liabilities or other material obligations
of the Company or any Subsidiary in connection with any acquisition (including,
without limitation, arising out of indemnification, the granting of
registration rights or the terms of any earn-out or make-whole provisions) are
summarized on Schedule 2.l6. In connection with any acquisition consummated by
the Company or any Subsidiary in which part or all of the consideration
consisted of shares of capital stock or any other securities (including,
without limitation, capital stock of the Company), such shares of capital stock
or other securities were issued in compliance with the registration
requirements of all applicable federal and state securities laws.
2.17. Brokers or Finders; Opinion of Financial Advisor. (a) Except
pursuant to the letter agreement with J.P.Morgan& Co., dated March15, 1999,
upon the consummation of the transactions contemplated by this Agreement, no
agent, broker, investment banker or other Person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement or the other
Transaction Documents based on arrangements made by or on behalf of the Company
or any of the Subsidiaries, or any Affiliate of any of the foregoing. A
complete and correct copy of all engagement letters and any other Commitment
between the Company or any Subsidiary and J.P.Morgan& Co. or any other Person
relating to the foregoing have previously been delivered to the Purchaser.
(b) The Company has been advised in writing by its financial advisor, J.P.
Morgan& Co., that in its opinion, as of the date hereof, the transactions
contemplated by this Agreement and the other Transaction Documents are fair to
the Company and its stockholders from a financial point of view.
2.18. Proxy Statement. Any proxy statement to be sent to the stockholders
of the Company in connection with a meeting of the stockholders of the Company
in connection with the transactions contemplated by this Agreement and the
other Transaction Documents (the "Stockholders Meeting"; such proxy statement
as amended or supplemented is referred to herein as the "Proxy Statement") will
comply as to form in all material respects with Article14(a) of the Exchange
Act and the rules promulgated thereunder, and it shall not, on the date the
Proxy Statement (or any amendment thereof or supplement thereto) is first
mailed to stockholders or at the time of the Stockholders Meeting, contain any
untrue statement of a material fact, or, in light of the circumstances under
which made, omit to state any material fact necessary in order to make the
statements made therein not false or misleading. If at any time prior to the
Second Closing any event relating to the Company or any of the Subsidiaries or
any of their respective Affiliates, officers or directors should be discovered
by the Company which is
-18-
<PAGE>
required to be set forth in a supplement to the Proxy Statement, the Company
shall promptly inform the Purchaser thereof.
2.19. Suppliers. Schedule2.19 sets forth a list of the Company's suppliers
of $1,000,000 or more in materials (other than suppliers of used cars) or
services to the Company and the Subsidiaries taken as a whole during the twelve
month period ended December31, 1998 ("Major Suppliers"). Since January1, 1999,
there has been no termination, cancellation or limitation of, or any material
adverse modification or change in, the business relationships of the Company or
any of the Subsidiaries with any Major Supplier.
2.20. Related Party Transactions. Schedule2.20 sets forth a list of all
transactions and Commitments between or involving the Company or any of the
Subsidiaries, on the one hand, and any Related Party, on the other hand,
engaged in or entered into since December31, 1996 (including those initiated
prior to such date and continued or continuing following such date).
2.21. Products. Except as set forth on Schedule2.21 and except for any
matter with respect to which the Company or any applicable Subsidiary is
indemnified or has the right to be reimbursed by a financially solvent entity,
there are no statements, citations or decisions by any Governmental Entity
stating that any product sold, rented, leased, designed, distributed or
marketed at any time by the Company or any Subsidiary ("Products") is defective
or unsafe or fails to meet any standards promulgated by any Governmental
Entity. Except as set forth on Schedule2.21 and except for any matter with
respect to which the Company or any applicable Subsidiary is indemnified or has
the right to be reimbursed by a financially solvent entity, there is no (i)fact
relating to any Product that, to the Knowledge of the Company, may impose upon
the Company or any Subsidiary a duty to recall any Product or a duty to warn
customers of a defect in any Product, (ii)latent or overt design, manufacturing
or other defect in any Product that could reasonably be expected individually
or in the aggregate to have a Material Adverse Effect or (iii)material
liability for warranty claims or returns with respect to any Product.
2.22. Section 203 of the DGCL; Takeover Statute. The Board of Directors has
taken all actions necessary or advisable so that the restrictions contained in
Section 203 of the DGCL applicable to a "business combination" (as defined in
such Section) will not apply to the execution, delivery or performance of this
Agreement or any of the other Transaction Documents or the consummation of the
transactions contemplated hereby or thereby. The execution, delivery and
performance of this Agreement or any of the other Transaction Documents and the
consummation of the transactions contemplated hereby or thereby will not cause
to be applicable to the Company any "fair price," "moratorium," "control share
acquisition" or other similar antitakeover statute or regulation enacted under
state or federal laws.
-19-
<PAGE>
2.23. Disclosure. Neither this Agreement nor any other Transaction
Document, nor any schedule or exhibit hereto or thereto, nor any certificate
furnished to the Purchaser by or on behalf of the Company in connection with
the transactions contemplated hereby and thereby, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company, as of the
date hereof and as of each Closing Date, as follows:
3.1. Acquisition for Investment. The Purchaser is acquiring the Preferred
Stock and the Warrants for its own account, for investment and not with a view
to the distribution thereof within the meaning of the Securities Act.
3.2. Restricted Securities. The Purchaser understands that (i)the
Preferred Stock and the Warrants will not be registered under the Securities
Act or any state securities laws by reason of their issuance by the Company in
a transaction exempt from the registration requirements thereof and (ii)shares
of the Preferred Stock and the Warrants and the Shares may not be sold unless
such disposition is registered under the Securities Act and applicable state
securities laws or is exempt from registration thereunder.
3.3. No Brokers or Finders. No agent, broker, investment banker or other
Person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with the transactions contemplated by
this Agreement or the other Transaction Documents based on arrangements made by
or on behalf of the Purchaser.
3.4. Accredited Investor. Each of IMCG-I and IMCG-II is an "accredited
investor" (as defined in Rule501(a) under the Securities Act).
3.5 Organization. Each of IMCG-I and IMCG-II is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware and has the requisite power and authority to carry on its
business as it is now being conducted.
3.6. Due Authorization.Each of IMCG-I and IMCG-II has all right, power and
authority to enter into this Agreement and the other Transaction Documents to
which it is a party and to consummate the transactions contemplated hereby and
thereby.
-20-
<PAGE>
The execution and delivery by each of IMCG-I and IMCG-II of this Agreement and
the other Transaction Documents to which it is a party and the consummation by
it of the transactions contemplated hereby and thereby (a)are within its power
and authority and (b)have been duly authorized by all necessary action on the
part of such entity. This Agreement constitutes, and each of the other
Transaction Documents to which it is a party will constitute upon execution and
delivery by each of IMCG-I and IMCG-II, a valid and binding agreement of such
entity enforceable against such entity in accordance with their respective
terms.
3.7. Consents, No Violations. Neither the execution, delivery or
performance by each of IMCG-I and IMCG-II of this Agreement and the other
Transaction Documents nor the consummation of the transactions contemplated
hereby or thereby will (a)conflict with, or result in a breach or a violation
of, any provision of the organizational documents of such entity;
(b)constitute, with or without notice or the passage of time or both, a breach,
violation or default, create an Encumbrance, or give rise to any right of
termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration, under (i)any Law, or (ii)any Commitment of such
entity, or to which such entity or any of its assets or properties is subject,
except, with respect to the matters set forth in clause(ii), for breaches,
violations, defaults, Encumbrances, or rights of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration,
which, individually or in the aggregate, could not have a material adverse
effect on the ability of such entity to consummate the transactions
contemplated hereby; or (c)except for any required filing under the HSR Act,
require any consent, approval or authorization of, notification to, filing
with, or exemption or waiver by, any Governmental Entity or any other Person on
the part of such entity.
3.8. Availability of Funds. The Purchaser has or will have available at
the date due, sufficient funds to pay its obligations under this Agreement or
arising out of its breach. The Purchaser has delivered to the Company a true
and correct copy of the Limited Liability Agreement of each of IMCG-I and
IMCG-II. Each investor in each of IMCG-I and IMCG-II is a financially solvent
entity able to meet its obligations as they become due.
3.9 Due Diligence. Purchaser has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of its investment in the Company as contemplated by this Agreement, and
is able to bear the economic risk of such investment for an indefinite period
of time. Purchaser has had the opportunity to ask questions of and receive
answers from representatives of the Company concerning the terms and conditions
of this Agreement and to obtain any additional information Purchaser desires or
deems relevant. Purchaser has obtained, to the extent it has deemed necessary,
professional advice with respect to the risks inherent in the investment in the
Company.
-21-
<PAGE>
ARTICLE IV
COVENANTS
4.1. Conduct of Business by the Company Pending the Closings. (a)The
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Initial Closing, unless the Purchaser otherwise agrees in writing, the
Company shall, and shall cause each of the Subsidiaries to, (i)conduct its
business only in the ordinary course and consistent with past practice; (ii)use
reasonable best efforts to preserve and maintain its assets and properties and
its relationships with its customers, suppliers, advertisers, distributors,
agents, officers and employees and other Persons with which it has significant
business relationships; (iii)use reasonable best efforts to maintain all of the
material assets it owns or uses in the ordinary course of business consistent
with past practice; (iv) maintain insurance in full force and effect
substantially comparable in amount, scope and coverage to that in effect on the
date of this Agreement; (v)use reasonable best efforts to preserve the goodwill
and ongoing operations of its business; (vi)maintain its books and records in
the usual, regular and ordinary manner, on a basis consistent with past
practice; (vii)perform and comply in all material respects with its
Commitments; and (viii) comply in all material respects with applicable Laws.
Except as expressly contemplated by this Agreement or as set forth on Schedule
4.1, between the date of this Agreement and the Initial Closing, the Company
shall not, and shall cause each of the Subsidiaries not to, do any of the
following without the prior written consent of the Purchaser:
(A) create any Encumbrance other than (i)Permitted Encumbrances and
(ii)Encumbrances securing indebtedness permitted by clause (D) of this Section
4.1(a);
(B)(i) except for inventory in the ordinary course of business or assets
in any transaction or series of related transactions with a book value of less
than $50,000, sell, assign, transfer, lease or otherwise dispose of or agree to
sell, assign, transfer, lease or otherwise dispose of any assets of the Company
or any Subsidiary or (ii)cancel any indebtedness owed to the Company or any
Subsidiary except for indebtedness owed by Persons that are not Affiliates of
the Company or its Affiliates in the ordinary course of business not in excess
of $250,000 in the aggregate;
(C) acquire or dispose of (by merger, consolidation, or acquisition of
stock or assets) any Person, business, business line or any material amount of
assets;
(D) (i) incur any additional indebtedness other than (aa)endorsements of
items for collections, (bb)working capital borrowings in the ordinary course of
business, (cc)purchase money indebtedness not to exceed $50,000 in any single
transaction or series of related transactions, (dd)revolving floor plan
financing
-22-
<PAGE>
arrangements entered into in order to finance the Company's new and used
vehicle inventory or (ee)any other indebtedness incurred in the ordinary course
of business not to exceed $250,000 in the aggregate, or (ii) make any loans,
advances or capital contributions to, or investments in, any Person other than
(x)to a Subsidiary or (y)advances in the ordinary course of business to Persons
that are not Related Parties not exceeding $10,000 to any one such Person;
(E) change any method of accounting or accounting practice used by the
Company or any Subsidiary, other than such changes required by GAAP;
(F) (i) enter into or adopt or amend any existing agreement or arrangement
relating to severance in which annual payments exceed $100,000 individually or
$300,000 in the aggregate, (ii)enter into or adopt or amend any existing
severance plan in which annual payments exceed $100,000 individually or
$300,000 in the aggregate, (iii)enter into or adopt or amend any Compensation
and Benefit Plans or employee agreement in which annual payments exceed
$100,000 individually or $300,000 in the aggregate or (iv)grant any increases
in compensation, except compensation increases for non-executive employees
associated with promotions and annual reviews in the ordinary course of
business;
(G) except as set forth in Schedule2.20, enter into any transaction or
Commitment with any Related Party;
(H) modify, terminate, amend or grant any waiver in respect of any
material Commitment outside of the ordinary course of business, or enter into
any Commitment with any original equipment manufacturer other than with respect
to obtaining a Consent in accordance with Section 4.6;
(I) allow the lapse of any of the Company's or any Subsidiary's rights of
ownership or use of any material Intellectual Property right except in the
ordinary course of business consistent with past practice;
(J) repurchase, redeem or otherwise acquire or exchange any share of
Common Stock or Non-Voting Common Stock or other equity interests; except for
issuances of Common Stock pursuant to the exercise of options to purchase
Common Stock or pursuant to existing Commitments outstanding on the date
hereof, in each case listed on Schedule 2.3, issue or sell any additional
shares of the capital stock of, or other equity interests in, the Company or
any Subsidiary, or securities convertible into or exchangeable for such shares
or other equity interests, or issue or grant any subscription rights, options,
warrants or other rights of any character relating to shares of such capital
stock, such other equity interests or such securities; or declare, set aside,
make or pay any dividend, or make any distribution, in respect of any shares of
capital stock of the Company;
-23-
<PAGE>
(K) amend the Company's certificate of incorporation or by-laws, except
with respect to the filing of the Certificates of Designation and the
Certificate of Amendment, or amend any Subsidiary's charter or by-laws or other
organizational documents in any respect materially adverse to the Company;
(L) make any material change in the Company's or any Subsidiary's Tax
accounting methods, any material new election with respect to Taxes or any
material modification or revocation of any existing election with respect to
Taxes or settle or otherwise dispose of any material Tax audit, dispute, or
other Tax proceeding, without the consent of the Purchaser, which consent will
not be unreasonably withheld or delayed;
(M) take any action that is reasonably likely to result in any of the
representations and warranties set forth in ArticleII becoming false or
inaccurate in any material respect as of any Closing Date; provided, however,
that (i)the suffering of a condition to exist by the Company shall not be a
breach of this Section 4.1(a)(M) and (ii)for purposes of Section 7.1 this
Section 4.1(a)(M) (and Section 4.1(a)(N) as it relates to this Section
4.1(a)(M)) shall be deemed a representation and warranty of the Company and not
a covenant of the Company;or
(N) agree to take any of the actions restricted by this Section 4.1.
(b) Except as expressly contemplated by this Agreement or as set forth on
Schedule4.1, between the Initial Closing and the Second Closing, the Company
shall not and shall cause each of the Subsidiaries not to, take any of the
actions described in clauses(C), (D), (E), (F), (G), (I), (J), (K) or (L) of
Section 4.1(a) or clause(N) of Section 4.1(a) as it relates to such clauses
without the prior written consent of the Purchaser.
4.2. No Solicitation. From the date of this Agreement until the earlier of
the termination of this Agreement or the Second Closing, other than in
connection with the transactions contemplated hereby, neither the Company nor
any of the Subsidiaries shall solicit, propose or facilitate (including by way
of providing information regarding the Company or any of the Subsidiaries or
their respective businesses to any Person), directly or indirectly, any
inquiries, discussions, offers or proposals for, continue or enter into
negotiations looking toward, or enter into or consummate any Commitment or
understanding in connection with any offer or proposal regarding, any purchase
or other acquisition of all or any material portion of the Company and the
Subsidiaries taken as a whole, the business or assets of the Company and the
Subsidiaries taken as a whole, or a material portion of the capital stock of or
equity interests in (whether newly issued or currently outstanding) the Company
or any of the Subsidiaries (other than with respect to inquires or discussions
(but not offers, proposals, negotiations, or the entering into of Commitments
or understandings) relating to proposed acquisitions by the Company of
-24-
<PAGE>
businesses for which the Company would use its capital stock as consideration,
but only following the prior consent of the Purchaser), or any merger, business
combination or recapitalization involving the Company or any of the material
Subsidiaries or their respective businesses; and the Company shall cause the
Subsidiaries and the officers, directors, employees, representatives and agents
of the Company and the Subsidiaries (collectively, "Company Affiliates") to
refrain from engaging in any of the above activities that the Company is
restricted from engaging in. Notwithstanding the foregoing, the parties agree
that in the event the Company receives a Takeover Proposal by any other Person,
the Company may review and act upon such Takeover Proposal solely as it relates
to such transaction and only in the event that the Board of Directors
determines in good faith, after consultation with and based upon the advice of
its financial and outside legal advisors, that failing to review and act upon
such Takeover Proposal would constitute a breach of the Company's directors'
fiduciary duties under applicable Law (a "Company Fiduciary Out"). A "Takeover
Proposal" shall mean an unsolicited inquiry, offer or proposal relating to the
acquisition of all of the capital stock and other equity interests in the
Company, or all or substantially all of the assets of the Company and its
Subsidiaries or the merger of the Company with or into a third party. The
Company agrees to promptly inform the Purchaser of the identity of any Person
making any inquiry, offer or proposal and the nature and terms of any such
inquiry, offer or proposal, including without limitation any Takeover Proposal,
and to keep the Purchaser promptly and fully informed as to the status thereof.
In addition, the Company shall promptly inform the Purchaser in writing of any
decision to exercise a Company Fiduciary Out. The Company shall, and shall
cause the Company Affiliates to, promptly cease and cause to be terminated, any
inquiry, discussion, offer or proposal of a type described in this Section 4.2
which was initiated prior to the date hereof and shall abide, and shall cause
the Company Affiliates to abide, by the provisions of the first sentence of
this Section 4.2 with respect to any such inquiry, discussion, offer or proposal
and the maker or makers thereof. The Company shall be liable to the Purchaser
for any breach of the covenants set forth in this Section 4.2 by any Company
Affiliate.
4.3. Press Releases; Interim Public Filings. Subject to Section 8.3, the
Company shall deliver to the Purchaser complete and correct copies of all press
releases and public filings relating to the Transaction Documents, the
transactions contemplated thereby and Company corporate matters made between
the date hereof and the Initial Closing, and shall give the Purchaser the
reasonable opportunity to review and comment on such releases and filings, in
each case prior to release in the form in which it will be issued.
4.4. HSR Act. Each of the Purchaser and the Company shall cooperate with
the other in making filings under the HSR Act and shall use its best efforts to
take, or cause to be taken, all actions necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including using its reasonable best efforts to
resolve such objections, if any, as the
-25-
<PAGE>
Antitrust Division of the Department of Justice or the Federal Trade Commission
or state antitrust enforcement or other Governmental Entities may assert under
antitrust Laws with respect to the transactions contemplated hereby. In the
event an action is instituted by any Person challenging the transactions
contemplated hereby as violative of the antitrust laws, each of the Purchaser
and the Company shall use its reasonable best efforts to resist or resolve such
action.
4.5. Proxy Statement; Stockholders Meeting. The Company shall hold a
meeting of its stockholders as soon as practicable after the date hereof for
the purpose of acting upon this Agreement and the transactions contemplated
hereby and by the other Transaction Documents to the extent requiring
stockholder approval, including, without limitation, the issuance and sale of
Preferred Stock and Warrants to the Purchaser in connection with the Second
Purchase, the amendment of the certificate of incorporation of the Company as
set forth on Exhibit 4.5, and the election to the Board of Directors of a
number of persons designated by the Purchaser who will constitute a majority of
the Board of Directors of the Company immediately following the Second Closing
(the "Purchaser Designees"). Unless the Board of Directors shall have
determined in good faith, after consultation with and based upon the advice of
its financial and outside legal advisors, that doing so would constitute a
breach of their fiduciary duty under applicable Law, the Company shall
recommend that its stockholders approve this Agreement and such transactions.
The Board of Directors shall give the Purchaser prompt written notice of any
determination by the Board of Directors not to recommend this Agreement and
such transactions, or any determination to withdraw, modify or change any such
recommendation. The Company and the Purchaser shall cooperate in the
preparation of the Proxy Statement to be mailed to the Company's stockholders
in connection with the solicitation of their approval of this Agreement and the
transactions described above, and shall use their reasonable best efforts to
take, or cause to be taken, all actions necessary to prepare the Proxy
Statement, file the Proxy Statement with the SEC and respond to any comments it
may have, and distribute the Proxy Statement to the Company's stockholders as
expeditiously as practicable. At least ten days prior to the filing of the
Proxy Statement with the SEC, Purchaser shall notify the Company of the
identity of the Purchaser Designees designated by the Purchaser to serve on the
Board of Directors at and following the Initial Closing. The Company shall give
the Purchaser a reasonable opportunity to review and comment on the Proxy
Statement and related communications with stockholders of the Company, and the
Purchaser shall have the right to consent to any descriptions of or references
to (i)the Purchaser or the Purchaser Designees or any Affiliate of any of the
foregoing, and (ii)the Transaction Documents and the other agreements executed
concurrently therewith and the transactions contemplated thereby in the Proxy
Statement or such communications, which consent shall not be unreasonably
withheld or delayed.
4.6. Consents; Approvals. The Company shall use its reasonable best
efforts, not requiring the expenditure of a material sum or the making of some
other
-26-
<PAGE>
material accommodation, to obtain all consents, waivers, exemptions,
approvals, authorizations or orders (collectively, "Consents") (including,
without limitation (i)Consents required to avoid any breach, violation,
default, encumbrance or right of termination, modification, cancellation,
prepayment, suspension, limitation, revocation or acceleration set forth on
Schedule 2.9 or required to be set forth thereon, (ii)all Consents pursuant to
the Company's or any Subsidiary's financing documents, including without
limitation, all indentures and credit agreements of the Company or any
Subsidiary, and (iii)all United States and foreign governmental and regulatory
rulings and approvals), and the Company shall make all filings (including,
without limitation, all filings with United States and foreign governmental or
regulatory agencies), required or desirable in connection with the
authorization, execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby, in each case as promptly as practicable but in any event
prior the Second Closing if permitted to be filed prior thereto; provided,
however, no payment (other than filing fees related to the matters contemplated
hereby) or other accommodation shall be made by the Company in connection with
obtaining any of the foregoing without the Purchaser's prior written consent.
The Purchaser shall cooperate with the Company in obtaining such Consents. The
Company also shall use its reasonable best efforts, not requiring the
expenditure of a material sum or the making of some other material
accommodation, to obtain all necessary state securities laws or blue sky
permits and approvals required to carry out the transactions contemplated
hereby and shall furnish all information as may be reasonably requested in
connection with any such action.
4.7. Listing. The Company shall use its best efforts to continue to be
listed on the NYSE or a national securities exchange during the term of this
Agreement and for so long as any shares of Preferred Stock, Warrants or any
Shares are outstanding. Prior to the Initial Closing, the Company shall prepare
and submit to the NYSE a listing application covering the shares of Common
Stock issuable upon conversion of the Preferred Stock and exercise of the
Warrants and shall obtain approval for the listing of such shares, subject to
official notice of issuance.
4.8. Intentionally Omitted.
4.9. Certificates of Designation; Amendment to Certificate of
Incorporation. The Company shall, prior to or concurrently with the Initial
Closing, cause the Certificates of Designation to be filed with the Secretary of
State of the State of Delaware. Subject to the approval of the Company's
stockholders at the Stockholder Meeting, the Company shall, prior to or
concurrently with the Second Closing, cause the Certificate of Amendment to the
certificate of incorporation of the Company providing for the amendment to the
certificate of incorporation of the Company referenced in Section 4.5 (the
"Certificate of Amendment") to be filed with the Secretary of State of the State
of Delaware.
-27-
<PAGE>
4.10. Cooperation. Each of the Purchaser and the Company agrees to use its
reasonable best efforts to take, or cause to be taken, as promptly as
practicable all such further actions as shall be necessary to make effective
and consummate the transactions contemplated by this Agreement.
4.11. Access to Property; Records. Between the date hereof and the Second
Closing the Company shall give the Purchaser and its employees, counsel,
accountants, members, investors, financing sources and other authorized
representatives reasonable access, during normal business hours, to the assets,
properties, offices and other facilities, Commitments and books and records of
the Company and of the Subsidiaries, and to the outside auditors of the Company
and their work papers relating to the Company and the Subsidiaries. The parties
hereto agree that except as expressly set forth herein no investigation by the
Purchaser or its representatives shall affect or limit the scope of the
representations and warranties of the Company contained in this Agreement or in
any other Transaction Document delivered pursuant hereto or limit the liability
for breach of any such representation or warranty. Purchaser agrees to hold all
information obtained pursuant to this Section 4.11 confidential pursuant to the
letter agreement, dated February27, 1999, between the Company and Penske
Capital Partners, L.L.C. (the "Confidentiality Agreement") as if it were a
party thereto in lieu of Penske Capital Partners, L.L.C.
4.12. Reserve Shares. The Company will at all times reserve and keep
available, solely for issuance and delivery upon conversion of the Preferred
Stock or the exercise of the Warrants, the number of shares of Common Stock and
Non-Voting Common Stock from time to time issuable upon conversion of all
shares of the Preferred Stock and exercise of the Warrants at the time
outstanding. All shares of Common Stock and Non-Voting Common Stock issuable
upon conversion of the Preferred Stock or the exercise of the Warrants shall be
duly authorized and, when issued upon such conversion or exercise, shall be
validly issued, fully paid and nonassessable.
4.13. Notice of Breach. From the date hereof through the Second Closing,
as promptly as practicable, and in any event not later than two business days
after senior management of the Company becomes aware thereof, the Company shall
provide the Purchaser with written notice of (a)any representation or warranty
of the Company contained in this Agreement or any other Transaction Document
being untrue or inaccurate in any material respect at any time from the date
hereof to the Second Closing, or (b)any failure of the Company to comply with
or satisfy any covenant, condition or agreement to be complied with or
satisfied by the Company under this Agreement or any other Transaction
Document; provided, however, that (i)any breach of this Section 4.13 shall be
deemed to be a breach of a representation and warranty of the Company and not a
covenant of the Company and (ii)the delivery of any notice pursuant to this
Section 4.13 shall not limit or otherwise affect the remedies available to the
Purchaser, or
-28-
<PAGE>
modify in any way any disclosure made in this Agreement or any
other Transaction Document or the schedules hereto or thereto as of the date
hereof.
4.14. Transfer Taxes. The Company shall be responsible for liability with
respect to any transfer, stamp or similar Taxes which may be payable in
connection with the execution, delivery and performance of this Agreement
including, without limitation, any such Taxes with respect to the issuance of
the Preferred Stock, the Warrant or the Shares.
4.15. Indemnification. From and after the Initial Closing to the sixth
year anniversary of the Initial Closing, except for amendments or modifications
required by Law, the Company shall not amend or modify any rights to
indemnification now existing in favor of the present and former directors,
officers or employees of the Company and its Subsidiaries provided in the
certificate of incorporation and by-laws of the Company or any Subsidiary in a
manner adverse to any such director, officer or employee, and such parties
shall be third party beneficiaries of this Section 4.15.
4.16. Certain Limitations. Notwithstanding anything to the contrary
contained in this ArticleIV, a covenant of the Company contained in this
ArticleIV shall be deemed breached during the period following the Initial
Closing only to the extent the action or omission giving rise to such potential
breach (i)is not authorized, approved or recommended by the Chief Executive
Officer of the Company and (ii)is authorized or approved by a majority of the
members of the Board of Directors not designated by the Purchaser pursuant to
the Stockholders Agreement or otherwise (the "Independent Directors").
4.17. Acquisition Entities. The Company will cause each entity over which
the Company or a Subsidiary has operational control pursuant to a management
agreement or pending acquisition agreement to not take any action that would
constitute a breach of any covenant of the Company under this Agreement if such
entity were a Subsidiary to the extent it may do so under the applicable
management agreement or acquisition agreement.
ARTICLE V
CONDITIONS
5.1. Conditions to Obligations of the Purchaser and the Company . (a)The
respective obligations of the Purchaser and the Company to consummate the
Initial Purchase and the Second Purchase shall be subject to the satisfaction
or waiver at or prior to the Initial Closing (in the case of the Initial
Purchase) or the Second Closing (in the case of the Second Purchase) of each of
the following conditions:
-29-
<PAGE>
(i) No statute, rule or regulation or order of any court
or administrative agency shall be in effect which prohibits the
consummation of the transactions to be consummated at such Closing;
(ii) Any waiting period (and any extension thereof) under
the HSR Act applicable to this Agreement and the transactions
contemplated hereby shall have expired or been terminated; and
(iii) The Consents set forth on Exhibit 5.1(a)(iii) shall
have been obtained or made by the Company.
(b) The respective obligations of the Purchaser and the Company
to consummate the Second Purchase shall be subject to the satisfaction or waiver
at or prior to the Second Closing of the following conditions:
(i) The issuance and sale of the Preferred Stock and the
Warrants to the Purchaser, the amendment to the certificate of
incorporation of the Company referenced in Section 4.5 and the election
to the Board of Directors of the Purchaser Designees shall have been
approved and adopted by the requisite vote of the stockholders of the
Company in accordance with applicable Law, the applicable rules of the
NYSE, unless the NYSE shall have waived such requirement, and the
Company's certificate of incorporation and by-laws; and
(ii) The Consents set forth on Exhibit 5.1(b)(ii) shall
have been obtained or made by the Company.
5.2. Conditions to Obligations of the Purchaser. (a) The obligation of the
Purchaser to consummate the Initial Purchase and the Second Purchase shall be
subject to the satisfaction or waiver at or prior to the Initial Closing (in
the case of the Initial Purchase) or the Second Closing (in the case of the
Second Purchase) of each of the following conditions:
(i) Each of the representations and warranties of the
Company contained in this Agreement shall be true and correct
(disregarding for this purpose all references in such representations
and warranties to any materiality, Material Adverse Effect or Knowledge
qualifications) as of the Initial Closing (except to the extent such
representations and warranties are made as of a particular date, in
which case such representations and warranties shall have been true and
correct in all material respects as of such date), except for failures
to be true and correct which individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect (and, for
purposes of the Second Closing, this condition shall be automatically
deemed to be satisfied unless both (A)the Company had Knowledge on or
prior to the Initial
-30-
<PAGE>
Closing of matters that would result in such representations and
warranties failing to be true and correct as of the Initial Closing
except for such failures to be true and correct which individually or
in the aggregate would not have a Material Adverse Effect, and (B)the
Purchaser did not have actual knowledge of such failures as of the
Initial Closing or the Purchaser had such knowledge and advised the
Company in writing and such failures were not waived by the Purchaser
in connection with waiving the satisfaction of this condition at the
Initial Closing (such failures to be true and correct complying with
both of clauses (A) and (B) of this clause(i), "Second Closing
Failures"); and only Second Closing Failures which continue to fail to
be true and correct as of the Second Closing shall be considered in
determining whether this condition is satisfied at the Second
Closing)),
(ii) The Company in all material respects shall have
performed, satisfied and complied with each of its covenants and
agreements (provided that in the case of the Second Closing such
covenants and agreements shall not include those contained in
Sections4.3, 4.7, 4.9, 4.13, 4.14 and 4.15 and the first sentence of
Section 4.12, subject to Section 4.16) set forth in this Agreement to be
performed, satisfied and complied with prior to or at such Closing;
(iii) The Company shall have delivered to the Purchaser an
officer's certificate certifying as to the Company's compliance with the
conditions set forth in clauses(i) and (ii) of this Section 5.2(a);
(iv) The Significant Shareholders and the Company shall
have executed and delivered an agreement in the form of
Exhibit 5.2(a)(iv) (the "Stockholders Agreement"), and the Stockholders
Agreement shall be in full force and effect;
(v) The Company shall have executed and delivered a
Registration Rights Agreement in the form of Exhibit 5.2(a)(v) (the
"Registration Rights Agreement"), and the Registration Rights Agreement
shall be in full force and effect;
(vi) The Certificate of Designation shall have been duly
filed with the Secretary of State of the State of Delaware and shall be
in full force and effect;
(vii) The Shares initially issuable upon conversion or
exercise, as the case may be, of the Preferred Stock and the Warrants
shall have been duly authorized and reserved for issuance and such
Shares shall have been listed on the NYSE, subject to official notice of
issuance;
(viii) The Purchaser shall have received at the Initial
Closing an opinion of Willkie Farr& Gallagher, outside counsel to the
Company, in the form of Exhibit 5.2(a)(viii); and
-31-
<PAGE>
(ix) In the case of the Initial Closing only, except to
the extent set forth on Schedule 2.6, there shall not have occurred
after December31, 1998 any change or development or series of changes or
developments (including without limitation as a result of any change in
the Law) which has resulted in or could reasonably be expected to result
individually or in the aggregate in a Material Adverse Effect.
(b) In addition to the conditions set forth in paragraph (a)
above, the obligation of the Purchaser to consummate the Second Purchase shall
be subject to the satisfaction or waiver at or prior to the Second Closing of
the following conditions:
(i) the Certificate of Amendment shall have been duly
filed with the Secretary of State of the State of Delaware and shall be
in full force and effect, and the certificate of incorporation of the
Company shall not have been otherwise amended, modified or waived, and
(ii) each of the representations and warranties of the
Company contained in Section 2.4 of this Agreement shall be true and
correct (disregarding for this purpose all references in such
representations and warranties as to materiality) as of the Initial
Closing, except for (i)failures to be true and correct which
individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect and (ii)failures to be true and correct
which (A)were known to the Purchaser as of the Initial Closing, (B)were
not disclosed in writing by the Purchaser to the Company, and (C)could
have been asserted by the Purchaser as a basis for the failure of the
condition set forth in Section 5.2(a)(i).
5.3. Conditions to Obligations of the Company. The obligation of the
Company to consummate the Initial Purchase and the Second Purchase shall be
subject to the satisfaction or waiver at or prior to the Initial Closing (in
the case of the Initial Purchase) or the Second Closing (in the case of the
Second Purchase) of each of the following conditions:
(a) Each of the representations and warranties of both of IMCG-I and
IMCG-II contained in this Agreement shall be true and correct (disregarding for
this purpose all references in such representations and warranties to any
materiality, material adverse effect or knowledge qualifications) as of such
Closing (except to the extent such representations and warranties are made as
of a particular date, in which case such representations and warranties shall
have been true and correct in all material respects as of such date), except
for failures to be true and correct which individually or in the aggregate
would not reasonably be expected to have a material adverse effect on the
ability of the Purchaser to fulfill its obligations hereunder;
(b) Both of IMCG-I and IMCG-II in all material respects shall have
performed, satisfied and complied with each of its covenants and agreements set
forth in
-32-
<PAGE>
this Agreement to be performed, satisfied and complied with prior to or at such
Closing, disregarding for this purpose all references in such covenants and
agreements to any materiality or similar qualifications;
(c) Both of IMCG-I and IMCG-II shall have delivered to the Company an
officer's certificate certifying as to the Purchaser's compliance with the
conditions set forth in clauses (a) and (b) of this Section 5.3; and
(d) Roger S. Penske shall be serving as the Chief Executive Officer of the
Company as of and since the consummation of the Initial Closing and as of the
Second Closing.
ARTICLE VI
TERMINATION
6.1. Termination. This Agreement may be terminated at any time prior to
the Second Closing, notwithstanding approval thereof by the stockholders of the
Company (other than as set forth in clause (e) below), upon written notice of
such termination by the terminating party to the other party setting forth the
basis for such termination:
(a) by mutual written consent of the Company and the Purchaser at any time
prior to the Closing; or
(b) by either the Purchaser or the Company if the Second Closing shall not
have been consummated by December31, 1999 (provided that the right to terminate
this Agreement under this Section 6.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of or resulted in the failure of the Second Closing to occur on or before such
date); or
(c) by either the Purchaser or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; or
(d) by the Purchaser or the Company, (i)if any representation or warranty
of the other set forth in this Agreement shall be untrue in any material
respect when made to the extent that such first party did not have actual
knowledge of such breach as of the date of this Agreement, or (ii)upon a breach
in any material respect of any covenant or agreement on the part of the other
set forth in this Agreement, in each case which would constitute a failure of
the condition to Closing of the first party
-33-
<PAGE>
(either(i) or(ii) above being a "Terminating Breach"); provided, that, if such
Terminating Breach is curable within ten business days after notice of a
party's intent to terminate this Agreement, through the exercise of reasonable
efforts, and for so long as the other party continues to exercise such
reasonable efforts during such ten business day cure period, the termination
shall be effective immediately following notice and such ten business day cure
period and only if the Terminating Breach is not cured as of such time; or
(e) (i) by the Company in the event of the exercise by the
Company of a Company Fiduciary Out, but only if the Board of Directors has
accepted a Takeover Proposal (following valid exercise of a Company Fiduciary
Out) prior to the approval by the stockholders of this Agreement and the
transactions described in Section 4.5 at the Stockholder Meeting or (ii) by the
Purchaser (x)following the thirtieth day following the exercise by the Company
of a Company Fiduciary Out if the Company has not ceased all communications with
the applicable third party or third parties regarding a Takeover Proposal or
(y)following the acceptance by the Company of a Takeover Proposal; provided,
that the Company agrees that it shall not exercise a Company Fiduciary Out more
than once with respect to any third party or group of third parties (or any
Affiliate of any of the foregoing);
(f) by either the Company or the Purchaser in the event that the
stockholders of the Company fail to approve this Agreement and the transactions
described in Section 4.5 at the Stockholder Meeting, or by the Purchaser if the
Company's Board of Directors shall fail to recommend that the stockholders of
the Company approve this Agreement and such transactions, or withdraw, modify or
change such recommendation in a manner adverse to the Purchaser, or shall have
recommended to the stockholders of the Company an Alternative Transaction, or if
the Board of Directors has resolved to do any of the foregoing; or
(g) by the Company on the 90th day following the date of written
notice from the Antitrust Division of the Department of Justice or the Federal
Trade Commission that such entity will seek to enjoin the transactions
contemplated by this Agreement absent an agreement to divest certain assets of
either the Purchaser or the Company, unless the Purchaser or the Company has
agreed to divest assets in accordance with such notice.
6.2. Effect of Termination; Termination Fee. In the event of the
termination of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except as set forth in this Section 6.2, provided that Sections7.2, 7.4,
8.3, 8.8, 8.13, 8.14 and 8.15 and this Section 6.2 and the last sentence of
Section 4.11 shall survive any termination of this Agreement. In addition, in
the event of a termination of this Agreement pursuant to Section 6.1(d)(ii) as a
result of a breach by the Company of the covenants or agreements contained in
ArticleI, clauses(C), (D), (E), (F), (G), (I), (J), (K) or (L) of Section 4.1(a)
-34-
<PAGE>
or clause(N) of Section 4.1(a) as it relates to such clauses, Sections4.2, 4.4,
4.5, 4.6, or 4.10, or the second sentence of Section 4.12 (but in any such case,
to the extent such breach occurs prior to the Initial Closing, and only to the
extent the action or omission underlying such breach is either authorized or
approved by the Board of Directors or is an action or omission primarily of the
Company, and not of any Subsidiary) in the event the Purchaser is the
terminating party or Section 6.1(e) or Section 6.1(f) regardless of the
terminating party, the Company shall pay to the Purchaser within five business
days following the date of termination $4,000,000 in cash plus the Purchaser
Expenses in an amount not to exceed $750,000, which payments, together with any
rights of the Purchaser contemplated by Section 7.4, shall constitute the sole
and exclusive remedy of Purchaser in the event of such a termination. In the
event of any other termination by the Purchaser pursuant to Section 6.1(d), the
Company shall pay the Purchaser the Purchaser Expenses in an amount not to
exceed $750,000 within five business days following the date of termination.
Following any termination of this Agreement by the Company with respect to
which the Purchaser is not entitled to receive the $4,000,000 termination
payment and so long as at the time of such termination the Purchaser had the
right to terminate this Agreement pursuant to Section 6.1(d), the Company shall,
without duplication, pay the Purchaser the Purchaser Expenses in an amount not
to exceed $750,000 within five business days following the date of termination.
With respect to any breach of this Agreement by either party, the other party
shall have the right, which each of the parties hereto hereby acknowledges and
accepts, to obtain specific performance of this Agreement and injunctive or
other equitable relief to cure any such breach and the parties acknowledge and
agree that irreparable damage would occur in the event that any related
provision of this Agreement is not performed in accordance with its specific
terms or is otherwise breached, and further acknowledge and agree that money
damages are an inadequate remedy for any such breach because of the difficulty
of ascertaining the amount of damage that would be suffered in the event of
such breach.
ARTICLE VII
SURVIVAL; CERTAIN REMEDIES
7.1. Survival.The representations, warranties, covenants and agreements of
the parties hereto contained in this Agreement shall expire at the Second
Closing, except that the parties shall have no rights with respect to
representations and warranties following the Initial Closing other than
pursuant to Sections5.2(a)(i), 5.2(b)(ii) and 5.3(a), and except as set forth
in ArticleVII, unless this Agreement is terminated in accordance with Article
VI following the Initial Closing.
7.2. Right to Require Repurchase. Notwithstanding anything to the contrary
contained in Section 7.1, in the event the Company (a)had breached the
representations or warranties contained in Section 2.4 and such breach or
breaches,
-35-
<PAGE>
without giving effect to any qualification as to materiality contained in such
representations and warranties, have had, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, and the
Purchaser makes a written claim against the Company on or before March31, 2000
relating thereto, then the Company shall purchase all of the outstanding
Preferred Stock, Warrants and Shares for an amount in cash equal to the sum of
(x)the Purchase Price plus (y)an amount equal to the liquidation preference of
any Preferred Stock received by the Purchaser as a dividend prior to the
consummation of the purchase plus (z)without duplication, all accrued and
unpaid dividends (which if in shares of Preferred Stock shall be valued at the
liquidation preference thereof) on such securities prior to the consummation of
the purchase (the "Section 7.2 Put Price"); provided that a breach shall not be
taken into account for such determination if (i)such breach were actually known
to the Purchaser at either Closing, (ii)were not disclosed in writing by the
Purchaser to the Company, and (iii)constituted a failure of a condition to such
Closing set forth in Section 5.2(a)(i) or 5.2(b)(ii) hereof. Any such purchase
shall be consummated as promptly as reasonably practicable following the date
of such written claim, but in any event within six months, following receipt of
such written claim from the Purchaser, provided that the Section 7.2 Put Price
shall be automatically due and payable upon a payment default in respect of, or
an acceleration of, any indebtedness of the Company or any Subsidiary for
borrowed money in excess of $5,000,000 in the aggregate.
7.3. Sole and Exclusive Remedy. From the Initial Closing to the date of
any termination of this Agreement in accordance with Article VI, or if this
Agreement is not so terminated, from and after the Initial Closing, the
provisions of Section 7.2 shall constitute the sole and exclusive recourse and
remedy available to the Purchaser with respect to the breach of any
representation, warranty, covenant or agreement contained in this Agreement or
in any related certificate delivered pursuant to this Agreement, except for
matters involving fraud.
7.4. Termination Following Initial Closing. (a) In the event that this
Agreement is terminated in accordance with ArticleVI for any reason by either
or both parties following the Initial Closing, the Purchaser shall have the
right, exercisable by written notice to the Company within 15days following the
date of termination, to require that the Company purchase all of the
outstanding Preferred Stock and any outstanding Shares for an amount in cash
equal to the sum of (x)the Initial Closing Purchase Price plus (y)an amount
equal to 111% of the liquidation preference of any Preferred Stock received as
a dividend prior to the consummation of the purchase plus (z)without
duplication, all accrued and unpaid dividends (which if in shares of Preferred
Stock shall be valued at 111% of the liquidation preference thereof) on the
securities being purchased prior to the consummation of the purchase (the
"Section 7.4 Put Price"). Any such purchase shall be consummated as promptly as
reasonably practicable, but in any event within six months, following receipt
of such written claim from the Purchaser, provided that the Section 7.4 Put
Price shall be automatically due and payable upon a
-36-
<PAGE>
payment default in respect of, or an acceleration of, any indebtedness of the
Company or any Subsidiary for borrowed money in excess of $5,000,000 in the
aggregate.
(b) If the Purchaser does not exercise such right, the Company shall have
the right exercisable within 15days following the last day the Purchaser could
have given notice under the first sentence of this Section 7.4, to purchase the
shares of Preferred Stock that have not been, or in connection with the
exercise by the Company of such purchase right are not, converted into Shares,
at a price equal to the Section 7.4 Put Price within the time period and
subject to the same acceleration as provided in the immediately preceding
sentence. Upon such notice, holders of Preferred Stock shall have a 15-day
period in which to convert any of its outstanding Preferred Stock into Common
Stock in accordance with the Certificate of Designation for the Series A
Preferred Stock.
(c) In the event that both the Purchaser and the Company do not elect to
exercise their purchase right under this Section 7.4, the Company shall issue to
the Purchaser a number of shares of Preferred Stock equal to 11% of the number
of shares of Preferred Stock that were received as dividends or were accrued as
dividends and not paid as of the date of issuance contemplated by this
sentence.
(d) Prior to the Second Closing the Purchaser shall not transfer any of
the Preferred Stock unless the transferee shall agree in writing, which shall
have been delivered to the Company, that the shares of Preferred Stock that it
is acquiring shall be subject to this Section 7.4.
(e) Notwithstanding anything in this Section 7.4 to the contrary, the
Section 7.4 Put Price shall be reduced by an amount equal to the portion of the
Initial Purchase Price the Chief Executive Officer of the Company has approved,
authorized or recommended the release or transfer of from any segregated
account set up by the Company to hold the Initial Purchase Price, which release
or transfer was made without the prior written consent of a majority of the
Independent Directors following the Initial Closing. In the event of any
reduction of the Section 7.4 Put Price pursuant to the immediately preceding
sentence, the number of securities which the Purchaser may require the Company
to purchase at such reduced Section 7.4 Put Price shall be equal to the product
of (x) the number of securities otherwise subject to purchase, and (y)a
fraction, the numerator of which is the Section 7.4 Put Price as reduced
pursuant to the immediately preceding sentence, and the denominator of which is
the Section 7.4 Put Price.
-37-
<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.1. Defined Terms; Interpretations. The following terms, as used herein,
shall have the following meanings:
"1998 Balance Sheet" shall have the meaning ascribed thereto in
Section 2.5.
"1998 Financial Statements" shall have the meaning ascribed thereto in
Section 2.5.
"Affiliate" shall have the meaning ascribed to such term in Rule12b-2 of
the General Rules and Regulations under the Exchange Act.
"Agreement" shall have the meaning ascribed thereto in the preamble.
"Alternative Transaction" shall mean any of (i) the acquisition, in one
transaction or a series of transactions by any Third Party of more than 10% of
the outstanding shares of Common Stock (or securities convertible or
exchangeable therefor), whether from the Company or pursuant to a tender offer
or exchange offer or otherwise, (ii) a merger or other business combination
involving the Company pursuant to which any Third Party acquires more than 10%
of the voting power of the outstanding equity securities of the Company or the
entity surviving such merger or business combination, or (iii) any other
transaction pursuant to which any Third Party acquires or would acquire control
of assets (including for this purpose the outstanding equity securities of the
Company's Subsidiaries, and the entity surviving any merger or business
combination including any of them) of the Company or the Subsidiaries having a
fair market value equal to more than 10% of the fair market value of all the
assets of the Company and the Subsidiaries, taken as a whole, immediately prior
to such transaction.
"Board of Directors" shall mean the Board of Directors of the Company.
"Certificate of Amendment" shall have the meaning ascribed thereto in
Section 4.9.
"Certificate of Designation" shall have the meaning ascribed thereto in
Section 2.2.
"Closing" shall have the meaning ascribed thereto in Section 1.2(a).
"Closing Date" shall have the meaning ascribed thereto in Section 1.2(a).
-38-
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitments" shall have the meaning ascribed thereto in Section 2.15.
"Common Stock" shall have the meaning ascribed thereto in the recitals.
"Company" shall have the meaning ascribed thereto in the preamble.
"Company Affiliates" shall have the meaning ascribed thereto in
Section 4.2.
"Company Fiduciary Out" shall have the meaning ascribed thereto in
Section 4.2.
"Compensation and Benefit Plans" shall mean all material bonus, vacation,
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock and
stock option plans, all employment or severance contracts, all medical, dental,
disability, health and life insurance plans, all other material employee
benefit and fringe benefit plans, contracts or arrangements and any applicable
"change of control" or similar provisions in any plan, contract or arrangement
sponsored, maintained or contributed to by the Company or any of its
Subsidiaries for the benefit of officers, former officers, employees, former
employees, directors, former directors, or the beneficiaries of any of the
foregoing or pursuant to which the Company or any of its Subsidiaries or ERISA
Affiliates has or may have any liability, contingent or otherwise.
"Confidentiality Agreement" shall have the meaning ascribed thereto in
Section 4.11.
"Consents" shall have the meaning ascribed thereto in Section 4.6.
"DGCL" shall mean the Delaware General Corporation Law.
"Encumbrances" shall have the meaning ascribed thereto in Section 2.1(b).
"Environmental Laws" shall mean, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
(section)(section)9601 et seq., the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. (section)(section)11001 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. (section)(section)6901 et
seq., the Toxic Substances Control Act, 15 U.S.C. (section)(section)2601 et
seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C.
(section)(section)136 et seq., the Clean Air Act, 42 U.S.C.
(section)(section)7401 et seq., the Clean Water Act (Federal Water Pollution
Control Act), 33 U.S.C. (section)(section)1251 et seq., the Safe Drinking Water
Act, 42 U.S.C. (section)(section)300f et seq., the Occupational Safety and
Health Act, 29 U.S.C. (section)(section)641, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. (section)(section)1801, et seq., as any of the
above statutes shall be in effect as of each Closing
-39-
<PAGE>
Date, all rules and regulations promulgated pursuant to any of the above
statutes, and any other foreign, federal, state or local law, statute,
ordinance, rule or regulation governing Environmental Matters, as the same
shall be in effect as of each Closing Date, including any common law cause of
action providing any right or remedy relating to Environmental Matters, and all
applicable judicial and administrative decisions, orders, and decrees relating
to Environmental Matters.
"Environmental Matter" shall mean any matter arising out of, relating to,
or resulting from pollution, contamination, protection of the environment,
human health or safety, health or safety of employees, sanitation, and any
matters relating to emissions, discharges, Releases or threatened Releases of
Hazardous Substances into the air (indoor and outdoor), surface water,
groundwater, soil, land surface or subsurface, or otherwise arising out of,
relating to, or resulting from the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, handling, release or threatened
release of Hazardous Substances.
"Environmental Permits" shall have the meaning ascribed thereto in
Section 2.14(d)(ii).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean each business or entity which is a member of
a "controlled group of corporations," under "common control" or a member of an
"affiliated service group" with the Company or any of its Subsidiaries within
the meaning of Articles414(b), (c) or (m) of the Code, or required to be
aggregated with the Company under Article 414(o) of the Code, or is under
"common control" with the Company, within the meaning of Article4001(a)(14) of
ERISA, and the regulations promulgated and proposed thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include reference to the
comparable section, if any, of any such successor federal statute.
"GAAP" shall have the meaning ascribed thereto in Section 2.5.
"Governmental Entity" shall mean any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
"Hazardous Substances" shall mean any pollutants, contaminants, toxic or
hazardous or extremely hazardous substances, materials, wastes, constituents,
-40-
<PAGE>
compounds, chemicals (including, without limitation, petroleum or any
by-products or fractions thereof, any form of natural gas, lead, asbestos and
asbestos-containing materials, building construction materials and debris,
polychlorinated biphenyls ("PCBs") and PCB-containing equipment, radon and
other radioactive elements, ionizing radiation, electromagnetic field radiation
and other non-ionizing radiation, pesticides, defoliants, explosives,
flammables, corrosives and urea formaldehyde foam insulation) that are
regulated by, or form the basis of liability under, any Environmental Laws.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"IMCG-I" shall have the meaning ascribed thereto in the preamble.
"IMCG-I Initial Closing Purchase Price" shall have the meaning ascribed
thereto in Section 1.1.
"IMCG-I Second Closing Purchase Price" shall have the meaning ascribed
thereto in Section 1.1.
"IMCG-II" shall have the meaning ascribed thereto in the preamble.
"Independent Directors" shall have the meaning ascribed thereto in
Section 4.16.
"Initial Closing" shall have the meaning ascribed thereto in
Section 1.2(a).
"Initial Closing Purchase Price" shall have the meaning ascribed thereto
in Section 1.1.
"Initial Purchase" shall have the meaning ascribed thereto in Section 1.1.
"Intellectual Property" shall mean (i) all patentable inventions and
discoveries (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents and patent applications,
together with all reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (ii)all trademarks, service marks, trade
dress, logos, trade names and corporate names, together with all translations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (iii)all copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith, (iv)all mask works and all
applications, registrations and renewals in connection therewith, (v)all
know-how, trade secrets and confidential business information (including ideas,
research and development, formulas, compositions, manufacturing and production
process and techniques, technical data, designs, drawings, specifications,
customer and supplier lists,
-41-
<PAGE>
pricing and cost information and business and marketing plans and proposals),
(vi)all computer software (including data and related documentation), (vii)all
management information systems, (viii)all other proprietary rights, (ix)all
copies and tangible embodiments thereof (in whatever form or medium) and (x)all
licenses and agreements in connection therewith.
"IRS" shall mean the Internal Revenue Service.
"Knowledge", with respect to the Company, shall mean the actual knowledge
of each member of the board of directors of the Company and each executive
officer of the Company.
"Laws" shall include all foreign, federal, state, and local laws,
statutes, ordinances, rules, regulations, orders, judgments, decrees and bodies
of law, including, without limitation, (i)any of the foregoing promulgated by
any Governmental Entity, (ii)Environmental Laws, (iii)the Federal
Truth-in-Lending Act, (iv)RegulationZ, (v)the Equal Credit Opportunity Act,
(vi)the Federal Fair Debt Collection Practices Act and (vii)state laws, rules
and regulations relating to consumer protection, installment sales, collection
and usury.
"Leased Real Property" shall mean the real property leased or subleased by
the Company or any Subsidiary, together with, to the extent leased or subleased
by the Company or any Subsidiary, all buildings and other structures,
facilities or improvements currently or hereafter located thereon, all
fixtures, systems, equipment and items of personal property of the Company or
any Subsidiary attached or appurtenant thereto, and all easements, licenses,
rights and appurtenances relating to the foregoing.
"Licenses" shall have the meaning ascribed thereto in Section 2.14(a).
"Litigation" shall have the meaning ascribed thereto in Section 2.7.
"Losses" shall mean each and all of the following items: claims, losses,
(including, without limitation, losses of earnings) liabilities, obligations,
payments, damages (actual, punitive or consequential), charges, judgments,
fines, penalties, amounts paid in settlement, costs and expenses (including,
without limitation, interest which may be imposed in connection therewith,
costs and expenses of investigation, actions, suits, proceedings, demands,
assessments and fees, expenses and disbursements of counsel, consultants and
other experts).
"Major Suppliers" shall have the meaning ascribed thereto in Section 2.19.
"Material Adverse Effect" shall mean, subject to Schedule2.6, a material
adverse effect of at least $10,000,000 on the properties, business, results of
operations, or financial condition of the Company and its Subsidiaries taken as
a whole.
-42-
<PAGE>
"Multi-Employer Plan" shall have the meaning ascribed thereto in
Section 2.12(c).
"Non-Voting Common Stock" shall have the meaning ascribed thereto in the
recitals.
"NYSE" shall mean The New York Stock Exchange, Inc.
"Owned Real Property" shall mean the real property owned by the Company or
any Subsidiary, together with all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures, systems,
equipment and items of personal property of the Company or any Subsidiary
attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing.
"Permitted Encumbrances" shall mean, with respect to any asset, (i)any
imperfection of title with respect to such asset which does not materially
interfere with the present occupancy or use of such asset and the continuation
of the present occupancy or use of such asset; (ii)such covenants, conditions,
restrictions, easements, encroachments or Encumbrances that are not created
pursuant to mortgages or other financing or security documents, and any other
state of facts, which do not, individually or in the aggregate, materially
interfere with the present occupancy or use of such asset; (iii)mechanic's,
materialmen's and similar Encumbrances with respect to amounts not yet due and
payable or which are being contested in good faith through appropriate
proceedings; (iv)Encumbrances for Taxes not yet delinquent or which are being
contested in good faith through appropriate proceedings; and (vi)Encumbrances
securing rental payments under capital lease arrangements.
"Person" shall mean any individual, firm, corporation, limited liability
company, partnership, company or other entity, and shall include any successor
(by merger or otherwise) of such entity.
"Preferred Stock" shall have the meaning ascribed thereto in the recitals.
"Products" shall have the meaning ascribed thereto in Section 2.21.
"Proxy Statement" shall have the meaning ascribed thereto in Section 2.18.
"Purchase Price" shall have the meaning ascribed thereto in the recitals.
"Purchaser" shall have the meaning ascribed thereto in the preamble.
"Purchaser Designees" shall have the meaning ascribed thereto in
Section 4.5.
-43-
<PAGE>
"Purchaser Expenses" shall have the meaning ascribed thereto in
Section 8.2.
"Real Property" shall have the meaning ascribed thereto in
Section 2.14(d)(iii).
"Registration Rights Agreement" shall have the meaning ascribed thereto in
Section 5.2(g).
"Related Parties" shall mean (i)Affiliates of the Company and
(ii)directors or officers of the Company and their Affiliates (including any
family members of directors and officers), but shall not include the
Subsidiaries or the directors or officers of the Subsidiaries (except for
directors or officers of the Subsidiaries who are also directors or officers of
the Company).
"Release" shall have the meaning set forth in Section 1021(22) of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. (section)9601(22).
"Return" shall mean any report, return, statement, estimate, declaration,
notice, form or other information required to be supplied to a taxing authority
in connection with Taxes.
"SEC" shall mean the Securities and Exchange Commission.
"Second Closing" shall have the meaning ascribed thereto in Section 1.2(a).
"Second Closing Failures" shall have the meaning ascribed thereto in
Section 5.2(a).
"Second Closing Purchase Price" shall have the meaning ascribed thereto in
Section 1.1.
"Second Purchase" shall have the meaning ascribed thereto in Section 1.1.
"SEC Reports" shall have the meaning ascribed thereto in Section 2.4.
"Section 7.2 Put Price" shall have the meaning ascribed thereto in
Section 7.2.
"Section 7.4 Put Price" shall have the meaning ascribed thereto in
Section 7.4.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the SEC thereunder,
all as the
-44-
<PAGE>
same shall be in effect at the time. Reference to a particular
section of the Securities Act shall include reference to the comparable
section, if any, of such successor federal statute.
"Series A Preferred Stock" shall have the meaning ascribed thereto in the
recitals.
"Series B Preferred Stock" shall have the meaning ascribed thereto in the
recitals.
"Shares" shall mean the shares of Common Stock issuable upon conversion of
shares of Preferred Stock and exercise of the Warrants.
"Significant Shareholders" shall mean Trace International Holdings, Inc.,
Aeneas Venture Corporation and AIFII, L.P.
"Stockholders Agreement" shall have the meaning ascribed thereto in
Section 5.2(a)(iv).
"Stockholders Meeting" shall have the meaning ascribed thereto in
Section 2.18.
"Subsidiaries" shall have the meaning ascribed thereto in Section 2.1(b).
"Subsidiary" shall have the meaning ascribed thereto in Section 2.1(b).
"Takeover Proposal" shall have the meaning ascribed thereto in Section 4.2.
"Tax" and "Taxes" shall mean any federal, state, local or foreign income,
gross receipts, property, sales, use, value added, license, excise, franchise,
capital, net worth, estimated, withholding, employment, payroll, premium,
withholding, alternative or added minimum, ad valorem, inventory, asset, gains,
transfer or excise tax, or any other tax, levy, custom, duty, impost,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty or additions to tax, imposed by any
Governmental Entity.
"Terminating Breach" shall have the meaning ascribed thereto in
Section 6.1(d).
"Third Party" shall mean any Person (or group of Persons) other than the
Purchaser.
"Transaction Documents" shall mean this Agreement, the Stockholders
Agreement, the Voting Agreement, the Certificate of Designation, the Warrants
and all other contracts, agreements, schedules, certificates and other
documents being delivered
-45-
<PAGE>
pursuant to or in connection with this Agreement or such other documents or the
transactions contemplated hereby or thereby.
"Warrants" shall have the meaning ascribed thereto in the recitals.
8.2. Fees and Expenses. At the Initial Closing or as set forth on
Section 6.2, the Company shall reimburse the Purchaser in cash for its fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and disbursements
of its attorneys, accountants, consultants and other advisors) (collectively,
"Purchaser Expenses"); provided, however, that the portion of the Purchaser
Expenses for which Purchaser is reimbursed shall not exceed $750,000 in the
aggregate.
8.3. Public Announcements. The Purchaser and the Company shall consult
with each other before issuing any press release with respect to this Agreement
or the transactions contemplated hereby and neither shall issue any such press
release or make any such public statement without the prior consent of the
other, which consent shall not be unreasonably withheld; provided, however,
that a party may, without the prior consent of the other party, issue such
press release or make such public statement as may upon the advice of counsel
be required by Law or the rules and regulations of the NYSE, if it has used
reasonable efforts to consult with the other party prior thereto.
8.4. Restrictive Legends. No shares of Preferred Stock, Warrants or Shares
may be transferred without registration under the Securities Act and applicable
state securities laws unless counsel to the Company shall advise the Company
that such transfer may be effected without such registration. Each certificate
representing any of the foregoing shall bear legends in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO,
AND THE HOLDER HEREOF IS ENTITLED TO CERTAIN RIGHTS AND SUBJECT TO
CERTAIN OBLIGATIONS CONTAINED IN, A SECURITIES PURCHASE
-46-
<PAGE>
AGREEMENT DATED AS OF APRIL12, 1999, A COPY OF WHICH IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF THE ISSUER HEREOF, AND WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SECURITIES UPON WRITTEN
REQUEST.
8.5. Further Assurances. At any time or from time to time after the
Initial Closing, the Company, on the one hand, and the Purchaser, on the other
hand, agree to cooperate with each other, and at the request of the other
party, to execute and deliver any further instruments or documents and to take
all such further action as the other party may reasonably request in order to
evidence or effectuate the consummation of the transactions contemplated hereby
or by the other Transaction Documents and to otherwise carry out the intent of
the parties hereunder or thereunder.
8.6. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Company and the Purchaser and the respective successors,
permitted assigns, heirs and personal representatives of the Company and the
Purchaser, provided that the Company may not assign its rights or obligations
under this Agreement to any Person without the prior written consent of the
Purchaser, and provided further that the Purchaser may not assign its rights or
obligations under this Agreement to any Person (other than a direct or indirect
wholly-owned subsidiary of the Purchaser) without the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchaser's benefit as a
purchaser or holder of Preferred Stock, Warrants or Shares are also for the
benefit of, and enforceable by, any subsequent holder of such Preferred Stock,
Warrants or Shares.
8.7. Entire Agreement. This Agreement and the other Transaction Documents
and the Confidentiality Agreement contain the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or understandings with respect thereto.
8.8. Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy, nationally
recognized overnight courier or first class registered or certified mail,
return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
-47-
<PAGE>
(i) if to the Company, to:
United Auto Group, Inc.
375 Park Avenue
New York, New York 10152
Telecopy: (212) 593-1303
Attention: Philip N. Smith, Jr., Esq.
General Counsel
with a copy to (which shall not constitute notice):
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Telecopy: (212) 728-8111
Attention: Maurice M. Lefkort, Esq.
(ii) if to the Purchaser,
c/o Penske Capital Partners, L.L.C.
399 Park Avenue
New York, New York 10022
Telecopy: (212) 207-9653
Attention: Mr. James A. Hislop
with copies to (which shall not constitute notice):
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Telecopy: (212) 859-8587
Attention: Valerie Ford Jacob, Esq.
Robert C. Schwenkel, Esq.
All such notices, requests, consents and other communications shall be
deemed to have been given or made if and when delivered personally or by
overnight courier to the parties at the above addresses or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
above (or at such other address or telecopy number for a party as shall be
specified by like notice).
8.9. Amendments. The terms and provisions of this Agreement may be
modified or amended, or any of the provisions hereof waived, temporarily or
permanently, in a writing executed and delivered by the Company and the
Purchaser. No waiver of any of the provisions of this Agreement shall be deemed
to or shall constitute a
-48-
<PAGE>
waiver of any other provision hereof (whether or not similar). No delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof.
8.10. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.
8.11. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
8.12. Nouns and Pronouns. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter
forms, and the singular form of names and pronouns shall include the plural and
vice versa.
8.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW.
8.14. Submission to Jurisdiction. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United States of
America, in each case located in the County of New York, for any Litigation
arising out of or relating to this Agreement or the other Transaction Documents
and the transactions contemplated hereby and thereby (and agrees not to
commence any Litigation relating hereto or thereto except in such courts), and
further agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in this Agreement shall be
effective service of process for any Litigation brought against it in any such
court. Each of the parties hereto hereby irrevocably and unconditionally waives
any objection to the laying of venue of any Litigation arising out of this
Agreement or the transactions contemplated hereby in the courts of the State of
New York or the United States of America, in each case located in the County of
New York, hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such Litigation brought in any
such court has been brought in an inconvenient forum.
8.15. WAIVER OF JURY TRIAL. THE COMPANY AND THE PURCHASER HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING
OR LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR THE TRANSACTION DOCUMENTS.
-49-
<PAGE>
8.16. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid, but if any
provision of this Agreement is held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Agreement.
-50-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
UNITED AUTO GROUP, INC.
By: /s/ Samuel X. Di Feo
-------------------------
Name:
Title:
INTERNATIONAL MOTOR CARS
GROUPI, L.L.C.
By: /s/ James A. Hislop
-------------------------
Name:
Title:
INTERNATIONAL MOTOR CARS
GROUPII, L.L.C.
By:/s/ James A. Hislop
-------------------------
Name:
Title:
-51-
<PAGE>
EXHIBIT 10.20.2
STOCKHOLDER VOTING AGREEMENT
STOCKHOLDER VOTING AGREEMENT, dated April 12, 1999 (this "Agreement"),
among Trace International Holdings, Inc. ("Stockholder"), International Motor
Cars Group I, L.L.C. and International Motor Cars Group II, L.L.C.
(collectively, the "Purchaser").
WHEREAS, United Auto Group, Inc., a Delaware corporation (the "Company"),
and Purchaser, are contemporaneously herewith entering into a Securities
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"),
which provides, among other things, for the acquisition by Purchaser of shares
of Preferred Stock and Warrants to purchase shares of Common Stock upon the
terms and subject to the conditions set forth therein;
WHEREAS, as a condition to its willingness to enter into the Purchase
Agreement, Purchaser has requested that Stockholder make certain agreements
with respect to the shares of Common Stock beneficially owned by Stockholder
and listed under Stockholder's name on the signature page hereto (the
"Stockholder Shares"), upon the terms and subject to the conditions hereof; and
WHEREAS, in order to induce Purchaser to enter into the Purchase
Agreement, Stockholder is willing to make certain agreements with respect to
the Stockholder Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. Voting Agreements; Proxy.
(a) For so long as this Agreement is in effect, in any meeting of
stockholders of the Company, however called, and in any action by consent of
the stockholders of the Company, Stockholder shall vote, or, if applicable,
give consents with respect to, all of the Stockholder Shares (and any other
shares of Common Stock over which Stockholder has voting power) (collectively,
"Shares") that are held on the record date applicable thereto in favor of (i)
the Purchase Agreement, (ii) the transactions contemplated by the Purchase
Agreement and (iii) any actions required in furtherance thereof. Any such vote
shall be cast or consent shall be given in accordance with such procedures
relating thereto as shall ensure that it is duly counted for purposes of
determining that a quorum is present and for purposes of recording the results
of such vote or consent.
(b) Upon the written request of Purchaser, Stockholder, in furtherance of
the transactions contemplated hereby and by the Purchase Agreement, and in
order to
<PAGE>
secure the performance by Stockholder of its duties under this Agreement, shall
promptly execute, in accordance with the provisions of Section 212 of the
Delaware General Corporation Law, and deliver to Purchaser an irrevocable
proxy, substantially in the form attached as Exhibit A hereto, and irrevocably
appoint Purchaser or its designees, with full power of substitution, its
attorney and proxy to vote or, if applicable, to give consent with respect to,
all Shares with regard to any of the matters referred to in Section 1(a) at any
meeting of the stockholders of the Company, however called, or in connection
with any action by written consent by the stockholders of the Company.
Stockholder acknowledges and agrees that (i) such proxy, if and when given,
shall be coupled with an interest, shall constitute, among other things, an
inducement for Purchaser to enter into the Purchase Agreement, shall be
irrevocable and shall not be terminated by operation of law or otherwise upon
the occurrence of any event, except as provided in Section 14 hereof, and (ii)
that no subsequent proxies with respect to the Shares shall be given (and if
given shall not be effective), with respect to any of the matters referred to
in Section 1(a).
2. Covenants. (a) From and after the date of this Agreement, Stockholder
agrees not to: (i) sell, transfer, pledge, assign, hypothecate, encumber,
tender or otherwise dispose of, or enter into any contract with respect to the
sale, transfer, pledge, assignment, hypothecation, encumbrance, tender or other
disposition of, any Stockholder Shares; (ii) grant any proxies with respect to
any Shares, deposit any Shares into a voting trust or enter into a voting or
option agreement with respect to any Shares; (iii) take any action, directly or
indirectly through any of its affiliates (other than the Company or any of its
subsidiaries), which the Company is prohibited from taking under Section 4.2 of
the Purchase Agreement; (iv) vote in any manner (i.e. by ballot, proxy, written
consent or otherwise) any Shares in favor of any other transaction that is
proposed by any Person (including the Company) as an alternative to the
transactions contemplated by the Purchase Agreement; or (v) take any action
which would make any representation or warranty of Stockholder herein untrue or
incorrect or prevent, burden or materially delay the consummation of the
transactions contemplated by this Agreement; provided, however, that
Stockholder may take any action described in clause (i) or (ii) above if any
third party which obtains the right to vote any Shares as a result of such
action assumes (in a writing executed by any such third party and delivered to
Purchaser) Stockholder's obligations under this Agreement with respect to such
Shares.
(b) Stockholder agrees that from and after the date of this Agreement
through and including the date this Agreement is terminated, without the prior
written consent of Purchaser, which may be withheld in Purchaser's sole
discretion, Stockholder shall not vote or give any consent with respect to any
Shares in favor of an Alternative Transaction (as defined in the Purchase
Agreement) other than an Alternative Transaction involving the sale of all or
substantially all of the capital stock or assets of the Company.
-2-
<PAGE>
3. Representations and Warranties of Stockholder. Stockholder represents
and warrants to Purchaser that, except as set forth on Schedule 3:
(a) Capacity; No Violations. Stockholder has the legal capacity to enter
into this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Stockholder, and
constitutes a valid and binding agreement of Stockholder enforceable against
Stockholder in accordance with its terms, except as enforceability against
Stockholder may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to the rights of creditors generally and other general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law) and such execution and delivery and performance by Stockholder of this
Agreement will not (i) conflict with, require a consent, waiver or approval
under, or result in a breach or default under, any of the terms of any
contract, commitment or other obligation to which Stockholder is a party or by
which Stockholder is bound; (ii) violate any order, writ, injunction, decree or
statute, or any law, rule or regulation applicable to Stockholder or the
Shares; or (iii) result in the creation of, or impose any obligation on
Stockholder to create, any Encumbrance other than transfer restrictions imposed
by applicable Federal and state securities laws upon the Shares.
(b) Shares. As of the date of this Agreement, Stockholder is the record
holder of, and has good and valid title to, the Shares free and clear of all
Encumbrances other than transfer restrictions imposed by applicable Federal and
state securities laws. The Shares are the only shares of any class of capital
stock of the Company which Stockholder has the right, power or authority (sole
or shared) to sell or vote, and Stockholder does not have any right to acquire,
nor is it the beneficial owner of, any other shares of any class of capital
stock of the Company or any securities convertible into or exchangeable or
exercisable for any shares of any class of capital stock of the Company. There
are no options or rights to acquire, or other contracts (including proxies,
voting trusts or voting agreements) relating to, the Shares to which
Stockholder is a party.
4. Adjustments; Additional Shares. In the event (i) of any stock dividend,
stock split, recapitalization, reclassification, combination or exchange of
Shares on, of or affecting the Shares, or (ii) Stockholder shall become the
beneficial owner of any additional Shares or other securities entitling the
holder thereof to vote or give consent with respect to the matters set forth in
Section 1(a) hereof, then the terms of this Agreement shall apply to the Shares
held by Stockholder immediately following the effectiveness of the events
described in clause (i) above or Stockholder becoming the beneficial owner of
the Shares or other securities, as described in clause (ii) above, in each case
as though they were Shares hereunder.
5. Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement.
-3-
<PAGE>
6. Specific Performance. Stockholder acknowledges and agrees that if it
fails to perform any of its obligations under this Agreement, immediate and
irreparable harm or injury would be caused to Purchaser for which money damages
would not be an adequate remedy. In such event, Stockholder agrees that
Purchaser shall have the right, in addition to any other rights it may have, to
specific performance of this Agreement. Accordingly, if Purchaser should
institute an action or proceeding seeking specific enforcement of the
provisions hereof, Stockholder hereby waives the claim or defense that
Purchaser has an adequate remedy at law and hereby agrees not to assert in any
such action or proceeding the claim or defense that such a remedy at law
exists. Stockholder further agrees to waive any requirements for the securing
or posting of any bond in connection with obtaining any such equitable relief.
7. Notices. All notices or other communications under this Agreement shall
be in writing and shall be deemed duly given, effective (i) three business days
later, if sent by registered or certified mail, return receipt requested,
postage prepaid, (ii) when sent, if sent by telecopier or fax, provided that
the telecopy or fax is promptly confirmed by telephone confirmation thereof,
(iii) when served, if delivered personally to the intended recipient, and (iv)
one business day later, if sent by overnight delivery via a national courier
service, and in each case, addressed to the intended recipient at the address
set forth as follows:
If to the Purchaser:
-------------------------
c/o Penske Capital Partners, L.L.C.
399 Park Avenue
New York, New York 10022
Telecopy: (212) 207-9653
Attention: Mr. James A. Hislop
with a copy to:
-------------------------
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Telecopy: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
-4-
<PAGE>
if to Stockholder:
-------------------------
Trace International Holdings, Inc.
375 Park Avenue
New York, NY 10152
Telecopy: (212) 593-1303
Attention: Philip N. Smith, Jr., Esq.
8. Parties in Interest. This Agreement shall inure to the benefit of and
be binding upon the parties named herein and their respective successors and
assigns; provided, however, that each such successor in interest or assign
shall agree to be bound by the provisions of this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any person or entity
other than Purchaser, Stockholder and their respective successors and assigns,
any rights or remedies under or by reason of this Agreement.
9. Entire Agreement; Amendments. This Agreement contains the entire
agreement between Stockholder and Purchaser with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such subject matter. This
Agreement may not be changed, amended or modified orally, but may be changed
only by an agreement in writing signed by the party against whom any waiver,
change, amendment, modification or discharge may be sought.
10. Assignment. No party to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
party hereto, except that: (i) Purchaser may assign its rights and obligations
hereunder to any of its affiliates or direct or indirect wholly owned
subsidiaries, but no such transfer shall relieve Purchaser of its obligations
hereunder if such transferee does not perform such obligations; and (ii)
Stockholder may assign its rights and obligations hereunder without the consent
of Purchaser in accordance with Section 2.
11. Defined Terms; Headings. Capitalized terms not otherwise defined
herein shall have the meaning ascribed to such terms in the Purchase Agreement.
The section headings herein are for convenience only and shall not affect the
construction of this Agreement.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
-5-
<PAGE>
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (regardless of the laws that
might otherwise govern under applicable Delaware principles of conflicts of
law).
14. Termination. This Agreement shall terminate at the earlier of (i) the
date the Second Closing occurs under the Purchase Agreement, (ii) December 31,
1999, and (iii) on the date the Purchase Agreement is terminated pursuant to
the terms thereof; provided, that the parties shall continue to be liable for
any breach of this Agreement following any such termination. In addition,
Stockholder may terminate this Agreement on or after the 2-month anniversary of
the date of the Initial Closing (as defined in the Securities Purchase
Agreement) by written notice to Purchaser if the Proxy Statement (as defined in
the Purchase Agreement) has not been filed with the Securities and Exchange
Commission prior to such date, and the parties are not working reasonably
diligently to file the Proxy Statement with the Securities and Exchange
Commission.
-6-
<PAGE>
IN WITNESS WHEREOF, Purchaser and Stockholder have caused this Agreement
to be duly executed and delivered on the day and year first above written.
INTERNATIONAL MOTOR CARS GROUP I, L.L.C.
By: /s/ James A. Hislop
------------------------------------------
Name:
Title:
INTERNATIONAL MOTOR CARS GROUP II, L.L.C.
By: /s/ James A. Hislop
------------------------------------------
Name:
Title:
TRACE INTERNATIONAL HOLDINGS, INC.
By: /s/ Philip N. Smith, Jr.
---------------------------------
Name: Philip N. Smith, Jr.
Title: Senior Vice President
Number of Shares Subject to this Agreement:
4,016,110
-----------------
-7-
<PAGE>
EXHIBIT A
IRREVOCABLE PROXY
In order to secure the performance of the duties of the undersigned
pursuant to the Stockholder Voting Agreement, dated as of April 12, 1999 (the
"Voting Agreement"), among the undersigned, International Motor Cars Group I,
L.L.C. and International Motor Cars Group II, L.L.C., each a Delaware limited
liability company ("Purchaser"), a copy of such agreement being attached hereto
and incorporated by reference herein, the undersigned hereby irrevocably
appoints ______________________ and ___________________ and
_____________________, and each of them, attorneys, agents and proxies, with
full power of substitution, for the undersigned and in the name, place and
stead of the undersigned, to vote or, if applicable, to give written consent,
in such manner as each such attorney, agent and proxy or his substitute shall
in his sole discretion deem proper to record such vote or consent in the manner
set forth in Section 1(a) of the Voting Agreement with respect to all shares of
Common Stock, par value $.0001 per share (the "Shares"), of United Auto Group,
Inc., a Delaware corporation (the "Company"), (i) which the undersigned is or
may be entitled to vote at any meeting of the Company held after the date
hereof, whether annual or special and whether or not an adjourned meeting, or,
if applicable, with respect to which the undersigned is or may be entitled to
give written consent in connection with any action by written consent by the
stockholders of the Company to give written consent with respect thereto. This
Proxy is coupled with an interest, shall be irrevocable and binding on any
successor in interest of the undersigned and shall not be terminated by
operation of law or otherwise upon the occurrence of any event (except as
provided in Section 14 of the Voting Agreement), including, without limitation,
the death or incapacity of the undersigned. This Proxy shall operate to revoke
any prior proxy as to the Shares heretofore granted by the undersigned. This
Proxy shall terminate upon the date on which the Voting Agreement shall
terminate in accordance with Section 14 of the Voting Agreement. This Proxy has
been executed in accordance with Section 212 of the Delaware General
Corporation Law.
Dated:_______________________
TRACE INTERNATIONAL HOLDINGS, INC.
By:__________________________________________
Name:
Title:
<PAGE>
SCHEDULE 3
----------
Trace has pledged its Stockholders Shares to the Bank of Nova Scotia
("BNS") to secure certain indebtedness owing from Trace to BNS.
<PAGE>
EXHIBIT 10.20.3
STOCKHOLDER VOTING AGREEMENT
STOCKHOLDER VOTING AGREEMENT, dated April 12, 1999 (this "Agreement"),
among Aeneas Venture Corporation ("Stockholder"), International Motor Cars
Group I, L.L.C. and International Motor Cars Group II, L.L.C. (collectively,
the "Purchaser").
WHEREAS, United Auto Group, Inc., a Delaware corporation (the "Company"),
and Purchaser, are contemporaneously herewith entering into a Securities
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"),
which provides, among other things, for the acquisition by Purchaser of shares
of Preferred Stock and Warrants to purchase shares of Common Stock upon the
terms and subject to the conditions set forth therein;
WHEREAS, as a condition to its willingness to enter into the Purchase
Agreement, Purchaser has requested that Stockholder make certain agreements
with respect to the shares of Common Stock beneficially owned by Stockholder
and listed under Stockholder's name on the signature page hereto (the
"Stockholder Shares"), upon the terms and subject to the conditions hereof; and
WHEREAS, in order to induce Purchaser to enter into the Purchase
Agreement, Stockholder is willing to make certain agreements with respect to
the Stockholder Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. Voting Agreements; Proxy.
(a) For so long as this Agreement is in effect, in any meeting of
stockholders of the Company, however called, and in any action by consent of
the stockholders of the Company, Stockholder shall vote, or, if applicable,
give consents with respect to, all of the Stockholder Shares (and any other
shares of Common Stock over which Stockholder has voting power) (collectively,
"Shares") that are held on the record date applicable thereto in favor of (i)
the Purchase Agreement, (ii) the transactions contemplated by the Purchase
Agreement and (iii) any actions required in furtherance thereof. Any such vote
shall be cast or consent shall be given in accordance with such procedures
relating thereto as shall ensure that it is duly counted for purposes of
determining that a quorum is present and for purposes of recording the results
of such vote or consent.
(b) Upon the written request of Purchaser, Stockholder, in furtherance of
the transactions contemplated hereby and by the Purchase Agreement, and in
order to
<PAGE>
secure the performance by Stockholder of its duties under this Agreement, shall
promptly execute, in accordance with the provisions of Section 212 of the
Delaware General Corporation Law, and deliver to Purchaser an irrevocable
proxy, substantially in the form attached as Exhibit A hereto, and irrevocably
appoint Purchaser or its designees, with full power of substitution, its
attorney and proxy to vote or, if applicable, to give consent with respect to,
all Shares with regard to any of the matters referred to in Section 1(a) at any
meeting of the stockholders of the Company, however called, or in connection
with any action by written consent by the stockholders of the Company.
Stockholder acknowledges and agrees that (i) such proxy, if and when given,
shall be coupled with an interest, shall constitute, among other things, an
inducement for Purchaser to enter into the Purchase Agreement, shall be
irrevocable and shall not be terminated by operation of law or otherwise upon
the occurrence of any event, except as provided in Section 14 hereof, and (ii)
that no subsequent proxies with respect to the Shares shall be given (and if
given shall not be effective), with respect to any of the matters referred to
in Section 1(a).
2. Covenants. (a) From and after the date of this Agreement, Stockholder
agrees not to: (i) sell, transfer, pledge, assign, hypothecate, encumber,
tender or otherwise dispose of, or enter into any contract with respect to the
sale, transfer, pledge, assignment, hypothecation, encumbrance, tender or other
disposition of, any Stockholder Shares; (ii) grant any proxies with respect to
any Shares, deposit any Shares into a voting trust or enter into a voting or
option agreement with respect to any Shares; (iii) take any action, directly or
indirectly through any of its affiliates (other than the Company or any of its
subsidiaries), which the Company is prohibited from taking under Section 4.2 of
the Purchase Agreement; (iv) vote in any manner (i.e. by ballot, proxy, written
consent or otherwise) any Shares in favor of any other transaction that is
proposed by any Person (including the Company) as an alternative to the
transactions contemplated by the Purchase Agreement; or (v) take any action
which would make any representation or warranty of Stockholder herein untrue or
incorrect or prevent, burden or materially delay the consummation of the
transactions contemplated by this Agreement; provided, however, that
Stockholder may take any action described in clause (i) or (ii) above if any
third party which obtains the right to vote any Shares as a result of such
action assumes (in a writing executed by any such third party and delivered to
Purchaser) Stockholder's obligations under this Agreement with respect to such
Shares.
(b) Stockholder agrees that from and after the date of this Agreement
through and including the date this Agreement is terminated, without the prior
written consent of Purchaser, which may be withheld in Purchaser's sole
discretion, Stockholder shall not vote or give any consent with respect to any
Shares in favor of an Alternative Transaction (as defined in the Purchase
Agreement) other than an Alternative Transaction involving the sale of all or
substantially all of the capital stock or assets of the Company.
-2-
<PAGE>
3. Representations and Warranties of Stockholder. Stockholder represents
and warrants to Purchaser that:
(a) Capacity; No Violations. Stockholder has the legal capacity to enter
into this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Stockholder, and
constitutes a valid and binding agreement of Stockholder enforceable against
Stockholder in accordance with its terms, except as enforceability against
Stockholder may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to the rights of creditors generally and other general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law) and such execution and delivery and performance by Stockholder of this
Agreement will not (i) conflict with, require a consent, waiver or approval
under, or result in a breach or default under, any of the terms of any
contract, commitment or other obligation to which Stockholder is a party or by
which Stockholder is bound; (ii) violate any order, writ, injunction, decree or
statute, or any law, rule or regulation applicable to Stockholder or the
Shares; or (iii) result in the creation of, or impose any obligation on
Stockholder to create, any Encumbrance other than transfer restrictions imposed
by applicable Federal and state securities laws upon the Shares.
(b) Shares. As of the date of this Agreement, Stockholder is the record
holder of, and has good and valid title to, the Shares free and clear of all
Encumbrances other than transfer restrictions imposed by applicable Federal and
state securities laws. The Shares are the only shares of any class of capital
stock of the Company which Stockholder has the right, power or authority (sole
or shared) to sell or vote, and Stockholder does not have any right to acquire,
nor is it the beneficial owner of, any other shares of any class of capital
stock of the Company or any securities convertible into or exchangeable or
exercisable for any shares of any class of capital stock of the Company. There
are no options or rights to acquire, or other contracts (including proxies,
voting trusts or voting agreements) relating to, the Shares to which
Stockholder is a party.
4. Adjustments; Additional Shares. In the event (i) of any stock dividend,
stock split, recapitalization, reclassification, combination or exchange of
Shares on, of or affecting the Shares, or (ii) Stockholder shall become the
beneficial owner of any additional Shares or other securities entitling the
holder thereof to vote or give consent with respect to the matters set forth in
Section 1(a) hereof, then the terms of this Agreement shall apply to the Shares
held by Stockholder immediately following the effectiveness of the events
described in clause (i) above or Stockholder becoming the beneficial owner of
the Shares or other securities, as described in clause (ii) above, in each case
as though they were Shares hereunder.
5. Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement.
-3-
<PAGE>
6. Specific Performance. Stockholder acknowledges and agrees that if it
fails to perform any of its obligations under this Agreement, immediate and
irreparable harm or injury would be caused to Purchaser for which money damages
would not be an adequate remedy. In such event, Stockholder agrees that
Purchaser shall have the right, in addition to any other rights it may have, to
specific performance of this Agreement. Accordingly, if Purchaser should
institute an action or proceeding seeking specific enforcement of the
provisions hereof, Stockholder hereby waives the claim or defense that
Purchaser has an adequate remedy at law and hereby agrees not to assert in any
such action or proceeding the claim or defense that such a remedy at law
exists. Stockholder further agrees to waive any requirements for the securing
or posting of any bond in connection with obtaining any such equitable relief.
7. Notices. All notices or other communications under this Agreement shall
be in writing and shall be deemed duly given, effective (i) three business days
later, if sent by registered or certified mail, return receipt requested,
postage prepaid, (ii) when sent, if sent by telecopier or fax, provided that
the telecopy or fax is promptly confirmed by telephone confirmation thereof,
(iii) when served, if delivered personally to the intended recipient, and (iv)
one business day later, if sent by overnight delivery via a national courier
service, and in each case, addressed to the intended recipient at the address
set forth as follows:
If to the Purchaser:
-------------------------
c/o Penske Capital Partners, L.L.C.
399 Park Avenue
New York, New York 10022
Telecopy: (212) 207-9653
Attention: Mr. James A. Hislop
with a copy to:
-------------------------
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Telecopy: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
-4-
<PAGE>
if to Stockholder:
-------------------------
Aeneas Venture Corporation
c/o Charlesbank Capital Partners, L.L.C.
600 Atlantic Avenue, 26th Floor
Boston, MA 02210
Telecopy: (617) 619-5402
Attention: Mark A. Rosen
with a copy to:
-------------------------
Ropes & Gray
One International Place
Boston, MA 02110
Telecopy: (617) 951-7050
Attention: Larry Jordan Rowe
8. Parties in Interest. This Agreement shall inure to the benefit of and
be binding upon the parties named herein and their respective successors and
assigns; provided, however, that each such successor in interest or assign
shall agree to be bound by the provisions of this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any person or entity
other than Purchaser, Stockholder and their respective successors and assigns,
any rights or remedies under or by reason of this Agreement.
9. Entire Agreement; Amendments. This Agreement contains the entire
agreement between Stockholder and Purchaser with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such subject matter. This
Agreement may not be changed, amended or modified orally, but may be changed
only by an agreement in writing signed by the party against whom any waiver,
change, amendment, modification or discharge may be sought.
10. Assignment. No party to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
party hereto, except that: (i) Purchaser may assign its rights and obligations
hereunder to any of its affiliates or direct or indirect wholly owned
subsidiaries, but no such transfer shall relieve Purchaser of its obligations
hereunder if such transferee does not perform such obligations; and (ii)
Stockholder may assign its rights and obligations hereunder without the consent
of Purchaser in accordance with Section 2.
-5-
<PAGE>
11. Defined Terms; Headings. Capitalized terms not otherwise defined
herein shall have the meaning ascribed to such terms in the Purchase Agreement.
The section headings herein are for convenience only and shall not affect the
construction of this Agreement.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (regardless of the laws that
might otherwise govern under applicable Delaware principles of conflicts of
law).
14. Termination. This Agreement shall terminate at the earlier of (i) the
date the Second Closing occurs under the Purchase Agreement, (ii) December 31,
1999, and (iii) on the date the Purchase Agreement is terminated pursuant to
the terms thereof; provided, that the parties shall continue to be liable for
any breach of this Agreement following any such termination. In addition,
Stockholder may terminate this Agreement on or after the 2-month anniversary of
the date of the Initial Closing (as defined in the Securities Purchase
Agreement) by written notice to Purchaser if the Proxy Statement (as defined in
the Purchase Agreement) has not been filed with the Securities and Exchange
Commission prior to such date, and the parties are not working reasonably
diligently to file the Proxy Statement with the Securities and Exchange
Commission.
-6-
<PAGE>
IN WITNESS WHEREOF, Purchaser and Stockholder have caused this Agreement
to be duly executed and delivered on the day and year first above written.
INTERNATIONAL MOTOR CARS GROUP I, L.L.C.
By:/s/ James A. Hislop
---------------------------------------
Name:
Title:
INTERNATIONAL MOTOR CARS GROUP II, L.L.C.
By:/s/ James A. Hislop
---------------------------------------
Name:
Title:
AENEAS VENTURE CORPORATION
By: /s/ Michael R. Eisenson
-------------------------------------
Name:
Title:
Number of Shares Subject to this Agreement:
2,843,656
-7-
<PAGE>
EXHIBIT A
IRREVOCABLE PROXY
In order to secure the performance of the duties of the undersigned
pursuant to the Stockholder Voting Agreement, dated as of April 12, 1999 (the
"Voting Agreement"), among the undersigned, International Motor Cars Group I,
L.L.C. and International Motor Cars Group II, L.L.C., each a Delaware limited
liability company ("Purchaser"), a copy of such agreement being attached hereto
and incorporated by reference herein, the undersigned hereby irrevocably
appoints ______________________ and ___________________ and
_____________________, and each of them, attorneys, agents and proxies, with
full power of substitution, for the undersigned and in the name, place and
stead of the undersigned, to vote or, if applicable, to give written consent,
in such manner as each such attorney, agent and proxy or his substitute shall
in his sole discretion deem proper to record such vote or consent in the manner
set forth in Section 1(a) of the Voting Agreement with respect to all shares of
Common Stock, par value $.0001 per share (the "Shares"), of United Auto Group,
Inc., a Delaware corporation (the "Company"), (i) which the undersigned is or
may be entitled to vote at any meeting of the Company held after the date
hereof, whether annual or special and whether or not an adjourned meeting, or,
if applicable, with respect to which the undersigned is or may be entitled to
give written consent in connection with any action by written consent by the
stockholders of the Company to give written consent with respect thereto. This
Proxy is coupled with an interest, shall be irrevocable and binding on any
successor in interest of the undersigned and shall not be terminated by
operation of law or otherwise upon the occurrence of any event (except as
provided in Section 14 of the Voting Agreement), including, without limitation,
the death or incapacity of the undersigned. This Proxy shall operate to revoke
any prior proxy as to the Shares heretofore granted by the undersigned. This
Proxy shall terminate upon the date on which the Voting Agreement shall
terminate in accordance with Section 14 of the Voting Agreement. This Proxy has
been executed in accordance with Section 212 of the Delaware General
Corporation Law.
Dated:_________________
AENEAS VENTURE CORPORATION
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT 10.20.4
STOCKHOLDER VOTING AGREEMENT
STOCKHOLDER VOTING AGREEMENT, dated April 12, 1999 (this "Agreement"),
among AIF II, L.P. ("Stockholder"), International Motor Cars Group I, L.L.C.
and International Motor Cars Group II, L.L.C. (collectively, the "Purchaser").
WHEREAS, United Auto Group, Inc., a Delaware corporation (the "Company"),
and Purchaser, are contemporaneously herewith entering into a Securities
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"),
which provides, among other things, for the acquisition by Purchaser of shares
of Preferred Stock and Warrants to purchase shares of Common Stock upon the
terms and subject to the conditions set forth therein;
WHEREAS, as a condition to its willingness to enter into the Purchase
Agreement, Purchaser has requested that Stockholder make certain agreements
with respect to the shares of Common Stock beneficially owned by Stockholder
and listed under Stockholder's name on the signature page hereto (the
"Stockholder Shares"), upon the terms and subject to the conditions hereof; and
WHEREAS, in order to induce Purchaser to enter into the Purchase
Agreement, Stockholder is willing to make certain agreements with respect to
the Stockholder Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. Voting Agreements; Proxy.
(a) For so long as this Agreement is in effect, in any meeting of
stockholders of the Company, however called, and in any action by consent of
the stockholders of the Company, Stockholder shall vote, or, if applicable,
give consents with respect to, all of the Stockholder Shares (and any other
shares of Common Stock over which Stockholder has voting power) (collectively,
"Shares") that are held on the record date applicable thereto in favor of (i)
the Purchase Agreement, (ii) the transactions contemplated by the Purchase
Agreement and (iii) any actions required in furtherance thereof. Any such vote
shall be cast or consent shall be given in accordance with such procedures
relating thereto as shall ensure that it is duly counted for purposes of
determining that a quorum is present and for purposes of recording the results
of such vote or consent.
(b) Upon the written request of Purchaser, Stockholder, in furtherance of
the transactions contemplated hereby and by the Purchase Agreement, and in
order to secure the performance by Stockholder of its duties under this
Agreement, shall promptly execute, in accordance with the provisions of Section
212 of the Delaware General
<PAGE>
Corporation Law, and deliver to Purchaser an irrevocable proxy, substantially
in the form attached as Exhibit A hereto, and irrevocably appoint Purchaser or
its designees, with full power of substitution, its attorney and proxy to vote
or, if applicable, to give consent with respect to, all Shares with regard to
any of the matters referred to in Section 1(a) at any meeting of the
stockholders of the Company, however called, or in connection with any action
by written consent by the stockholders of the Company. Stockholder acknowledges
and agrees that (i) such proxy, if and when given, shall be coupled with an
interest, shall constitute, among other things, an inducement for Purchaser to
enter into the Purchase Agreement, shall be irrevocable and shall not be
terminated by operation of law or otherwise upon the occurrence of any event,
except as provided in Section 14 hereof, and (ii) that no subsequent proxies
with respect to the Shares shall be given (and if given shall not be
effective), with respect to any of the matters referred to in Section 1(a).
2. Covenants. (a) From and after the date of this Agreement, Stockholder
agrees not to: (i) sell, transfer, pledge, assign, hypothecate, encumber,
tender or otherwise dispose of, or enter into any contract with respect to the
sale, transfer, pledge, assignment, hypothecation, encumbrance, tender or other
disposition of, any Stockholder Shares; (ii) grant any proxies with respect to
any Shares, deposit any Shares into a voting trust or enter into a voting or
option agreement with respect to any Shares; (iii) take any action, directly or
indirectly through any of its affiliates (other than the Company or any of its
subsidiaries), which the Company is prohibited from taking under Section 4.2 of
the Purchase Agreement; (iv) vote in any manner (i.e. by ballot, proxy, written
consent or otherwise) any Shares in favor of any other transaction that is
proposed by any Person (including the Company) as an alternative to the
transactions contemplated by the Purchase Agreement; or (v) take any action
which would make any representation or warranty of Stockholder herein untrue or
incorrect or prevent, burden or materially delay the consummation of the
transactions contemplated by this Agreement; provided, however, that
Stockholder may take any action described in clause (i) or (ii) above if any
third party which obtains the right to vote any Shares as a result of such
action assumes (in a writing executed by any such third party and delivered to
Purchaser) Stockholder's obligations under this Agreement with respect to such
Shares.
(b) Stockholder agrees that from and after the date of this Agreement
through and including the date this Agreement is terminated, without the prior
written consent of Purchaser, which may be withheld in Purchaser's sole
discretion, Stockholder shall not vote or give any consent with respect to any
Shares in favor of an Alternative Transaction (as defined in the Purchase
Agreement) other than an Alternative Transaction involving the sale of all or
substantially all of the capital stock or assets of the Company.
3. Representations and Warranties of Stockholder. Stockholder represents
and warrants to Purchaser that:
-2-
<PAGE>
(a) Capacity; No Violations. Stockholder has the legal capacity to enter
into this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Stockholder, and
constitutes a valid and binding agreement of Stockholder enforceable against
Stockholder in accordance with its terms, except as enforceability against
Stockholder may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to the rights of creditors generally and other general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law) and such execution and delivery and performance by Stockholder of this
Agreement will not (i) conflict with, require a consent, waiver or approval
under, or result in a breach or default under, any of the terms of any
contract, commitment or other obligation to which Stockholder is a party or by
which Stockholder is bound; (ii) violate any order, writ, injunction, decree or
statute, or any law, rule or regulation applicable to Stockholder or the
Shares; or (iii) result in the creation of, or impose any obligation on
Stockholder to create, any Encumbrance other than transfer restrictions imposed
by applicable Federal and state securities laws upon the Shares.
(b) Shares. As of the date of this Agreement, Stockholder is the record
holder of, and has good and valid title to, the Shares free and clear of all
Encumbrances other than transfer restrictions imposed by applicable Federal and
state securities laws. The Shares are the only shares of any class of capital
stock of the Company which Stockholder has the right, power or authority (sole
or shared) to sell or vote, and Stockholder does not have any right to acquire,
nor is it the beneficial owner of, any other shares of any class of capital
stock of the Company or any securities convertible into or exchangeable or
exercisable for any shares of any class of capital stock of the Company. There
are no options or rights to acquire, or other contracts (including proxies,
voting trusts or voting agreements) relating to, the Shares to which
Stockholder is a party.
4. Adjustments; Additional Shares. In the event (i) of any stock dividend,
stock split, recapitalization, reclassification, combination or exchange of
Shares on, of or affecting the Shares, or (ii) Stockholder shall become the
beneficial owner of any additional Shares or other securities entitling the
holder thereof to vote or give consent with respect to the matters set forth in
Section 1(a) hereof, then the terms of this Agreement shall apply to the Shares
held by Stockholder immediately following the effectiveness of the events
described in clause (i) above or Stockholder becoming the beneficial owner of
the Shares or other securities, as described in clause (ii) above, in each case
as though they were Shares hereunder.
5. Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement.
6. Specific Performance. Stockholder acknowledges and agrees that if it
fails to perform any of its obligations under this Agreement, immediate and
irreparable
-3-
<PAGE>
harm or injury would be caused to Purchaser for which money damages would not
be an adequate remedy. In such event, Stockholder agrees that Purchaser shall
have the right, in addition to any other rights it may have, to specific
performance of this Agreement. Accordingly, if Purchaser should institute an
action or proceeding seeking specific enforcement of the provisions hereof,
Stockholder hereby waives the claim or defense that Purchaser has an adequate
remedy at law and hereby agrees not to assert in any such action or proceeding
the claim or defense that such a remedy at law exists. Stockholder further
agrees to waive any requirements for the securing or posting of any bond in
connection with obtaining any such equitable relief.
7. Notices. All notices or other communications under this Agreement shall
be in writing and shall be deemed duly given, effective (i) three business days
later, if sent by registered or certified mail, return receipt requested,
postage prepaid, (ii) when sent, if sent by telecopier or fax, provided that
the telecopy or fax is promptly confirmed by telephone confirmation thereof,
(iii) when served, if delivered personally to the intended recipient, and (iv)
one business day later, if sent by overnight delivery via a national courier
service, and in each case, addressed to the intended recipient at the address
set forth as follows:
If to the Purchaser:
-------------------------
c/o Penske Capital Partners, L.L.C.
399 Park Avenue
New York, New York 10022
Telecopy: (212) 207-9653
Attention: Mr. James A. Hislop
with a copy to:
-------------------------
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Telecopy: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
-4-
<PAGE>
if to Stockholder:
-------------------------
c/o Apollo Advisors, L.P.
1999 Avenue of the Stars
Los Angeles, CA 90067
Telecopy: (310) 201-4166
Attention: Michael Weiner
8. Parties in Interest. This Agreement shall inure to the benefit of and
be binding upon the parties named herein and their respective successors and
assigns; provided, however, that each such successor in interest or assign
shall agree to be bound by the provisions of this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any person or entity
other than Purchaser, Stockholder and their respective successors and assigns,
any rights or remedies under or by reason of this Agreement.
9. Entire Agreement; Amendments. This Agreement contains the entire
agreement between Stockholder and Purchaser with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such subject matter. This
Agreement may not be changed, amended or modified orally, but may be changed
only by an agreement in writing signed by the party against whom any waiver,
change, amendment, modification or discharge may be sought.
10. Assignment. No party to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
party hereto, except that: (i) Purchaser may assign its rights and obligations
hereunder to any of its affiliates or direct or indirect wholly owned
subsidiaries, but no such transfer shall relieve Purchaser of its obligations
hereunder if such transferee does not perform such obligations; and (ii)
Stockholder may assign its rights and obligations hereunder without the consent
of Purchaser in accordance with Section 2.
11. Defined Terms; Headings. Capitalized terms not otherwise defined
herein shall have the meaning ascribed to such terms in the Purchase Agreement.
The section headings herein are for convenience only and shall not affect the
construction of this Agreement.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
-5-
<PAGE>
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (regardless of the laws that
might otherwise govern under applicable Delaware principles of conflicts of
law).
14. Termination. This Agreement shall terminate at the earlier of (i) the
date the Second Closing occurs under the Purchase Agreement, (ii) December 31,
1999, and (iii) on the date the Purchase Agreement is terminated pursuant to
the terms thereof; provided, that the parties shall continue to be liable for
any breach of this Agreement following any such termination. In addition,
Stockholder may terminate this Agreement on or after the 2-month anniversary of
the date of the Initial Closing (as defined in the Securities Purchase
Agreement) by written notice to Purchaser if the Proxy Statement (as defined in
the Purchase Agreement) has not been filed with the Securities and Exchange
Commission prior to such date, and the parties are not working reasonably
diligently to file the Proxy Statement with the Securities and Exchange
Commission.
-6-
<PAGE>
IN WITNESS WHEREOF, Purchaser and Stockholder have caused this Agreement
to be duly executed and delivered on the day and year first above written.
INTERNATIONAL MOTOR CARS GROUP I, L.L.C.
By: /s/ James A. Hislop
------------------------------------------
Name:
Title:
INTERNATIONAL MOTOR CARS GROUP II, L.L.C.
By: /s/ James A. Hislop
------------------------------------------
Name:
Title:
AIF II, L.P.
By: /s/ John J. Hannan
----------------------------
Name:
Title:
Number of Shares Subject to this Agreement:
1,843,656
-7-
<PAGE>
EXHIBIT A
IRREVOCABLE PROXY
In order to secure the performance of the duties of the undersigned
pursuant to the Stockholder Voting Agreement, dated as of April 12, 1999 (the
"Voting Agreement"), among the undersigned, International Motor Cars Group I,
L.L.C. and International Motor Cars Group II, L.L.C., each a Delaware limited
liability company ("Purchaser"), a copy of such agreement being attached hereto
and incorporated by reference herein, the undersigned hereby irrevocably
appoints ______________________ and ___________________ and
_____________________, and each of them, attorneys, agents and proxies, with
full power of substitution, for the undersigned and in the name, place and
stead of the undersigned, to vote or, if applicable, to give written consent,
in such manner as each such attorney, agent and proxy or his substitute shall
in his sole discretion deem proper to record such vote or consent in the manner
set forth in Section 1(a) of the Voting Agreement with respect to all shares of
Common Stock, par value $.0001 per share (the "Shares"), of United Auto Group,
Inc., a Delaware corporation (the "Company"), (i) which the undersigned is or
may be entitled to vote at any meeting of the Company held after the date
hereof, whether annual or special and whether or not an adjourned meeting, or,
if applicable, with respect to which the undersigned is or may be entitled to
give written consent in connection with any action by written consent by the
stockholders of the Company to give written consent with respect thereto. This
Proxy is coupled with an interest, shall be irrevocable and binding on any
successor in interest of the undersigned and shall not be terminated by
operation of law or otherwise upon the occurrence of any event (except as
provided in Section 14 of the Voting Agreement), including, without limitation,
the death or incapacity of the undersigned. This Proxy shall operate to revoke
any prior proxy as to the Shares heretofore granted by the undersigned. This
Proxy shall terminate upon the date on which the Voting Agreement shall
terminate in accordance with Section 14 of the Voting Agreement. This Proxy has
been executed in accordance with Section 212 of the Delaware General
Corporation Law.
Dated:__________________
AIF II, L.P.
By:__________________________________________
Name:
Title:
<PAGE>
EXHIBIT 99.5
UNITED AUTO ENTERS INTO AGREEMENT FOR $83.0
MILLION INVESTMENT FRom Penske Capital Partners
Business Editors
NEW YORK--(BUSINESS WIRE)--April 12, 1999--Roger S. Penske to Become Chairman
and CEO, Succeeding Marshall S. Cogan; Penske Capital Partners Expected to
Majority of Board of Directors Group, Inc. (NYSE:UAG), the nation's second
largest publicly traded automotive retailer, announced today that it has signed
a definitive agreement to secure $83.0 million in new capital funding from
Penske Capital Partners, L.L.C., an organization formed in 1997 to make
investments in the transportation and transportation services industries.
The investment will be made in two installments. After the completion of the
first installment of approximately $33.5 million, Roger S. Penske will succeed
Marshall S. Cogan, the Company's founder, as Chairman and Chief Executive
Officer. Mr. Cogan will remain as a Director of the Company. Upon completion of
the second installment of approximately $49.5 million, Penske Capital Partners
and its affiliates are expected to hold a majority of the seats on the
Company's Board of Directors.
In exchange for its investment, Penske Capital Partners will receive preferred
stock convertible into UnitedAuto common stock at an average price of $10.00
per share. Penske Capital Partners will also receive warrants to purchase five
million shares of common stock, exercisable at $12.50 for a period of 30
months, with any unexercised warrants after 30 months to become exercisable at
$15.50 for a successive 30-month period. The convertible preferred stock
dividend will be 6.5 percent. The dividend will be paid in kind for the first
two years from date of issuance. Upon exercise of the warrants in full Penske
Capital Partners will hold approximately 38% of the Company's common stock.
UnitedAuto will receive the first installment of the investment at an initial
closing upon the receipt of customary regulatory approvals and certain third
party consents. The remainder of the investment will be received at the final
closing of the transaction and is subject to a number of conditions, including
approval by a majority of UnitedAuto's shareholders and the receipt of third
party consents. There can be no assurance when or whether the funding under the
terms of the agreement with Penske Capital Partners will occur. If the first
part of the funding is made, but the final closing does not occur by December
31, 1999, the Company may be required to repurchase from Penske Capital
Partners the investment made at the initial closing, if not the conversion
price of the preferred stock will be $9.00 per share.
Mr. Penske said, "UnitedAuto has an excellent franchise base and strategic
clusters. I am impressed with the dealership management who have increased same
store sales and profitability in 1998. We feel that the contribution of our
capital and our retail automotive expertise will serve UnitedAuto well. I am
looking forward to working with the many employees of UnitedAuto in the
future."
<PAGE>
Mr. Cogan said, "From the perspective of the principal founding shareholder,
UnitedAuto is clearly at the threshold of a major opportunity. Roger Penske's
association with UnitedAuto is significant for a number of reasons: It provides
the Company with the strategic resources necessary to enhance our dealership
operations. His vision and commitment to the future of our industry is
unmatched."
The Company said that it expects the net proceeds from the Penske Capital
Partners investment to be used to reduce borrowings under its credit facility,
increase working capital and fund certain pending acquisitions.
UnitedAuto, which has pursued a strategy based on internal growth from its
existing dealerships as well as from strategic acquisitions, operates
franchises representing 30 brands in Arizona, Arkansas, California,
Connecticut, Florida, Georgia, Illinois, Indiana, Louisiana, Nevada, New
Jersey, New York, North Carolina, Puerto Rico, South Carolina, Tennessee and
Texas. UnitedAuto dealerships sell new and used vehicles and market a complete
line of aftermarket automotive products and services through UnitedAuto Care,
Inc. and UnitedAuto Care Products, Inc.
Penske Capital Partners, L.L.C. includes Penske Corporation and Chase Capital
Partners.
JP Morgan served as the financial advisor to UnitedAuto on the transaction.
This press release contains forward-looking information, and actual results may
materially vary from those expressed or implied herein. Other factors,
including, economic conditions, manufacturer approvals and acquisition risks
that could affect these results are described in the Company's Form 10-K.
-2-
