UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Form 10-Q
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended March 31, 2003 | ||
| or | ||
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from to | ||
Commission file number 1-12297
United Auto Group, Inc.
|
Delaware
|
22-3086739 | |
|
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
|
2555 Telegraph Road,
Bloomfield Hills, Michigan (Address of principal executive offices) |
48302-0954
(Zip Code) |
|
Registrant’s telephone number, including area code:
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is an accelerated filer (as defined Rule 12b-2 of the Exchange Act) Yes þ No o
As of May 12, 2003, there were 40,611,310 shares of voting common stock outstanding.
TABLE OF CONTENTS
1
UNITED AUTO GROUP, INC.
See Notes to Consolidated Condensed Financial
Statements
2
UNITED AUTO GROUP, INC.
See Notes to Consolidated Condensed Financial
Statements
3
UNITED AUTO GROUP, INC.
See Notes to Consolidated Condensed Financial
Statements
4
UNITED AUTO GROUP, INC.
See Notes to Consolidated Condensed Financial
Statements
5
UNITED AUTO GROUP, INC.
1. Interim
Financial Statements
The information presented as of March 31,
2003 and 2002 and for the three month periods then ended is
unaudited, but includes all adjustments (consisting only of
normal and recurring adjustments) which the management of United
Auto Group, Inc. (the “Company”) believes to be
necessary for the fair presentation of results for the periods
presented. The results for the interim periods are not
necessarily indicative of results to be expected for the year.
These consolidated condensed financial statements should be read
in conjunction with the Company’s audited financial
statements for the year ended December 31, 2002, which were
included as part of the Company’s Annual Report on
Form 10-K. In order to maintain consistency and
comparability of financial information between periods
presented, certain reclassifications have been made to the
Company’s prior year consolidated condensed financial
statements to conform to the current year presentation.
During 2002, the Company sold certain dealerships
which qualified for treatment as discontinued operations in
accordance with Statement of Financial Accounting Standard
No. 144 “Accounting for the Impairment of Disposal of
Long-Lived Assets”
.
Consequently, such dealerships
have been reported as discontinued operations. Combined
financial information of these dealerships is as follows:
In March 2003, the Financial Accounting Standards
Board’s (“FASB”) Emerging Issues Task Force
(“EITF”) finalized Issue No. 02-16,
“Accounting by a Customer (Including a Reseller) for Cash
Consideration Received from a Vendor”
(“EITF 02-16”). EITF 02-16 addresses the
accounting treatment for vendor allowances and provides that
cash consideration received from a vendor should be presumed to
be a reduction of the prices of the vendors’ product and
should therefore be shown as a reduction in the purchase price
of the merchandise. To the extent that the cash consideration
represents a reimbursement of a specific, incremental and
identifiable cost, then those vendor allowances should be used
to offset such costs. Historically, the company recorded
non-refundable floor plan credits and certain other
non-refundable credits when received. As a result of the EITF,
these credits are now presumed to be reductions in the cost of
purchased inventory and are deferred until the related vehicle
is sold. In accordance with EITF 02-16, the Company
recorded a cumulative effect of accounting change as of
January 1, 2003, the date of adoption, that decreased net
income for 2002 by $3.1 million, net of tax, or
$0.07 per diluted share.
Statement of Financial Accounting Standards
No. 146, “Accounting for Costs Associated with Exit or
Disposal Activities” (“SFAS No. 146”) was
issued in June 2002 and is effective for exit or disposal
activities initiated after December 31, 2002. SFAS
No. 146 addresses the timing of the recognition of exit
costs associated with restructuring activities. Under the new
standard, certain exit costs will be recognized over the period
in which the restructuring activities occur, rather than at the
point in time the Company commits to the restructuring plan. The
adoption of SFAS No. 146 did not have a material impact on
the Company’s results of operations, financial position or
cash flows.
6
Financial Accounting Standards Board
(“FASB”) Interpretation No. 45,
“Guarantor’s Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of
Others” (“FIN 45”) was issued in November
2002. FIN 45 requires the recognition of a liability for
certain guarantee obligations issued or modified after
December 31, 2002. FIN 45 also clarifies disclosure
requirements to be made by a guarantor for certain guarantees.
The adoption of FIN 45 did not have a material impact on
the Company’s results of operations, financial position or
cash flows.
FASB Interpretation No. 46,
“Consolidation of Variable Interest Entities, an
Interpretation of APB No. 50”
(“FIN 46”) was issued in January 2003.
FIN 46 requires certain variable interest entities to be
consolidated by the primary beneficiary of the entity if the
equity investors in the entity do not have the characteristics
of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties.
FIN 46 is effective for all new variable interest entities
created or acquired after January 31, 2003. For variable
interest entities created or acquired prior to February 1,
2003, the provisions of FIN 46 must be applied for the
first interim or annual period beginning after June 15,
2003. The Company does not currently participate in any variable
interest entities.
The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period.
Actual result could differ from those estimates. The accounts
requiring the use of significant estimates include accounts
receivable, inventories, income taxes, intangible assets and
certain reserves.
Intangible assets in the consolidated condensed
balance sheets include goodwill and franchise value. Goodwill
represents the excess of cost over the fair value of tangible
and identified intangible assets acquired arising in connection
with purchase business combinations. Franchise value represents
the estimated value of franchises acquired in business
combinations. Goodwill and franchise value are deemed to have
indefinite lives and are not amortized, but are subject to, at a
minimum, an annual impairment test. If the carrying value of
goodwill, franchise value or other intangible assets exceeds its
fair market value, an impairment loss would be recorded. The
Company uses a discounted cash flow model to determine the fair
market value of the Company’s reporting units.
Following is a summary of the changes in the
carrying amount of goodwill and franchise value:
7
2. Inventories
Inventories consisted of the following:
3. Business
Combinations
During the three months ended March 31,
2002, the Company acquired 62 automobile dealership
franchises. The aggregate consideration paid in connection with
such acquisitions amounted to $144,832 in cash. The
Company’s financial statements include the results of
operations of the acquired dealerships only from the date of
acquisition.
The following unaudited consolidated pro forma
results of operations of the Company for the three month
period ended March 31, 2002 give effect to acquisitions
consummated subsequent to January 1, 2002 as if they had
occurred on January 1, 2002.
4. Stock-Based
Compensation
Full-time employees of the Company and its
subsidiaries and affiliates are eligible to receive stock
options pursuant to the terms of the Company’s Stock Option
Plan. Options granted under the Stock Option Plan have a ten
year life and typically vest on a pro-rata basis over three or
five years. The aggregate number of shares of Common Stock
for which stock options may be granted under the Stock Option
Plan is 3,001,000. As of March 31, 2003,
150,000 shares of Common Stock were available for the grant
of options under the Stock Option Plan.
Pursuant to Accounting Principles Board Opinion
No. 25, “Accounting for Stock Issued to
Employees”, the Company accounts for stock-based employee
compensation arrangements using the intrinsic value method.
Accordingly, no compensation expense has been recorded in the
Consolidated Financial Statements with respect to option grants.
The Company has adopted the disclosure only provisions of
Financial Accounting Standards Board Statement No. 123,
“Accounting for Stock Based Compensation”, as amended
by Financial Accounting Standards Board Statement No. 148,
“Accounting for Stock Based Compensation —
Transition and Disclosure, an Amendment of FASB Statement
No. 123”.
8
Had the Company elected to recognize compensation
expense for stock-based compensation using the fair value
method, net income, basic net income per common share and net
income per diluted common share would have been as follows
(unaudited):
The weighted average fair value of the
Company’s stock options was calculated using the
Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 2002: no
dividend yield; expected volatility of 60.8%; risk-free interest
rate of 4% and expected lives of five years. There were no
option grants in the first quarter of 2003. The weighted average
fair value of options granted during the period ended
March 31, 2002 was $11.67.
The Company has proposed that stockholders
approve the United Auto Group, Inc. 2002 Equity
Compensation Plan (the “Plan”) at its annual meeting
of stockholders in May 2003. The Plan would include
2,100,000 shares available for future issuance of awards
including; stock options, stock appreciation rights, restricted
stock and restricted stock units, performance shares and other
awards to key employees, outside directors, consultants and
advisors of the Company.
5. Earnings Per
Share
Basic earnings per common share is computed using
the weighted average number of common shares outstanding.
Diluted earnings per common share is based on the weighted
average number of common shares outstanding, adjusted for the
dilutive effect of stock options, preferred stock, warrants and
stock price guarantees. For the three months ended
March 31, 2003 and 2002, 969,087 and 150,000 shares
issuable upon the exercise of outstanding options were excluded
from the calculation of diluted earnings per common share
9
because the effect of such securities was
antidilutive. A reconciliation of the number of shares used in
the calculation of basic and diluted earnings per common share
is as follows:
6. Supplemental
Cash Flow Information
The following table presents certain
supplementary information to the consolidated condensed
statements of cash flow:
7. Long Term
Debt
Long-term debt consisted of the following:
Undrawn, available capacity under the
Company’s credit facilities amounted to approximately
$344,000 as of March 31, 2003.
10
The Company is party to a credit agreement with
DaimlerChrysler Services North America LLC and Toyota Motor
Credit Corporation, dated as of August 3, 1999, as amended
and restated (the “U.S. Credit Agreement”), which
provides for up to $700,000 in revolving loans to be used for
acquisitions, working capital, the repurchase of common stock
and general corporate purposes, as well as a $50,000 standby
letter of credit facility. Revolving loans mature on
August 3, 2005. Loans under the U.S. Credit Agreement bear
interest between U.S. LIBOR plus 2.00% and U.S. LIBOR plus
3.00%. The U.S. Credit Agreement is fully and unconditionally
guaranteed on a joint and several basis by the Company’s
domestic automotive dealership subsidiaries and contains a
number of significant covenants that, among other things,
restrict the ability of the Company to dispose of assets, incur
additional indebtedness, repay other indebtedness, create liens
on assets, make investments or acquisitions and engage in
mergers or consolidations. We are also required to maintain
specified ratios and tests as defined in the U.S. Credit
Agreement. The U.S. Credit Agreement also contains typical
events of default including change of control and non-payment of
obligations. Availability under the revolving portion of the
U.S. Credit Agreement is subject to a collateral-based borrowing
limitation, which is determined based on certain of our
allowable tangible assets (which does not include foreign
assets). Substantially all of the Company’s domestic assets
are subject to security interests granted to lenders under the
U.S. Credit Agreement. Our U.S. Credit Agreement, the
subordinated notes discussed below and borrowings under floor
plan financing arrangements have cross-default provisions that
trigger a default in the event of an uncured default under other
material indebtedness. As of March 31, 2003 and
December 31, 2002, outstanding letters of credit under the
U.S. Credit Agreement amounted to $42,500. As of March 31,
2003 the Company was in compliance with all financial covenants
under the U.S. Credit Agreement.
On February 28, 2003, the Company entered
into a new credit facility with the Royal Bank of Scotland (the
“U.K. Credit Facility”), which provides for up to
£45,000 in revolving loans to be used for acquisitions,
working capital, and general corporate purposes and a seasonally
adjusted overdraft line of credit up to a maximum of
£10,000. Loans under the U.K. Credit Facility bear interest
between U.K. LIBOR plus 0.85% and U.K. LIBOR plus 1.25%. The
Company’s borrowing capacity under the U.K. Credit Facility
will be reduced by £2,000 every six months, with the first
reduction occurring on January 1, 2004. The remaining
£35,000 of revolving loans mature on January 31, 2006.
The U.K. Credit Facility is fully and unconditionally guaranteed
on a joint and several basis by the Company’s automotive
dealership subsidiaries in the U.K. (the “U.K.
Subsidiaries”), and contains a number of significant
covenants that, among other things, restrict the ability of the
U.K. Subsidiaries to pay dividends, dispose of assets, incur
additional indebtedness, repay other indebtedness, create liens
on assets, make investments or acquisitions and engage in
mergers or consolidations. In addition, the U.K. Subsidiaries
are required to comply with specified ratios and tests, as
defined in the U.K. Credit Facility. The U.K. Credit
Facility also contains typical events of default, including
change of control and non-payment of obligations. Substantially
all of the U.K. Subsidiaries’ assets are subject to
security interests granted to lenders under the U.K. Credit
Facility and the U.K. Credit Facility has cross-default
provisions that trigger a default in the event of an uncured
default under other material indebtedness of the U.K.
Subsidiaries. As of March 31, 2003, outstanding borrowings
under the U.K. Credit Facility amounted to approximately
£23,800. As of March 31, 2003, the Company was in
compliance with all financial covenants under the U.K. Credit
Facility.
In March 2002, the Company completed the sale of
$300,000 aggregate principal amount of 9.625% Senior
Subordinated Notes due 2012. The sale of the notes was exempt
from registration pursuant to Rule 144A and
Regulation S under the Securities Act of 1933, as amended.
Net proceeds from the offering were approximately $291,900, and
were used to repay indebtedness outstanding under the U.S. Credit
11
Agreement. In February 2003, the Company
exchanged the notes in a registered offering for $300,000 of new
notes (the “Notes”) with identical terms. The Notes
are unsecured senior subordinated notes and rank behind all
existing and future senior debt, including debt under our credit
agreements and floor plan indebtedness. The Notes are guaranteed
by substantially all of our domestic subsidiaries on a senior
subordinated basis. We can redeem all or some of the Notes at
our option beginning in 2007 at specified redemption prices. In
addition, until 2005 we are allowed to redeem up to 35% of the
Notes with the net cash proceeds from specified public equity
offerings. Upon a change of control, each holder of Notes will
be able to require us to repurchase all or some of the Notes at
a redemption price of 101% of the principal amount of the Notes.
The Notes also contain customary negative covenants and events
of default.
8. Interest Rate
Swaps
During January 2000, the Company entered into a
swap agreement of five years duration pursuant to which a
notional $200,000 of our floating rate debt was exchanged for
fixed rate debt. The fixed rate interest to be paid by us was
based on U.S. LIBOR and amounted to 7.15%. In October 2002, the
terms of this swap were amended pursuant to which the interest
rate to be paid by the Company was reduced to 5.86% and the term
of the agreement was extended for an additional three years.
During March 2003, the Company entered into a swap agreement of
five years duration pursuant to which a notional $350,000 of
floating rate debt was exchanged for fixed rate debt. The fixed
rate interest to be paid by the Company of 3.15% is based on
U.S. LIBOR. These swaps have been designated as cash flow hedges
of future interest payments of the Company’s LIBOR based
floor plan borrowings.
9. Subsequent
Events
In April 2003, the Company acquired nine
automobile dealership franchises. The aggregate consideration
paid in connection with such acquisitions amounted to
approximately $62.7 million in cash.
In April 2003, an entity controlled by one of our
directors, Lucio A. Noto (the “Investor”), paid
approximately $1.8 million (including approximately
$800,000 credited from prior earnings retroactive to
March 1, 2001) for a 6.5% interest in one of the
Company’s subsidiaries, UAG Connecticut I, LLC, which
entitles the Investor to 20% of the operating profits of UAG
Connecticut I. In addition, the Investor has an option to
purchase up to a 20% interest in UAG Connecticut I for specified
amounts. The Investor has also guaranteed 20% of UAG Connecticut
I’s lease obligation to Automotive Group Realty, LLC
(“AGR”), our landlord of the facility at which the
dealership operates and a wholly owned subsidiary of Penske
Corporation. In exchange for that guarantee, the Investor will
be entitled to 20% of any appreciation of the property, which
appreciation would otherwise accrue to AGR at the time of sale,
and the Investor is responsible to AGR for any corresponding
depreciation of the property at the time of sale, which
obligation shall be secured solely by the Investor’s
ownership interest in UAG Connecticut I, LLC.
In April 2003, we formed a joint venture to own
and operate three BMW dealerships in and around Munich, Germany.
Our joint venture partner in Germany is Mr. Peter
Reisacher. We contributed approximately $5.0 million for a
50% interest and Mr. Reisacher contributed approximately
$5.0 million for a 50% interest in the joint venture.
10. Condensed
Consolidating Financial Information
The following tables include condensed
consolidating financial information as of March 31, 2003
and December 31, 2002 and for the three month periods ended
March 31, 2003 and 2002 for United Auto Group, Inc. (as the
issuer), wholly-owned subsidiary guarantors, non-wholly owned
guarantors, and non-guarantor subsidiaries (primarily
representing foreign entities). The condensed consolidating
financial information includes certain allocations of balance
sheet, income statement and cash flow items, which are not
necessarily indicative of the financial position, results of
operations and cash flows of these entities on a stand-alone
basis.
12
UNITED AUTO GROUP, INC.
CONDENSED CONSOLIDATING BALANCE
SHEET
13
UNITED AUTO GROUP, INC.
14
UNITED AUTO GROUP, INC.
15
16
UNITED AUTO GROUP, INC.
17
UNITED AUTO GROUP, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH
FLOW
18
This Management’s Discussion and Analysis
of Financial Condition and Results of Operations contains
forward-looking statements that involve risks and uncertainties.
Our actual results may differ materially from those discussed in
the forward-looking statements as a result of various
factors.
General
We are the second largest publicly-held
automotive retailer in the United States as measured by total
revenues. As of March 31, 2003, we owned and operated
129 franchises in the United States and 71 franchises
internationally, primarily in the United Kingdom. As an integral
part of our dealership operations, we retail new and used
automobiles and light trucks, operate service and parts
departments, operate collision repair centers and sell various
aftermarket products, including finance, warranty, extended
service and other insurance contracts.
New vehicle revenues include sales to retail
customers and to leasing companies providing consumer automobile
leasing. Used vehicle revenues include amounts received for used
vehicles sold to retail customers, leasing companies providing
consumer leasing and other dealers. We generate finance and
insurance revenues from sales of warranty policies, extended
service contracts, other insurance policies, and accessories, as
well as from fees for placing finance and lease contracts.
Service and parts revenues include fees paid for repair and
maintenance service, the sale of replacement parts and body shop
repairs.
Our gross profit tends to vary with the mix of
revenues we derive from the sale of new vehicles, used vehicles,
finance and insurance products, and service and parts services.
Our gross profit generally varies across product lines, with new
vehicle sales usually resulting in lower gross profit margins
and our other products resulting in higher gross profit margins.
Factors such as seasonality, weather, cyclicality and
manufacturers’ advertising and incentives may impact the
mix of our revenues, and therefore influence our gross profit
margin.
Our selling expenses consist of advertising and
compensation for sales department personnel, including
commissions and related bonuses. General and administrative
expenses include compensation for administration, finance, legal
and general management personnel, depreciation, amortization,
rent, insurance, utilities and other outside services. A
significant portion of our selling expenses are variable, and a
significant portion of our general and administrative expenses
are subject to our control, allowing us to adjust them over time
to reflect economic trends.
Floor plan interest expense relates to floor plan
financing. Floor plan financing represents indebtedness incurred
in connection with the acquisition of new and used vehicle
inventories. Other interest expense consists of interest charges
on all of our interest-bearing debt, other than interest
relating to floor plan financing.
We have made a number of dealership acquisitions
in each year since our inception. Each of these acquisitions has
been accounted for using the purchase method of accounting. As a
result, our financial statements include the results of
operations of the acquired dealerships from the date of
acquisition.
In March 2003, the Financial Accounting Standards
Board’s (“FASB”) Emerging Issues Task Force
(“EITF”) finalized Issue No. 02-16,
“Accounting by a Customer (Including a Reseller) for Cash
Consideration Received from a Vendor”
(“EITF 02-16”). EITF 02-16 addresses the
accounting treatment for vendor allowances and provides that
cash consideration received from a vendor should be presumed to
be a reduction of the prices of the vendors’ product and
should therefore be shown as a reduction in the purchase price
of the merchandise. To the extent that the cash consideration
represents a reimbursement of a specific, incremental and
identifiable cost, then those vendor allowances should be used
to offset such costs. Historically, the company recorded
non-refundable floor plan credits and certain other
non-refundable credits when received. As a result of the EITF,
these credits are now presumed to be reductions in the cost of
purchased inventory and are deferred until the related vehicle
is sold. In accordance with EITF 02-16, the
19
Results of Operations
Retail revenues, which exclude revenues relating
to fleet and wholesale transactions, increased by
$379.4 million, or 26.2%, from $1.446 billion to
$1.826 billion. The overall increase in retail revenues is
due primarily to: (1) a $45.2 million, or 3.4%,
increase in retail revenues at dealerships owned prior to
January 1, 2002, and (2) dealership acquisitions made
subsequent to January 1, 2002, partially offset by a
decrease in revenues resulting from the divestiture of certain
dealerships. The overall increase in retail revenues at
dealerships owned prior to January 1, 2002 reflects 2.4%,
4.2%, 6.2% and 11.6% increases in new retail vehicle, used
retail vehicle, service and parts and finance and insurance
revenues, respectively. Aggregate retail unit sales increased by
17.0%, due principally to: (1) the net increase at
dealerships owned prior to January 1, 2002 and
(2) acquisitions made subsequent to January 1, 2002.
We retailed 60,835 retail vehicles during the three months
ended March 31, 2003, compared with 51,987 retail
vehicles during the three months ended March 31, 2002.
Retail sales of new vehicles increased by
$170.4 million, or 18.0%, from $946.3 million to
$1.117 billion. The increase is due primarily to:
(1) a $20.7 million, or 2.4%, increase at dealerships
owned prior to January 1, 2002 and (2) acquisitions
made subsequent to January 1, 2002. The increase at
dealerships owned prior to January 1, 2002, is due
primarily to a 0.4% increase in new retail unit sales and a
1.9% increase in comparative average selling prices per
vehicle. Aggregate retail unit sales of new vehicles increased
by 12.3%, due principally to: (1) the net increase at
dealerships owned prior to January 1, 2002 and
(2) acquisitions made subsequent to January 1, 2002.
We retailed 38,958 new vehicles (64.0% of total retail
vehicle sales) during the three months ended March 31,
2003, compared with 34,689 new vehicles (66.7% of total
retail vehicle sales) during the three months ended
March 31, 2002.
20
Retail sales of used vehicles increased by
$145.8 million, or 48.6%, from $299.9 million to
$445.7 million. The increase is due primarily to:
(1) an $11.3 million, or 4.2%, increase at dealerships
owned prior to January 1, 2002 and (2) acquisitions
made subsequent to January 1, 2002. The increase at
dealerships owned prior to January 1, 2002 is due primarily
to a 6.1% increase in used retail unit sales, offset slightly by
a 1.8% decrease in comparative average selling prices per
vehicle. Aggregate retail unit sales of used vehicles increased
by 26.5%, due principally to: (1) the net increase at
dealerships owned prior to January 1, 2002, and
(2) acquisitions made subsequent to January 1, 2002.
We retailed 21,877 used vehicles (36.0% of total retail vehicle
sales) during the three months ended March 31, 2003,
compared with 17,298 used vehicles (33.3% of total retail
vehicle sales) during the three months ended March 31, 2002.
Finance and insurance revenues increased by
$11.1 million, or 29.5%, from $37.7 million to
$48.8 million. The increase is due primarily to: (1) a
$3.7 million, or 11.6%, increase at dealerships owned prior
to January 1, 2002 and (2) acquisitions made
subsequent to January 1, 2002. The increase at dealerships
owned prior to January 1, 2002 is primarily due to a
finance and insurance revenue increase of $60 per retail vehicle
sold, which increased revenue by $3.0 million, and a 2.3%
increase in retail vehicles sold which increased revenue by
$0.7 million.
Service and parts revenues increased by
$52.2 million, or 32.1%, from $162.5 million to
$214.7 million. The increase is due primarily to:
(1) a $9.4 million, or 6.2%, increase at dealerships
owned prior to January 1, 2002 and (2) acquisitions
made subsequent to January 1, 2002. The Company believes
that its service and parts business is being positively impacted
by the complexity of today’s vehicles, increases in retail
unit sales at our dealerships and capacity increases in our
service and parts operations resulting from capital construction
projects.
Fleet revenues decreased $1.9 million, or
6.1%, versus the comparable prior year period. The decrease in
fleet revenues is due entirely to a decrease in fleet sales
revenues at dealerships owned prior to January 1, 2002.
21
Wholesale revenues increased $24.5 million,
or 25.2%, versus the comparable prior year period. The increase
in wholesale revenues is due primarily to acquisitions made
subsequent to January 1, 2002, partially offset by a
$5.2 million, or 5.9%, decrease at dealerships owned prior
to January 1, 2002. The Company believes that wholesale
sales levels are decreasing as a result of the relative strength
of the company’s used vehicle sales, coupled with the
relative weakness of the new car market, resulting in the
ability to dispose of older vehicles received on trade through
retail channels rather than through the auction process.
Retail gross profit, which excludes gross profit
on fleet and wholesale transactions, increased
$60.3 million, or 26.5%, from $227.4 million to
$287.7 million. The increase in gross profit is due to:
(1) an $8.1 million, or 3.9%, increase in retail gross
profit at stores owned prior to January 1, 2002, and
(2) acquisitions made subsequent to January 1, 2002.
The increase in gross profit at stores owned prior to
January 1, 2002 is due to (1) an increase in the
relative proportion of service and parts sales to total retail
sales attributable largely to our capacity expansion programs
and (2) an increase in gross profit margins on service and
parts revenues. Additionally, finance and insurance revenues per
unit increased by $60. These factors were offset by decreased
gross profit margins on the sale of new, fleet and wholesale
vehicles.
Retail gross profit as a percentage of revenues
on retail transactions increased from 15.7% to 15.8%. Gross
profit as a percentage of revenues for new vehicle retail, used
vehicle retail, finance and insurance and service and parts
revenues was 8.4%, 9.5%, 100.0%, and 47.8%, respectively,
compared with 8.6%, 11.2%, 100.0% and 46.0% in the comparable
prior year period.
Selling, general and administrative expenses
increased by $53.6 million, or 28.9%, from
$185.7 million to $239.3 million. Such expenses
increased as a percentage of total revenue from 11.8% to 12.1%,
and increased as a percentage of gross profit from 81.4% to
83.3%. The aggregate increase in selling, general and
administrative expenses is due principally to: (1) a
$15.6 million, or 9.4%, increase at dealerships owned prior
to January 1, 2002, and (2) acquisitions made
subsequent to January 1, 2002, offset in part by a decrease
of approximately $7.0 million related to reduced legal
expenses, employee costs, and insurance expense as a result of
favorable experience. The increase in selling, general and
administrative expenses at stores owned prior to January 1,
2002 is due in large part to increased selling expenses,
including increases in variable compensation as a result of the
3.9% increase in retail gross profit over the prior year coupled
with increased occupancy, depreciation and utility costs of
approximately $6.4 million associated with the
Company’s facility improvement and expansion program.
Floor plan interest expense increased by
$0.8 million, or 9.6%, from $8.3 million to
$9.1 million. The increase in floor plan interest expense
is due to (1) a $0.6 million, or 7.6%, decrease at
stores owned prior to January 1, 2002 and
(2) acquisitions made subsequent to January 1, 2002.
The decrease at stores owned prior
22
Other interest expense increased by
$2.5 million, or 31.6%, from $7.9 million to
$10.4 million. The increase is due primarily to
(1) increased acquisition related indebtedness, including
approximately $140.0 million borrowed in connection with
the acquisition of the Sytner Group plc in March 2002 and
(2) a full quarter of interest expense related to our
$300 million senior subordinated notes offered in March
2002, offset slightly by (1) a decrease in our weighted
average borrowing rate during 2003 and (2) the pay down of
certain debt with proceeds of equity transactions in the first
quarter of 2002.
Income taxes increased by $0.8 million from
$10.4 million to $11.2 million. The increase is due to
an increase in pre-tax income compared with 2002 offset by a
reduction in our effective rate due to an increase in the
relative proportion of taxable income from our U.K. operations,
which are taxed at a lower rate.
Our cash requirements are primarily for working
capital, the acquisition of new dealerships, the improvement and
expansion of existing facilities and the construction of new
facilities. Historically, these cash requirements have been met
through borrowings under our credit agreements, the issuance of
debt securities, including floor plan notes payable,
sale-leaseback transactions, the issuance of equity securities
and cash flow from operations. At March 31, 2003, we had
working capital of $164.1 million.
We finance the majority of our new and a portion
of our used vehicle inventory under revolving floor plan
financing arrangements between our subsidiaries and various
lenders. In the U.S., we make monthly interest payments on the
amount financed, but are generally not required to make loan
principal repayments prior to the sale of the new and used
vehicles we have financed. In the U.K., we pay interest only for
60 days, after which we repay the floor plan indebtedness
with cash flow from operations or borrowings under available
credit facilities. The floor plan agreements grant a security
interest in substantially all of the assets of our automotive
dealership subsidiaries. Interest rates on the floor plan
arrangements are variable and increase or decrease based on
movements in the prime rate or LIBOR. Outstanding borrowings
under floor plan arrangements amounted to $1.0 billion as
of March 31, 2003, of which $175.4 million relates to
inventory held by our U.K. subsidiaries.
The Company is party to an amended and restated
credit agreement with DaimlerChrysler Services North America LLC
and Toyota Motor Credit Corporation, dated as of
December 22, 2002 (the “U.S. Credit Agreement”),
which provides for up to $700.0 million in revolving loans
to be used for acquisitions, working capital, the repurchase of
common stock and general corporate purposes, as well as a
$50.0 million standby letter of credit facility. Revolving
loans mature on August 3, 2005. Loans under the U.S. Credit
Agreement bear interest between U.S. LIBOR plus 2.00% and U.S.
LIBOR plus 3.00%. The U.S. Credit Agreement is fully and
unconditionally guaranteed on a joint and several basis by the
Company’s domestic automotive dealership subsidiaries and
contains a number of significant covenants that, among other
things, restrict the ability of the Company to dispose of
assets, incur additional indebtedness, repay other indebtedness,
create liens on assets, make investments or acquisitions and
engage in mergers or consolidations. We are also required to
maintain specified ratios and tests as defined in the U.S.
Credit Agreement. The U.S. Credit Agreement also contains
typical events of default including change of control and
non-payment of obligations. Availability under the revolving
portion of the U.S. Credit Agreement is subject to a
collateral-based
23
On February 28, 2003, the Company entered
into a new credit facility with the Royal Bank of Scotland (the
“U.K. Credit Facility”), which provides for up to
£45.0 million in revolving loans to be used for
acquisitions, working capital, and general corporate purposes
and a seasonally adjusted overdraft line of credit up to a
maximum of £10.0 million. Loans under the U.K. Credit
Facility bear interest between U.K. LIBOR plus 0.85% and U.K.
LIBOR plus 1.25%. The Company’s borrowing capacity under
the U.K. Credit Facility will be reduced by
£2.0 million every six months, with the first
reduction occurring on January 1, 2004. The remaining
£35.0 million of revolving loans mature on
January 31, 2006. The U.K. Credit Facility is fully and
unconditionally guaranteed on a joint and several basis by the
Company’s automotive dealership subsidiaries in the U.K.
(the “U.K. Subsidiaries”), and contains a number of
significant covenants that, among other things, restrict the
ability of the U.K. Subsidiaries to pay dividends, dispose of
assets, incur additional indebtedness, repay other indebtedness,
create liens on assets, make investments or acquisitions and
engage in mergers or consolidations. In addition, the U.K.
Subsidiaries are required to comply with specified ratios and
tests as defined in the U.K. Credit facility. The U.K.
Credit Facility also contains typical events of default,
including change of control and non-payment of obligations.
Substantially all of the U.K. Subsidiaries’ assets are
subject to security interests granted to lenders under the U.K.
Credit Facility and the U.K. Credit Facility has cross-default
provisions that trigger a default in the event of an uncured
default under other material indebtedness of the U.K.
Subsidiaries. As of March 31, 2003, outstanding borrowings
under the U.K. Credit Facility amounted to approximately
£23.8 million. As of March 31, 2003, the Company
was in compliance with all financial covenants under the U.K.
Credit Facility.
In March 2002, the Company completed the sale of
$300.0 million aggregate principal amount of 9.625% Senior
Subordinated Notes due 2012. The sale of the notes was exempt
from registration pursuant to Rule 144A and
Regulation S under the Securities Act of 1933, as amended.
Net proceeds from the offering were approximately
$291.9 million, and were used to repay indebtedness
outstanding under the U.S. Credit Agreement. In February 2003,
the Company exchanged the notes in a registered offering for
$300.0 million of new notes (the “Notes”) with
identical terms. The Notes are unsecured senior subordinated
notes and rank behind all existing and future senior debt,
including debt under our credit agreements and floor plan
indebtedness. The Notes are guaranteed by substantially all of
our domestic subsidiaries on a senior subordinated basis. We can
redeem all or some of the Notes at our option beginning in 2007
at specified redemption prices. In addition, until 2005 we are
allowed to redeem up to 35% of the Notes with the net cash
proceeds from specified public equity offerings. Upon a change
of control, each holder of Notes will be able to require us to
repurchase all or some of the Notes at a redemption price of
101% of the principal amount of the Notes. The Notes also
contain customary negative covenants and events of default.
During January 2000, the Company entered into a
swap agreement of five years duration pursuant to which a
notional $200.0 million of our floating rate debt was
exchanged for fixed rate debt. The fixed rate interest to be
paid by us was based on U.S. LIBOR and amounted to 7.15%. In
October 2002, the terms of this swap were amended pursuant to
which the interest rate to be paid by us was reduced to 5.86%
and the term of the agreement was extended for an additional
three years. During March 2003, the Company entered into a
24
As of March 31, 2003, we had approximately
$11.5 million of cash available to fund operations and
future acquisitions. In addition, as of March 31, 2003,
$344.0 million was available for borrowing under our credit
agreements. Availability under the U.S. Credit Agreement is not
currently limited by the credit agreement’s borrowing base
collateral limitation (in general, the borrowing base equals
certain of our allowable tangible assets plus
$300.0 million). Borrowings used to finance the cost of
domestic acquisitions and domestic capital construction projects
will typically increase tangible assets, allowing the Company to
access borrowing capacity that may not otherwise be available
due to the base collateral limitation in the U.S. Credit
Agreement.
In March 2002, pursuant to an all cash tender
offer, we acquired Sytner Group plc, a publicly traded
automotive retailer operating in excess of 60 franchises in the
United Kingdom. Total consideration for Sytner amounted to
approximately $140.0 million. In addition, we assumed
approximately $22.4 million of Sytner’s debt. As an
alternative to receiving all or any part of the cash
consideration receivable under the offer, Sytner shareholders
could elect to receive loan notes in lieu of cash. Approximately
$40.0 million of such loan notes were issued pursuant to
this election. The loan notes bear interest at approximately
3.9% and mature in July 2003. The funds to be used to repay
these notes are being held in escrow by the Royal Bank of
Scotland for the benefit of the note holders.
During the quarter ended March 31, 2003, net
cash used in operations amounted to $1.5 million. Net cash
used in investing activities during the quarter ended
March 31, 2003 totaled $44.8 million, including
$42.0 million related to capital expenditures. Net cash
provided by financing activities during the quarter ended
March 31, 2003 totaled $49.7 million.
We have a number of capital projects planned or
underway relating to the expansion and renovation of our retail
automotive operations. Historically, we have financed such
capital expenditures with cash flow from operations and
borrowings under our credit agreements. In the past, we have
also entered into sale-leaseback transactions with Automotive
Group Realty, LLC (“AGR”), a wholly owned subsidiary
of Penske Corporation. We made lease payments to AGR totaling
$1.3 million during the period ended March 31, 2003,
which payments relate to the properties we lease from AGR. We
believe we will continue to finance certain capital expenditures
in this fashion in the future. Funding for such capital
expenditures is expected to come from cash flow from operations,
supplemented by borrowings under our credit agreements.
In connection with an acquisition of dealerships
completed in October 2000, the Company agreed to make a
contingent payment in cash to the extent 841,476 shares of
common stock issued as consideration in connection with that
acquisition are sold subsequent to the fifth anniversary of the
transaction and have a market value of less than $12.00 per
share at the time of sale. The Company will be forever released
from this guarantee in the event the average daily closing price
of the Company’s common stock for any 90 day period
subsequent to the fifth anniversary of the transaction exceeds
$12.00 per share. In the event the Company is required to make a
payment relating to this guarantee, such payment would result in
the revaluation of the common stock issued in the transaction,
resulting in a reduction of additional paid-in-capital. The
Company has further granted the seller a put option pursuant to
which the Company may be required to repurchase no more than
108,333 shares for $12.00 per share on each of the first five
anniversary dates of the transaction. To
25
In connection with an acquisition of dealerships
completed in October 1997, the Company agreed that if the
acquired companies achieved aggregate specified base earnings
levels in any of the five years beginning with the year ending
December 31, 1999, we would pay to the sellers for each
year in which the acquired companies exceeded base earnings an
amount equal to $0.7 million plus defined percentages of
the amounts earned in excess of such base earnings for any such
year. The total amount of payments to be made pursuant to this
agreement is limited to $7.0 million. To date we have paid
$2.0 million relating to this agreement. The amount of
additional payments, if any, will be determined based upon the
financial performance of the acquired business in 2003. Payments
relating to this earnings contingency are recorded as additional
cost of the acquired dealerships, resulting in an increase in
goodwill.
We are a holding company whose assets consist
primarily of the direct or indirect ownership of the capital
stock of our operating subsidiaries. Consequently, our ability
to pay dividends is dependent upon the earnings of our
subsidiaries and their ability to distribute earnings and other
advances and payments to us. The minimum working capital
requirement under our franchise agreements could in some cases
restrict the ability of our subsidiaries to make distributions,
although to date we have not faced any such restrictions.
Our principal source of growth has come from
acquisitions of automotive dealerships. We believe that our
existing cash flow provided by operating activities and our
capital resources, including the liquidity provided by our
credit agreement and floor plan financing, will be sufficient to
fund our current operations and commitments for the next twelve
months. To the extent we pursue additional significant
acquisitions, we may need to raise additional capital either
through the public or private issuance of equity or debt
securities or through additional bank borrowings. We may not
have sufficient availability under our credit agreement to
finance significant additional acquisitions. In certain
circumstances, a public equity offering could require the prior
approval of several automobile manufacturers. There is no
assurance that we would be able to access the capital markets or
increase our borrowing capabilities on terms acceptable to us,
if at all.
Joint Ventures
From time to time we enter into joint venture
arrangements in the ordinary course of business, pursuant to
which we acquire dealerships together with a minority investor.
In April 2003, an entity controlled by one of our
directors, Lucio A. Noto (the “Investor”), paid
approximately $1.8 million (including approximately
$800,000 credited from prior earnings retroactive to
March 1, 2001) for a 6.5% interest in one of the
Company’s subsidiaries, UAG Connecticut I, LLC, which
entitles the Investor to 20% of the operating profits of UAG
Connecticut I. In addition, the Investor has an option to
purchase up to a 20% interest in UAG Connecticut I for
specified amounts. The Investor has also guaranteed 20% of UAG
Connecticut I’s lease obligation to Automotive Group
Realty, LLC (“AGR”), our landlord of the facility at
which the dealership operates and a wholly owned subsidiary of
Penske Corporation. In exchange for that guarantee, the Investor
will be entitled to 20% of any appreciation of the property,
which appreciation would otherwise accrue to AGR at the time of
sale, and the Investor is responsible to AGR for any
corresponding depreciation of the property at the time of sale,
which obligation shall be secured solely by the Investor’s
ownership interest in UAG Connecticut I, LLC.
In April 2003, we formed a joint venture to own
and operate three BMW dealerships in and around Munich,
Germany. Our joint venture partner in Germany is Peter
Reisacher. We contributed approximately $5.0 million for a
50% interest and Mr. Reisacher contributed approximately
$5.0 million for a 50% interest in the joint venture.
26
In March 2002, we formed a joint venture to own
and operate Lexus and Toyota dealerships in and around
Frankfurt, Germany. Our joint venture partner in Germany is
Mr. Werner Nix. We contributed $4.7 million for a
50.0% interest and Mr. Nix contributed $4.7 million
for a 50.0% interest, respectively, in the joint venture.
In March 2002, we formed a joint venture to own
and operate a Toyota dealership in Monterrey Mexico. Our joint
venture partners in Mexico are Mr. Mario Padilla and
Mr. Bernard Wolfe. We contributed $2.4 million for a
48.7% interest, Mr. Padilla contributed $2.5 million
for a 49.8% interest, and Mr. Wolfe contributed approximately
eighty thousand dollars for a 1.5% interest,
respectively, in the joint venture.
In December 2001, we formed a joint venture with
Roger S. Penske, Jr. to own and operate certain
Mercedes-Benz, Audi and Porsche dealerships. We contributed
$65.1 million for a 90% interest in HBL, LLC and
Mr. Penske, Jr. contributed $7.2 million for the
remaining 10% interest.
In November 1999, we formed a joint venture to
own and operate certain dealerships in Brazil. Our joint venture
partners in Brazil are Roger S. Penske, Jr. and Andre
Ribeiro Holdings, Ltda. We contributed approximately
$3.6 million for a 90.6% interest in United Auto
do Brasil, Ltda. and Mr. Penske, Jr. and
Mr. Ribeiro each contributed approximately
$0.2 million for a 4.7% interest.
In January 1998, we entered into an agreement
with a third party to jointly acquire and manage dealerships in
Illinois, Ohio, North Carolina and South Carolina. With respect
to any joint venture established pursuant to this agreement, we
are required to repurchase our partner’s interest at the
end of the five-year period following the date of the
acquisition. Pursuant to this arrangement, we entered into a
joint venture with respect to the Citrus Chrysler dealership
acquired in 1998. We are required to repurchase our
partner’s interest in this joint venture in November 2003.
We expect this payment to be approximately $3.0 million.
Cyclicality
Unit sales of motor vehicles, particularly new
vehicles, historically have been cyclical, fluctuating with
general economic cycles. During economic downturns, the
automotive retailing industry tends to experience similar
periods of decline and recession as the general economy. We
believe that the industry is influenced by general economic
conditions and particularly by consumer confidence, the level of
personal discretionary spending, fuel prices, interest rates and
credit availability.
Seasonality
Our business is modestly seasonal overall. Our
operations generally experience higher volumes of vehicle sales
in the second and third quarters of each year due in part to
consumer buying trends and the introduction of new vehicle
models. Also, demand for cars and light trucks is generally
lower during the winter months than in other seasons,
particularly in regions of the United States where dealerships
may be subject to harsh winters. Accordingly, we expect our
revenues and profitability to be generally lower in our first
and fourth quarters as compared to our second and third
quarters. The greatest seasonalities exist with the dealerships
in the northeastern United States, for which the second and
third quarters are the strongest with respect to vehicle-related
sales. The service and parts business at all dealerships
experiences relatively modest seasonal fluctuations.
New Accounting Pronouncements
Statement of Financial Accounting Standards
No. 146, “Accounting for Costs Associated with Exit or
Disposal Activities” (“SFAS No. 146”) was
issued in June 2002 and is effective for exit or disposal
activities initiated after December 31, 2002. SFAS
No. 146 addresses the timing of the recognition of exit
costs associated with restructuring activities. Under the new
standard, certain exit costs will be recognized over the period
in which the restructuring activities occur, rather than at the
point in time the Company commits to the restructuring plan. The
adoption of SFAS No. 146 did not have a material impact on
the Company’s results of operations, financial position or
cash flows.
27
Financial Accounting Standards Board
(“FASB”) Interpretation No. 45,
“Guarantor’s Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of
Others” (“FIN 45”) was issued in November
2002. FIN 45 requires the recognition of a liability for
certain guarantee obligations issued or modified after
December 31, 2002. FIN 45 also clarifies disclosure
requirements to be made by a guarantor for certain guarantees.
The adoption of FIN 45 did not have a material impact on
the Company’s results of operations, financial position or
cash flows.
FASB Interpretation No. 46,
“Consolidation of Variable Interest Entities, an
Interpretation of APB No. 50”
(“FIN 46”) was issued in January 2003.
FIN 46 requires certain variable interest entities to be
consolidated by the primary beneficiary of the entity if the
equity investors in the entity do not have the characteristics
of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties.
FIN 46 is effective for all new variable interest entities
created or acquired after January 31, 2003. For variable
interest entities created or acquired prior to February 1,
2003, the provisions of FIN 46 must be applied for the
first interim or annual period beginning after June 15,
2003. We do not currently participate in any variable interest
entities.
Effects of Inflation
We believe that the relatively moderate rates of
inflation over the last few years have not had a significant
impact on revenues or profitability. We do not expect inflation
to have any near-term material effects on the sale of our
products and services. However, there can be no assurance that
there will be no such effect in the future.
We finance substantially all of our inventory
through various revolving floor plan arrangements with interest
rates that vary based on the prime rate or LIBOR. Such rates
have historically increased during periods of increasing
inflation. We do not believe that we would be placed at a
competitive disadvantage should interest rates increase due to
increased inflation since most other automotive dealerships have
similar floating rate borrowing arrangements.
Forward Looking Statements
This quarterly report on Form 10-Q 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. Forward-looking statements generally can be identified
by the use of terms such as “may,” “will,”
“should,” “expect,” “anticipate,”
“believe,” “intend,” “plan,”
“estimate,” “predict,”
“potential,” “forecast,”
“continue” or variations of such terms, or the use of
these terms in the negative. Forward-looking statements include
statements regarding our current plans, forecasts, estimates,
beliefs or expectations, including, without limitation,
statements with respect to:
28
Forward-looking statements involve known and
unknown risks and uncertainties and are not assurances of future
performance. Actual results may differ materially from
anticipated results due to a variety of factors, including the
factors identified in the reports and our other periodic filings
with the SEC. Important factors that could cause actual results
to differ materially from our expectations include the following:
29
We urge you to carefully consider these risk
factors in evaluating all forward-looking statements regarding
our business. Readers of this report are cautioned not to place
undue reliance on the forward-looking statements contained in
this report. All forward-looking statements attributable to us
are qualified in their entirety by this cautionary statement.
Except to the extent required by the federal securities laws and
Securities and Exchange Commission rules and regulations, we
have no intention or obligation to update publicly any
forward-looking statements whether as a result of new
information, future events or otherwise.
Interest Rates.
We
are exposed to market risk from changes in the interest rates on
a significant portion of our outstanding indebtedness.
Outstanding balances under our U.S. and U.K. credit agreements
bear interest at a variable rate based on a margin over LIBOR,
as defined. Based on the amount outstanding as of March 31,
2003, a 100 basis point change in interest rates would
result in an approximate $3.9 million change to our annual
interest expense. Similarly, amounts outstanding under floor
plan financing arrangements bear interest at a variable rate
based on a margin over defined LIBOR or Prime rates. Based on an
average of the aggregate amounts outstanding under our floor
plan financing arrangements, a 100 basis point change in
interest rates would result in an approximate $6.7 million
change to our annual floor plan interest expense.
The Company continually evaluates its exposure to
interest rate fluctuations and follows established policies and
procedures to implement strategies designed to manage the amount
of variable rate indebtedness outstanding at any point in time
in an effort to reduce the effect of interest rate fluctuations
on the Company’s earnings and cash flows. The Company is
currently party to swap agreements pursuant to which a notional
$200.0 million of our floating rate debt was exchanged for
5.86% fixed rate debt through January 2008 and a notional
$350.0 million of our floating rate debt was exchanged for
3.155% fixed rate debt through March 2008.
Interest rate fluctuations effect the fair market
value of our fixed rate debt, including the Notes and certain
seller financed promissory notes, but do not impact our earnings
or cash flows.
Foreign Currency Exchange Rates.
The Company currently has operations
in the U.K. and Brazil and has investments in Germany and
Mexico. In each of these markets, the local currency is the
functional currency. Due to the Company’s intent to remain
permanently invested in these foreign markets, we do not hedge
against foreign currency fluctuations. Other than the U.K., the
Company’s foreign operations are not significant. In the
event we change our intent with respect to the investment in any
of our international operations, the Company would expect to
implement strategies designed to manage those risks in an effort
to reduce the effect of foreign currency fluctuations on the
Company’s earnings and cash flows.
In common with other automotive retailers, we
purchase certain of our new vehicle and parts inventories from
foreign manufacturers. Although we purchase the majority of our
inventories in the local functional currency, including the
U.S. Dollar, our business is subject to certain risks,
including, but not limited to, differing economic conditions,
changes in political climate, differing tax structures, other
regulations and restrictions and foreign exchange rate
volatility which may influence such manufacturers’ ability
to provide their products at competitive prices in the local
jurisdictions. Our future results could be materially and
adversely impacted by changes in these or other factors.
30
We maintain a set of disclosure controls and
procedures designed to ensure that material information related
to the Company, including our consolidated subsidiaries, is made
known to our principal executive officer and principal financial
officer on a regular basis, in particular during the period in
which the quarterly and annual reports are being prepared. As
required, we continue to evaluate the effectiveness of these
disclosure controls and procedures. Based on the most recent
evaluation, the principal executive officer and principal
financial officer concluded that our disclosure controls and
procedures are effective. There have been no significant changes
in our internal controls or in other factors that could
significantly affect internal controls subsequent to our most
recent evaluation.
31
March 31,
December 31,
2003
2002
(Unaudited)
(In thousands except per
share amounts)
ASSETS
$
11,468
$
8,069
324,791
319,625
1,087,397
973,185
40,260
27,869
1,463,916
1,328,748
346,837
313,496
951,302
945,303
36,025
36,025
77,873
66,742
$
2,875,953
$
2,690,314
LIABILITIES AND STOCKHOLDERS’
EQUITY
$
1,000,466
$
907,903
151,619
131,303
142,627
145,290
5,115
14,979
1,299,827
1,199,475
715,110
651,256
148,689
135,141
2,163,626
1,985,872
—
—
4
4
—
—
—
—
564,609
564,609
147,527
133,794
187
6,035
712,327
704,442
$
2,875,953
$
2,690,314
Table of Contents
Three Months Ended
March 31,
2003
2002
(In thousands, except
per share amounts)
(Unaudited)
$
1,116,662
$
946,309
445,666
299,917
48,830
37,714
214,681
162,538
29,404
31,324
121,568
97,130
1,976,811
1,574,932
1,689,659
1,346,792
287,152
228,140
239,310
185,683
47,842
42,457
(9,088
)
(8,299
)
(10,350
)
(7,868
)
28,404
26,290
(393
)
(416
)
(11,220
)
(10,416
)
16,791
15,458
—
253
16,791
15,711
(3,058
)
—
$
13,733
$
15,711
—
(1,490
)
$
13,733
$
14,221
$
0.41
$
0.51
—
0.01
(0.07
)
—
$
0.34
$
0.52
40,598
27,542
$
0.41
$
0.39
—
0.01
(0.07
)
—
$
0.34
$
0.40
40,920
39,196
Table of Contents
Three Months Ended
March 31,
2003
2002
(In thousands)
(Unaudited)
$
13,733
$
15,711
7,361
4,394
3,058
—
618
416
(6,522
)
1,365
(121,673
)
(41,395
)
96,341
25,114
15,773
(5,014
)
(10,146
)
2,660
(1,457
)
3,251
(42,039
)
(36,606
)
—
50,000
(2,791
)
(149,485
)
(44,830
)
(136,091
)
49,686
838
—
126,812
49,686
127,650
—
7,868
3,399
2,678
8,069
2,952
$
11,468
$
5,630
Table of Contents
Voting and Non-voting
Common Stock
Accumulated
Additional
Other
Total
Issued
Paid-in
Retained
Comprehensive
Stockholders’
Comprehensive
Shares
Amount
Capital
Earnings
Income
Equity
Income
(Dollars in thousands)
(Unaudited)
40,597,810
$
4
$
564,609
$
133,794
$
6,035
$
704,442
$
—
—
—
—
—
(1,725
)
(1,725
)
(1,725
)
—
—
—
—
(4,123
)
(4,123
)
(4,123
)
—
—
—
13,733
—
13,733
13,733
40,597,810
$
4
$
564,609
$
147,527
$
187
$
712,327
$
7,885
Table of Contents
Basis of Presentation
Discontinued Operations
Three months ended
March 31, 2002
$
58,176
411
Accounting Change
New Accounting Pronouncements
Table of Contents
Estimates
Intangible Assets
Three Months Ended
March 31, 2003
$
981,328
9,454
(3,455
)
$
987,327
$
951,302
$
36,025
Table of Contents
March 31,
December 31,
2003
2002
$
840,406
$
751,990
198,510
172,850
48,481
48,345
$
1,087,397
$
973,185
Three Months
Ended
March 31, 2002
$
1,813,443
29,177
17,472
0.45
Table of Contents
Three months ended
March 31, 2003
2003
2002
$
13,733
$
15,711
—
(1,490
)
$
13,733
$
14,221
446
462
$
13,287
$
13,759
$
0.34
$
0.52
$
0.33
$
0.50
$
0.34
$
0.40
$
0.33
$
0.39
Table of Contents
Three Months
Ended
March 31,
2003
2002
40,598
27,542
309
1,347
—
9,443
—
864
13
—
40,920
39,196
Three Months Ended
March 31,
2003
2002
$
27,293
$
19,067
1,129
220
—
22,448
March 31,
December 31,
2003
2002
$
376,300
$
343,300
300,000
300,000
37,385
16,019
3,061
3,088
3,479
3,828
720,225
666,235
5,115
14,979
$
715,110
$
651,256
Table of Contents
U.S. Credit Agreement
U.K. Credit Agreement
Senior Subordinated Notes
Table of Contents
Table of Contents
March 31, 2003
Non-Wholly
United
Owned
Non-
Total
Auto
Guarantor
Guarantor
Guarantor
Company
Eliminations
Group, Inc.
Subsidiaries
Subsidiaries
Subsidiaries
(Dollars in thousands)
$
11,468
$
—
$
—
$
3,363
$
—
$
8,105
324,791
—
—
232,358
8,921
83,512
1,087,397
—
—
818,402
23,485
245,510
40,260
—
1,049
20,281
804
18,126
1,463,916
—
1,049
1,074,404
33,210
355,253
346,837
—
4,380
258,331
7,453
76,673
987,327
—
—
735,996
68,281
183,050
77,873
(532,044
)
532,044
71,912
2
5,959
$
2,875,953
$
(532,044
)
$
537,473
$
2,140,643
$
108,946
$
620,935
$
1,000,466
$
—
$
—
$
760,149
$
20,610
$
219,707
151,619
—
2,763
67,854
3,206
77,796
142,627
—
2,371
60,937
15,164
64,155
5,115
—
—
1,965
—
3,150
1,299,827
—
5,134
890,905
38,980
364,808
715,110
—
—
497,188
70,332
147,590
148,689
—
—
134,489
4,228
9,972
2,163,626
—
5,134
1,522,582
113,540
522,370
712,327
(532,044
)
532,339
618,061
(4,594
)
98,565
$
2,875,953
$
(532,044
)
$
537,473
$
2,140,643
$
108,946
$
620,935
Table of Contents
December 31, 2002
Non- Wholly
United
Owned
Non-
Total
Auto
Guarantor
Guarantor
Guarantor
Company
Eliminations
Group, Inc.
Subsidiaries
Subsidiaries
Subsidiaries
(Dollars in thousands)
$
8,069
$
—
$
—
$
7,776
$
—
$
293
319,625
—
—
252,879
9,489
57,257
973,185
—
—
740,073
23,044
210,068
27,869
—
545
17,967
451
8,906
1,328,748
—
545
1,018,695
32,984
276,524
313,496
—
4,186
230,000
6,416
72,894
981,328
—
—
734,665
67,529
179,134
66,742
(448,085
)
479,036
27,479
2
8,310
$
2,690,314
$
(448,085
)
$
483,767
$
2,010,839
$
106,931
$
536,862
$
907,903
$
—
$
—
$
700,223
$
21,267
$
186,413
131,303
—
4,581
71,354
2,854
52,514
145,290
—
2,482
67,823
14,616
60,369
14,979
—
—
8,596
—
6,383
1,199,475
—
7,063
847,996
38,737
305,679
651,256
—
—
449,522
69,580
132,154
135,141
—
—
130,545
3,624
972
1,985,872
—
7,063
1,428,063
111,941
438,805
704,442
(448,085
)
476,704
582,776
(5,010
)
98,057
$
2,690,314
$
(448,085
)
$
483,767
$
2,010,839
$
106,931
$
536,862
Table of Contents
Three Months Ended March 31, 2003
Non- Wholly
United
Owned
Non-
Total
Auto
Guarantor
Guarantor
Guarantor
Company
Eliminations
Group, Inc.
Subsidiaries
Subsidiaries
Subsidiaries
(In thousands)
$
1,976,811
$
—
$
—
$
1,464,115
$
44,314
$
468,382
1,689,659
—
—
1,248,066
37,145
404,448
287,152
—
—
216,049
7,169
63,934
239,310
—
3,093
179,258
5,578
51,381
47,842
—
(3,093
)
36,791
1,591
12,553
(9,088
)
—
—
(7,374
)
(127
)
(1,587
)
(10,350
)
—
—
(7,500
)
(586
)
(2,264
)
—
(39,848
)
39,848
—
—
—
28,404
(39,848
)
36,755
21,917
878
8,702
(393
)
—
—
(158
)
(146
)
(89
)
(11,220
)
15,740
(14,518
)
(9,103
)
(303
)
(3,036
)
16,791
(24,108
)
22,237
12,656
429
5,577
(3,058
)
—
—
(3,016
)
—
(42
)
$
13,733
$
(24,108
)
$
22,237
$
9,640
$
429
$
5,535
Table of Contents
Three Months Ended March 31, 2002
Non- Wholly
United
Owned
Non-
Total
Auto
Guarantor
Guarantor
Guarantor
Company
Eliminations
Group, Inc.
Subsidiaries
Subsidiaries
Subsidiaries
(In thousands)
$
1,574,932
$
—
$
—
$
1,354,778
$
50,696
$
169,458
1,346,792
—
—
1,156,597
43,049
147,146
228,140
—
—
198,181
7,647
22,312
185,683
—
1,719
161,901
5,422
16,641
42,457
—
(1,719
)
36,280
2,225
5,671
(8,299
)
—
—
(7,721
)
(126
)
(452
)
(7,868
)
—
—
(4,528
)
(725
)
(2,615
)
—
(44,888
)
44,888
—
—
—
26,290
(44,888
)
43,169
24,031
1,374
2,604
(416
)
—
—
(210
)
(206
)
(10,416
)
17,776
(17,063
)
(10,048
)
(1,081
)
15,458
(27,112
)
26,106
13,983
1,164
1,317
253
—
—
129
—
124
$
15,711
$
(27,112
)
$
26,106
$
14,112
$
1,164
$
1,441
Table of Contents
Three Months Ended March 31, 2003
Non-Wholly
Owned
Total
United Auto
Guarantor
Guarantor
Non-Guarantor
Company
Eliminations
Group, Inc.
Subsidiaries
Subsidiaries
Subsidiaries
(In thousands)
$
(1,457
)
$
$
270
$
(11,817
)
$
1,133
$
8,957
(42,039
)
—
(270
)
(35,721
)
(1,119
)
(4,929
)
(2,791
)
—
—
(2,330
)
—
(461
)
(44,830
)
—
(270
)
(38,051
)
(1,119
)
(5,390
)
49,686
—
—
40,939
—
8,747
—
—
4,516
(14
)
(4,502
)
49,686
—
—
45,455
(14
)
4,245
3,399
—
—
(4,413
)
—
7,812
8,069
—
—
7,776
—
293
$
11,468
$
—
$
—
$
3,363
$
—
$
8,105
Table of Contents
Three Months Ended March 31, 2002
Non-Wholly
Owned
Total
United Auto
Guarantor
Guarantor
Non-Guarantor
Company
Eliminations
Group, Inc.
Subsidiaries
Subsidiaries
Subsidiaries
(In thousands)
$
3,251
$
$
(159
)
$
2,575
$
1,984
$
(1,149
)
(36,606
)
—
(257
)
(32,871
)
(1,360
)
(2,118
)
50,000
—
—
50,000
—
—
(149,485
)
—
—
(149,485
)
—
—
(136,091
)
—
(257
)
(132,356
)
(1,360
)
(2,118
)
838
—
—
838
—
—
126,812
—
—
126,812
—
—
—
—
—
614
(624
)
10
127,650
—
—
128,264
(624
)
10
7,868
—
—
272
—
7,596
2,678
—
(416
)
(1,245
)
—
4,339
2,952
—
416
846
—
1,690
$
5,630
$
—
$
—
$
(399
)
$
—
$
6,029
Table of Contents
Item 2.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Accounting Change
Table of Contents
Three Months Ended March 31, 2003
Compared to Three Months Ended March 31, 2002 ($’s in
millions)
Retail Revenues
Units
Three Months
Three Months
Ended
Ended
March 31,
March 31,
Increase
%
Increase
%
2003
2002
(Decrease)
Change
2003
2002
(Decrease)
Change
$
1,382.1
$
1,336.9
$
45.2
3.4%
49,987
48,846
1,141
2.3%
441.1
97.9
343.2
10,770
2,755
8,015
2.6
11.6
(9.0
)
78
386
(308
)
$
1,825.8
$
1,446.4
$
379.4
26.2%
60,835
51,987
8,848
17.0%
New Vehicle Revenues
Units
Three Months
Three Months
Ended
Ended
March 31,
March 31,
Increase
%
Increase
%
2003
2002
(Decrease)
Change
2003
2002
(Decrease)
Change
$
901.3
$
880.6
$
20.7
2.4%
32,633
32,495
138
0.4%
214.5
58.8
155.7
6,292
1,961
4,331
0.9
6.9
(6.0
)
33
233
(200
)
$
1,116.7
$
946.3
$
170.4
18.0%
38,958
34,689
4,269
12.3%
Table of Contents
Used Vehicle Revenues
Units
Three Months
Three Months
Ended
Ended
March 31,
March 31,
Increase
%
Increase
%
2003
2002
(Decrease)
Change
2003
2002
(Decrease)
Change
$
282.1
$
270.8
$
11.3
4.2%
17,354
16,351
1,003
6.1%
162.9
26.7
136.2
4,478
794
3,684
0.7
2.4
(1.7
)
45
153
(108
)
$
445.7
$
299.9
$
145.8
48.6%
21,877
17,298
4,579
26.5%
Finance & Insurance
Revenues
Service & Parts Revenues
Fleet Revenues
Units
Three Months
Three Months
Ended
Ended
March 31,
March 31,
Increase
%
Increase
%
2003
2002
(Decrease)
Change
2003
2002
(Decrease)
Change
$
29.4
$
31.3
$
(1.9
)
-6.1%
1,571
1,667
(96
)
-5.8%
—
—
—
—
—
—
—
—
—
—
—
—
$
29.4
$
31.3
$
(1.9
)
-6.1%
1,571
1,667
(96
)
-5.8%
Table of Contents
Wholesale Revenues
Units
Three Months
Three Months
Ended
Ended
March 31,
March 31,
Increase
%
Increase
%
2003
2002
(Decrease)
Change
2003
2002
(Decrease)
Change
$
82.7
$
87.9
$
(5.2
)
-5.9%
12,944
13,958
(1,014
)
-7.3%
38.4
7.7
30.7
3,319
774
2,545
0.5
1.5
(1.0
)
55
163
(108
)
$
121.6
$
97.1
$
24.5
25.2%
16,318
14,895
1,423
9.6%
Retail Gross Profit
Selling, General and Administrative
Expenses
Floor Plan Interest Expense
Table of Contents
Other Interest Expense
Income Taxes
Liquidity and Capital
Resources
Floor Plan Notes Payable
U.S. Credit Agreement
Table of Contents
U.K. Credit Agreement
Senior Subordinated Notes
Interest Rate Swaps
Table of Contents
Cash and Borrowing Capacity
Loan Notes
Cash Flow
Commitments and Contingencies
Table of Contents
Dividends
Future Cash Flow
Table of Contents
Table of Contents
•
our future financial performance;
•
future acquisitions;
•
future capital expenditures;
•
our ability to obtain cost savings and synergies;
•
our ability to respond to economic cycles;
•
trends in the automotive retail industry and in
the general economy;
•
trends in the European automotive market;
•
our ability to access the remaining availability
under our credit agreements;
•
our liquidity;
•
trends affecting our future financial condition
or results of operations; and
•
our business strategy.
Table of Contents
•
automobile manufacturers exercise significant
control over our operations and we depend on them in order to
operate our business;
•
because we depend on the success and popularity
of the brands we sell, adverse conditions affecting one or more
automobile manufacturers may negatively impact our revenues and
profitability;
•
if we are unable to complete additional
acquisitions and successfully integrate acquisitions, we will be
unable to achieve desired results from our acquisition strategy;
•
we may not be able to satisfy our capital
requirements for making acquisitions, dealership renovation
projects or financing the purchase of our inventory;
•
our failure to meet a manufacturer’s
consumer satisfaction requirements may adversely affect our
ability to acquire new dealerships, our ability to obtain
incentive payments from manufacturers and our profitability;
•
automobile manufacturers impose limits on our
ability to issue additional equity and on the ownership of our
common stock by third parties, which may hamper our ability to
meet our financing needs;
•
our business and the automotive retail industry
in general are susceptible to adverse economic conditions,
including changes in consumer confidence, fuel prices and credit
availability;
•
substantial competition in automotive sales and
services may adversely affect our profitability;
•
automotive retailing is a mature industry with
limited potential in new vehicle sales;
•
if we lose key personnel or are unable to attract
additional qualified personnel, our business could be adversely
affected;
•
our quarterly operating results may fluctuate due
to seasonality in the automotive retail business and other
factors;
•
our business may be adversely affected by import
product restrictions and foreign trade risks that may impair our
ability to sell foreign vehicles profitably;
•
our automobile dealerships are subject to
substantial regulation which may adversely affect our
profitability;
•
if state dealer laws in the United States are
repealed or weakened, our automotive dealerships will be more
susceptible to termination, non-renewal or renegotiation of
their franchise agreements;
•
our automotive dealerships are subject to
foreign, federal, state and local environmental regulations that
may result in claims and liabilities;
•
our principal stockholders have substantial
influence over us and may make decisions with which stockholders
may disagree;
•
some of our directors and officers may have
conflicts of interest with respect to certain related party
transactions and other business interests;
•
our substantial amount of indebtedness may limit
our ability to obtain financing for acquisitions and will
require that a significant portion of our cash flow be used for
debt service;
•
due to the nature of the automotive retailing
business, we may be involved in legal proceedings that could
have a material adverse effect on our business;
•
changes in the European Commission’s
regulations regarding automobile manufacturers may have an
adverse effect on our European operations;
Table of Contents
•
the price of our common stock is subject to
substantial fluctuation, which may be unrelated to our
performance;
•
shares eligible for future sale may cause the
market price of our common stock to drop significantly, even if
our business is doing well; and
•
we are a holding company and as a result rely on
the receipt of payments from our subsidiaries in order to meet
our cash needs and service our indebtedness.
Item 3.
Quantitative and Qualitative Disclosures
about Market Risk
Table of Contents
Item 4.
Controls and Procedures
Table of Contents
The Company and its subsidiaries are involved in litigation that has arisen in the ordinary course of business. None of these matters, either individually or in the aggregate, are expected to have a material adverse effect on the Company’s results of operations or financial condition.
(a) Exhibits
| 10.1 | Sixth Amendment of the Amended and Restated Credit Agreement dated April 16, 2003 among us, various financial institutions and Daimler Chrysler Services North America LLC, as agent for the lenders. | |||
| 10.2 | Credit Agreement dated February 28, 2003 between Sytner Group Limited and The Royal Bank of Scotland plc, as agent for National Westminster Bank plc. | |||
| 10.3 | First Amended and Restated Limited Liability Company Agreement dated April 1, 2003 between UAG Connecticut I, LLC and Noto Holdings, LLC. | |||
| 10.4 | Letter Agreement dated April 1, 2003 among UAG Connecticut I, LLC, Noto Holdings, LLC and the other parties named therein. | |||
| 10.5 | Letter Agreement dated April 1, 2003 between UAG Connecticut I, LLC and Noto Holdings, LLC. | |||
| 99.1 | Certification pursuant to 18 U.SC. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. | |||
| 99.2 | Certification pursuant to 18 U.SC. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. |
(b) Reports on Form 8-K.
The Company filed the following Current Reports on Form 8-K during the quarter ended March 31, 2003:
| 1. February 19, 2003, reporting under Item 9 the Company’s financial and other results for the three and twelve months ended December 31, 2002. | |
| 2. February 24, 2003, reporting under Item 9 that the Company’s Chairman and Chief Executive Officer would be a presenter at an investor conference. | |
| 3. February 28, 2003, reporting under Item 9 that the Company’s Chairman and Chief Executive Officer would be a presenter at an investor conference. | |
| 4. March 12, 2003, reporting under Item 9 that an investor presentation would be available on the Company’s website. | |
| 5. March 31, 2003, reporting under Item 9 that the Company’s Chairman and Chief Executive Officer would be a presenter at an investor conference. |
32
UNITED AUTO GROUP, INC.
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE
Certification
I, Roger S. Penske, certify that:
1. I have reviewed this quarterly report on Form 10-Q of United Auto Group, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-14 and 15d-14) for the registrant and we have:
| a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; | |
| b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and | |
| c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; |
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
| a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and | |
| b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and |
6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| /S/ ROGER S. PENSKE | |
|
|
|
| Roger S. Penske | |
| Title: Chief Executive Officer |
Date: May 15, 2003
33
UNITED AUTO GROUP, INC.
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE
Certification
I, James R. Davidson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of United Auto Group, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-14 and 15d-14) for the registrant and we have:
| a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; | |
| b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and | |
| c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; |
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
| a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and | |
| b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and |
6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| /S/ JAMES R. DAVIDSON | |
|
|
|
| James R. Davidson | |
| Title: Executive Vice President — Finance | |
| (Chief Accounting Officer) |
Date: May 15, 2003
34
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 thereunto duly authorized.
| UNITED AUTO GROUP, INC. |
| By: | /s/ SAMUEL X. DIFEO |
|
|
|
| Samuel X. DiFeo | |
| President and | |
| Chief Operating Officer |
Date: May 15, 2003
| By: | /s/ JAMES R. DAVIDSON |
|
|
|
| James R. Davidson | |
| Executive Vice President — Finance | |
| (Chief Accounting Officer) |
Date: May 15, 2003
35
|
10.1
|
Sixth Amendment of the Amended and Restated Credit Agreement dated April 16, 2003 among us, various financial institutions and Daimler Chrysler Services North America LLC, as agent for the lenders. | |
|
10.2
|
Credit Agreement dated February 28, 2003 between Sytner Group Limited and The Royal Bank of Scotland plc, as agent for National Westminster Bank plc. | |
|
10.3
|
First Amended and Restated Limited Liability Company Agreement dated April 1, 2003 between UAG Connecticut I, LLC and Noto Holdings, LLC. | |
|
10.4
|
Letter Agreement dated April 1, 2003 among UAG Connecticut I, LLC, Noto Holdings, LLC and the other parties named therein. | |
|
10.5
|
Letter Agreement dated April 1, 2003 between UAG Connecticut I, LLC and Noto Holdings, LLC. | |
|
99.1
|
Certification pursuant to 18 U.SC. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. | |
|
99.2
|
Certification pursuant to 18 U.SC. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. |
EXHIBIT 10.1
SIXTH AMENDMENT
THIS SIXTH AMENDMENT dated as of April 16, 2003 (this "Amendment") is to the Amended and Restated Credit Agreement (as heretofore amended, the "Credit Agreement") dated as of December 22, 2000 among UNITED AUTO GROUP, INC. (the "Company"), various financial institutions (the "Lenders") and DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC (formerly Chrysler Financial Company L.L.C.), as agent for the Lenders (the "Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as defined in the Credit Agreement.
WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects;
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows:
SECTION 1 AMENDMENT. On the Amendment Effective Date (defined hereafter), Section 2.1.3 of the Credit Agreement shall be amended by deleting the figure "$10,000,000" where it appears in such Section and substituting the figure "$20,000,000" therefor.
SECTION 2 REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Agent and the Lenders that: (a) the representations and
warranties made in Section 8 of the Credit Agreement are true and correct on and
as of the Amendment Effective Date (as defined below) with the same effect as if
made on and as of the Amendment Effective Date (except to the extent relating
solely to an earlier date, in which case they were true and correct as of such
earlier date); (b) no Event of Default or Unmatured Event of Default exists or
will result from the execution of this Amendment; (c) no event or circumstance
has occurred since the Effective Date that has resulted, or would reasonably be
expected to result, in a Material Adverse Effect; (d) the execution and delivery
by the Company of this Amendment and the performance by the Company of its
obligations under the Credit Agreement as amended hereby (as so amended, the
"Amended Credit Agreement") (i) are within the corporate powers of the Company,
(ii) have been duly authorized by all necessary corporate action, (iii) have
received all necessary approval from any governmental authority and (iv) do not
and will not contravene or conflict with any provision of any law, rule or
regulation or any order, decree, judgment or award which is binding on the
Company or any of its Subsidiaries or of any provision of the certificate of
incorporation or bylaws or other organizational documents of the Company or of
any agreement, indenture, instrument or other document which is binding on the
Company or any of its Subsidiaries; and (e) the Amended Credit Agreement is the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability.
SECTION 3 EFFECTIVENESS. The amendment set forth in Section 1 above shall become effective on such date (the "Amendment Effective Date") when the Agent shall have received (a) a counterpart of this Amendment executed by the Company and the Required Lenders (or, in the case of any party other than the Company from which the Agent has not received a counterpart hereof, facsimile confirmation of the execution of a counterpart hereof by such party) and (b) each of the following documents, each in form and substance satisfactory to the Agent:
3.1 Reaffirmation. A counterpart of the Reaffirmation of Loan Documents, substantially in the form of Exhibit A, executed by each Loan Party other than the Company.
3.2 Other Documents. Such other documents as the Agent or any Lender may reasonably request.
SECTION 4 MISCELLANEOUS.
4.1 Continuing Effectiveness, etc. As hereby amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. As of the Amendment Effective Date, all references in the Credit Agreement, the Notes, each other Loan Document and any similar document to the "Credit Agreement" or similar terms shall refer to the Amended Credit Agreement.
4.2 Counterparts. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original but all such counterparts shall together constitute one and the same Amendment.
4.3 Expenses. The Company agrees to pay the reasonable costs and expenses of the Agent (including reasonable fees and disbursements of counsel, including, without duplication, the allocable costs of internal legal services and all disbursements of internal legal counsel) in connection with the preparation, execution and delivery of this Amendment.
4.4 Governing Law. This Amendment shall be a contract made under and governed by the laws of the State of New York applicable to contracts made and to be wholly performed within the State of New York.
4.5 Successors and Assigns. This Amendment shall be binding upon the Company, the Lenders and the Agent and their respective successors and assigns, and shall inure to the benefit of the Company, the Lenders and the Agent and the successors and assigns of the Lenders and the Agent.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Delivered as of the day and year first above written.
UNITED AUTO GROUP, INC.
By: /s/ Robert H. Kurnick, Jr.
-----------------------------------------
Title: Executive Vice President
--------------------------------------
|
DAIMLERCHRYSLER SERVICES NORTH
AMERICA LLC, as Agent, as Issuing Lender and
as a Lender
By: /s/ M. L'Archer
-----------------------------------------
Title: Vice President
--------------------------------------
|
TOYOTA MOTOR CREDIT CORPORATION,
as a Lender
By: /s/ D.M. Taylor
-----------------------------------------
Title: Corp. Dealer Relations Mgr.
-------------------------------------
|
April 16, 2003
DaimlerChrysler Services North
America LLC, as Agent
and the Lenders party
to the Amended and Restated Credit Agreement
referred to below
27777 Inkster Road
Farmington Hills, Michigan 48334
Attn: Michele Nowak
RE: REAFFIRMATION OF LOAN DOCUMENTS
Ladies and Gentlemen:
Please refer to:
(a) The Amended and Restated Security Agreement dated as of December 23, 1999 (the "Security Agreement") among United Auto Group, Inc. (the "Company"), its subsidiaries and Chrysler Financial Company L.L.C. in its capacity as Agent (in such capacity, the "Agent");
(b) The Guaranty dated as of October 8, 1999 (the "Guaranty") executed in favor of the Agent and various other parties by all subsidiaries of the Company; and
(c) The Pledge Agreement dated as of October 8, 1999 (the "Pledge Agreement") executed by the Company and certain of its subsidiaries.
Each of the undersigned acknowledges that the Company, the Lenders and the Agent have executed the Sixth Amendment (the "Sixth Amendment") to the Amended and Restated Credit Agreement dated as of December 22, 2000 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Capitalized terms not otherwise defined herein have the meanings given in the Credit Agreement.
Each of the undersigned hereby confirms that the Security Agreement, the Guaranty, the Pledge Agreement and each other Loan Document to which such undersigned is a party remains in full force and effect after giving effect to the effectiveness of the Sixth Amendment and that, upon such effectiveness, all references in each Loan Document to the "Credit Agreement" shall be references to the Credit Agreement, as amended by the Sixth Amendment.
DaimlerChrysler Services North
America LLC, as Agent
April 16, 2003
This letter agreement may be signed in counterparts and by the various parties on separate counterparts. This letter agreement shall be governed by the laws of the State of New York applicable to contracts made and to be performed entirely within such State.
UAG NORTHEAST, INC.
DIFEO PARTNERSHIP, INC.
UAG HUDSON, INC.
SOMERSET MOTORS INC.
UAG NORTHEAST BODY SHOP, INC.
LANDERS AUTO SALES, INC.
LANDERS UNITED AUTO GROUP NO. 2, INC.
LANDERS UNITED AUTO GROUP NO. 6, INC.
LANDERS BUICK-PONTIAC, INC.
LANDERS FORD NORTH, INC.
UNITED AUTO GROUP, INC.
UAG SOUTHEAST, INC.
UAG DULUTH, INC.
UNITED NISSAN, INC. (GA)
UNITED NISSAN, INC. (NV)
UNITED NISSAN, INC. (TN)
PEACHTREE NISSAN, INC.
UAG WEST, INC.
SA AUTOMOTIVE, LTD.
SL AUTOMOTIVE, LTD.
SPA AUTOMOTIVE, LTD.
LRP, LTD.
SUN MOTORS, LTD.
SCOTTSDALE MANAGEMENT GROUP, LTD.
SAU AUTOMOTIVE, LTD.
SK MOTORS, LTD.
KMT/UAG, INC.
RELENTLESS PURSUIT ENTERPRISES, INC.
TRI-CITY LEASING, INC.
HT AUTOMOTIVE LTD.
UAG TEXAS, INC.
UAG TEXAS II, INC.
UAG EAST, INC.
WESTBURY SUPERSTORE, LTD.
PALM AUTO PLAZA, INC.
FLORIDA CHRYSLER PLYMOUTH, INC.
WEST PALM NISSAN, INC.
WEST PALM INFINITI, INC.
NORTHLAKE AUTO FINISH, INC.
JS IMPORTS, INC.
WEST PALM AUTO MALL, INC.
AUTO MALL PAYROLL SERVICES, INC.
UAG CAROLINA, INC.
REED-LALLIER CHEVROLET, INC.
MICHAEL CHEVROLET-OLDSMOBILE, INC.
GENE REED CHEVROLET, INC.
UNITEDAUTO DODGE OF SHREVEPORT, INC.
COVINGTON PIKE DODGE, INC.
THE NEW GRACELAND DODGE, INC.
UAG GRACELAND II, INC.
UAG MEMPHIS II, INC.
UAG MEMPHIS IV, INC.
UAG MEMPHIS V, INC.
UAG-CARIBBEAN, INC.
DAN YOUNG CHEVROLET INC.
YOUNG MANAGEMENT GROUP, INC.
UAG YOUNG II, INC.
UAG PARAMOUNT MOTORS, INC.
UAG KISSIMMEE MOTORS, INC.
UAG CLASSIC, INC.
CLASSIC AUTO GROUP, INC.
UAG CHCC, INC.
CLASSIC MANAGEMENT COMPANY, INC.
UAG CHEVROLET, INC.
CLASSIC IMPORTS, INC.
UNITED AUTOCARE, INC.
UNITED AUTOCARE PRODUCTS, INC.
UNITEDAUTO FOURTH FUNDING INC.
UNITEDAUTO FIFTH FUNDING INC.
UAG FINANCE COMPANY, INC.
CLASSIC MOTOR SALES LLC
D. YOUNG CHEVROLET LLC
DAN YOUNG MOTORS LLC
UAG YOUNG AUTOMOTIVE GROUP LLC
YOUNG AUTOMOTIVE HOLDINGS LLC
EUROPA AUTO IMPORTS, INC.
UAG LAKE NORMAN, LLC
UAG INDIANAPOLIS, LLC
MOTORCARS ACQUISITION, LLC
MOTORCARS ACQUISITION II, LLC
MOTORCARS ACQUISITION III, LLC
SCOTTSDALE FERRARI, LLC
UAG OLDSMOBILE OF INDIANA, LLC
ATLANTIC AUTO FUNDING CORPORATION
ATLANTIC AUTO SECOND FUNDING CORPORATION
ATLANTIC AUTO THIRD FUNDING CORPORATION
GOODSON NORTH, LLC
GOODSON PONTIAC GMC, LLC
GOODSON SPRING BRANCH, LLC
PIONEER FORD WEST, LLC
UAG CERRITOS, LLC
UAG CONNECTICUT, LLC
UAG CONNECTICUT I, LLC
UAG FAIRFIELD CA, LLC
UAG FAIRFIELD CM, LLC
UAG FAIRFIELD CP, LLC
UAG FAIRFIELD CV, LLC
UAG HOUSTON ACQUISITION, LLC
UAG INTERNATIONAL HOLDINGS, INC.
UAG LANDERS SPRINGDALE, LLC
UAG MENTOR ACQUISITION, LLC
UAG MICHIGAN CADILLAC, LLC
UAG MICHIGAN PONTIAC-GMC, LLC
UAG ATLANTA IV MOTORS, INC.
UAG MICHIGAN T1, LLC
UAG MICHIGAN TMV, LLC
UAG PHOENIX VC, LLC
UAG REALTY, LLC
UAG SPRING, LLC
UNITED AUTO FINANCE, INC.
UNITED RANCH AUTOMOTIVE, LLC
BRETT MORGAN CHEVROLET - GEO, INC.
H.B.L. HOLDINGS, INC. (f/k/a H.B.L., Inc.)
HBL, LLC
MOTORCARS ACQUISITION IV, LLC
UAG NANUET I, LLC
UAG NANUET II, LLC
NISSAN OF NORTH OLMSTED, LLC
LANDERS NISSAN, LLC
UAG TULSA HOLDINGS, LLC
UAG FAYETTEVILLE I, LLC
UAG FAYETTEVILLE II, LLC
UAG FAYETTEVILLE III, LLC
CLASSIC TURNERSVILLE, INC.
GMG MOTORS, INC.
SCOTTSDALE JAGUAR, LTD.
UNITED AUTO LICENSING, LLC
LANTZCH-ANDREAS ENTERPRISES, INC.
UAG TURNERSVILLE REALTY, LLC
CJNS, LLC
UAG VK, LLC
KMPB, LLC
LMNS, LLC
UAG SPRING, LLC
UNITED RANCH AUTOMOTIVE, LLC
LATE ACQUISITION I, LLC
LATE ACQUISITION II, LLC
WTA MOTORS, LTD.
UAG MICHIGAN H1, LLC
UAG TULSA VC, LLC
DIFEO HYUNDAI PARTNERSHIP
DIFEO NISSAN PARTNERSHIP
DIFEO CHRYSLER PLYMOUTH JEEP EAGLE
PARTNERSHIP
DIFEO LEASING PARTNERSHIP
DANBURY AUTO PARTNERSHIP
DIFEO TENAFLY PARTNERSHIP
OCT PARTNERSHIP
HUDSON MOTORS PARTNERSHIP
COUNTY AUTO GROUP PARTNERSHIP
SOMERSET MOTORS PARTNERSHIP
By: DIFEO PARTNERSHIP, INC.
a general partner
SHANNON AUTOMOTIVE, LTD.
By: UAG TEXAS, INC.
a general partner
UAG CITRUS MOTORS, LLC
By: UAG CITRUS, INC.
Member
CLASSIC ENTERPRISES, LLC
CLASSIC NISSAN OF TURNERSVILLE, LLC
By: UAG CLASSIC, INC.
Member
LANDERS FORD, INC
NATIONAL CITY FORD, INC.
CENTRAL FORD CENTER, INC.
PIONEER FORD SALES, INC.
ACKNOWLEDGED AND AGREED
as of the date first written above
DAIMLERCHRYSLER SERVICES NORTH
AMERICA, LLC, as Agent
EXHIBIT 10.2
AGREEMENT
DATED February 28, 2003
Pound Sterling45,000,000
CREDIT FACILITY
FOR
SYTNER GROUP LIMITED
PROVIDED BY
THE ROYAL BANK OF SCOTLAND plc
acting as agent for
NATIONAL WESTMINSTER BANK Plc
Produced by The Royal Bank of Scotland Group using
[ALLEN AND OVERY GRAPHIC][ NEWCHANGE GRAPHIC]
INDEX
CLAUSE Page ------ ---- 1. Interpretation......................................................................................1 2. Facility............................................................................................9 3. Purpose.............................................................................................9 4. Conditions precedent................................................................................9 5. Utilisation.........................................................................................9 6. Repayment..........................................................................................10 7. REDUCTION OF TRANCHE A COMMITMENT..................................................................10 8. Prepayment and cancellation........................................................................11 9. Interest...........................................................................................13 10. Terms..............................................................................................14 11. Security...........................................................................................14 12. Market disruption..................................................................................14 13. Taxes..............................................................................................15 14. Increased Costs....................................................................................16 15. Mitigation.........................................................................................17 16. Payments...........................................................................................17 17. Representations....................................................................................18 18. Information covenants..............................................................................20 19. Financial covenants................................................................................22 20. General covenants..................................................................................29 21. Default............................................................................................33 22. Evidence and calculations..........................................................................36 23. Fees...............................................................................................36 24. Indemnities and Break Costs........................................................................37 25. Expenses...........................................................................................38 26. Amendments and Waivers.............................................................................38 27. Changes to the Parties.............................................................................39 28. Disclosure of information..........................................................................39 29. Set-off............................................................................................40 30. Severability.......................................................................................40 31. Notices............................................................................................40 32. Language...........................................................................................41 33. Governing law......................................................................................41 34. Enforcement........................................................................................42 SCHEDULES --------- 1 Conditions precedent documents.....................................................................43 2 Calculation of the Mandatory Cost..................................................................46 3 Existing Security..................................................................................48 |
THIS AGREEMENT is dated 28th February 2003
BETWEEN:
(1) SYTNER GROUP LIMITED (registered number 02883766) (formerly Sytner Group Plc) (the "COMPANY"); and
(2) THE ROYAL BANK OF SCOTLAND PLC ACTING AS AGENT FOR NATIONAL WESTMINSTER BANK PLC as lender (the "Lender").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"AFFILIATE"
means a Subsidiary or a Holding Company of a person or any other Subsidiary of that Holding Company.
"AVAILABILITY PERIOD"
means the period from and including the date of this Agreement to and including the Final Maturity Date.
"BREAK COSTS"
means the amount (if any) which the Lender is entitled to receive under this Agreement as compensation if any part of a Loan or overdue amount is prepaid.
"BUSINESS DAY"
means a day (other than a Saturday or a Sunday) on which banks are open for general business in London.
"COMMITMENT"
means:
(I) in respect of Tranche A Pound Sterling10,000,000 (as adjusted under Clause 7); and
(II) in respect of Tranche B Pound Sterling35,000,000.
in each case to the extent not cancelled, transferred or reduced under this Agreement and "COMMITMENT" shall be construed accordingly.
"DEFAULT"
means:
(a) an Event of Default; or
(b) an event which would be (with the expiry of a grace period, the giving of notice or the making of any determination under the Finance Documents or any combination of them) an Event of Default.
"EVENT OF DEFAULT"
means an event specified as such in this Agreement.
"EXISTING FACILITIES"
means the Pound Sterling6,000,000 Revolving Credit Facility and the Pound Sterling14,000,000 Term Loan Facility dated 3 December 1997 (as subsequently amended on 13 August 1999 and 31 October 2001) granted by The Royal Bank of Scotland plc to the Company.
"EXISTING SECURITY"
means all existing Security Documents held by the Lender and detailed in Schedule 3.
"FACILITY"
means the credit facility made available under this Agreement.
"FACILITY OFFICE"
means the office(s) through which the Lender will perform its obligations under this Agreement.
"FINAL MATURITY DATE"
means 31 January 2006.
"FINANCE DOCUMENT"
means:
(a) this Agreement;
(b) a Security Document; or
(c) any other document designated as such by the Lender and the Company.
"FINANCIAL INDEBTEDNESS"
means any indebtedness for or in respect of:
(a) moneys borrowed;
(b) any acceptance credit;
(c) any bond, note, debenture, loan stock or other similar instrument;
(d) any finance or capital lease;
(e) receivables sold or discounted (otherwise than on a non-recourse basis);
(f) the acquisition cost of any asset to the extent payable after its acquisition or possession by the party liable where the deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset;
(g) any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, except for non-payment of an amount, the then mark to market value of the derivative transaction will be used to calculate its amount);
(h) any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing;
(i) any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; or
(j) any guarantee, indemnity or similar assurance against financial loss of any person in respect of any item referred to in paragraphs (a) to (i) above.
"GROUP"
means the Parent and its Subsidiaries and "MEMBER OF THE GROUP" and "GROUP COMPANY" means any of them.
"HOLDING COMPANY"
means a holding company within the meaning of section 736 of the Companies Act 1985.
"INCREASED COST"
means:
(a) an additional or increased cost;
(b) a reduction in the rate of return under a Finance Document or on its overall capital; or
(c) a reduction of an amount due and payable under any Finance Document,
which is incurred or suffered by the Lender or any of its Affiliates but only to the extent attributable to the Lender having entered into any Finance Document or funding or performing its obligations under any Finance Document.
"LIBOR"
means for a Term of any Loan or overdue amount the rate quoted by the Lender to leading banks in the London interbank market as of 11.00 a.m. on the Rate Fixing Day for the offering of deposits in Sterling or overdue amount for a period comparable to that Term.
"LOAN"
means, unless otherwise stated in this Agreement, the principal amount of each borrowing under this Agreement or the principal amount outstanding of that borrowing.
"MANDATORY COST"
means the cost of complying with certain regulatory requirements, expressed as a percentage rate per annum and calculated by the Lender under Schedule 2 (Calculation of the Mandatory Cost).
"MARGIN"
means the percentage per annum set out in Column 2 below opposite the ratio of Consolidated Net Borrowing to Consolidated EBITDA less Stocking Interest in column 1 as stated in the latest Compliance Certificate provided under Clause 18.2.
COLUMN 1 COLUMN 2 -------- -------- 1:1 or below 0.85 Greater than 1:1 1.25 |
"MATERIAL ADVERSE EFFECT"
means a material adverse effect on:
(a) the business or financial condition of the Group as a whole;
(b) the ability of the Company to perform its obligations under any Finance Document; or
(c) the validity or enforceability of any Finance Document.
"MATERIAL FRANCHISING AGREEMENT"
means a franchising agreement entered into by any Group Company:
(i) where the profits attributable to or generated under such franchising agreement are equal to or greater than 5 per cent. of the aggregate profits of the Group; or
(ii) where the turnover attributable to or generated under such franchising agreement is equal to or greater than 5 per cent. of the aggregate turnover of the Group;
"MATERIAL SUBSIDIARY"
means the Company, and each Subsidiary of the Company:
(a) whose profits are equal to or greater than 5 per cent. of the aggregate profits of the Group; or
(b) whose turnover is equal to or greater than 5 per cent. of the aggregate turnover of the Group; or
(c) whose assets have a value equal to or greater than 5 per cent. of the aggregate value of all assets owned by the Group.
"MATURITY DATE"
means the last day of the Term of a Loan.
"ORIGINAL FINANCIAL STATEMENTS"
means the audited consolidated financial statements of the Company for the year ended 28 February 2002.
"PARENT"
means UAG UK Holdings Limited (company number 4334322).
"PARTY"
means a party to this Agreement.
"RATE FIXING DAY"
means the first day of a Term for a Loan or such other day as the Lender determines is generally treated as the rate fixing day by market practice in the relevant interbank market.
"REQUEST"
means a request for a Loan, in a form approved by the Lender.
"REQUIRED SECURITY"
means the Security Documents detailed in Schedule 4.
"ROLLOVER LOAN"
means one or more Loans:
(a) to be made on the same day that a maturing Loan is due to be repaid; and
(b) the aggregate amount of which is equal to or less than the maturing
Loan.
"SECURITY DOCUMENT"
means the Existing Security, the Required Security and any other document in a form approved by the Lender guaranteeing or evidencing or creating security over any asset to secure any obligation of the Company to the Lender under the Finance Documents.
"SECURITY INTEREST"
means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having a similar effect.
"STERLING" OR "POUND STERLING"
means the lawful currency for the time being of the U.K.
"SUBSIDIARY"
means:
(a) a subsidiary within the meaning of section 736 of the Companies Act 1985; and
(b) unless the context otherwise requires, a subsidiary undertaking within the meaning of section 258 of the Companies Act 1985.
"TAX"
means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any related penalty or interest).
"TAX DEDUCTION"
means a deduction or withholding for or on account of Tax from a payment under a Finance Document.
"TAX PAYMENT"
means a payment made by the Company to the Lender in any way related to a Tax Deduction or under any indemnity given by the Company in respect of Tax under any Finance Document.
"TERM"
means each period determined under this Agreement by reference to which interest on a Loan or an overdue amount is calculated.
"TRANCHE" means the following Loans to be made under this Agreement (which shall be drawn for the purpose as stipulated):
(a) a Loan up to the aggregate principal amount of Pound Sterling10,000,000 for the purpose detailed in Clause 3.1(a) ("TRANCHE A"); and
(b) a Loan of up to the aggregate principal amount of Pound Sterling35,000,000 for the purpose detailed in Clause 3.1(b) ("TRANCHE B").
"U.K."
means the United Kingdom.
"UTILISATION DATE"
means each date on which the Facility is utilised.
1.2 CONSTRUCTION
(a) In this Agreement, unless the contrary intention appears, a reference to:
(i) an "AMENDMENT" includes a supplement, novation, restatement or re-enactment and "AMENDED" will be construed accordingly;
"ASSETS" includes present and future properties, revenues and rights of every description;
an "AUTHORISATION" includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration or notarisation;
"DISPOSAL" means a sale, transfer, grant, lease or other disposal, whether voluntary or involuntary, and "DISPOSE" will be construed accordingly;
"INDEBTEDNESS" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money;
a "PERSON" includes any individual, company, corporation, unincorporated association or body (including a partnership, trust, joint venture or consortium), government, state, agency, organisation or other entity whether or not having separate legal personality;
a "REGULATION" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, being of a type with which any person to which it applies is accustomed to comply) of any governmental, inter-governmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;
(ii) a currency is a reference to the lawful currency for the time being of the relevant country;
(iii) a Default being "OUTSTANDING" means that it has not been remedied or waived;
(iv) a provision of law is a reference to that provision as extended, applied, amended or re-enacted and includes any subordinate legislation;
(v) a Clause, a Subclause or a Schedule is a reference to a clause or subclause of, or a schedule to, this Agreement;
(vi) a person includes its successors in title, permitted assigns and permitted transferees;
(vii) a Finance Document or another document is a reference to that Finance Document or other document as amended; and
(viii) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a reference to a "MONTH" or "MONTHS" is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month or the calendar month in which it is to end, except that:
(i) if the numerically corresponding day is not a Business Day, the period will end on the next Business Day in that month (if there is one) or the preceding Business Day (if there is not);
(ii) if there is no numerically corresponding day in that month, that period will end on the last Business Day in that month; and
(iii) notwithstanding sub-paragraph (i) above, a period which commences on the last Business Day of a month will end on the last Business Day in the next month or the calendar month in which it is to end, as appropriate.
(c) Unless expressly provided to the contrary in a Finance Document, a person who is not a party to a Finance Document may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999.
(i) Notwithstanding any term of any Finance Document, the consent
of any third party is not required for any variation
(including any release or compromise of any liability under)
or termination of that Finance Document.
(d) Unless the contrary intention appears:
(i) a reference to a Party will not include that Party if it has ceased to be a Party under this Agreement;
(ii) a term used in any other Finance Document or in any notice given in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement;
(iii) if there is an inconsistency between this Agreement and any other Finance Document, this Agreement will prevail;
(iv) any obligations of the Company under the Finance Documents which is not a payment obligation remains in force for so long as any payment obligation is or may be outstanding under the Finance Documents; and
the headings in this Agreement do not affect its interpretation.
2. FACILITY
Subject to the terms of this Agreement, the Lender makes available to the Company a revolving credit facility in an aggregate amount equal to the Commitment.
3. PURPOSE
3.1 TRANCHES
(a) TRANCHE A
Tranche A may only be used for the refinancing of Existing Facilities
(b) TRANCHE B
Tranche B may only be used for payment of a dividend to the Parent not exceeding Pound Sterling7,500,000, to assist in the funding of dealership acquisitions and associated expenditure, Capital Expenditure and for ongoing general corporate purposes.
3.2 NO OBLIGATION TO MONITOR
The Lender is not bound to monitor or verify the utilisation of the Facility.
4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT DOCUMENTS
A Request may not be given until the Lender has notified the Company that it has received all of the documents and evidence set out in Schedule 1 (Conditions precedent documents) in form and substance satisfactory to the Lender. The Lender must give this notification as soon as reasonably practicable.
4.2 FURTHER CONDITIONS PRECEDENT
The obligations of the Lender to participate in any Loan are subject to the further conditions precedent that on both the date of the Request and the Utilisation Date for that Loan:
(a) the representations are correct in all material respects; and
(b) no Default or, in the case of a Rollover Loan, no Event of Default is outstanding or would result from the Loan.
5. UTILISATION
5.1 GIVING OF REQUESTS
(a) The Company may borrow a Loan by giving to the Lender a duly completed Request and provided that the first Request is (i) sufficient in amount to repay all outstanding loans under the Existing Facility and (ii) accompanied with a written authority authorising the Lender to repay and cancel the Existing Facility in full.
(b) Unless the Lender otherwise agrees, the latest time for receipt by the Lender of a duly completed Request is 11.00 a.m. on the Rate Fixing Day for the proposed borrowing.
(c) Each Request is irrevocable.
5.2 COMPLETION OF REQUESTS
A Request will not be regarded as having been duly completed unless:
(a) the Utilisation Date is a Business Day falling within the Availability Period; and
(b) the proposed currency, amount and Term comply with this Agreement.
Only one Loan may be requested in a Request.
5.3 AMOUNT OF LOAN
(a) Except as provided below, the amount of the Loan must be a minimum of Pound Sterling250,000 and an integral multiple of Pound Sterling250,000.
(b) The amount of the Loan may also be the balance of the undrawn Commitment or such other amount as the Lender may agree.
5.4 ADVANCE OF LOAN
(a) The Lender is not obliged to participate in a Loan if, as a result, the Loans would exceed the Commitment applicable to the relevant Tranche.
(b) If the conditions set out in this Agreement have been met, the Lender must make the Loan available to the Company on the Utilisation Date.
6. REPAYMENT
(a) The Company must repay each Loan made to it in full on its Maturity Date.
(b) Subject to the other terms of this Agreement, any amounts repaid under paragraph (a) above may be re-borrowed.
7. REDUCTION OF TRANCHE A COMMITMENT
The amount available under Tranche A will reduce as follows:
With effect from 31 January 2004 by Pound Sterling2m With effect from 30 July 2004 by Pound Sterling2m With effect from 31 January 2005 by Pound Sterling2m With effect from 30 July 2005 by Pound Sterling2m With effect from 31 January 2006 by Pound Sterling2m |
8. PREPAYMENT AND CANCELLATION
8.1 MANDATORY PREPAYMENT - ILLEGALITY
(a) The Lender must notify the Company promptly if it becomes aware that it is unlawful in any jurisdiction for the Lender to perform any of its obligations under a Finance Document or to fund or maintain any Loan.
(b) After notification under paragraph (a) above:
(i) the Company must repay or prepay the Lender each Loan made to it on the date specified in paragraph (c) below; and
(ii) the Commitment will be immediately cancelled.
(c) The date for repayment or prepayment of a Loan will be:
(i) the Business Day following receipt by the Company of notice from the Lender; or
(ii) if later, the latest date allowed by the relevant law.
8.2 MANDATORY PREPAYMENT - CHANGE OF CONTROL
(a) The Company must promptly notify the Lender if it becomes aware of any person or group of persons acting in concert gaining control of the Company.
(b) After notification under paragraph (a) above, the Lender may, by notice to the Company:
(i) cancel the Commitment; and
(ii) declare all outstanding Loans, together with accrued interest and all other amounts accrued under the Finance Documents, to be immediately due and payable.
Any such notice will take effect in accordance with its terms.
(c) In paragraph (a) above:
"CONTROL" has the meaning given to it in section 416 of the Income and Corporation Taxes Act 1988; and
"ACTING IN CONCERT" means acting together pursuant to an agreement or understanding (whether formal or informal)].
8.3 VOLUNTARY PREPAYMENT
(a) Subject to clause 8.8(e) the Company may, by giving not less than five Business Days' prior notice to the Lender, prepay any Loan at any time in whole or in part.
(b) A prepayment of part of a Loan must be in a minimum amount of Pound Sterling250,000 and an integral multiple of Pound Sterling250,000.
8.4 AUTOMATIC CANCELLATION
The Commitment will be automatically cancelled at the close of business on the last day of the Availability Period.
8.5 VOLUNTARY CANCELLATION
(a) Subject to Clause 8.8(e) the Company may, by giving not less than five Business Days' prior notice to the Lender, cancel the unutilised amount of the Commitment in whole or in part.
(b) Subject to Clause 8.8(e) partial cancellation of the Commitment must be in a minimum amount of Pound Sterling250,000 and an integral multiple of Pound Sterling250,000.
8.6 INVOLUNTARY PREPAYMENT AND CANCELLATION
(a) If the Company is, or will be, required to pay to the Lender a Tax Payment or an Increased Cost, the Company may, while the requirement continues, give notice to the Lender requesting prepayment and cancellation.
(b) After notification under paragraph (a) above:
(i) Subject to Clause 8.8(e) the Company must repay or prepay each Loan made to it on the date specified in paragraph (c) below; and
(ii) the Commitment will be immediately cancelled.
(c) The date for repayment or prepayment of a Loan will be the last day of the Term for that Loan or, if earlier, the date specified by the Company in its notification.
8.7 RE-BORROWING OF LOANS
Any voluntary prepayment of a Loan may be re-borrowed on the terms of this Agreement. Any mandatory or involuntary prepayment of a Loan may not be re-borrowed.
8.8 MISCELLANEOUS PROVISIONS
(a) Any notice of prepayment and/or cancellation under this Agreement is irrevocable and must specify the relevant date(s) and the affected Loans.
(b) All prepayments under this Agreement must be made with accrued interest on the amount prepaid. No premium or penalty is payable in respect of any prepayment except for Break Costs.
(c) No prepayment or cancellation is allowed except in accordance with the express terms of this Agreement.
(d) No amount of the Commitment cancelled under this Agreement may subsequently be reinstated.
(e) Any prepayment and/or cancellation under this Agreement shall firstly be applied against Tranche A until such Commitment in respect of Tranche A is reduced to nil and thereafter
shall be applied against Tranche B until such Commitment in respect of Tranche B is reduced to nil.
9. INTEREST
9.1 CALCULATION OF INTEREST
The rate of interest on each Loan for each Term is the percentage rate per annum equal to the aggregate of the applicable:
(a) Margin;
(b) LIBOR; and
(c) Mandatory Cost.
9.2 PAYMENT OF INTEREST
Except where it is provided to the contrary in this Agreement, the Company must pay accrued interest on each Loan made to it on the last day of each Term and also, if the Term is longer than six months, on the dates falling at six-monthly intervals after the first day of that Term.
9.3 INTEREST ON OVERDUE AMOUNTS
(a) If the Company fails to pay any amount payable by it under the Finance Documents, it must immediately on demand by the Lender pay interest on the overdue amount from its due date up to the date of actual payment, both before, on and after judgment.
(b) Interest on an overdue amount is payable at a rate determined by the Lender to be one per cent. per annum above the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount. For this purpose, the Lender may (acting reasonably):
(i) select successive Terms of any duration of up to three months; and
(ii) determine the appropriate Rate Fixing Day for that Term.
(c) Notwithstanding paragraph (b) above, if the overdue amount is a principal amount of a Loan and becomes due and payable prior to the last day of its current Term, then:
(i) the first Term for that overdue amount will be the unexpired portion of that Term; and
(ii) the rate of interest on the overdue amount for that first Term will be one per cent. per annum above the rate then payable on that Loan.
After the expiry of the first Term for that overdue amount, the rate on the overdue amount will be calculated in accordance with paragraph (b) above.
(d) Interest (if unpaid) on an overdue amount will be compounded with that overdue amount at the end of each of its Terms but will remain immediately due and payable.
9.4 NOTIFICATION OF RATES OF INTEREST
The Lender must promptly notify the Company of the determination of a
rate of interest under this Agreement.
10. TERMS
10.1 SELECTION
(a) Each Loan has one Term only.
(b) The Company must select the Term for a Loan in the relevant Request.
(c) Subject to the following provisions of this Clause, each Term for a
Loan will be one, two, three or six months or any other period agreed
by the Company and the Lender.
10.2 NO OVERRUNNING THE FINAL MATURITY DATE
If a Term would otherwise overrun the Final Maturity Date, it will be
shortened so that it ends on the Final Maturity Date.
10.3 NOTIFICATION
The Lender must notify the Company of the duration of each Term
promptly after ascertaining its duration.
11. SECURITY
The obligations and liabilities of the Company to the Lender under the
Facility shall be secured by the interests and rights granted in favour
of the Lender under the Existing Security, the Required Security and
any additional Security Documents the Lender may require from time to
time.
12. MARKET DISRUPTION
12.1 MARKET DISRUPTION
(a) If the Lender determines that adequate and fair means do not exist for
ascertaining LIBOR for a Loan, it must promptly notify the Company.
(b) After notification under paragraph (a) above, the rate of interest on
the affected Loan for the relevant Term will be the aggregate of the
|
applicable:
(i) Margin;
(ii) rate notified by the Lender to the Company as soon as practicable to be that which expresses as a percentage rate per annum the cost to the Lender of funding the Loan from whatever source it may reasonably select; and
(iii) Mandatory Cost.
12.2 ALTERNATIVE BASIS
(a) After receipt of any notification under this Clause, if the Lender or
the Company so requires, the Company and the Lender must enter into
negotiations for a period of not more than 30 days with a view to
agreeing an alternative basis for determining the rate of interest
and/or funding for the affected Loan and any future Loan.
(b) Any alternative basis agreed will be binding on each Party.
13. TAXES
13.1 TAX GROSS-UP
(a) The Company must make all payments to be made by it under the Finance
Documents without any Tax Deduction, unless a Tax Deduction is required
by law.
(b) If the Company is aware that the Company must make a Tax Deduction (or
that there is a change in the rate or the basis of a Tax Deduction),
then it must promptly notify the Lender.
(c) If a Tax Deduction is required by law to be made by the Company, the
amount of the payment due from the Company will be increased to an
amount which (after making the Tax Deduction) leaves an amount equal to
the payment which would have been due if no Tax Deduction had been
required.
(d) If the Company is required to make a Tax Deduction, it must make the
minimum Tax Deduction and must make any payment required in connection
with that Tax Deduction within the time allowed by law.
(e) Within 30 days of making either a Tax Deduction or a payment required
in connection with a Tax Deduction, the Company must deliver to the
Lender evidence satisfactory to the Lender (acting reasonably) that the
Tax Deduction has been made or (as applicable) the appropriate payment
has been paid to the relevant taxing authority.
13.2 TAX INDEMNITY
(a) Except as provided below, the Company must indemnify the Lender against
any loss or liability which the Lender (in its absolute discretion)
determines will be or has been suffered (directly or indirectly) by it
for or on account of Tax in relation to a payment received or
receivable (or any payment deemed to be received or receivable) under a
Finance Document.
(b) Paragraph (a) above does not apply to any Tax assessed on the Lender
under the laws of the jurisdiction in which:
(i) the Lender is incorporated or, if different, the jurisdiction
(or jurisdictions) in which the Lender is treated as resident
for tax purposes; or
(ii) the Lender's Facility Office is located in respect of amounts
received or receivable in that jurisdiction,
if that Tax is imposed on or calculated by reference to the net income
received or receivable by the Lender. However, any payment deemed to be
received or receivable, including any
|
amount treated as income but not actually received by the Lender, such
as a Tax Deduction, will not be treated as net income received or
receivable for this purpose.
(c) If the Lender makes, or intends to make, a claim under paragraph (a)
above, it must promptly notify the Company of the event which will
give, or has given, rise to the claim.
13.3 STAMP TAXES
The Company must pay and indemnify the Lender against any stamp duty,
registration or other similar Tax payable in connection with the entry
into, performance or enforcement of any Finance Document.
13.4 VALUE ADDED TAXES
(a) Any amount (including costs and expenses) payable under a Finance
Document by the Company is exclusive of any Tax (including value added
tax) which might be chargeable in connection with that amount. If any
such Tax is chargeable, the Company must pay to the Lender (in addition
to and at the same time as paying that amount) an amount equal to the
amount of that Tax.
(b) The obligation of the Company under paragraph (a) above will be reduced
to the extent that the Lender is entitled to repayment or a credit in
respect of the relevant Tax.
14. INCREASED COSTS
14.1 INCREASED COSTS
Except as provided below in this Clause, the Company must pay to the
Lender the amount of any Increased Cost incurred by the Lender or any
of its Affiliates as a result of:
(a) the introduction of, or any change in, or any change in the
interpretation or application of, any law or regulation; or
(b) compliance with any law or regulation,
made after the date of this Agreement.
14.2 EXCEPTIONS
The Company need not make any payment for an Increased Cost to the
extent that the Increased Cost is:
(a) compensated for under another Clause or would have been but
for an exception to that Clause;
(b) a tax on the overall net income of the Lender or any of its
Affiliates; or
(c) attributable to the Lender or its Affiliate wilfully failing
to comply with any law or regulation.
|
14.3 CLAIMS
The Lender must notify the Company promptly of the circumstances giving
rise to, and the amount of, the claim.
15. MITIGATION
15.1 MITIGATION
(a) The Lender must, in consultation with the Company, take all reasonable
steps to mitigate any circumstances which arise and which result or
would result in:
(i) any Tax Payment or Increased Cost being payable to the Lender;
or
(ii) the Lender being able to exercise any right of prepayment
and/or cancellation under this Agreement by reason of any
illegality,
including transferring its rights and obligations under the Finance
Documents to an Affiliate or changing its Facility Office.
(b) The Company must indemnify the Lender for all costs and expenses
reasonably incurred by it as a result of any step taken by it under
this Subclause.
(c) The Lender is not obliged to take any step under this Subclause if, in
its opinion (acting reasonably), to do so might be prejudicial to it.
15.2 CONDUCT OF BUSINESS BY THE LENDER
No term of this Agreement will:
(a) interfere with the right of the Lender to arrange its affairs
(Tax or otherwise) in whatever manner it thinks fit;
(b) oblige the Lender to investigate or claim any credit, relief,
remission or repayment available to it in respect of Tax or
the extent, order and manner of any claim; or
(c) oblige the Lender to disclose any information relating to its
affairs (Tax or otherwise) or any computation in respect of
Tax.
16. PAYMENTS
16.1 PLACE
Unless a Finance Document specifies that payments under it are to be
made in another manner, all payments under a Finance Document must be
made to the relevant Party to its account at such office or bank as it
may notify to the other Party for this purpose by not less than five
Business Days' prior notice.
16.2 FUNDS
Payments under the Finance Documents to the Lender must be made for
value on the due date at such times and in such funds as the Lender may
specify to the Company as being
|
customary at the time for the settlement of transactions in the
relevant currency in the place for payment.
16.3 CURRENCY
Each amount payable under the Finance Documents is payable in Sterling.
16.4 NO SET-OFF OR COUNTERCLAIM
All payments made by the Company under the Finance Documents must be
made without set-off or counterclaim.
16.5 BUSINESS DAYS
(a) If a payment under the Finance Documents is due on a day which is not a
Business Day, the due date for that payment will instead be the next
Business Day in the same calendar month (if there is one) or the
preceding Business Day (if there is not) or whatever day the Lender
determines is market practice.
(b) During any extension of the due date for payment of any principal under
this Agreement interest is payable on that principal at the rate
payable on the original due date.
16.6 TIMING OF PAYMENTS
If a Finance Document does not provide for when a particular payment is
due, that payment will be due within three Business Days of demand by
the Lender.
17. REPRESENTATIONS
17.1 REPRESENTATIONS
The representations set out in this Clause are made by the Company to
the Lender.
17.2 STATUS
(a) It is a limited liability company, duly incorporated and validly
existing under the laws of its jurisdiction of incorporation.
(b) It and each of its Subsidiaries has the power to own its assets and
carry on its business as it is being conducted.
17.3 POWERS AND AUTHORITY
It has the power to enter into and perform, and has taken all necessary
action to authorise the entry into and performance of, the Finance
Documents to which it is or will be a party and the transactions
contemplated by those Finance Documents.
17.4 LEGAL VALIDITY
Each Finance Document to which it is a party is its legally binding,
valid and enforceable obligation.
|
17.5 NON-CONFLICT
The entry into and performance by it of, and the transactions
contemplated by, the Finance Documents do not conflict with:
(a) any law or regulation applicable to it;
(b) its or any of its Subsidiaries' constitutional documents; or
(c) any document which is binding upon it or any of its
Subsidiaries or any of its or its Subsidiaries' assets.
17.6 NO DEFAULT
(a) No Event of Default is outstanding or will result from the execution
of, or the performance of any transaction contemplated by, any Finance
Document; and
(b) no other event is outstanding which constitutes a default under any
document which is binding on it or any of its Subsidiaries or any of
its or its Subsidiaries' assets to an extent or in a manner which is
reasonably likely to have a Material Adverse Effect.
17.7 AUTHORISATIONS
Except for registration of any Security Document under the Companies
Act 1985 and the Land Registration Acts 1925-1986, all authorisations
required by it in connection with the entry into, performance, validity
and enforceability of, and the transactions contemplated by, the
Finance Documents have been obtained or effected (as appropriate) and
are in full force and effect.
17.8 FINANCIAL STATEMENTS
Its audited consolidated financial statements most recently delivered
to the Lender (which, at the date of this Agreement, are the Original
Financial Statements):
(a) have been prepared in accordance with accounting principles
and practices generally accepted in its jurisdiction of
incorporation, consistently applied; and
(b) fairly represent its consolidated financial condition as at
the date to which they were drawn up,
except, in each case, as disclosed to the contrary in those financial
statements.
17.9 NO MATERIAL ADVERSE CHANGE
In the case of the Company only, as at the date of this Agreement,
there has been no material adverse change in the consolidated financial
condition of the Company since the date to which the Original Financial
Statements were drawn up.
17.10 LITIGATION
No litigation, arbitration or administrative proceedings are current
or, to its knowledge, pending or threatened.
|
17.11 INFORMATION
(a) All information supplied by it to the Lender in connection with the
Finance Documents is true and accurate in all material respects as at
its date or (if appropriate) as at the date (if any) at which it is
stated to be given; and
(b) it has not omitted to supply any information which, if disclosed, might
make the information supplied untrue or misleading in any material
respect.
17.12 TIMES FOR MAKING REPRESENTATIONS
(a) The representations set out in this Clause are made by the Company on
the date of this Agreement.
(b) Each representation is deemed to be repeated by the Company on the date
of each Request and the first day of each Term.
(c) When a representation is repeated, it is applied to the circumstances
existing at the time of repetition.
18. INFORMATION COVENANTS
18.1 FINANCIAL STATEMENTS
(a) The Company must supply or procure such supply (as the case may be) to
the Lender:
(i) the audited consolidated financial statements of the Parent
for each of its financial years;
(ii) its management financial statements for the three months
period of each of its financial years; and
(iii) its management financial statements for each month of its
financial years.
(b) All financial statements must be supplied as soon as they are available
and:
(i) in the case of the Parent's audited consolidated financial
statements, within 120 days; and
(ii) in the case of the Company's management financial statements,
within 30 days.
of the end of the relevant financial period.
18.2 COMPLIANCE CERTIFICATE
(a) A "COMPLIANCE CERTIFICATE" is a certificate in a form and substance
satisfactory to the Lender setting out, among other things,
calculations of the financial covenants.
(b) The Company must procure that the Parent supplies to the Lender a
Compliance Certificate with each set of its financial statements sent
to the Lender in accordance with Clause 18.1 (a)(i) and (ii).
|
(c) A Compliance Certificate must be signed by two authorised signatories
of the Parent and, in the case of a Compliance Certificate supplied
with its annual audited consolidated financial statements, its
auditors.
18.3 FORM OF FINANCIAL STATEMENTS
(a) The Company must ensure that each set of financial statements supplied
under this Agreement gives (if audited) a true and fair view of, or (if
unaudited) fairly represents, the financial condition (consolidated or
otherwise) of the Group as at the date to which those financial
statements were drawn up.
(b) The Company must notify or procure that the Parent notifies the Lender
of any change to the basis on which its audited consolidated financial
statements are prepared.
(c) If requested by the Lender, the Company must supply to the Lender:
(i) a full description of any change notified under paragraph (b)
above; and
(ii) sufficient information to enable it to make a proper
comparison between the financial position shown by the set of
financial statements prepared on the changed basis and its
most recent audited consolidated financial statements
delivered to Lender under this Agreement.
(d) If requested by the Lender, the Company must enter into discussions for
a period of not more than 30 days with a view to agreeing any
amendments required to be made to this Agreement to place the Company
and the Lender in the same position as they would have been in if the
change had not happened.
18.4 INFORMATION - MISCELLANEOUS
The Company must supply to the Lender:
(a) copies of all documents despatched by the Company to its
shareholders (or any class of them) or its creditors generally
at the same time as they are despatched;
(b) promptly upon becoming aware of them, details of any
litigation, arbitration or administrative proceedings which
are current, threatened or pending and which might, if
adversely determined, have a Material Adverse Effect;
(c) promptly on request, such further information regarding the
financial condition and operations of the Group as the Lender
may reasonably request.
(d) promptly on request, annual budgets and projections for the
Group in a format acceptable to the Lender including forward
testing of the Financial Covenants set out in Clause 19.
18.5 NOTIFICATION OF DEFAULT
(a) The Company must notify the Lender of any Default (and the steps, if
any, being taken to remedy it) promptly upon becoming aware of its
occurrence.
|
22
(b) Promptly on request by the Lender, the Company must supply to the
Lender a certificate, signed by two of its authorised signatories on
its behalf, certifying that no Default is outstanding or, if a Default
is outstanding, specifying the Default and the steps, if any, being
taken to remedy it.
18.6 YEAR END
The Company must not change its financial year end with the prior
written consent of the Lender such consent not to be unreasonably
withheld.
19. FINANCIAL COVENANTS
19.1 DEFINITIONS
In this Clause:
"CAPITAL EXPENDITURE"
means for a Measurement Period any amount paid to acquire tangible
fixed assets where such expenditure is capitalised on the balance sheet
of the Group excluding:-
|
(a) rental payments in respect of finance leases;
(b) fixed assets acquired through the acquisition of a business; and
(c) maintenance payments which are charged to the profit and loss account.
"NET CAPITAL EXPENDITURE"
means Capital Expenditure less asset disposal proceeds (including for the avoidance of doubt proceeds from any sale and lease back).
"CONSOLIDATED EBITA"
means the profit/loss of the Group on ordinary activities before tax and after exceptional items for a Measurement Period but after adding back:-
(a) Consolidated Interest Payable (net of capitalised interest and dividends on redeemable shares);
(b) interest payable by associates and joint ventures;
(c) the Group's share of operating losses arising in associates and joint ventures;
(d) amortisation of goodwill and intangibles;
(e) exceptional losses charged below operating profit;
(f) the Group's share of exceptional losses arising in associates and joint ventures not already included in above,
(g) interest on any such obligations in respect of any loan to the Parent or any other member of the Group which is subordinated to amounts owing under the Facility;
and after deducting:-
(h) interest receivable and other similar income;
(i) income from fixed asset investments;
(j) interest receivable by associates and joint ventures;
(k) the Group's share of operating profits arising in associates and joint ventures;
(l) exceptional gains credited below operating profit; and
(m) the Group's share of exceptional gains arising in associates and joint ventures not already included above;
"CONSOLIDATED EBITDA"
means, for a Measurement Period, Consolidated EBITA but after adding back depreciation.
"CONSOLIDATED EBITAR"
means EBITA plus Rental Paid less rental received,
"CONSOLIDATED GROSS BORROWINGS"
means at any time the aggregate of all obligations of the Group for the repayment of money, whether present or future, actual or contingent incurred in respect of:-
(a) money borrowed from all sources;
(b) any bonds, notes, loan stock, debentures or similar instruments;
(c) acceptance credits, bills of exchange or documentary credits;
(d) shares issued on the basis that they are or may become redeemable (at redemption value);
(e) gross obligations under finance leases;
(f) the factoring of debts;
(g) guarantees, indemnities or other assurances against financial loss; and
(h) amounts raised or obligations incurred in respect of any other transaction which has the commercial effect of borrowing.
but excluding:
(i) any such obligations between Members of the Group;
(ii) any such obligations in respect of any loan to the Parent or any other Member of the Group which is subordinated to amounts owing under the Facility; and
(iii) any such obligations in respect of Stocking Finance.
"CONSOLIDATED INTEREST AND RENTAL PAYABLE"
means, for a Measurement Period, Consolidated Interest Payable plus Rental Paid and due to be paid by the Group during a Measurement Period.
"CONSOLIDATED NET BORROWINGS"
means at any time Consolidated Gross Borrowings less consolidated cash at bank and in hand.
"CONSOLIDATED INTEREST PAYABLE"
means the aggregate of all interest, commission, fees and charges paid and due to be paid by the Group in respect of its Consolidated Gross Borrowings during a Measurement Period.
"CONSOLIDATED NET INTEREST PAYABLE"
means Consolidated Interest Payable less the aggregate of consolidated interest received by the Group on cash at bank and in hand.
"CONSOLIDATED NET WORTH"
means Consolidated Shareholder's Funds plus the amount outstanding of any loan to the Parent or any other Member of the Group other than from a Member of the Group which is subordinated to amounts owing under the Facility.
"CONSOLIDATED SHAREHOLDER'S FUNDS"
means at any time the aggregate of:
(a) the amount paid up or credited as paid up on the issued share capital of the Parent; and
(b) the amount standing to the credit of the consolidated capital and revenue reserves of the Group;
based on the latest published audited consolidated balance sheet of the Company (the "LATEST BALANCE SHEET") but adjusted by:
(i) adding any amount standing to the credit of the profit and loss account of the Group for the period ending on the date of the latest balance sheet to the extent not included in sub-paragraph (b) above;
(ii) deducting any dividend or other distribution declared, recommended or made by any Member of the Group, other than to another Member of the Group;
(iii) deducting any amount standing to the debit of the profit and loss account of the Group for the period ending on the date of the latest balance sheet;
(iv) reflecting any variation in the amount of the issued share capital of the Parent and the consolidated capital and revenue reserves of the Group after the date of the latest balance sheet;
(v) reflecting any variation in the interest of the Parent in any other Member of the Group since the date of the latest balance sheet;
(vi) excluding any amount attributable to deferred taxation;
(vii) excluding any amount attributable to minority interests;
(viii) adding back the amount of any goodwill or other intangible asset that has been amortised through the consolidated profit and loss account of the Parent since the date of the Original Financial Statements; and
(ix) including for the avoidance of doubt any amount attributable to goodwill or any other intangible asset.
"DIVIDENDS"
means for a Measurement Period all dividends on the Parents's:-
(a) ordinary share capital; and
(b) preference share capital (other than redeemable preference shares).
"MEASUREMENT PERIOD"
means a period of 12 months ending on the last day of a financial quarter of the Parent.
"RENTAL PAID"
means rental paid on operating leases with an expiry date in excess of 5 years at the date of measurement.
"STOCKING INTEREST"
means interest charged on funding provided for vehicle stock, comprising used demonstrators and consignment vehicles.
19.2 INTERPRETATION
(a) Except as provided to the contrary in this Agreement, an
accounting term used in this Clause is to be construed in
accordance with the principles applied in connection with the
Original Financial Statements.
(b) No item must be credited or deducted more than once in any
calculation under this Clause.
19.3 CONSOLIDATED NET WORTH
The Company must ensure that Consolidated Net Worth is not, at any time
during the period set out in Column 1 below, less than the amount set
|
out in Column 2 below opposite such period:
COLUMN 1 COLUMN 2
-------- --------
From 31 December 2002 to 30 December 2003 Pound Sterling97,500,000
31 December 2003 to 29 June 2005 Pound Sterling107,000,000
Thereafter Pound Sterling120,000,000
|
19.4 GEARING
The Company must ensure that Consolidated Net Borrowings do not, at any
time during the period set out in Column 1 below, exceed the percentage
of Consolidated Shareholder's Funds set out in Column 2 below opposite
|
such period:
COLUMN 1 COLUMN 2
-------- --------
From 31 December 2002 to 30 March 2003 60%
From 31 March 2003 to 29 September 2003 70%
From 30 September 2003 to 30 December 2003 85%
From 31 December 2003 to 29 June 2004 80%
From 30 June 2004 to 30 December 2004 70%
31 December 2004 to 30 March 2005 65%
Thereafter 50%
|
19.5 INTEREST COVER
The Company must ensure that the ratio of Consolidated EBITA to
Consolidated Net Interest Payable is not, at the end of each
Measurement Period, less than 3.4:1 to the period ending 30 March 2004
and then 3.65:1 thereafter.
19.7 CAPITAL EXPENDITURE
The Company must ensure that at the end of each Measurement Period set
out in Column 1 below Net Capital Expenditure for that Measurement
Period does not exceed the figure set out in Column 2 below opposite
such period: (excluding Capital Expenditure funded by UAG International
Holdings Inc mentioned below)
|
COLUMN 1 COLUMN 2
-------- --------
31 March 2003 until 29 September 2003 Pound Sterling15,000,000
30 September 2003 until 30 March 2004 Pound Sterling25,000,000
31 March 2004 until 29 June 2004 Pound Sterling20,000,000
|
COLUMN 1 COLUMN 2
-------- --------
30 June 2004 until 29 September 2004 15,000,000
Thereafter Pound Sterling11,000,000
|
For each Measurement Period until that ending on 30 March 2004 the
Company may incur additional Capital Expenditure of Pound
Sterling10,000,000 provided that and to the extent that either:
(a) UAG International Holdings Inc has granted loans to the Parent
in excess of Pound Sterling37,000,000; or
(b) UAG International Holdings Inc grants to the Company a loan or
loans.
19.8 CONSOLIDATED NET BORROWINGS TO CONSOLIDATED EBITDA LESS STOCKING
INTEREST
The Company must ensure that the ratio of Consolidated Net Borrowings
to Consolidated EBITDA less Stocking Interest does not, for each
Measurement Period ending on the date set out in Column 1 below exceed
|
the ratio set out in Column 2 below opposite such period:
COLUMN 1 COLUMN 2
-------- --------
31 March 2003 2.0:1
30 June 2003 2.0:1
30 September 2003 2.25:1
31 December 2003 2.0:1
31 March 2004 2.0:1
30 June 2004 1.6:1
30 September 2004 1.6:1
31 December 2004 1.5:1
Thereafter 1.5:1
|
19.9 FIXED CHARGE
The Company must ensure that the ratio of Consolidated EBITAR to
Consolidated Net Interest and Rental Payable is not, at the end of each
Measurement Period less than 1.95:1 to the period ending 30 March 2004,
thereafter 2.05:1.
|
20. GENERAL COVENANTS
20.1 GENERAL
The Company agrees to be bound by the covenants set out in this Clause
relating to it and, where the covenant is expressed to apply to each
Member of the Group, the Company must ensure that each of its
Subsidiaries performs that covenant.
20.2 AUTHORISATIONS
The Company must promptly obtain, maintain and comply with the terms of
any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability
of, any Finance Document.
20.3 COMPLIANCE WITH LAWS
Each Member of the Group must comply in all respects with all laws to
which it is subject where failure to do so is reasonably likely to have
a Material Adverse Effect.
20.4 PARI PASSU RANKING
The Company must ensure that its payment obligations under the Finance
Documents rank at least pari passu with all its other present and
future unsecured payment obligations, except for obligations
mandatorily preferred by law applying to companies generally.
20.5 NEGATIVE PLEDGE
(a) Except as provided below the Company shall not and shall procure that
no Subsidiary shall create or allow to exist any Security Interest on
any of its assets.
|
(b) Paragraph (a) does not apply to:
(i) any Security Interest created under any Finance Document;
(ii) any right of set-off or lien, in each case arising by operation of law;
(iii) any retention of title to goods supplied to a Member of the Group in the ordinary course of its trading activities;
(iv) any right of set-off over credit balances on bank accounts of any Member of the Group created in order to facilitate the operation of those bank accounts and other bank accounts of other Members of the Group arising in the ordinary course of the banking arrangements of the Group;
(v) any agreement entered into by a Member of the Group in the ordinary course of its trading activities to sell or otherwise dispose of any asset on terms whereby that asset is or may be leased to or re-acquired or acquired by any Member of the Group;
(vi) any Security Interest over an asset of a company which becomes a Subsidiary of the Company (other than by reason of its incorporation) after the date of this Agreement, being an Security Interest which is in existence at the time at which that company
becomes such a Subsidiary but only if (i) that Security Interest was not created in contemplation of that company becoming such a Subsidiary, (ii) the principal amount secured by that Security Interest has not been and shall not be increased and (iii) that Security Interest is discharged within 6 months of the date on which that company became such a Subsidiary;
(vii) any Security Interest over an asset acquired by a Member of the Group after the date of this Agreement and subject to which that asset is acquired but only if (i) that Security Interest was not created in contemplation of its acquisition by that company, (ii) the amount secured by that Security Interest has not been increased in contemplation of, or since the date of, its acquisition by that company and (iii) that the Security Interest is discharged within 6 months of the date of its acquisition by that company; and
(viii) any Security Interest notified to the Lender in writing prior
to the date of this Agreement except to the extent the
principal amount secured by that Security Interest exceeds the
amount stated in that notification.
20.6 DISPOSALS
(a) Except as provided below, no Member of the Group may, either in a
single transaction or in a series of transactions and whether related
or not, dispose of all or any part of its assets.
|
(b) Paragraph (a) does not apply to any disposal:
(i) in the ordinary course of its trading activities;
(ii) where the proceeds of the disposal are used within 3 months of that disposal for the purchase of an asset to replace directly the asset which was the subject of that disposal (including for the avoidance of doubt any sale and leaseback of such asset) disposed;
(iii) a disposal of an asset which is obsolete for the purpose for
which such an asset is normally utilised; or
(iv) where the net proceeds of any disposal are used to reduce or
repay the Facility;
(v) a disposal with the prior written consent of the Lender; and
(vi) a disposal on arm's length terms where the aggregate value of
the assets the subject of a disposal by a Member of the Group
other than in accordance with paragraphs (i) to (iii) above in
any Financial Year of the Company does not exceed Pound
Sterling250,000 (for the purposes of this paragraph, the value
of any asset shall be the greater of its book value and the
consideration received for it).
20.7 FINANCIAL INDEBTEDNESS
(a) Except as provided below, no Member of the Group may incur any
Financial Indebtedness.
|
(b) Paragraph (a) does not apply to:
(i) Financial Indebtedness owed to the Lender including, without limitation, Financial Indebtedness under any Finance Document;
(ii) Financial Indebtedness existing at the date of this Agreement between Members of the Group;
(iii) any Financial Indebtedness of any person acquired by a Member
of the Group which is incurred under arrangements in existence
at the date of acquisition, but only for a period of 6 months
from the date of acquisition; or any derivative transaction
protecting against or benefiting from fluctuations in any rate
or price entered into in the ordinary course of business; and
(iv) Financial Indebtedness existing at the date of this Agreement
and notified to the Lender in writing prior to the date of
this Agreement;
20.8 CHANGE OF BUSINESS
The Company must ensure that no substantial change is made to the
general nature of the business of the Company or the Group from that
carried on at the date of this Agreement.
20.9 MERGERS
The Company may not enter into any amalgamation, demerger, merger or
reconstruction otherwise than under an intra-Group re-organisation on a
solvent basis or other transaction agreed by the Lender.
20.10 ACQUISITIONS
(a) Except as provided below, the Company may not and none of its
Subsidiaries may make any acquisition or investment.
(b) Paragraph (a) does not apply to :
(i) acquisitions or investments made in the ordinary course of
trade;
(ii) acquisitions or investments up to an amount of Pound
Sterling5,000,000 (including any Capital Expenditure covered
by a loan granted by UAG International Holdings Inc under
Clause 19.7); and
(iii) acquisitions or investments with the prior consent of the
Lender such consent not to be unreasonably withheld or
delayed. Any request for consent to include projections
including forward testing of the Financial Covenants set out
in Clause 19.
(c) If an acquisition is made pursuant to paragraph (b) above, the Company
shall procure that promptly on such acquisition:
(A) if the acquisition is of a business, the business and
assets of the business become subject to an existing
Security Document; or
(B) if the acquisition is of shares comprising more than
50 per cent. of the issued share capital of a
company, subject to any legal prohibition
|
or limitation on the giving of any such guarantee and
debenture (or its equivalent under relevant law),
that company executes a guarantee and a debenture,
being in each case a Security Document, (or the
equivalent documents (in a form approved by the
Lender) under the laws of the jurisdiction of that
company's incorporation) and delivers the same to the
Lender together with, in the latter case, a legal
opinion (in a form and content satisfactory to the
Lender) from lawyers appointed by the Lender;
(d) In the event that a Member of the Group makes any share acquisition
then the Company shall procure that United Auto Group UK Limited
executes a guarantee and a debenture, being in each case a Security
Document, in form and substance satisfactory to the Lender and that
United Auto Group UK Limited complies in all respects with sections 151
to 158 inclusive of the Companies Act 1985.
20.11 LOANS
(a) Except as provided below, the Company may not and none of its
Subsidiaries may make any loan or grant credit to or for the benefit of
any person.
(b) Paragraph (a) does not apply to:
(i) amounts of credit allowed by any Member of the Group in the
normal course of its trading activities;
(ii) loans made by any Member of the Group to another Member of the
Group; or
(iii) loans made by a Member of the Group to its employees where
such loans do not, when aggregated with all such loans made by
all Members of the Group, exceed Pound Sterling300,000 at any
time.
20.12 DIVIDENDS
The Company may not make, pay or declare any dividend in respect of its
financial year ended 31 December 2002. Dividends in respect of any
future financial years may not be made without the prior consent of the
Lender (not to be unreasonably withheld or delayed if the Financial
Covenants set out in Clause 19 of this Agreement have been complied
with).
20.13 MATERIAL SUBSIDIARIES
The Company procures that any Member of the Group that becomes a
Material Subsidiary shall within 30 days of becoming a Material
Subsidiary execute, subject to, and to the extent permitted under, all
applicable laws, any additional Security Documents the Lender may
require, in a form and content satisfactory to the Lender.
20.14 INSURANCE
Each Member of the Group must insure its business and assets with
insurance companies to such an extent and against such risks as
companies engaged in a similar business normally insure.
|
20.15 UAG INTERNATIONAL HOLDINGS INC LOAN
The Parent may not without the prior written consent of the Lender
(such consent not to be unreasonably withheld or delayed if the
Financial Covenants set out in Clause 19 of this Agreement have been
complied with), repay any loan granted to it by UAG International
Holdings Inc. (including any loan granted under Clause 19.7) unless all
amounts due under the Facility have been repaid and the Facility has
been cancelled.
20.16 COMPLIANCE WITH SECTION 151 OF THE COMPANIES ACT 1985
Each Member of the Group shall comply in all respects with sections 151
to 158 inclusive of the Companies Act 1985, including in relation to
the execution of the Security Documents and the payment of amounts due
under this Agreement.
20.17 RELEASE OR INVESTIGATION OF SECURITY INTERESTS
The Company shall:
(a) procure that deeds of release and/or Forms 403a are provided
to the Lender within 60 days of the date of this Agreement in
respect of the Security Interests listed in Part A of Schedule
5; and
(b) investigate the Security Interests listed in Part B of
Schedule 5 and report to the Lender within 60 days of the date
of this Agreement and following such report within a further
30 days the Company shall procure that either:
(aa) the Security Interests are released and Form 403a's
are provided to the Lender; or
(bb) deeds of priority in a form and substance
satisfactory to the Lender are entered into between
the beneficiary of the relevant Security Interest,
the Company, the Lender and any other relevant party.
21. DEFAULT
21.1 EVENTS OF DEFAULT
|
Each of the events set out in this Clause is an Event of Default.
21.2 NON-PAYMENT
The Company does not pay on the due date any amount payable by it under
the Finance Documents in the manner required under the Finance
|
Documents, unless the non-payment:
(a) is caused by technical or administrative error; and
(b) is remedied within three Business Days of the due date.
21.3 BREACH OF OTHER OBLIGATIONS
(a) The Company does not comply with any term of Clause 18
(General covenants) or Clause 16 (Financial covenants); or the
Company does not comply with any other term of the Finance
Documents not already referred to in this Clause.
21.4 MISREPRESENTATION
A representation made or repeated by the Company in any Finance
Document or in any document delivered by or on behalf of the Company
under any Finance Document is incorrect in any material respect when
made or deemed to be repeated.
21.5 CROSS-DEFAULT
Any of the following occurs in respect of the Company or any of its
Subsidiaries:
(a) any of its Financial Indebtedness is not paid when due (after
the expiry of any originally applicable grace period);
(b) any of its Financial Indebtedness:
(i) becomes prematurely due and payable;
(ii) is placed on demand; or
(c) is capable of being declared by a creditor to be prematurely
due and payable or being placed on demand,
in each case, as a result of an event of default (howsoever described);
or
(d) any commitment for its Financial Indebtedness is cancelled or
suspended as a result of an event of default (howsoever
described),
unless the aggregate amount of Financial Indebtedness falling within
paragraphs (a)-(c) above is less than Pound Sterling250,000 or its
equivalent.
21.6 INSOLVENCY
Any of the following occurs in respect of a Member of the Group:
(a) it is, or is deemed for the purposes of any law to be, unable
to pay its debts as they fall due or insolvent;
|
(b) it admits its inability to pay its debts as they fall due;
(c) it suspends making payments on any of its debts or announces an intention to do so;
(d) by reason of actual or anticipated financial difficulties, it begins negotiations with any creditor for the rescheduling of any of its indebtedness; or
(e) a moratorium is declared in respect of any of its indebtedness.
21.7 INSOLVENCY PROCEEDINGS
(a) Except as provided below, any of the following occurs in respect of a Member of the Group:
(i) any step is taken with a view to a composition, assignment or similar arrangement with any of its creditors;
(ii) a meeting of it is convened for the purpose of considering any resolution for (or to petition for) its winding-up, administration or dissolution or any such resolution is passed;
(iii) any person presents a petition for its winding-up, administration or dissolution;
(iv) an order for its winding-up, administration or dissolution is made;
(v) any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer is appointed in respect of it or any of its assets;
(vi) its directors or other officers request the appointment of a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer; or
(vii) any other analogous step or procedure is taken in any
jurisdiction.
21.8 CREDITORS' PROCESS
Any attachment, sequestration, distress, execution or analogous event
affects any asset(s) of a Member of the Group having a value of at
least Pound Sterling150,000 and such process is not discharged within
14 days.
21.9 CESSATION OF BUSINESS
A Member of the Group ceases, or threatens to cease, to carry on
business except:
(a) as a result of any disposal allowed under this Agreement.
21.10 EFFECTIVENESS OF FINANCE DOCUMENTS
(a) It is or becomes unlawful for the Company or any other Member
of the Group to perform any of its obligations under the
Finance Documents.
(b) Any Finance Document is not effective or is alleged by the
Company or any other Member of the Group to be ineffective for
any reason.
(c) The Company or any other Member of the Group repudiates a
Finance Document or evidences an intention to repudiate a
Finance Document.
21.11 FRANCHISE AGREEMENTS
|
A breach occurs under any a Material Franchising Agreement which has a
Material Adverse Effect.
21.12 MATERIAL ADVERSE CHANGE
Any event or series of events occurs which, in the opinion of the
Lender, would have a Material Adverse Effect.
21.13 ACCELERATION
If an Event of Default is outstanding, the Lender may, by notice to the
Company:
(a) cancel the Commitment; and/or
(b) declare that all or part of any amounts outstanding under the
Finance Documents are:
(i) immediately due and payable; and/or
(ii) payable on demand by the Lender.
Any notice given under this Subclause will take effect in accordance
with its terms.
22. EVIDENCE AND CALCULATIONS
22.1 ACCOUNTS
Accounts maintained by the Lender in connection with this Agreement are
prima facie evidence of the matters to which they relate for the
purpose of any litigation or arbitration proceedings.
22.2 CERTIFICATES AND DETERMINATIONS
Any certification or determination by the Lender of a rate or amount
under the Finance Documents will be, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
22.3 CALCULATIONS
Any interest or fee accruing under this Agreement accrues from day to
day and is calculated on the basis of the actual number of days elapsed
and a year of 360 or 365 days or otherwise, depending on what the
Lender determines is market practice.
23. FEES
23.1 FRONT-END FEE
The Company must pay to the Lender on the date of this Agreement a
front-end fee of Pound Sterling270,000.00.
|
23.2 COMMITMENT FEE
(a) The Company must pay to the Lender a commitment fee computed at the rate of 0.35 per cent. per annum on the undrawn, uncancelled amount of the Commitment.
(b) Accrued commitment fee is payable quarterly in arrear. Accrued commitment fee is also payable to the Lender on the date that the Commitment is cancelled in full.
24. INDEMNITIES AND BREAK COSTS
24.1 INDEMNITIES
(a) The Company must indemnify the Lender against any loss or liability which the Lender incurs as a consequence of:
(i) the occurrence of any Event of Default;
(ii) any failure by the Company to pay any amount due under a Finance Document on its due date;
(iii) (other than by reason of negligence or default by the Lender) a Loan not being made after a Request has been delivered for that Loan;
(iv) a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment;
(v) investigating any event which the Lender reasonably believes to be a Default; or
(vi) acting or relying on any notice which the Lender reasonably believes to be genuine, correct and appropriately authorised.
(b) The Company's liability in each case includes any loss or expense on account of funds borrowed, contracted for or utilised to fund any amount payable under any Finance Document, any amount repaid or prepaid or any Loan.
24.2 BREAK COSTS
(a) The Company must pay to the Lender its Break Costs.
(b) Break Costs are the amount (if any) determined by the Lender by which:
(i) the interest which the Lender would have received for the period from the date of receipt of any part of its share in a Loan or an overdue amount to the last day of the applicable Term for that Loan or overdue amount if the principal or overdue amount received had been paid on the last day of that Term;
exceeds
(ii) the amount which the Lender would be able to obtain by placing an amount equal to the amount received by it on deposit with a leading bank in the appropriate
interbank market for a period starting on the Business Day
following receipt and ending on the last day of the applicable
Term.
(c) The Lender must supply to the Company details of the amount of
any Break Costs claimed by it under this Subclause.
25. EXPENSES
25.1 INITIAL COSTS
Each party to this Agreement shall be responsible for the amount of all
costs and expenses (including legal fees) reasonably incurred by it in
connection with the negotiation, preparation, printing and execution of
the Finance Documents.
25.2 SUBSEQUENT COSTS
The Company must pay to the Lender the amount of all costs and expenses
(including legal fees) reasonably incurred by it in connection with:
(a) the negotiation, preparation, printing and execution of any
Finance Document executed after the date of this Agreement;
(b) any amendment, waiver or consent requested by or on behalf of
the Company or specifically allowed by this Agreement; and
(c) the taking and preparation of any additional Security Document
required by the Lender under this Agreement.
25.3 ENFORCEMENT COSTS
The Company must pay to the Lender the amount of all reasonable costs
and expenses (including legal fees) incurred by it in connection with
the enforcement of, or the preservation of any rights under, any
Finance Document.
26. AMENDMENTS AND WAIVERS
26.1 CHANGE OF CURRENCY
If a change in any currency of a country occurs (including where there
is more than one currency or currency unit recognised at the same time
as the lawful currency of a country), the Finance Documents will be
amended to the extent the Lender (acting reasonably and after
consultation with the Company) determines is necessary to reflect the
change.
26.2 WAIVERS AND REMEDIES CUMULATIVE
|
The rights of the Lender under the Finance Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any right is not a waiver of
that right.
27. CHANGES TO THE PARTIES
27.1 ASSIGNMENTS AND TRANSFERS BY THE COMPANY
The Company may not assign or transfer any of its rights and
obligations under the Finance Documents without the prior consent of
the Lender.
27.2 ASSIGNMENTS AND TRANSFERS BY THE LENDER
(a) The Lender may at any time assign or transfer (including by
way of novation) any of its rights and obligations under this
Agreement to another bank or financial institution (the "NEW
LENDER").
(b) A transfer of obligations will be effective only if the New
Lender confirms to the Company in form and substance
satisfactory to the Company that it is bound by the terms of
this Agreement as the Lender. On the transfer becoming
effective in this manner the Lender will be released from its
obligations under this Agreement to the extent that they are
transferred to the New Lender.
28. DISCLOSURE OF INFORMATION
(a) The Lender must keep confidential any information supplied to
it by or on behalf of the Company in connection with the
Finance Documents. However, the Lender is entitled to disclose
information:
(i) which is publicly available, other than as a result
of a breach by the Lender of this Clause;
(ii) in connection with any legal or arbitration
proceedings;
|
(iii) if required to do so under any law or regulation;
(iv) to a governmental, banking, taxation or other regulatory authority;
(v) to its professional advisers;
(vi) to the extent allowed under paragraph (b) below; or
(vii) with the agreement of the Company.
(b) The Lender may disclose to an Affiliate or any person with whom it may enter, or has entered into, any kind of transfer, participation or other agreement in relation to this Agreement (a "PARTICIPANT"):
(i) a copy of any Finance Document; and
(ii) any information which the Lender has acquired under or in connection with any Finance Document.
However, before a participant may receive any confidential information, it must agree with the Lender to keep that information confidential on the terms of paragraph (a) above.
This Clause supersedes any previous confidentiality undertaking given by the Lender in connection with this Agreement.
29. SET-OFF
The Lender may set off any matured obligation owed to it by the Company under the Finance Documents (to the extent beneficially owned by the Lender) against any obligation (whether or not matured) owed by the Lender to the Company, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
30. SEVERABILITY
If a term of a Finance Document is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect:
(a) the legality, validity or enforceability in that jurisdiction of any other term of the Finance Documents; or
(b) the legality, validity or enforceability in other jurisdictions of that or any other term of the Finance Documents.
31. NOTICES
31.1 IN WRITING
(a) Any communication in connection with a Finance Document must be in writing and, unless otherwise stated, may be given in person, by post or fax.
(b) Unless it is agreed to the contrary, any consent or agreement required under a Finance Document must be given in writing.
31.2 CONTACT DETAILS
(a) The contact details of the Company for this purpose are:
Address: Sytner Group Limited,
Woodcote House,
Harcourt Way,
Meridian Business Park,
Leicester
LE19 1WE
Fax number: 01162 893232
Attention: Mark Morris
|
(b) The contact details of the Lender for this purpose are:
Address: Corporate & Institutional Banking,
2nd Floor, 79-83 Colmore Row,
Birmingham,
B3 2AP
Fax number: 0121 236 1658
Attention: Andrew Baker.
|
(c) The Company or the Lender may change their contact details by giving five Business Days' notice to the other Party.
(d) Where a Party nominates a particular department or officer to receive a communication, a communication will not be effective if it fails to specify that department or officer.
31.3 EFFECTIVENESS
(a) Except as provided below, any communication in connection with a Finance Document will be deemed to be given as follows:
(i) if delivered in person, at the time of delivery;
(ii) if posted, five days after being deposited in the post, postage prepaid, in a correctly addressed envelope;
(iii) if by fax, when received in legible form.
(b) A communication given under paragraph (a) above but received on a non-working day or after business hours in the place of receipt will only be deemed to be given on the next working day in that place.
(c) A communication to the Lender will only be effective on actual receipt by it.
32. LANGUAGE
(a) Any notice given in connection with a Finance Document must be in English.
(b) Any other document provided in connection with a Finance Document must be:
(i) in English; or
(ii) (unless the Lender otherwise agrees) accompanied by a certified English translation. In this case, the English translation prevails unless the document is a statutory or other official document.
33. GOVERNING LAW
This Agreement is governed by English law.
34. ENFORCEMENT
34.1 JURISDICTION
(a) The English courts have exclusive jurisdiction to settle any dispute in connection with any Finance Document.
(b) The English courts are the most appropriate and convenient courts to settle any such dispute.
(c) This Clause is for the benefit of the Lender only. To the extent allowed by law, the Lender may take:
(i) proceedings in any other court; and
(ii) concurrent proceedings in any number of jurisdictions.
This Agreement has been entered into on the date stated at the beginning of this Agreement.
SCHEDULE 1
CONDITIONS PRECEDENT DOCUMENTS
COMPANY
1. A certified copy of the certificate of incorporation (and any relative certificate of incorporation on change of name) of the Company and each of the companies detailed in Schedule 4 which is to grant a Security Document.
2. A certified copy the memorandum and articles of association of the Company and each of the companies detailed in Schedule 4 which is to grant a Security Document.
3. A copy of a resolution of the board of directors or a committee of the board of directors of the Company and each of the companies detailed in Schedule 4 which is to grant a Security Document approving the terms of, and the transactions contemplated by, this Agreement and/or the Security Documents to which they are to be a party.
4. A specimen of the signature of each person authorised on behalf of the Company and each of the companies detailed in Schedule 4 which is to grant a Security Document to execute or witness the execution of any Finance Document or to sign or send any document or notice in connection with any Finance Document.
5. A certificate of an authorised signatory of the Company:
(a) confirming that utilising the Commitment in full would not breach any limit binding on it; and
(b) certifying that each copy document specified in this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.
6. A certified copy of a letter evidencing the loan arrangements entered into between UAG International Holdings Inc. and UAG UK Holdings Limited.
7. Evidence that the Existing Facilities have been, or will be, immediately following drawdown under the Facilities, repaid and cancelled in full.
8. Certified copies of special resolutions of the following companies:
o the Parent amending its memorandum of association;
o the Company amending its memorandum and articles of association;
o Ron Stratton & Co Limited amending its articles of association;
o W A Hatfield Limited amending its memorandum and articles of association;
o United Auto Group UK Limited amending its articles of association;
o Guy Salmon Jaguar Limited amending its articles of association;
o Guy Salmon Honda Limited amending its articles of association;
o Ron Stratton (Knutsford) Limited amending its memorandum and articles of association;
o Graypaul Motors Limited amending its articles of association;
o Sytner Sheffield Limited amending its articles of association;
o Sytner of Leicester Limited amending its articles of association;
o Hallamshire Motor Company Limited amending its articles of association;
o Prophets Garage Limited amending its memorandum of association;
o Sytner Holdings Limited amending its articles of association;
o Guy Salmon Highgate Limited amending its articles of association;
o Sandridge Limited amending its articles of association;
o Hughenden Motor Company Limited amending its articles of association;
o Sytner Limited amending its memorandum and articles of association.
9. Evidence that there are no Security Interests subsisting over any Group Company other than Security Interests permitted by Clause 20.5(b), those listed in Part A and Part B of Schedule 5 and the following:
o Charge over Deposit dated 7 March 2002 granted by the Parent in favour of The Royal Bank of Scotland plc;
o Floating Charge dated 2 February 1993 granted by Prophets (Gerrard Cross) Limited in favour of BMW Finance (GB) Limited;
o Floating Charge dated 5 March 2002 granted by United Auto Group UK Limited in favour of Daimlerchrysler Services UK Limited;
o Floating Charge dated 27 April 2002 granted by United Auto Group UK Limited in favour of Daimlerchrysler Services UK Limited;
o Deed of Assignment dated 16 March 2001 granted by Sytner Chelsea Limited in favour of BMW Financial Services (GB) Limited;
o Debenture dated 3 January 1996 granted by Goodman (Leeds) Limited in favour of Volkswagen Financial Services (UK) Limited;
o Debenture dated 10 November 1997 granted by Graypaul Motors Limited in favour of Lloyds Bowmaker Limited;
o Debenture dated 22 Debenture 1987 granted by Sytner Sheffield Limited in favour of BMW Finance (GB) Limited;
o Debenture dated 1 September 1993 granted by Sytner of Leicester Limited in favour of BMW Finance (GB) Limited;
o Floating Charge dated 31 December 1996 granted by Hallamshire Motor Company Limited in favour of Lombard North Central plc;
o Debenture dated 18 January 1988 granted by Prophets Garage Limited in favour of BMW Finance (GB) Limited;
o Floating Charge dated 21 September 1992 granted by Prophets Garage Limited in favour of BMW Finance (GB) Limited;
o Debenture dated 6 August 1998 granted by Sandridge Limited in favour of Lloyds Bowmaker Limited;
o Debenture dated 14 September 1989 granted by Hughenden Motor Company Limited in favour of BMW Finance (GB) Limited;
o Floating Charge dated 26 January 2001 granted by Hughenden Motor Company Limited in favour of BMW Finance (GB) Limited;
o Debenture dated 11 November 1988 granted by Sytner Limited in favour of BMW Finance (GB) Limited;
o General Charge dated 16 August 1993 granted by Sytner Limited in favour of BMW Finance (GB) Limited.
SECURITY DOCUMENTS
The Security Documents listed in Schedule 4 (Required Security) each duly executed by the parties to it together with, in each case, all documents deliverable with them..
SCHEDULE 2
CALCULATION OF THE MANDATORY COST
1. GENERAL
The Mandatory Cost is the rate for the Lender calculated below by the Lender on the first day of a Term in accordance with the following formula:
AB + C(B - D) + E x 0.01
------------------------ percent. per annum
100 - (A + C)
where on the day of application of the formula:
A is the percentage of the Lender's eligible liabilities (in
excess of any stated minimum) which the Bank of England
requires it to hold on a non-interest-bearing deposit account
in accordance with its cash ratio requirements;
B is LIBOR for that Term;
C is the percentage of the Lender's eligible liabilities which
the Bank of England requires it to place as a special deposit;
D is the interest rate per annum allowed by the Bank of England
on a special deposit; and
E is the charge payable by the Lender to the Financial Services
Authority under the fees regulations (but, for this purpose,
ignoring any minimum fee required under the fees regulations)
and expressed in pounds per L1 million of the fee base of the
Lender.
|
(b) For the purposes of this paragraph 2:
(i) "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSIT" have the meanings given to them at the time of application of the formula by the Bank of England;
(ii) "FEE BASE" has the meaning given to it in the fees regulations; and
(iii) "FEES REGULATIONS" means The Financial Services Banking Supervision (Fees) Regulations 2000.
(c) (i) In the application of the formulae, A, B, C and D are included as figures and not as percentages, e.g. if A = 0.5% and B = 15%, AB is calculated as 0.5 x 15. A negative result obtained by subtracting D from B is taken as zero.
(ii) Each rate calculated in accordance with a formula is, if necessary, rounded upward to four decimal places.
2. CHANGES
The Lender may, after consultation with the Company, notify the Company of any amendment to this Schedule which is required to reflect:
(a) any change in law or regulation; or
(b) any requirement imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any successor authority).
Any notification will be, in the absence of manifest error, conclusive and binding on all the Parties.
SCHEDULE 3
EXISTING SECURITY
First Legal Charges over the following properties:-
(a) Tetner Street, North Side of Hollis Croft and Broad Lane, Sheffield given by Sytner Sheffield Ltd.
(b) Union Road, North West of Union Road and Shelton Street, Nottingham, given by Sytner of Nottingham Ltd.
(c) Land on North West side of Marsh Road, Bristol (incorporated in Mortgage Debenture) and 127 Westbury Road Bristol, given by Cruickshank Motors Ltd.
(d) Concord Garage, The Conneries, Loughborough (incorporated in Mortgage Debenture) given by Graypaul Motors Ltd.
Second Legal Charges over the following property:-
(e) Freehold and Leasehold premises in Valley Road, Hughenden Valley, High Wycombe, given by Hughenden Motors Ltd.
Unlimited inter-company cross guarantee between the following companies:
Sytner Group Limited
Sytner Limited
Sytner of Leicester Limited
Sytner Sheffield Limited
Hallamshire Motor Company Limited
Cruickshank Motors Limited
Graypaul Motors Limited
Goodman Leeds Limited
Hyde Car Centre Limited
Sandridge Limited
Sytner Finance Limited
Guy Salmon Jaguar Limited
Guy Salmon Honda Limited
WA Hatfield Limited
Sytner Holdings Limited (formerly Ixion Motor Group Limited)
Prophets Garage Limited
Prophets (Gerrards Cross) Limited
Sytner Properties Limited
Yarnolds of Stratford Limited
Sytner Chelsea Limited
Hughenden Motor Company Limited
Mortgage Debentures from the following companies:
Sytner Group Limited
Sytner Limited
Sytner of Leicester Limited
Sytner Sheffield Limited
Hallamshire Motor Company Limited
Cruickshank Motors Limited
Graypaul Motors Limited
Goodman Leeds Limited
Hyde Car Centre Limited
Sandridge Limited
Sytner Finance Limited
Guy Salmon Jaguar Limited
Guy Salmon Honda Limited
WA Hatfield Limited
Sytner Holdings Limited
Prophets Garage Limited
Prophets (Gerrards Cross) Limited
Yarnolds of Stratford Limited
Guy Salmon Highgate Limited
Sytner Chelsea Limited
Hughenden Motor Company Limited
First fixed charge over the following:
(a) all sums standing to the credit of the interest bearing blocked deposit account in the name of UAG UK Holdings Limited, sort code 60-80-09, account number 30280486 given by UAG UK Holdings Limited
(b) all book debts and other debts given by Sytner Limited
SCHEDULE 4
REQUIRED SECURITY
1. An unlimited inter-company cross guarantee between the following companies:-
Ron Stratton & Co Limited
Ron Stratton (Knutsford) Limited
United Auto Group UK Limited
Guy Salmon Honda Limited
2. A guarantee from UAG UK Holdings Limited in respect of liabilities of the Company in a format acceptable to the Lender.
3. Mortgage Debentures from the following companies
UAG UK Holdings Limited
Ron Stratton & Co Limited
Ron Stratton (Knutsford) Limited
United Auto Group UK Limited
Guy Salmon Honda Limited
4. A Subordination Agreement in respect of the loan to UAG UK Holdings Limited from UAG International Holdings Inc in a format acceptable to the Lender.
SCHEDULE 5
PART A
SECURITY TO BE RELEASED
Deeds of release and Forms 403a are to be provided to the Lender (in accordance with Clause 20.17(a)) in respect of the following:
o Legal Charge dated 3 September 1996 granted by Ron Stratton & Co Limited in favour of Esso Petroleum Limited;
o Guarantee and Debenture dated 27 February 1998 granted by Ron Stratton & Co Limited in favour of Barclays Bank PLC;
o Legal Charge dated 7 July 1999 granted by Ron Stratton & Co Limited in favour of Esso Petroleum Limited;
o Guarantee and Debenture dated 27 February 1998 granted by Ron Stratton (Knutsford) Limited in favour of Barclays Bank PLC;
o Floating Charge dated 10 November 1997 granted by Graypaul Motors Limited in favour of Lloyds Bowmaker Limited;
o Debenture dated 14 December 1935 granted by Sytner Sheffield Limited in favour of CM Walker;
o Legal Charge dated 14 December 1994 granted by Sytner Holdings Limited in favour of The Governor and Company of the Bank of Scotland;
o Legal Charge dated 12 March 1996 granted by Sandridge Limited in favour of Esso Petroleum Company Limited;
SCHEDULE 5
PART B
SECURITY TO BE INVESTIGATED
The Company is to investigate the following Security Interests and to report back to the Lender in accordance with Clause 20.17(b):
o Floating Charge dated 21 September 1992 granted by Prophets (Gerrard Cross) Limited in favour of BMW Finance (GB) Limited;
o Floating Charge dated 8 January 1988 granted by Prophets (Gerrard Cross) Limited in favour of BMW Finance (GB) Limited;
o Debenture dated 10 November 1997 granted by Graypaul Motors Limited in favour of Lloyds Bowmaker Limited;
o Floating Charge dated 29 May 1997 granted by Hyde Car Centre Limited in favour of Lombard North Central plc;
o Floating Charge dated 27 April 1993 granted by Sytner Holdings Limited in favour of Lloyds Bowmaker Limited;
o Debenture dated 15 December 1995 granted by Sytner Holdings Limited in favour of Saab Finance Limited;
o Floating Charge dated 30 December 1997 granted by Sytner Holdings Limited in favour of TGB Finance Limited;
o Debenture dated 9 May 1997 granted by Sandridge Limited in favour of Lloyds Bowmaker Limited;
o Mortgage Debenture dated 25 July 1997 granted by Sandridge Limited in favour of CJ Financial Services Limited;
SIGNATORIES
COMPANY
SYTNER GROUP LIMITED
By: /s/ Mark Morris |
LENDER
THE ROYAL BANK OF SCOTLAND plc
acting as agent for
NATIONAL WESTMINSTER BANK Plc
By: /s/ Jason Necker |
EXHIBIT 10.3
UAG CONNECTICUT I, LLC
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
EFFECTIVE MARCH 1, 2001
TABLE OF CONTENTS
SECTION 1.........................................................................................................2 FORMATION OF THE LIMITED LIABILITY COMPANY........................................................................2 1.1 FORMATION; FILINGS....................................................................................2 1.2 NAME..................................................................................................2 1.3 TERM..................................................................................................2 1.4 REGISTERED AGENT AND OFFICE...........................................................................2 1.5 PRINCIPAL PLACE OF BUSINESS...........................................................................3 1.6 QUALIFICATION IN OTHER JURISDICTIONS..................................................................3 SECTION 2.........................................................................................................3 PURPOSE AND POWERS................................................................................................3 2.1 BUSINESS PURPOSES.....................................................................................3 2.2 POWERS OF THE COMPANY.................................................................................3 SECTION 3.........................................................................................................3 MEMBERS...........................................................................................................3 3.1 POWERS OF MEMBERS.....................................................................................3 3.2 NO PRIORITY, ETC......................................................................................4 3.3 MEETINGS OF MEMBERS...................................................................................4 3.4 ACTIONS OF MEMBERS WITHOUT A MEETING..................................................................5 3.5 TRADE SECRETS; CONFIDENTIALITY........................................................................5 SECTION 4.........................................................................................................5 MANAGEMENT........................................................................................................5 4.1 THE BOARD.............................................................................................5 4.2 OFFICERS..............................................................................................8 4.3 ACTIONS AND DETERMINATIONS OF THE COMPANY............................................................13 SECTION 5........................................................................................................13 OPERATING POLICIES...............................................................................................13 5.1 ANNUAL BUSINESS PLAN PROCESS.........................................................................13 5.2 INSURANCE............................................................................................13 5.3 FISCAL YEAR..........................................................................................14 5.4 INITIAL ACCOUNTANTS; CHANGE OF ACCOUNTANTS...........................................................14 SECTION 6........................................................................................................14 CAPITAL CONTRIBUTIONS, UNITS,....................................................................................14 CAPITAL ACCOUNTS AND ADVANCES....................................................................................14 6.1 CAPITAL CONTRIBUTIONS................................................................................14 6.2 MEMBER'S UNITS.......................................................................................14 6.3 STATUS OF CAPITAL CONTRIBUTIONS......................................................................14 |
6.5 NEGATIVE CAPITAL ACCOUNTS............................................................................16 6.6 LOANS FROM MEMBERS...................................................................................16 SECTION 7........................................................................................................16 ALLOCATIONS OF PROFITS AND LOSSES................................................................................16 7.1 ALLOCATIONS OF NET PROFIT AND NET LOSS...............................................................16 7.2 SPECIAL ALLOCATIONS..................................................................................17 7.4 TRANSFER OR CHANGE IN MEMBER INTERESTS...............................................................19 SECTION 8........................................................................................................19 DISTRIBUTIONS AND WITHHOLDING....................................................................................19 8.1 DISTRIBUTIONS........................................................................................19 8.2 LIMITATIONS ON DISTRIBUTION..........................................................................19 8.3 WITHHOLDING TAXES....................................................................................19 8.4 TAX DISTRIBUTIONS....................................................................................20 8.5 ADJUSTED NET CASH DISTRIBUTIONS......................................................................20 SECTION 9........................................................................................................20 TAX MATTERS......................................................................................................20 9.1 TAX MATTERS MEMBER...................................................................................20 9.2 RIGHT TO MAKE SECTION 754 ELECTION...................................................................21 9.3 TAXATION AS PARTNERSHIP..............................................................................21 SECTION 10.......................................................................................................22 BANKING; ACCOUNTING; BOOKS AND RECORDS...........................................................................22 10.1 BANKING..............................................................................................22 10.2 MAINTENANCE OF BOOKS AND RECORDS; ACCOUNTS AND ACCOUNTING METHOD; INSPECTION.........................22 SECTION 11.......................................................................................................22 REPORTS TO MEMBERS...............................................................................................22 11.1 REPORTS TO CURRENT MEMBERS...........................................................................22 11.2 TAX INFORMATION......................................................................................23 11.3 ADDITIONAL INFORMATION...............................................................................23 SECTION 12.......................................................................................................24 LIABILITY, EXCULPATION AND INDEMNIFICATION.......................................................................24 12.1 LIABILITY............................................................................................24 12.2 EXCULPATION..........................................................................................24 12.3 INDEMNIFICATION......................................................................................25 SECTION 13.......................................................................................................27 TRANSFER OF UNITS; WITHDRAWAL,...................................................................................27 BANKRUPTCY, DISSOLUTION; CERTAIN ADMISSIONS OF MEMBERS...........................................................27 13.1 ADMISSION, SUBSTITUTION AND WITHDRAWAL OF MEMBERS; ASSIGNMENT........................................27 13.2 WITHDRAWAL...........................................................................................28 13.3 NOTO OPTION TO PURCHASE..............................................................................28 |
SECTION 14.......................................................................................................29
DISSOLUTION AND TERMINATION OF THE COMPANY.......................................................................29
14.1 EVENTS CAUSING DISSOLUTION...........................................................................29
14.2 LIQUIDATION..........................................................................................29
14.3 DISTRIBUTIONS IN CASH OR IN KIND.....................................................................30
14.4 TIME AND MANNER FOR LIQUIDATION, ETC.................................................................30
14.5 TERMINATION..........................................................................................31
14.6 CLAIMS OF THE MEMBERS................................................................................31
SECTION 15.......................................................................................................31
DEFINITIONS......................................................................................................31
15.1 DEFINITIONS..........................................................................................31
SECTION 16.......................................................................................................37
AMENDMENTS; MERGER OR SALE.......................................................................................37
16.1 AMENDMENTS GENERALLY.................................................................................37
16.2 MERGER OR SALE.......................................................................................37
SECTION 17.......................................................................................................38
MISCELLANEOUS PROVISIONS.........................................................................................38
17.1 NOTICES..............................................................................................38
17.2 COUNTERPARTS.........................................................................................38
17.3 TABLE OF CONTENTS AND HEADINGS.......................................................................38
17.4 SUCCESSORS AND ASSIGNS; ASSIGNMENT...................................................................38
17.5 SEVERABILITY.........................................................................................38
17.6 NON-WAIVER...........................................................................................38
17.7 APPLICABLE LAW.......................................................................................39
17.8 WAIVER OF JURY TRIAL.................................................................................39
17.9 SURVIVAL OF CERTAIN PROVISIONS.......................................................................39
17.10 LIMITATION ON DAMAGES; LEGAL DISPUTES................................................................39
17.11 WAIVER OF PARTITION..................................................................................39
17.12 ENTIRE AGREEMENT.....................................................................................39
17.13 FURTHER ACTIONS......................................................................................40
17.14 NO PARTNERSHIP.......................................................................................40
UNITS......................................................................................................41
Member Information.........................................................................................42
INITIAL DIRECTORS................................................................................................43
INITIAL OFFICERS.................................................................................................43
|
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF UAG CONNECTICUT I, LLC
This Limited Liability Company Agreement of UAG CONNECTICUT I, LLC (the "COMPANY") is effective as of March 1, 2001 by and between UAG CONNECTICUT, LLC, a Delaware corporation, ("UAG") and NOTO HOLDINGS LLC ("NOTO") (each of the foregoing parties to this Agreement shall be referred to herein collectively as the "PARTIES"), and the Persons who become Members of the Company in accordance with the provisions of this Agreement. Certain capitalized terms used herein without definition have the meanings specified in Section 15.
WHEREAS, the Company owns various entities that own and operate factory authorized retail sales and service Mercedes Benz, Porsche and Audi dealerships and a full service automobile body shop located on or around Commerce Drive, in Fairfield, Connecticut (collectively the "BUSINESS").
WHEREAS, the Company was formed under the Delaware Act in order to hold the entities that own and operate the Business; and
WHEREAS, the Parties hereto desire to establish their respective rights and obligations as Members of such limited liability company effective as of the date of this Agreement.
WHEREAS, the Parties wish to amend and restate this Agreement as outlined herein.
NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members hereby agree as follows:
SECTION 1
FORMATION OF THE LIMITED LIABILITY COMPANY
1.1 FORMATION; FILINGS.
(a) GENERALLY. The Parties agree that the limited liability company formed pursuant to the provisions of the Delaware Act and upon its terms, shall be subject to the conditions, and for the purposes set forth in this Agreement. Each of the Members shall execute or cause to be executed from time to time all other instruments, certificates, notices and documents, and shall do or cause to be done all such filing, recording, publishing and other acts, in each case, as may be necessary or appropriate from time to time to comply with all applicable requirements for the formation and/or operation and, when appropriate, termination of a limited liability company in the State of Delaware and all other jurisdictions where the Company shall desire to conduct its business.
(b) UNITS; NAME; CAPITAL CONTRIBUTIONS. The number of Units, Voting Units and Non-Voting Units authorized, issued and outstanding are set forth in Schedule A hereto. The name, mailing address, Capital Contribution, Voting Units and Non-Voting Units held by each Member is listed on Schedule B attached hereto.
1.2 NAME.
The name of the Company is "UAG CONNECTICUT I, LLC" and its business shall be carried on in this name with such variations and changes including, but not limited to "MERCEDES BENZ OF FAIRFIELD," "AUDI OF FAIRFIELD" and "PORSCHE OF FAIRFIELD" as the Board in its sole judgment deems necessary or appropriate to comply with requirements of the jurisdictions in which the Company's operations are conducted.
1.3 TERM.
The term of the Company shall commence on the date of the filing of a Certificate of Formation in the office of the Secretary of State of the State of Delaware and shall continue until dissolved and liquidated in accordance with the provisions of Section 13.
1.4 REGISTERED AGENT AND OFFICE.
The registered agent and office of the Company in Delaware shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware. The registered agent for service of process on the Company in the State of Delaware shall be The Corporation Trust Company. At any time, the Managers of the Company may designate another registered agent and/or registered office.
1.5 PRINCIPAL PLACE OF BUSINESS.
The principal place of business of the Company shall be at 165 Commerce Drive, Fairfield, Connecticut 06430.
1.6 QUALIFICATION IN OTHER JURISDICTIONS.
The Board shall take and/or authorize the taking of such action necessary to cause the Company to be qualified, formed or registered under assumed or fictitious name statutes or similar laws in any jurisdiction in which the Company transacts business and in which such qualification or registration is required by law or deemed advisable by the Company. The President or any duly qualified officer of the Company, as an authorized person within the meaning of the Delaware Act, shall execute, deliver and file any certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in any jurisdiction in which the Company may wish to conduct business.
SECTION 2
PURPOSE AND POWERS
2.1 BUSINESS PURPOSES.
The purpose of the Company is to (i) engage for profit in the Business,
(ii) engage for profit in any and all other activities reasonably
related to or incidental to the Business, and (iii) engage for profit
in any other business for which limited liability companies may be
formed under the Delaware Act, whether or not related or incidental to
the Business, as may be determined from time to time by the act of the
Directors constituting fifty and one-tenth percent (50.1%) or more of
the total vote of the Board.
2.2 POWERS OF THE COMPANY.
Subject to obtaining any requisite Board approval required by Sections 2.1 or 4.2(e), the Company shall have the power and authority to take any and all actions necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purposes set forth in Section 2.1, to the extent that the same may be lawfully exercised by limited liability companies under the Delaware Act.
SECTION 3
MEMBERS
3.1 POWERS OF MEMBERS.
Except as otherwise expressly provided herein, the Members shall have no power to transact any business in the Company's name nor have the power to sign documents for or otherwise bind the Company. Subject to the provisions of the Delaware Act, the Certificate and this Agreement, the Members hereby delegate any and all such powers to
the Board and the officers to carry out the business affairs of the Company on the Members' behalf. Any power not reserved to the Members or delegated to the officers of the Company, if any, shall remain with the Board.
3.2 NO PRIORITY, ETC.
Except as otherwise provided herein, no Member shall have priority over any other Member either as to the return of the amount of its Capital Contribution, if any, to the Company or as to any allocation of Net Profit and Net Loss.
3.3 MEETINGS OF MEMBERS.
(a) ANNUAL MEETINGS. An annual meeting of the Members for the election of Directors and the transaction of other proper business shall be held once a year at a time designated by the Company.
(b) SPECIAL MEETINGS. Special meetings of the Members, for any purpose or purposes, may be called by the Company and shall be called by the Company at the request of Members holding Fifty Percent (50%) or more of the aggregate Units. The business transacted at any special meeting of Members shall be limited to the purposes stated in the notice.
(c) PLACE OF MEETING. All meetings of Members shall be held at such place within or outside the State of Delaware as the Company shall designate.
(d) NOTICE OF MEETINGS. Notice of all meetings of Members, stating the time, place and purpose of the meeting, shall be given as provided in Section 16.1 at least 10 days and not more than 60 days before the meeting. Any adjourned meeting may be adjourned without further notice, provided that any adjourned session or sessions are held within 60 days after the date set for the original meeting. No notice need be given (i) to any Member if a written waiver of notice, executed before or after the meeting by such Member or his attorney thereunto duly authorized, is filed with the records of the meeting, or (ii) to any Member who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. A waiver of notice need not specify the purposes of the meeting.
(e) QUORUM AND VOTING. Members constituting at least 50% of the Voting Units held by all Members must be present in order to constitute a minimum quorum required for the transaction of business at any meeting of Members. Any question brought before any meeting shall be decided by Members who, at the time in question and in the aggregate, hold, or hold proxies with respect to, a majority of the aggregate Units, unless a different vote is specifically provided for by this Agreement.
(f) PROXIES. Voting Units of Members may be voted in person or by proxy. A proxy purporting to be executed by or on behalf of a Member shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger.
(g) ELECTRONIC COMMUNICATIONS. Members may participate in any meeting of Members by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
3.4 ACTIONS OF MEMBERS WITHOUT A MEETING.
Any action required to be taken at any annual or special meeting of Members or otherwise, or any action which may be taken at any annual or special meeting of such Members or otherwise, may be taken without a meeting and without a vote, if (i) at least two days advance notice of the intent to take action without a meeting is provided to each Member and (ii) a consent in writing, setting forth the action so taken, shall be signed by Members having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting. The foregoing two day advance notice period shall be deemed waived with respect to any Member that returns a signed consent to the Company. Prompt notice of the taking of the action without a meeting by less than unanimous written consent shall be given to each of those Members who have not consented in writing.
3.5 TRADE SECRETS; CONFIDENTIALITY.
(a) Each Member, to the extent, if any, that it becomes aware of a trade secret of the Company, agrees that it will not at any time reveal, divulge or otherwise make known any such trade secret of the Company to any Person other than a current officer, employee or affiliate of the Company, or such other person as the Board may designate in writing or, with prior notice to the Company, pursuant to court order or other legal process or the order of any governmental agency or entity.
(b) Except as required by applicable law (including reporting requirements under generally accepted accounting principles), each Member shall keep secret all material confidential matters of the Company which are not otherwise in the public domain and will not intentionally disclose them to anyone outside of the Company or any Affiliate of the Company during the term of this Agreement.
SECTION 4
MANAGEMENT
4.1 THE BOARD.
(a) GENERAL. The business and affairs of the Company shall be managed by or under the direction of a committee of Managers of the Company (the "BOARD")
consisting initially of three (e) natural persons designated as directors of the Company ("DIRECTORS") pursuant to the terms of this Agreement. Other than rights and powers expressly reserved to Members by this Agreement or the Delaware Act, the Board shall have full, exclusive and complete discretion to manage and control the business and affairs of the Company, to make all decisions affecting the business and affairs of the Company and to take all such actions as it deems necessary or appropriate to accomplish the purposes of the Company as set forth herein. Each Director is hereby designated a Manager. The Directors shall be appointed or elected as provided in Section 4.1(b). Each Director elected shall hold office until a successor is elected and qualified or until such Director's earlier death, resignation or removal. Directors need not be Members. No appointment or election of a Director shall become effective, however, until the Person named shall have accepted in writing such appointment and agreed in writing to be bound by the terms of this Agreement.
(b) INITIAL ELECTION AND APPOINTMENT OF DIRECTORS. UAG shall be entitled to designate two (2) Directors (the "UAG Designees") and Noto shall be entitled to designate one (1) Director (the "Noto Designee"). The initial UAG Designees shall be Robert H. Kurnick, Jr. and James Davidson and the initial Noto Designee shall be Richard S. Koppelman. UAG shall have the power to remove, with or without cause, a UAG Designee and fill any vacancy created by the death, resignation or removal of any UAG Designee. Noto shall have to the power to remove, with or without cause, the Noto Designee and fill any vacancy created by the death, resignation or removal of the Noto Designee.
(c) INCREASE OR DECREASE IN SIZE OF BOARD. The size of the Board may be increased or decreased from time to time only by an amendment to this Agreement.
(d) RESTRICTIONS ON THE BOARD. The Board shall not: (i) do any act in contravention of any applicable law or regulation, or provision of this Agreement; or (ii) admit any Person as a Member except as permitted in this Agreement and the Delaware Act.
(e) MEETINGS OF THE BOARD. The Board may hold meetings, both regular and special, either within or outside the State of Delaware. The first meeting of each newly elected Board shall be held immediately after the annual meeting of Members and at the same place, and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not held at that time and place, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board, or as shall be specified in a written waiver signed by all of the Directors. Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board. Special meetings of the Board may be called by any Member on two days' notice to each Director, either personally, by telephone,
by mail, by telegram or by any other means of communication; special meetings shall be called by any Member, the Chairman, or the Secretary in like manner and on five days' notice on the written request of one or more of the Directors. Notice of a meeting need not be given to any Director if a written waiver of notice, executed by such Director before or after the meeting, is filed with the records of the meeting, or to any Director who attends the meeting without protesting prior thereto or at its commencement, the lack of notice. A waiver of notice need not specify the purposes of the meeting.
(f) QUORUM. At all meetings of the Board, two Directors shall constitute a quorum for the transaction of business. If a quorum shall not be present at any meeting of the Board, the Directors present at such meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting, and without a vote, provided that, at least two days advance notice of the intent to take such action without a meeting and without a vote is given to each Director, if a consent in writing, setting forth the action so taken, shall be signed, in the case of action by the Board, by Directors having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting, and in the case of action by a committee, by all members of such committee.
(g) REQUIRED BOARD VOTE. The affirmative vote of a majority of the Directors present at any meeting at which there are sufficient Directors present to constitute a quorum ("MAJORITY BOARD VOTE") shall be the act of the Board, unless another vote is specifically provided by this Agreement.
(h) COMMITTEES OF DIRECTORS. The Board may, by resolution passed by a Majority Board Vote, designate one or more additional committees, each committee to consist of one or more of the Directors. Any such committee, to the extent and only to the extent expressly provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company. Each committee shall keep regular minutes of its meetings and report the same to the Board when required.
(i) ELECTRONIC COMMUNICATIONS. Members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
(j) COMPENSATION OF DIRECTORS. Directors shall not receive remuneration for services as a Director; provided, that Directors shall be entitled to reimbursement
of reasonable out-of-pocket expenses incurred in connection with attendance at regular or special meetings of the Board or any committee thereof.
(k) DIRECTORS NOT AGENTS. The Directors are not agents of the Company for the purpose of the Company's business and shall not have the power to sign documents for or otherwise bind the Company.
4.2 OFFICERS.
(a) GENERAL. The designated officers of the Company shall be a Chairman, a President who shall be the Chief Executive Officer of the Company, a Secretary and a Treasurer and may include one or more Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 4.2(k) (each, an "OFFICER," and together, the "OFFICERS"). Officers may be, but need not be, Managers.
(b) ELECTION, TERM OF OFFICE, QUALIFICATIONS. Officers shall be elected by a Majority Board Vote at any regular or special meeting of the Board, provided that until such elections or appointments have been made, the Officers shall be the natural persons designated on SCHEDULE B annexed hereto. Except as provided in paragraphs (c) and (d) of this Section 4.2, each Officer shall hold office until his or her successor shall have been chosen and qualified. Any two offices may be held by the same Person, but no Officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument be required by law or this Agreement to be executed, acknowledged or verified by any two or more Officers.
(c) RESIGNATIONS AND REMOVALS. Any Officer may resign his or her office at any time by delivering a written resignation to the President or any Director. Unless otherwise specified therein, such resignation shall take effect upon delivery. Executive Officers may be removed from office at any time, with or without cause, by a Majority Board Vote at any regular meeting or any special meeting. All other officers may be removed from offices at any time by the President. Except to the extent expressly provided in a written agreement with the Company, no Officer resigning and no Officer removed shall have any right to any compensation for any period following his resignation or removal or any right to damages on account of such removal.
(d) VACANCIES AND NEWLY CREATED OFFICES. If any vacancy shall occur in any office, other than any Executive Officer, by reason of death, resignation, removal, disqualification or other cause, or if any new office shall be created, such vacancies or newly created offices may be filled by the Board at any regular or special meeting or, in the case of any office created pursuant to Section 4.2(k), by any Officer upon whom such power shall have been conferred by the Board. If
any vacancy shall occur in the office of any Executive Officer, such vacancy shall be filled by appointment made by a Majority Board Vote.
(e) AUTHORITY OF OFFICERS; CERTAIN ACTS REQUIRING OR MAJORITY BOARD VOTE. Subject to the provisions of this Agreement and to the directives and policies of the Board not in conflict with this Agreement, the President and the other Officers of the Company shall have the power, acting individually or jointly, to represent and bind the Company in all matters, in accordance with the scope of their respective duties subject to the following restrictions:
(i) The following actions or types of transactions shall not be taken or consummated by the President or any other Officer, employee or agent of the Company except pursuant to resolutions, directions or guidelines adopted by a Majority Board Vote, and such actions and types of transactions shall not constitute action by the Company unless such Majority Board Vote is obtained:
(1) The merger, consolidation, reorganization or other business combination of any kind involving the Company or sale of all or substantially all the assets of the Company.
(2) Amendments to, or the execution or filing of any document or agreement of any kind which would affect the terms of the Certificate.
(3) The issuance or sale, or any agreement to issue or sell, directly or indirectly, to any Person, by the Company any interest of any kind in the Company, including, but not limited to, Units, Voting Units or Non-Voting Units, any rights, options or warrants or other securities to acquire any such interest, or any securities convertible into or exchangeable or exercisable for such interest; provided, however, that any such issuance that could or would entitle such person to the rights of a Member or that would cause (or entitle) such person to receive an interest (other than collateral security interests granted by the Company to secure its obligations) of 5% or more in the assets or profits of the Company shall also require the approval of the Members of the Company in accordance with Section 13.1(b).
(4) Any sale or other transfer of assets of the Company not in the ordinary course of business consistent with past practices (other than as provided in the approved annual Business Plan).
(5) The declaration or payment, directly or indirectly, of any distribution, whether in cash, property or securities or a combination thereof, with respect to any Units or Capital Contribution.
(6) The redemption, purchase, repurchase, retirement or other acquisition for value of any of the interests in, or securities of, the Company.
(7) The dissolution, liquidation, or voluntary bankruptcy of the Company (other than any right of liquidation expressly provided for under this Agreement).
(8) Approval of the annual Business Plan.
(9) Any investment in the equity or debt of another corporation or in any partnership or other enterprise (other than temporary investments of cash in money market instruments).
(10) Acceptance of annual financial statements.
(11) Approval of policies relating to the investment or allocation of surplus funds and creation of reserve accounts.
(12) Any change in the Company's accountants or any change in the Company's material accounting policies, except as required by generally accepted accounting principles.
(13) Subject to Section 4.2(e)(ii) below, the making of any capital expenditure or acquisition of assets by the Company (including by way of merger) other than capital expenditures or acquisitions of assets provided for in the then current approved annual Business Plan (or any permitted deviations from the capital budget which may be allowed by a current approved Business Plan) provided that, any such capital expenditure or acquisition shall be the subject of discussion and debate by the Members prior to it being submitted to the Board for a vote.
(14) Incurring, creating, assuming or guaranteeing any indebtedness by the Company, absolute or contingent of any nature whatsoever (other than indebtedness incurred in the ordinary course of business consistent with past practice or as provided for in a current approved Business Plan).
(15) The extension of any material credit, including the lending of funds by the Company, to another Person, other than in the normal course of business of the Company.
(16) Election of Executive Officers; the establishment or change in any Executive Officer's compensation or benefits of any kind; the establishment or amendment of any employee pension or other benefit programs of any kind; or action taken under any employment agreement.
(17) The institution, termination or settlement by the Company of any litigation where the amount in controversy exceeds $100,000.
(18) The formation of any Subsidiary.
(19) Any change in the Company's name.
(ii) The following action or type of transaction shall not be taken or consummated by the President or any other Officer, employee or agent of the Company except pursuant to resolutions, directions or guidelines adopted by a unanimous vote of the Directors, and such action or transaction shall not constitute action by the Company unless such unanimous vote is obtained:
The making of any capital expenditure which would cause the net working capital of the Dealership Operating Companies, in the aggregate, to fall below the levels of minimum net working capital as is necessary to satisfy the requirements, in the aggregate, of the Franchise Agreements of the Dealership Operating Companies.
(F) CHAIRMAN. The Chairman shall be elected by the Board, but shall have no other duties or powers except as may be determined by the Board from time to time.
(g) PRESIDENT. From time to time as appropriate, pursuant to
Section 4.2(b) the Board shall elect a president of the
Company who (subject to the terms of any applicable employment
agreement) shall serve as such until the earlier of his death
or resignation or his removal in accordance with the terms of
this Agreement (the "PRESIDENT"). The President shall be the
chief executive officer of the Company, shall preside at all
meetings of the Members, and shall have the responsibility for
managing the day-to-day business operations and affairs of the
Company and supervising its other Officers, subject to the
direction, supervision and control of the Board. In general,
the President shall have such other powers and (subject to the
terms of any applicable employment agreement) perform such
other duties as usually pertain to the office of the
President, and as from time to time may be assigned to him by
the Board, including, without limitation, the authority to
retain and terminate employees of the Company (other than
Officers). The powers and duties of the President shall at all
times be subject to the provisions of Section 4.2(e).
(h) VICE PRESIDENT. From time to time as appropriate, pursuant to
Section 4.2(b), the Board may elect one or more vice
presidents of the Company (each a "VICE PRESIDENT") who
(subject to the terms of any applicable employment agreement)
shall serve as such until the earlier of such persons death or
resignation or his removal in accordance with the terms of
this Agreement. A Vice President shall have such duties as may
be prescribed by the Board or the President, under whose
supervision the Vice President shall be.
(i) THE SECRETARY AND ASSISTANT SECRETARY. The Secretary shall attend all meetings of the Board and all meetings of the Members and record all the proceedings of the meetings and all actions of the Members, the Board and the committees of the Board in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the Members and special meetings of the Board, and shall perform such other duties as may be prescribed by the Board or the President, under whose supervision the Secretary shall be. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board (or if there be no such determination, then in order of their election) shall, in the absence of the Secretary or in the event of the Secretary's inability to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board may from time to time prescribe.
(j) THE TREASURER AND ASSISTANT TREASURER. The Treasurer shall have the custody of the Company's funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Board. The Treasurer shall disburse the funds of the Company as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the President, under whose supervision the Treasurer shall be, and the Board, at its regular meetings, or when the Board so requires, an account of all of the Treasurer's transactions and of the financial condition of the Company. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of the Treasurer's inability to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board may from time to time prescribe.
(k) SUBORDINATE OFFICERS. The Board from time to time may appoint such other subordinate Officers, or agents as it may deem advisable, each of whom shall have such title, hold office for such period, have such authority and perform such duties as the Board may determine in its sole discretion subject always to the direction and control of the President. The Board from time to time may delegate to one or more Officers or agents the power to appoint any such subordinate Officers or agents and prescribe their respective rights, terms of office, authorities and duties.
(L) OFFICERS AS AGENTS. The Officers, to the extent of their powers set forth in this Agreement, are agents of the Company for the purpose of the Company's business, and the actions of the Officers taken in accordance with such powers shall bind the Company.
4.3 ACTIONS AND DETERMINATIONS OF THE COMPANY.
Whenever this Agreement provides that a determination shall be made or an action shall be taken by the Company, such determination or act may be made or taken by the Board or, pursuant to this Agreement or with the required authorization of the Board, by any committee of the Board or any Officer acting under the supervision of the Board.
SECTION 5
OPERATING POLICIES
5.1 ANNUAL BUSINESS PLAN PROCESS.
The President shall prepare and submit, or cause to have prepared and submitted, to the Board for its approval (i) a business plan (the "INITIAL BUSINESS PLAN") on or before March 1, 2001, and (ii) updated business plans at least sixty (60) days prior to the beginning of each new Fiscal Year (each such business plan, a "BUSINESS PLAN") covering the period of the new Fiscal Year (except for the Initial Business Plan, which shall cover the current Fiscal Year) (such one year period, the "BUSINESS PLAN PERIOD"). Each such Business Plan shall set forth, for each of the years covered by the Business Plan Period, the Company's expense budgets, and a detailed financial plan relating to such new Fiscal Year for the Company.
(a) Not more than thirty (30) days following its receipt of an annual Business Plan, the Board shall identify any additional information, clarification and/or modification required for its approval, and the President shall provide such to the Board as soon as practicable. Any approval granted by the Board shall apply only to the first year of any Business Plan Period and, in the event that the annual Business Plan for the next fiscal year is not approved by the close of the then current Fiscal Year, the then existing Business Plan shall continue as the approved Business Plan for a period of not more than 90 days following the close of the then current Fiscal Year.
(b) The President shall prepare and present, or have prepared and presented, at each regular meeting of the Board, or at any special meeting called for this purpose, a review of the Company's year-to-date progress in comparison to the approved Business Plan.
5.2 INSURANCE.
The Company will maintain insurance at levels and of types consistent with what would be deemed commercially reasonable for a company engaged in business activities substantially similar to that of the Business.
5.3 FISCAL YEAR.
The fiscal year of the Company (the "FISCAL YEAR") shall end on the 31st day of December in each year. The Company shall have the same fiscal year for income tax and for financial accounting purposes. To the extent permissible under applicable law, the Fiscal Year may be changed by a Majority Board Vote.
5.4 INITIAL ACCOUNTANTS; CHANGE OF ACCOUNTANTS.
The Company's independent public accountant as of the Closing shall be Deloitte & Touche LLP. The Company's independent public accountant may be changed at any time by a Majority Board Vote.
SECTION 6
CAPITAL CONTRIBUTIONS, UNITS,
CAPITAL ACCOUNTS AND ADVANCES
6.1 CAPITAL CONTRIBUTIONS.
The value of each Member's initial capital contribution to the Company shall equal the amount set forth opposite the Member's name on SCHEDULE B attached hereto.
6.2 MEMBER'S UNITS.
Units held by a Member shall for all purposes be personal property. A Member has no interest in specific Company property.
6.3 STATUS OF CAPITAL CONTRIBUTIONS.
(a) Except as otherwise expressly provided herein, no Member shall have the right to withdraw capital from the Company or to receive any distribution or return of such Member's Capital Contributions.
(b) No Member shall receive any interest, salary or drawing with respect to its Capital Contributions, if any, or its Capital Account or for services rendered on behalf of the Company or otherwise in its capacity as a Member, except as otherwise specifically provided in this Agreement.
(c) The Members shall be liable only to make their initial Capital Contributions pursuant to Section 6.1, and no Member shall be required to lend any funds to the Company or to make any additional Capital Contributions to the Company except as otherwise set forth herein.
6.4 CAPITAL ACCOUNTS.
A separate capital account (each a "CAPITAL ACCOUNT") for each Member shall be established on the books and records of the Company and such Capital Accounts shall be maintained for each Member in accordance with the following provisions:
(a) To each Member's Capital Account there shall be credited such
Member's Capital Contributions, such Member's distributive
share of Net Profit and items in the nature of income or gain
which are specially allocated to such Member pursuant to
Section 6.4(f) and Section 7.2 hereof, and the amount of any
Company liabilities assumed by such Member or which are
secured by any Company property distributed to such Member.
(b) To each Member's Capital Account there shall be debited the amount of cash and the Gross Asset Value of any Company property distributed to such Member pursuant to any provision of the Agreement (including amounts distributed to a Member but required to be paid on such Member's behalf directly to a creditor or another party pursuant to a separate agreement), such Member's distributive share of Net Loss and any items in the nature of expenses or losses which are specially allocated pursuant to Section 6.4(f) and Section 7.2 hereof, and the amount of any liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company.
(c) In the event all or a portion of the Units held by a Member are transferred in accordance with the terms of the Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Units.
(d) In determining the amount of any liability for purposes of Sections 6.4(a) and 6.4(b) hereof, there shall be taken into account Code Section 752 and any other applicable provisions of the Code and Treasury Regulations.
(e) Immediately prior to the occurrence of an event specified in
Treasury Regulation Section 1.704(b)-1(b)(2)(iv)(f)(5)(i) or
(ii), the Capital Accounts of the Members shall be adjusted
(consistent with the provisions hereof and Treasury
Regulations under Section 704 of the Code) upward or downward
to reflect any unrealized gain or unrealized loss attributable
to property of the Company, as if such unrealized gain or
unrealized loss had been recognized upon an actual sale of
each asset immediately prior to such event and had been
allocated first to equalize the Capital Accounts of the
Members in proportion to their relative Non-Voting Percentage
Interest, and then to all the Members in accordance with their
Non-Voting Percentage Interest. In determining such unrealized
gain or unrealized loss, the fair market value of the property
of the Company as of any date of determination shall be
reasonably determined by Majority Board Vote. This Section
6.4(e) provision is intended to meet the requirements of
Treas. Reg. 1.704-1(b)(2)(iv)(f).
(f) This Section 6.4 and other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Treasury Regulations. Notwithstanding that a particular adjustment is not set forth in this Section 6.4, the Capital Accounts of the
Members shall be adjusted as required by, and in accordance with, the capital account maintenance rules of Treasury Regulations Section 1.704-1(b).
6.5 NEGATIVE CAPITAL ACCOUNTS. No Member shall be required to make up an Adjusted Capital Account Deficit nor pay to any Member the amount of any such deficit in any such account.
6.6 LOANS FROM MEMBERS. Loans by a Member to the Company shall not be considered Capital Contributions. If any Member shall advance funds to the Company in excess of the amounts required hereunder to be contributed by such Member to the capital of the Company, the making of such advances shall not result in any increase in the amount of the Capital Account of such Member. The amounts of any such advances shall be a debt of the Company to such Member and shall be payable or collectible only out of the Company assets in accordance with the terms and conditions upon which such advances are made. The repayment of loans from a Member to the Company upon liquidation shall be subject to the order of priority set forth in Section 13.2.
SECTION 7
ALLOCATIONS OF PROFITS AND LOSSES
7.1 ALLOCATIONS OF NET PROFIT AND NET LOSS.
(a) After giving effect to the special allocations set forth in
Section 6.4(e) and Section 7.2 hereof, Net Profit of the
Company for any Fiscal Year shall be allocated to each Member
by multiplying the Net Profit of the Company for any Fiscal
Year by a fraction, the numerator of which shall be the
cumulative Net Losses allocated to the Member pursuant to
Section 7.1(b) for all prior fiscal years and the denominator
which shall be cumulative Net Losses allocated to all Members
pursuant to Section 7.1(b) for all prior Fiscal Years. The
balance of the Net Profits, if any, shall be allocated among
the Members in proportion to their Non-Voting Percentage
Interest.
(b) After giving effect to the special allocations set forth in
Section 6.4(f) and Section 7.2 hereof, Net Losses of the
Company for any Fiscal Year shall be allocated among the
Members in proportion to their Non-Voting Percentage Interest.
(c) Notwithstanding the foregoing provisions of Section 7.1(b), the Net Losses allocated pursuant to Section 7.1(b) shall not exceed the maximum amount of Net Losses that can be so allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of any Fiscal Year. In the event some but not all of the Members would have Adjusted Capital Account Deficits as a consequence of an allocation of Net Losses pursuant to Section 7.1(b) hereof, the
limitation set forth in this Section 7.1(c) shall be applied on a Member by Member basis so as to allocate the maximum permissible Net Loss amounts to each Member under Treasury Regulations Section 1.704-1(b)(2)(ii)(d). All Net Loss amounts in excess of the limitation set forth in this Section 7.1(c) shall be allocated to the Members in proportion to their Non-Voting Percentage Interest
7.2 SPECIAL ALLOCATIONS.
(a) Any allocation pursuant to Section 7.1 will be subject to the following adjustments and special allocations which shall be made in the following order of priority and prior to any allocation under Section 7.1:
(i) MINIMUM GAIN CHARGEBACK. Notwithstanding any other provision of this Section 7.2, if there is a net decrease in Company Minimum Gain or Member Minimum Gain during any Fiscal Year, prior to any other allocation pursuant hereto, items of Company income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) shall be specially allocated between the Members in accordance with Treasury Regulations Sections 1.704-2(f) and (i). The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(f)(6) and 1.704-2(j)(2)(i) through (iii).
(ii) QUALIFIED INCOME OFFSET. If any Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible, provided that an allocation pursuant to this Section 7.2(a)(ii) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Section 7.2(a) have been tentatively made as if this Section 7.2(a)(ii) were not in the Agreement.
(iii) SPECIAL INCOME ALLOCATION. If any Member has an Adjusted Capital Account Deficit in its Capital Account at the end of any Fiscal Year or portion thereof that is in excess of the sum of (I) the amount such Member is obligated to restore pursuant to any provision of this Agreement, and (II) the amount such Member is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations, each such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 7.2(a)(iii) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit in excess of such sum after all
other allocations provided for in this Section 7.2(a) have been made as if this Section 7.2(a)(iii) were not in the Agreement.
(iv) NON-RECOURSE DEDUCTIONS. Non-recourse Deductions, if
any, for any Fiscal Year shall be allocated (as
nearly as possible) under Treasury Regulations
Section 1.704-2(e) among the Members in proportion to
their Non-Voting Percentage Interest.
(v) MEMBER NONRECOURSE DEDUCTIONS. In accordance with the principles set forth in Treasury Regulations Section 1.704-2(i), any Member Nonrecourse Deductions for any Fiscal Year shall be allocated to the Members in accordance with the ratios in which they potentially bear the economic risk of loss with respect to such Member Nonrecourse Debt.
(vi) SECTION 754 ADJUSTMENTS. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) or 743(b) of the Code is required pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts as a result of a distribution to a Member in complete liquidation of its interest, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset), or loss (if the adjustment decreases such basis), and such item of gain or loss shall be specially allocated in a manner consistent with the manner in which the Capital Accounts of the Members are required to be adjusted pursuant to such Section of the Regulations.
(b) CURATIVE ALLOCATIONS. It is the intent of the parties that, to
the extent possible, all allocations pursuant to Sections
7.2(a)(i) through 7.2(a)(vi) (the "REGULATORY ALLOCATIONS")
shall be offset either with other Regulatory Allocations or
with special allocations of other items of Company income,
gain, loss or deduction pursuant to this Section 7.2(b).
Therefore, notwithstanding any other provision of this
Agreement (other than Sections 7.2(a)(i) through 7.2(a)(vi)),
the Board shall make such offsetting special allocations of
Company income, gain, loss or deductions as are appropriate so
that after such offsetting allocations are made, each Members
Capital Account balance is, to the extent possible, equal to
the Capital Account balance such Member would have had if
Sections 7.2(a)(i) through 7.2(a)(vi) were not part of this
Agreement and all Company items were allocated pursuant to
Section 7.1 of this Agreement.
7.3 TAX ALLOCATIONS.
Items of income, gain, loss, deduction and credit of the Company shall, for each Fiscal Year, be allocated, for U.S. federal, state and local income tax purposes, among the Members in the same manner as the items of income, gain, loss, deduction and credit were allocated to such Members pursuant to Section 6.4(e), Section 7.1 and Section 7.2
hereof. Notwithstanding the foregoing, in accordance with Code Section
704(c) and the Treasury Regulations thereunder, items of income, gain,
loss and deduction with respect to any property contributed to the
capital of the Company shall, solely for tax purposes, be allocated
among the Members so as to take account of any variation between the
adjusted tax basis of such property at the time of contribution to the
Company for federal income tax purposes and its Gross Asset Value at
the time of contribution using the "remedial allocation method" set
forth in Treasury Regulation 1.704-3(d). In the event the Gross Asset
Value of any Company asset is adjusted in accordance with the
definition of Gross Asset Value hereof, subsequent allocations of items
of income, gain, loss, and deductions with respect to such asset shall
take account of any variation between the adjusted tax basis of such
asset for federal income tax purposes and its adjusted Gross Asset
Value in a manner consistent with the principles of Code Section 704(c)
and the Treasury Regulations thereunder. Allocations pursuant to this
Section 7.3 are solely for purposes of U.S. federal, state, and local
income taxes and shall not affect, or in any way be taken into account
in computing, any Member's Capital Account or share of Net Profit or
Net Loss, other items, or distributions pursuant to any provision of
this Agreement.
7.4 TRANSFER OR CHANGE IN MEMBER INTERESTS.
If the respective Units held by the existing Members in the Company change or if a Unit is transferred to any other person or entity, then, for the Fiscal Year of transfer, all income, gains, losses, deductions, tax credits and other tax incidents resulting from the operations of the Company shall be allocated, as between the transferor and the transferee, by taking into account their varying interests in accordance with Section 706 of the Code.
SECTION 8
DISTRIBUTIONS AND WITHHOLDING
8.1 DISTRIBUTIONS.
The Company shall not make any distributions to its Members except as determined by the Board in accordance with Section 4.2(e) or except as otherwise provided herein. Except as otherwise expressly provided herein, all Distributions shall be made to Members pro rata in accordance with their respective Non-Voting Percentage Interest.
8.2 LIMITATIONS ON DISTRIBUTION.
Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to any Member on account of its interest in the Company if such distribution would violate Section 18-607 of the Delaware Act.
8.3 WITHHOLDING TAXES.
If the Company is required to withhold any portion of any amounts distributed or allocated to a Member by applicable U.S. federal, state, local or foreign tax laws, the Company may withhold such amounts and make such payments to taxing authorities as are necessary to ensure compliance with such tax laws. Any funds withheld by reason of
this Section 8.3 shall nonetheless be deemed distributed to the Member in question for all purposes under this Agreement. If the Company did not withhold from actual distributions any amounts it was required to withhold, the Company may, at its option, (i) require the Member to which the withholding was credited to reimburse the Company for such withholding; or (ii) reduce any subsequent distributions to such Member by the amount of such withholding. The obligation of a Member to reimburse the Company for taxes that were required to be withheld shall continue after such Member transfers or liquidates its interest in the Company. Each Member agrees to furnish the Company with any representations and forms as shall reasonably be requested by the Company to assist in determining the extent of, and in fulfilling, any withholding obligations it may have.
8.4 TAX DISTRIBUTIONS.
At a minimum, the Company shall make annual cash distributions each year to each Member in an amount determined by multiplying (i) such Member's taxable income resulting from the pass through allocations of the Company's income and gain to such Member by (ii) the highest rate applicable to any of the Members under applicable state and federal income tax laws.
8.5 ADJUSTED NET CASH DISTRIBUTIONS.
The Company shall distribute the amounts as determined by Section 8.4 above on an annual basis. In addition the Company shall distribute not less than Fifty Percent (50%) of the Adjusted Net Cash on, at a minimum, a quarterly basis to the Members in proportion to their Non-Voting Percentage Interest.
SECTION 9
TAX MATTERS
9.1 TAX MATTERS MEMBER.
(a) UAG is hereby designated as the initial "Tax Matters Member" ("TMM") of the Company under Section 6231 of the Code and the Treasury Regulations thereunder. Each Member hereby consents to such designation and agrees that upon the request of the Company it will execute, certify, acknowledge, deliver, swear to, file and record at the appropriate public offices such documents as may be necessary or appropriate to evidence such consent. Upon the resignation or bankruptcy of UAG, or upon the failure of UAG to carry out the responsibilities of a TMM in a timely fashion, a successor to serve in such capacity shall be designated by vote of Members holding a majority of the interests in the Company. The TMM may employ experienced tax counsel to represent the Company in connection with any audit or investigation of the Company by the Internal Revenue Service ("IRS"), and in connection with all subsequent administrative and judicial proceedings arising out of such audit. The fees and expenses of such counsel shall be a Company expense and shall be paid by the Company. Such counsel shall be responsible for representing the Company; it
shall be the responsibility of the Members, at their own expense, to employ tax counsel to represent their respective separate interests. The TMM shall keep the Members informed of all administrative and judicial proceedings as required by Code Section 6223(g) and shall furnish to each Member a copy of each notice or other communication received by the TMM from the IRS except such notice or communication sent directly to the Members by the IRS. All expenses incurred by the TMM in serving in such capacity shall be Company expenses and shall be paid by the Company.
(b) Notwithstanding the foregoing, prior to taking any of the following actions the Company shall provide notice to the Members and shall provide the Members with a reasonable period of time in which to review and approve such action (which approval shall not be unreasonably withheld):
(i) Any written correspondence or filings and any settlements in connection with any income tax audit of the Company or any other tax audit involving material taxes of the Company, including administrative settlement and judicial review.
(ii) Except as set forth in Section 9.1(a) and Section 9.2, the making of any tax election.
(iii) Any adjustment to the capital accounts of the Members in connection with Section 6.4(e) and Section 6.4(f).
(iv) Approval of any income tax return of the Company and
any other tax return of the Company which reflects
the tax treatment of any item arising in connection
with actions described in Section 4.2(e)(i)(1),(4),
(5), (6) or (7) or 4.2(e)(ii) (2), (5) or (7).
(v) Any allocation made pursuant to Section 7.2, and any decision to revise, alter or otherwise modify the methods of allocation set forth in Section 7 hereof.
9.2 RIGHT TO MAKE SECTION 754 ELECTION.
The TMM may make an election under Section 754 of the Code to the extent requested by any Member. Each Member shall, upon request of the TMM, at such Member's cost, promptly supply the TMM information reasonably necessary to give effect to such election.
9.3 TAXATION AS PARTNERSHIP.
The Company shall be treated as a partnership for United States federal and state income tax purposes and the Members agree not to take any action inconsistent with the Company's classification as a partnership for United States federal and State income tax purposes. By executing this Agreement, each of the Members hereby consents to, and the
TMM shall, take any action necessary, including, without limitation,
the execution of any forms and documents, for the Company to be treated
as a partnership for United States federal and state income tax
purposes.
SECTION 10
BANKING; ACCOUNTING; BOOKS AND RECORDS
10.1 BANKING.
All funds of the Company may be deposited in such bank, brokerage or
money market accounts as shall be established by the Company.
Withdrawals from and checks drawn on any such account shall be made
upon the President's signature and/or such other signature or
signatures as the Board may designate.
10.2 MAINTENANCE OF BOOKS AND RECORDS; ACCOUNTS AND ACCOUNTING METHOD;
INSPECTION.
(a) the Company shall keep or cause to be kept at the address of
the Company (or at such other place as the Company shall
advise the Members in writing) full and accurate accounts of
the transactions of the Company in proper books and records of
account which shall set forth all information required by the
Delaware Act. Such books and records shall be maintained on
the basis of United States generally accepted accounting
principles, to the extent that such principles are not
inconsistent with the other provisions of this Agreement. Such
books and records shall be available, upon reasonable notice
to the Company, for inspection and copying at reasonable times
during business hours by a Member or its duly authorized
agents or representatives for any purpose reasonably related
to such Member's interest as a member in the Company.
(b) Employees, agents and representatives of UAG shall have full
access to the plants and properties of the Company and its
Subsidiaries for the purpose of inspecting such plants and
properties and the operations thereon during normal business
hours, in a manner that does not unduly disrupt the business
or operations of the Company and upon the prior written notice
to the President of the Company of any such inspection.
|
SECTION 11
REPORTS TO MEMBERS
11.1 REPORTS TO CURRENT MEMBERS.
(a) The Company shall use its good faith efforts to prepare and mail to each Member, within 90 days after the end of each Fiscal Year and 45 days after the end of each quarter thereof other than the last quarter of the Fiscal Year, a financial report (upon request of UAG, audited in the case of a report sent as of the end of a Fiscal Year and unaudited in the case of a report sent as of the end of a quarter) setting
forth as of the end of such Fiscal Year or quarter (i) the assets and liabilities of the Company as of the end of such Fiscal Year or quarter, (ii) the income or loss of the Company for such Fiscal Year or quarter and (iii) the changes in cash flow during such Fiscal Year or quarter.
(b) The Company shall use its good faith efforts to prepare and mail to each Member, within 100 days after the end of each Fiscal Year a financial report setting forth as of the end of such Fiscal Year such Member's closing Capital Account as of the end of such Fiscal Year, together with a reconciliation of the changes from the previous report.
11.2 TAX INFORMATION.
(a) No later than April 10, June 10, September 10 and December 10
of each Fiscal Year, the Company shall deliver to each Person
that was a Member at any time during the quarter in which or
immediately preceding which such date occurs a statement of
such Person's distributive share, if any, of items of income,
gain, loss, deduction and credit of the Company for such
quarter and such other information as may be reasonably
necessary for such Person to make its estimated tax payments.
(b) As soon as practicable after the end of the Fiscal Year, but
in no event later than 45 days after the end of the Fiscal
Year, the Company shall deliver to each Person that was a
Member at any time during such Fiscal Year a final statement
of such Person's reasonably determined distributive share, if
any, of items of income, gain, loss, deduction and credit of
the Company for such Fiscal Year and such other information as
may be reasonably necessary for such Person to complete its
tax returns (including copies of any tax returns that have
been filed by the Company).
(c) The Company shall provide each Member with a copy of any tax
return described in Section 9.1(b)(iv) hereof for such
Member's review at least twenty (20) business days before the
due date of such tax return.
11.3 ADDITIONAL INFORMATION.
Upon the request of any Member, the Company shall, at the request of a
Member, furnish such additional information about the Company and
distributions from the Company reasonably related to such Member's
interest in the Company. Without limiting the foregoing sentence, the
Company agrees to use its good faith efforts to make available to any
Member which accounts for its interest on the equity method (whether or
not the Company is publicly reporting), such financial information as
may be reasonably required by such Member, it being understood that
such information will be the type of financial information that the
Company would file with the Securities and Exchange Commission if the
Company were subject to the periodic reporting requirements of the
Exchange Act of 1934, as amended. The Company agrees to use its good
faith efforts to provide such information to any such Member at a date
which will allow such Member a reasonable
23
|
period of time in which to incorporate such information into any
filings to be made by such Member.
SECTION 12
LIABILITY, EXCULPATION AND INDEMNIFICATION
12.1 LIABILITY.
Except as otherwise provided herein or by the Delaware Act, the debts,
obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Covered Person shall be obligated
personally for any such debt, obligation or liability of the Company
solely by reason of being a Covered Person.
12.2 EXCULPATION.
(a) GENERALLY. No Covered Person shall be liable to the Company or
any Member for any act or omission taken or suffered by such
Covered Person in good faith and in the reasonable belief that
such act or omission is in or is not contrary to the best
interests of the Company and is within the scope of authority
granted to such Covered Person by this Agreement, provided
that such act or omission is not in material violation of this
Agreement and does not constitute Disabling Conduct by the
Covered Person. No Member shall be liable to the Company or
any Member for any action taken by any other Member.
(b) RELIANCE GENERALLY. A Covered Person shall incur no liability
in acting upon any signature or writing reasonably believed by
it to be genuine, and may rely on a certificate signed by an
executive officer of any Person in order to ascertain any fact
with respect to such Person or within such Person's knowledge
and may rely on an opinion of counsel selected by such Covered
Person with respect to legal matters, except to the extent
that such liability resulted from the Covered Person having
engaged in Disabling Conduct. Each Covered Person may act
directly or through its agents or attorneys. Each Covered
Person may consult with counsel, appraisers, engineers,
accountants and other skilled Persons of its choosing, and
shall not be liable for anything done, suffered or omitted in
good faith in reasonable reliance upon the advice of any of
such Persons, except to the extent that such Covered Person
engaged in Disabling Conduct. No Covered Person shall be
liable to the Company or any Member for any error of judgment
made in good faith by a responsible officer or officers of the
Covered Person, except to the extent that such liability
resulted from the Covered Person having engaged in Disabling
Conduct. Except as otherwise provided in this Section 12.2, no
Covered Person shall be liable to the Company or any Member
for any mistake of fact or judgment by the Covered Person in
conducting the affairs of the Company or otherwise acting in
respect of and within the scope of this Agreement, except to
the extent that such liability resulted from the Covered
Person having engaged in Disabling Conduct. No Covered Person
shall be liable for the return to any
24
|
Member of all or any portion of any Member's Capital Account
or Capital Contributions, except to the extent that such
liability resulted from the Covered Person having engaged in
Disabling Conduct.
(c) RELIANCE ON THIS AGREEMENT. To the extent that, at law or in
equity, a Covered Person has duties (including fiduciary
duties) and liabilities relating thereto to the Company or to
the Members, any Covered Person acting under this Agreement or
otherwise shall not be liable to the Company or to any Member
for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent
that they restrict the duties and liabilities of a Covered
Person otherwise existing at law or in equity, are agreed by
the Members to replace such other duties and liabilities of
such Covered Person.
(d) STANDARD OF CARE. Whenever in this Agreement a Person is
permitted or required to make a decision (i) except the
Directors in connection with the discharge of their duties as
Members of the Board in its "sole and absolute discretion,"
"sole discretion," "discretion" or under a grant of similar
authority or latitude, the Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting
any other Member, the Company or any other Person, or (ii) in
its "good faith" or under another express standard, the Person
shall act under such express standard and shall not be subject
to any other or different standard imposed by this Agreement
or other applicable law.
12.3 INDEMNIFICATION.
(a) INDEMNIFICATION GENERALLY. The Company shall and hereby does,
to the fullest extent permitted by applicable law, indemnify,
hold harmless and release each Covered Person from and against
all claims, demands, liabilities, costs, expenses, damages,
losses, suits, proceedings and actions, whether judicial,
administrative, investigative or otherwise, of whatever
nature, known or unknown, liquidated or unliquidated
("CLAIMS"), that may accrue to or be incurred by any Covered
Person, or in which any Covered Person may become involved, as
a party or otherwise, or with which any Covered Person may be
threatened, relating to or arising out of the business and
affairs of, or activities undertaken in connection with, the
Company, or otherwise relating to or arising out of this
Agreement, including, but not limited to, amounts paid in
satisfaction of judgments, in compromise or as fines or
penalties and counsel fees and expenses incurred in connection
with the preparation for or defense or disposition of any
investigation, action, suit, arbitration or other proceeding
(a "PROCEEDING"), whether civil or criminal (all of such
Claims and amounts covered by this Section 12.3. and all
expenses referred to in Section 12.3(c), are referred to as
"DAMAGES"), except to the extent that it shall have been
determined ultimately that such Damages arose from Disabling
Conduct of such Covered Person or that such Covered Person
|
committed a material breach of this Agreement. The termination of any Proceeding by settlement shall not, of itself, create a presumption that any Damages relating to such settlement arose from a material violation of this Agreement by, or Disabling Conduct of, any Covered Person.
(b) NO DIRECT MEMBER INDEMNITY. Members shall not be required directly to indemnify any Covered Person.
(c) EXPENSES, ETC. Expenses incurred by a Covered Person in defense or settlement of any Claim that may be subject to a right of indemnification hereunder may be advanced by the Company prior to the final disposition thereof upon receipt of an agreement by or on behalf of the Covered Person to repay such amount if it shall be determined ultimately that the Covered Person is not entitled to be indemnified hereunder. The right of any Covered Person to the indemnification provided herein shall be cumulative with, and in addition to, any and all rights to which such Covered Person may otherwise be entitled by contract or as a matter of law or equity and shall extend to such Covered Person's successors, assigns and legal representatives.
(d) NOTICES OF CLAIMS, ETC. Promptly after receipt by a Covered Person of notice of the commencement of any Proceeding, such Covered Person shall, if a claim for indemnification in respect thereof is to be made against the Company, give written notice to the Company of the commencement of such Proceeding, provided that the failure of any Covered Person to give notice as provided herein shall not relieve the Company of its obligations under this Section 12.3 except to the extent that the Company is actually prejudiced by such failure to give notice. In case any such Proceeding is brought against a Covered Person (other than a derivative suit in right of the Company), the Company will be entitled to participate in and to assume the defense thereof to the extent that the Company may wish, with counsel reasonably satisfactory to such Covered Person. After notice from the Company to such Covered Person of the Company's election to assume the defense thereof (and corresponding expenses), the Company will not be liable for expenses subsequently incurred by such Covered Person in connection with the defense thereof. The Company will not consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Covered Person of a release from all liability in respect to such Claim.
(e) NO WAIVER. Nothing contained in this Section 12.3 shall constitute a waiver by any Member of any right that it may have against any party under United States federal or state securities laws.
SECTION 13
TRANSFER OF UNITS; WITHDRAWAL,
BANKRUPTCY, DISSOLUTION; CERTAIN ADMISSIONS OF MEMBERS
13.1 ADMISSION, SUBSTITUTION AND WITHDRAWAL OF MEMBERS; ASSIGNMENT.
(a) GENERAL. Except as set forth in this Section 13, no Person may be admitted to, and no Member may withdraw from, the Company prior to the dissolution and winding up of the Company. No Member shall sell, transfer, assign, convey, pledge, mortgage, encumber, hypothecate or otherwise dispose of all or any part of its interest in the Company (a "TRANSFER") without first complying with the provisions of this Section 13.1.
(b) ADMISSION OF NEW MEMBERS AND ISSUANCE OF INTERESTS No person shall be admitted as a new Member and the Company shall not authorize the issuance of interest in the Company of any kind that could or would entitle the recipient thereof to the rights of a Member or that would cause (or entitle) such person to receive an interest (other than collateral security interests granted by the Company to secure its obligations) in the assets or profits of the Company unless approved by a Majority Board Vote as defined in Section 4.1(g).
(c) CONDITIONS TO TRANSFER. Any purported Transfer by a Member pursuant to the terms of this Section 13 shall be subject to the satisfaction of the following conditions:
(i) the transferring Member or transferee shall undertake to pay all reasonable expenses incurred by the Company in connection therewith;
(ii) the Company shall received from the transferring Member a legal opinion, in form and substance reasonably satisfactory to the nontransferring Members, to the effect that the transfer will not result (directly or indirectly) in (A) a termination of the Company under any Section of the Code that would require the non-transferring Members to recognize gain under Section 731 of the Code, or (B) treatment of the Company as an entity other than a partnership for purposes of the Code; and
(iii) the Company shall receive from the Person to whom such Transfer is to be made (A) such documents, instruments and certificates as may be requested by the Company, pursuant to which such transferee shall agree to be bound by this Agreement, (B) such other documents, opinions, instruments and certificates as the Company shall reasonably request and (C) a counterpart of this Agreement executed by or on behalf of such Person; and
(d) COOPERATION BY THE COMPANY. The Company shall provide reasonable assistance to any Member at such Member's request seeking to sell its Units in compliance with this Agreement,
provided that the Company shall not be required to provide any
confidential information to any prospective purchaser who has
not executed a confidentiality agreement in form reasonably
satisfactory to the Company. Any costs to the Company of
providing such assistance shall be paid by the Member seeking
to sell its Units.
(e) PROHIBITED TRANSFERS. No attempted Transfer shall be
recognized by the Company unless effected in accordance with
and as permitted by this Agreement.
(f) RIGHT OF FIRST REFUSAL. UAG shall have a right of first
refusal to purchase all of the Noto interest on the terms that
Noto offers such interest to a third party. UAG shall have
twenty (20) days after receipt of written notice from Noto
that it intends to sell its interest to exercise this right of
first refusal. If UAG fails to exercise its right, any
attempted Transfer of the Noto interest to a third party must
still meet the requirements of this Agreement to become
effective.
13.2 WITHDRAWAL.
No Member shall have the right to withdraw from the Company and no
Member shall take any action to accomplish its voluntary dissolution.
13.3 NOTO OPTION TO PURCHASE.
For a period commencing as of the effective date of this Agreement and
expiring on the twentieth (20th) anniversary of the effective date,
Noto shall have the option to purchase up to, but no more than, Fifty
Three Thousand Eight Hundred and Forty (53,840) Voting Units from UAG
for the purchase price of Sixty Eight and 42/100 dollars ($68.42)per
Voting Unit (the "Noto Option"). Noto may exercise this option in one
or more installments. The intent of the Parties is that Noto shall have
the option to purchase up to, but no more than, Twenty Percent (20%) of
the Voting Units of the Company. If, prior to an exercise of the Noto
Option, the Members make additional capital contributions to the
Company and Noto contributes a percentage that is less than its
Non-Voting Percentage Interest, then upon an exercise of the Noto
Option, the option price shall be adjusted to include the differential
between the amount of the actual capital contribution made by Noto and
the amount of the capital contribution which would have been made by
Noto had it contributed a percentage equal to its Non-Voting Percentage
Interest. Noto shall exercise this option upon five (5) days written
notice to UAG and the Company. Upon the exercise of the option provided
for herein, Schedule B attached hereto shall be amended as soon as
practicable to reflect the results of such election.
|
SECTION 14
DISSOLUTION AND TERMINATION OF THE COMPANY
14.1 EVENTS CAUSING DISSOLUTION.
(a) DISSOLUTION EVENTS. There will be a dissolution of the Company and its affairs shall be wound up upon the first to occur of any of the following events:
(i) the written consent of all Members;
(ii) the death, retirement, resignation, expulsion, bankruptcy or dissolution (any of the foregoing, a "WITHDRAWAL") of any Member (in such capacity, the "WITHDRAWING MEMBER") unless, within ninety days after the occurrence of such an event Members holding a majority of the Units of all of the remaining Members agree in writing to continue the business of the Company and to the appointment, if necessary or desired, effective as of the date of such event, of one or more new Members; or
(iii) the entry of a decree of judicial dissolution under
Section 18-802 of the Delaware Act.
(b) If the remaining Members decide to continue the Company
pursuant only to Section 14.1(a)(ii), the Company shall inform
the Withdrawing Member of such decision by written notice
delivered within ninety (90) days of the occurrence of the
Withdrawal. If the Members so elect to continue the Company,
the Withdrawing Member shall no longer be a Member of the
Company and the Company (and/or the other Members) shall make
payment in cash in liquidation of the Withdrawing Member's
interest in the Company. Any such payment shall be equal to
the Withdrawing Member's capital account minus any costs, fees
or expenses of the Company and the non-withdrawing members
related to the Withdrawal.
14.2 LIQUIDATION.
Upon dissolution of the Company, the Person or Persons approved as
provided in Section 14.4(b) to carry out the winding up of the Company
(in such capacity, the "LIQUIDATING TRUSTEE") and shall proceed,
subject to the provisions herein, to liquidate the Company and apply
the proceeds of such liquidation, or at the discretion of the Members
to distribute Company assets, in the following order of priority:
(a) First, to creditors (including creditors that are also
Members) in satisfaction of debts and liabilities of the
Company, whether by payment or the making of reasonable
provision for payment (including any loans or advances that
may have been made by any of the Members to the Company), and
the expenses of liquidation, whether by payment or the making
of reasonable provision for payments, any such reasonable
reserves (which may be funded by a liquidating
29
|
trust) to be established by the Liquidating Trustee, as the
case may be, in amounts deemed by it to be reasonably
necessary for the payment of the Company's expenses,
liabilities and other obligations (whether fixed or
contingent); and
(b) Second, to the Members in proportion to, and to the extent of,
each Member's Capital Account, as such Capital Account has
been adjusted pursuant to Section 6.4, any remainder to be
distributed among the Members in accordance with their
respective Voting Percentage Interest; provided that, prior to
such distribution, Noto shall be entitled to exercise the
option referenced in Section 13.3, if such option is in
effect, in order to increase his Voting Percentage Interest up
to, but no more than Twenty Percent (20%)
14.3 DISTRIBUTIONS IN CASH OR IN KIND.
(a) Upon the dissolution of the Company, the Liquidating Trustee
shall use its good faith efforts to liquidate all of the
Company assets in an orderly manner and apply the proceeds of
such liquidation as set forth in Section 14.2, or if in the
good faith business judgment of the Liquidating Trustee a
Company asset should not be liquidated, the Liquidating
Trustee shall allocate, on the basis of the Value of any
Company assets not sold or otherwise disposed of, any
unrealized gain or loss based on such Value to the Members'
Capital Accounts as though the assets in question had been
sold on the date of distribution and, after giving effect to
any such adjustment, distribute said assets in accordance with
Section 14.2, provided that the Liquidating Trustee will in
good faith attempt to liquidate sufficient Company assets to
satisfy in cash (or make reasonable provision for) the debts
and liabilities referred to in paragraph First of Section
14.2.
14.4 TIME AND MANNER FOR LIQUIDATION, ETC.
(a) A reasonable time period shall be allowed for the orderly
winding up and liquidation of the assets of the Company and
the discharge of liabilities to creditors so as to enable the
Liquidating Trustee to seek to minimize potential losses upon
such liquidation. The provisions of this Agreement shall
remain in full force and effect during the period of winding
up and until the filing of a certificate of cancellation of
the Company with the Secretary of State of the State of
Delaware.
(b) In the event of a liquidation of the Company, the Members
shall jointly approve the Person to act as Liquidating Trustee
and shall be entitled to direct the manner and timing under
which such Liquidating Trustee shall proceed to liquidate the
Company. All Members shall be promptly informed of any
directions given by another Member to the Liquidating Trustee
and of the progress of the liquidation.
|
14.5 TERMINATION.
Upon completion of the foregoing, the Liquidating Trustee shall
execute, acknowledge and cause to be filed a certificate of
cancellation of the Company with the Secretary of State of the State of
Delaware.
14.6 CLAIMS OF THE MEMBERS.
The Members and former Members shall, other than for a breach of this
Agreement, gross negligence or willful misconduct, look solely to the
Company's assets for the return of their Capital Contributions, and if
the assets of the Company remaining after payment of or due provision
for all debts, liabilities and obligations of the Company are
insufficient to return such Capital Contributions, the Members and
former Members shall have no recourse against any Member, any Manager
or any Member's or Manager's Affiliates.
SECTION 15
DEFINITIONS
15.1 DEFINITIONS.
Unless the context otherwise requires, the terms defined in this
Section 15.1 shall, for the purposes of this Agreement, have the
meanings herein specified.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" shall mean, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account
as of the end of the relevant Fiscal Year after giving effect to the
following adjustments: (a) credit to such Capital Account any amounts
that such Member is obligated to restore pursuant to the penultimate
sentences of Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and (b) debit to such Capital Account the items
described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5)
and (6). This definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Treasury Regulations and shall be interpreted consistently
therewith.
"ADJUSTED NET CASH" means an amount that is reasonably determined by
the Chief Financial Officer of United Auto Group, Inc. and the
President of the Company.
"AFFILIATE" of any entity or Person shall mean any other entity or
person Controlling, Controlled by, or under Common Control with, such
entity or Person.
"AGREEMENT" shall mean this Limited Liability Company Agreement, as
amended, modified, supplemented or restated from time to time.
"ASSOCIATE" shall have the meaning ascribed to such term in Rule 12b-2
of the Securities Exchange Act of 1934, as amended.
|
"BUSINESS" is defined in the Recitals to this Agreement.
"BUSINESS DAY" shall mean any day on which banks located in New York City are not required or authorized by law to remain closed.
"CAPITAL ACCOUNT" shall mean, with respect to any Member, the account maintained for such Member in accordance with the provisions of Section 6.4.
"CAPITAL CONTRIBUTION" shall mean, with respect to any Member, the amount of money and the Gross Asset Value of property contributed by such Member to the Company pursuant to Article VI hereof and as set forth on Schedule B.
"CERTIFICATE" shall mean the Company's Certificate of Formation and any and all amendments thereto and restatements thereof filed on behalf of the Company with the office of the Secretary of State of the State of Delaware pursuant to the Delaware Act.
"CLAIMS" shall have the meaning set forth in Section 12.3(a).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY MINIMUM GAIN" shall have the meaning of "partnership minimum gain" set forth in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
"CONTROL" (including the terms "Controlling", "Controlled by" and "under common Control with") means the possession, directly or indirectly, or the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of securities, by contract or otherwise.
"COVERED PERSON" shall mean a Member, a Manager, a Director, an Officer, any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the Company, a Member or a Manager; any officers, directors, shareholders, controlling Persons, partners, employees, representatives or agents of a Member or a Manager, or their respective Affiliates; or any officer, employee or agent of the Company or its Affiliates; or any Person who was, at the time of the act or omission in question, such a Person.
"DAMAGES" shall have the meaning set forth in Section 12.3(a).
"DEALERSHIP OPERATING COMPANIES" shall mean UAG Fairfield CM, LLC, UAG
Fairfield CA, LLC and UAG Fairfield CP, LLC and all their successors.
"DELAWARE ACT" shall mean the Delaware Limited Liability Company Act, 6 Del. C. " 18-101, et seq., as amended from time to time.
"DEPRECIATION" shall mean, for each Fiscal Year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Fiscal Year, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Fiscal Year bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for federal income tax purposes of an asset at the beginning of such Fiscal Year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Member.
"DIRECTORS" shall have the meaning set forth in Section 4.1(a).
"DISABLING CONDUCT" shall mean conduct that constitutes fraud, a willful violation of this Agreement or law, gross negligence or reckless disregard of duty in the conduct of the duties of the Person referred to which results in a material loss to the Company.
"EXECUTIVE OFFICER" shall mean the President of the Company and all officers and employees of the Company who directly report to, or are directly supervised by, the President.
"FINANCIAL STATEMENTS" with respect to the Company shall mean the financial statements of the Company that reflect the assets, liabilities, retained capital, operations and cash flows of the Company.
"FISCAL YEAR" shall have the meaning set forth in Section 5.4.
"FRANCHISE AGREEMENTS" means, with respect to the Dealership Operating Companies, the agreements entered into with each respective manufacturer which serve to establish the rights and obligations of the Dealership Operating Companies and manufacturers to each other with respect to the sale and service of new motor vehicles.
"GROSS ASSET VALUE" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the fair market value of such asset at the time it is accepted by the Company, unreduced by any liability secured by such asset, as determined by the Members.
(b) The Gross Asset Values of all Company assets shall be adjusted to equal their respective fair market values, unreduced by any liabilities secured by such assets, as determined by the Members as of the following times: (i) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital
Contribution; (ii) the distribution by the Company to
a Member of more than a de minimis amount of Property
as consideration for an interest in the Company; and
(iii) the liquidation of the Company within the
meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g).
(c) The Gross Asset Values of any Company asset distributed to any Member shall be adjusted to equal the fair market value of such asset, unreduced by any liability secured by such asset, on the date of distribution as determined by the Members.
(d) The Gross Asset Values of the Company assets shall be
increased (or decreased) to reflect any adjustments
to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b); but only to
the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and
paragraph (vi) of the definition of "Net Profits" and
"Net Losses".
If the Gross Asset Value of an asset has been
determined or adjusted pursuant to paragraphs (a),
(b) or (d) of this definition, such Gross Asset Value
shall thereafter be adjusted by the Depreciation
taken into account with respect to such asset for
purposes of computing Net Profits and Net Losses.
"LIQUIDATING TRUSTEE" shall have the meaning set forth in Section 14.2.
"MAJORITY IN INTEREST OF THE MEMBERS" shall mean the written consent, or vote at a duly called meeting of Members, of Members holding a majority of Units held by all Members.
"MANAGER" shall mean a "manager" (within the meaning of the Delaware Act) of the Company.
"MEMBER" shall mean any Person named as a member of the Company on Schedule A hereto or admitted subsequently as an additional Member pursuant to the provisions of this Agreement, in such Person's capacity as a member of the Company, and "Members" shall mean two or more of such Persons when acting in their capacities as members of the Company.
"MEMBER MINIMUM GAIN" shall mean a Member's share of Company Minimum
Gain as set forth in Treasury Regulations Section 1.704-2(g) and member
nonrecourse debt minimum gain as described in Treasury Regulations
Section 1.704-2(i).
"MEMBER NONRECOURSE DEBT" shall have the meaning of "partner nonrecourse debt" as set forth in Treasury Regulations Section 1.704-2(b)(4).
"MEMBER NONRECOURSE DEDUCTIONS" shall have the meaning of "partner nonrecourse deductions" set forth in Treasury Regulations Section 1.704-2(i).
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in Treasury Regulations Section 1.704-2(b)(1).
"NET PROFIT" or "NET LOSS" shall mean, for each Fiscal Year, an amount equal to the Company's taxable income or loss for such Fiscal Year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:
(a) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition shall be added to such taxable income or loss;
(b) any expenditures of the Company described in Code
Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Net Profits
or Net Losses pursuant to this definition shall be
subtracted from such taxable income or loss;
(c) in the event the Gross Asset Value of any Company asset is adjusted pursuant to paragraphs (b) or (c) of the definition of "Gross Asset Value," the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Profits or Net Losses;
(d) gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;
(e) in lieu of depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss there shall be taken into account Depreciation with respect to each asset of the Company for such Fiscal Year, computed in accordance with the definition of "Depreciation" above;
(f) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Treasury Regulations 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in complete liquidation of a Member's Interest, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Profits or Net Losses; and
(g) notwithstanding any other provision of this definition, any items which are specially allocated pursuant to Section 7.2(a) of this Agreement shall not be taken into account in computing Net Profits or Net Losses.
The amounts of the items of Company income, gain, loss, or deduction available to be specially allocated pursuant to Sections 7.2(a) hereof shall be determined by applying rules analogous to those set forth in paragraphs (a) through (f) above.
"NON-VOTING PERCENTAGE INTEREST" shall mean the percentage of the total Non-Voting Units held by a Member.
"NON-VOTING UNITS" shall mean the class of Units for which the holder thereof is not entitled to vote for or against matters submitted to a vote of the Members in accordance with this Agreement.
"OFFICER" shall have the meaning set forth in Section 4.2(a).
"PERIOD" shall mean, for the first period, the period commencing on the date of this Agreement and ending on the next Adjustment Date. All succeeding Periods shall commence on the day after an Adjustment Date and end on the next Adjustment Date.
"PERSON" shall mean any individual, corporation, association, partnership (general or limited), joint venture, trust, joint-stock company, estate, limited liability company, unincorporated organization or other legal entity or organization.
"PROCEEDING" shall have the meaning set forth in Section 12.3(a).
"SECRETARY" shall mean the person or persons duly appointed as Secretary of the Company.
"SUBSIDIARY" of any Person shall mean a corporation or other entity a majority of whose capital stock with voting power or the majority ownership interest of which is at the time owned or controlled, directly or indirectly, by such Person.
"TMM" shall have the meaning set forth in Section 9.1(a).
"TRANSFER" shall have the meaning set forth in Section 13.1(a).
"TREASURER" shall mean the person or persons duly appointed as Treasurer of the Company.
"TREASURY REGULATIONS" shall mean the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as the same may be amended hereafter from time to time (including corresponding provisions of succeeding Income Tax Regulations).
"UNITS" shall mean the total limited liability company interests of the Company, which shall be comprised of Voting Units and Non-Voting Units in accordance with this Agreement. The number of Units, Voting Units and Non-Voting Units authorized to be issued and outstanding is specified in Schedule A, as amended from time to time in accordance with this Agreement.
"VOTING UNITS" shall mean the class of Units for which the holder thereof is entitled to vote for or against matters submitted to a vote of the Members in accordance with this Agreement.
"VOTING PERCENTAGE INTEREST" shall mean the percentage of the total Voting Units held by a Member.
"WITHHELD AMOUNT" shall have the meaning set forth in Section 7.4(c).
SECTION 16
AMENDMENTS; MERGER OR SALE
16.1 AMENDMENTS GENERALLY.
Notwithstanding any other provision of this Agreement, the terms of
this Agreement shall not be amended except in a writing signed by all
Members, provided that, without the consent of any of the Members, the
Company:
(i) may enter into agreements with Persons who are transferees of
the interests in the Company of Members, pursuant to the terms
of this Agreement, providing in substance that such Persons
will be bound by this Agreement; and
(ii) may amend this Agreement as may be required to implement (A)
transfers of interests of Members or (B) any admission of new
Members.
16.2 MERGER OR SALE.
The Company may merge with, or consolidate into, a Delaware limited
liability company or another business entity (as defined in Section
18-209(a) of the Delaware Act) or may sell all or substantially all of
its assets only upon the approval of the Company and all Members of the
Company.
|
SECTION 17
MISCELLANEOUS PROVISIONS
17.1 NOTICES.
Each notice relating to this Agreement shall be in writing and shall be
delivered (a) in person, by registered or certified mail, private
courier or (b) by telecopy or other facsimile transmission, confirmed
by telephone to an executive officer of the recipient. In addition, all
notices to any Member shall be addressed to such Member at their
respective addresses set forth on Schedule A or at such other address
as the Member may have designated by notice in writing. Any Member may
designate a new address by notice to that effect given to the Company.
The Company may designate a new address by notice to that effect given
to each Member. Unless otherwise specifically provided in this
Agreement, a notice given in accordance with the foregoing clause (a)
shall be deemed to have been effectively given when mailed by
registered or certified mail, return receipt requested, to the proper
address, or when delivered in person. Any notice to the Company or to a
Member by telecopy or other facsimile transmission shall be deemed to
be given when sent and confirmed by telephone in accordance with the
foregoing clause (b).
17.2 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which taken together shall
constitute a single agreement.
17.3 TABLE OF CONTENTS AND HEADINGS.
The table of contents and the headings and subheadings of the sections
of this Agreement are inserted for convenience and identification only
and are in no way intended to describe, interpret, define or limit the
scope, extent or intent of this Agreement or any provision thereof.
17.4 SUCCESSORS AND ASSIGNS; ASSIGNMENT.
This Agreement shall inure to the benefit of the Members and the
Covered Persons, and shall be binding upon the parties, and their
respective successors and permitted assigns.
17.5 SEVERABILITY.
Every provision of this Agreement is intended to be severable. If any
term or provision of this Agreement is illegal or invalid for any
reason whatsoever, such term or provision will be enforced to the
maximum extent permitted by law and, in any event, such illegality or
invalidity shall not affect the validity of the remainder of the
Agreement.
17.6 NON-WAIVER.
No provision of this Agreement shall be deemed to have been waived
except if the giving of such waiver is contained in a written notice
given to the party claiming such waiver and no such waiver shall be
deemed to be a waiver of any other or further obligation or liability
of the party or parties in whose favor the waiver was given.
38
|
17.7 APPLICABLE LAW.
This agreement and the rights and obligations of the parties hereunder
shall be interpreted and enforced in accordance with and governed by
the laws of the state of Delaware, and all rights and remedies shall be
governed by such laws without regard to principles of conflict of laws.
17.8 WAIVER OF JURY TRIAL.
Each party to this Agreement waives to the fullest extent permitted by
applicable law any right it may have to a trial by jury in respect of
any action, suit or proceeding arising out of or relating to this
Agreement.
17.9 SURVIVAL OF CERTAIN PROVISIONS.
The obligations of each Member pursuant to Sections 6.5 and 12.3 shall
survive the termination or expiration of this Agreement and the
winding-up, liquidation and dissolution of the Company.
17.10 LIMITATION ON DAMAGES; LEGAL DISPUTES.
(a) In no event will any party to this Agreement be liable to any
other party for special, indirect, punitive or incidental
damages, or any other consequential damages except for lost
profits and lost savings, even if such party has been advised
of the possibility of such damages resulting from the breach
by it of any of its obligations hereunder or from the use of
any confidential or other information.
(b) Subject to the limitations of subsection (a), immediately
above, the rights and remedies of the parties under this
Agreement are cumulative and are not exclusive of any rights
or remedies which the parties would otherwise have for
equitable relief, including the remedies of specific
performance and injunction.
17.11 WAIVER OF PARTITION.
Except as may otherwise be provided by law in connection with the
winding-up, liquidation and dissolution of the Company, each Member
hereby irrevocably waives any and all rights that it may have to
maintain an action for partition of any of the Company's property.
17.12 ENTIRE AGREEMENT.
This Agreement and the Transaction Agreement and agreements executed in
connection therewith constitute the entire agreement among the Members
with respect to the subject matter hereof, and supersede any prior
agreement or understanding among them with respect to such subject
matter.
|
17.13 FURTHER ACTIONS.
Each Member shall execute and deliver such other certificates,
agreements and documents, and take such other actions, as may
reasonably be requested by the Company in connection with the formation
of the Company and the achievement of its purposes, including, without
limitation all such agreements, certificates, tax statements and other
documents as may be required to be filed in respect of the Company.
17.14 NO PARTNERSHIP.
Nothing contained in this Agreement shall be deemed or construed to
make any Member partners or joint venturers with each other, for any
purposes other than for federal and state tax purposes. The only
business association to be formed by the Members will be the Company,
which will be a limited liability company under Delaware law, to be
organized pursuant to this Agreement. The Company shall not be a
general partnership, a limited partnership or a joint venture, and no
Member shall be considered a partner or joint venturer of or with any
other Member for any purposes other than for federal and state tax
purposes.
Units
|
IN WITNESS WHEREOF, the undersigned have duly executed this Limited Liability Company Agreement of UAG CONNECTICUT I, LLC on the 1st day of April, 2003 and made effective as of March 1, 2001.
UAG CONNECTICUT, LLC
BY: /S/ ROBERT H. KURNICK, JR.
NAME: ROBERT H. KURNICK, JR.
TITLE: ASSISTANT SECRETARY
|
NOTO HOLDINGS LLC
BY: /S/ LUCIO A. NOTO
NAME: LUCIO A. NOTO
TITLE: MEMBER
|
SCHEDULE A
UNITS
o Number of Units authorized, issued and outstanding:
five hundred thousand (500,000)
o Number of Voting Units authorized, issued and outstanding:
four hundred thousand (400,000)
o Number of Non-Voting Units authorized, issued and outstanding:
one hundred thousand (100,000)
Schedule B
MEMBER INFORMATION
Voting Non-Voting
Capital Voting Percentage Non-Voting Percentage
Name/Address Contribution Units Interest Units Interest
----------------------------------- ------------------- -------------- ------------------- ---------------- -------------------
UAG Connecticut, LLC
2555 Telegraph Road $25,578,000 373,840 93.46% 80,000 80%
Bloomfield Hills, MI
48302-0954
----------------------------------- ------------------- -------------- ------------------- ---------------- -------------------
Noto Holdings LLC
342 West Putnam Ave 6.54% 20,000 20%
Greenwich, CT 1,791,000(1) 26,160
06830
----------------------------------- ------------------- -------------- ------------------- ---------------- -------------------
TOTAL $ 27,369,000 400,000 100% 100,000 100%
----------------------------------- ------------------- -------------- ------------------- ---------------- -------------------
|
(1) $1,003,800 contributed in cash at closing and $788,000 credited from earnings that would otherwise have been distributed had the transaction closed on March 1, 2001.
SCHEDULE C
INITIAL DIRECTORS
Robert H. Kurnick, Jr. -------------------------------------------------------------- ----------------------------------------------------------- James R. Davidson -------------------------------------------------------------- ----------------------------------------------------------- Richard S. Koppelman -------------------------------------------------------------- ----------------------------------------------------------- |
INITIAL DIRECTORS
Chairman Samuel X. DiFeo -------------------------------------------------------------- ----------------------------------------------------------- President A. Andrew Shapiro -------------------------------------------------------------- ----------------------------------------------------------- Vice President R. Whitfield Ramonat -------------------------------------------------------------- ----------------------------------------------------------- Secretary/Treasurer Scott Carlsson -------------------------------------------------------------- ----------------------------------------------------------- Assistant Treasurer James R. Davidson -------------------------------------------------------------- ----------------------------------------------------------- Assistant Secretary Robert H. Kurnick, Jr. -------------------------------------------------------------- ----------------------------------------------------------- Assistant Secretary Maggie Feher -------------------------------------------------------------- ----------------------------------------------------------- |
EXHIBIT 10.4
April 1, 2003
UAG Connecticut I, LLC 2555 Telegraph Road Bloomfield Hills, MI 48302 UAG Realty, LLC Automotive Group Realty, LLC 2555 Telegraph Road 2555 Telegraph Road Bloomfield Hills, MI 48302 Bloomfield Hills, MI 48302 UAG Connecticut, LLC Noto Holdings LLC 2555 Telegraph Road 342 West Putnam Avenue Bloomfield Hills, MI 48302 Greenwich, CT 06838 |
RE: First Amended and Restated Limited Liability Company Agreement (the "Agreement") dated effective March 1, 2001, by and between Noto Holdings LLC ("Noto") and UAG Connecticut, LLC ("UAG") relating to the ownership of limited liability company membership interests of UAG Connecticut I, LLC (the "Company").
Gentlemen:
In connection with the captioned Agreement, and to induce Noto to enter into and complete the transactions contemplated by the captioned Agreement, Automotive Group Realty, LLC, a wholly owned subsidiary of Penske Corporation ("AGR"), UAG, UAG Realty, LLC ("UAG Realty") and the Company have all agreed to execute and deliver to Noto this letter setting forth certain understandings with respect to the real property underlying the business operations of the Company and its subsidiaries.
AGR currently holds title to the real property described on Schedule "A" attached hereto and all improvements thereon, along with any other real property acquired by AGR and used in connection with the business of the Company, (collectively referred to herein as the "Property" or "Properties"). The values reflected on Schedule A represent the investment in the properties made by AGR as of the date hereof (such amounts being referred to herein as the "Current Value"). Schedule "A" shall be amended and adjusted from time to time in order to reflect any additional investment by AGR in a Property or any other property used in connection with the Company's business. The Properties are currently leased by UAG Realty from AGR pursuant to a Lease Agreement dated September 29, 2000, as amended and as may be amended from time to time (the "Lease"), and the Company subleases the Properties from UAG Realty, LLC.
In connection with the execution of this letter, UAG and Noto have entered into the Agreement which, among other things, serves to convey a membership interest in the Company to Noto. AGR intends to convey to Noto a twenty percent (20%) share of appreciation in the Properties in exchange for Noto's guarantee of twenty percent (20%) of the rent payments due under the Lease, on the terms and conditions set forth below.
So long as Noto is not in default of its obligations under the Agreement and UAG Realty is not in default of its obligations under the Lease, upon the sale and transfer of all or any of the Properties by AGR, AGR shall pay to Noto promptly upon completion of any such sale or transfer an amount equal to twenty percent (20%) of the positive difference between (i) the actual proceeds received by AGR on the date of the sale or transfer of the Property as sales price, net of all sales related costs including, but not limited to, transfer taxes, broker commissions and title policies, of the Property or Properties sold or otherwise transferred by AGR (the "Net Sale Proceeds") and (ii) the Current Value with respect to each Property sold or otherwise transferred by AGR. If the amount calculated pursuant to the immediately preceding sentence is less than zero, then Noto agrees to pay to AGR an amount equal to twenty percent (20%) of the difference between (i) the Current Value with respect to each Property sold or otherwise transferred by AGR, and (ii) the Net Sale Proceeds; provided, however, that the foregoing obligations of Noto may only be satisfied from proceeds from the Collateral (as defined below), if any, and except for the Collateral or proceeds therefrom AGR shall have no recourse against Noto or any other person for the foregoing obligations of Noto.
In consideration for the interest conveyed herein, Noto hereby agrees to guarantee to AGR the payment of twenty percent (20%) of the monthly payment obligation of Base Annual Rent (as defined in the Lease) made by UAG Realty in accordance with the terms of the Lease as such Base Annual Rent may be increased or decreased from time to time. This guarantee shall terminate with respect to each Property upon the sale and transfer of that Property by AGR. This guaranty is secured by Noto's limited liability ownership interest in the Company (the "Collateral") which is pledged to AGR in accordance with a Pledge Agreement of even date herewith. UAG Realty will use its best commercial efforts to make timely lease payments. AGR shall copy Noto on any written notice of an Event of Default (as defined in the Lease) provided to UAG Realty under the Lease with respect to all or any of the Properties and agrees to provide Noto with an opportunity to cure such default on the same terms that the Lease permits UAG Realty the opportunity to cure an Event of Default.
The parties acknowledge that the amount of the payments made under the Lease to AGR has been structured to provide AGR with sufficient funds to pay the interest only on its mortgage loan relating to the Property together with a reasonable sum above such interest costs to reimburse AGR for expenses incurred in connection with its administration of the Property. While this Agreement is in effect, Noto shall have the right to participate in any net refinancing proceeds relating to the Property on the twenty percent (20%) basis
set forth above, provided that Noto agrees to apply its guarantee to any additional amount of Lease payments made as a result of the refinancing.
The obligations of AGR and Noto hereunder shall terminate upon the expiration of the term of the Lease, as extended from time to time.
This agreement shall not serve to eliminate, modify or alter the obligations of UAG Realty under the Lease and UAG Realty hereby reaffirms its obligations thereunder.
All capitalized terms not defined herein shall have the meaning ascribed to them by the Agreement.
This letter agreement constitutes the entire agreement among the parties with respect to the subject matter hereof, and supersedes any prior agreement or understanding among them including, but not limited to, a certain letter agreement dated March 1, 2001, with respect to such subject matter.
UAG CONNECTICUT I, LLC AUTOMOTIVE GROUP REALTY, LLC /s/ Robert H. Kurnick, Jr. /s/ Aaron Michael ------------------------------- ------------------------------- By: Robert H. Kurnick, Jr. By: Aaron Michael Its: Assistant Secretary Its: Vice President UAG REALTY, LLC NOTO HOLDINGS LLC /s/ Robert H. Kurnick, Jr. /s/ Lucio A. Noto ------------------------------- -------------------------------- By: Robert H. Kurnick, Jr. By: Lucio A. Noto Its: Assistant Secretary Its: Member |
UAG CONNECTICUT, LLC
/s/ Robert H. Kurnick, Jr. ------------------------------- By: Robert H. Kurnick, Jr. Its: Assistant Secretary |
Exhibit 10.5
April 1, 2003
Noto Holdings LLC
342 West Putnam Avenue
Greenwich, CT 07840
RE: UAG Connecticut I, LLC (the "Company")
Gentlemen:
This letter is provided in connection with Noto Holdings LLC ("Noto") acquisition of a membership interest in the Company pursuant to the First Amended and Restated Limited Liability Company Agreement (the "Agreement") dated March 1, 2001 by and between Noto and UAG Connecticut, LLC ("UAG").
UAG covenants to Noto that if UAG intends to enter into an agreement (the "Proposed Sale Agreement") to sell, assign, transfer or otherwise dispose of its Percentage Interest to a third party purchaser (the "Transaction") which, as a result of such Transaction, Penske Corporation, or an Affiliate thereof, would no longer have Control of the Company, then Noto shall have the right to sell its Percentage Interest to such third party purchaser as part of the Transaction. The purchase price for Noto's Percentage Interest shall be equal to the purchase price for UAG's Percentage Interest adjusted on a pro rata basis taking into account Noto's and UAG's Voting Interest ownership in the Company.
UAG shall provide Noto with a written copy of a Proposed Sale Agreement, and Noto shall provide UAG with written notice within seven (7) days thereafter should it wish to become a party to the Proposed Sale Agreement upon the terms set forth in the Proposed Sale Agreement which shall include the purchase price terms for Noto's Voting Interest set forth above.
Capitalized words and terms not otherwise defined herein shall have the definitions and meanings ascribed to them by the Agreement.
This letter constitutes the entire agreement among the parties with respect to the subject matter hereof, and supersedes any prior agreement or understanding among them including, but not limited to, a certain letter dated March 1, 2001, with respect to such subject matter.
UAG CONNECTICUT, LLC
/s/ Robert H. Kurnick, Jr. ------------------------------ By: Robert H. Kurnick, Jr. Its: Secretary |
AGREED:
NOTO HOLDINGS LLC
/s/ Lucio A. Noto ---------------------- By: Lucio A. Noto Its: Member |
EXHIBIT 99.1
906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of United Auto Group, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Roger S. Penske, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Roger S. Penske --------------------------- Roger S. Penske Chairman of the Board, Chief Executive Officer May 15, 2003 |
A signed original of this written statement required by Section 906 has been provided to United Auto Group and will be retained by United Auto Group and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 99.2
906 CERTIFICATION OF CHIEF FINANCIAL OFFICER
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of United Auto Group, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James R. Davidson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
3. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
4. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ James R. Davidson --------------------------- James R. Davidson Executive Vice President - Finance May 15, 2003 |
A signed original of this written statement required by Section 906 has been provided to United Auto Group and will be retained by United Auto Group and furnished to the Securities and Exchange Commission or its staff upon request.