Exhibit 2.1
Asset Purchase Agreement
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated as of this 29th day of January 1998, by
and among FirstAmerica Automotive, Inc., a Delaware corporation, or nominee
("Purchaser"), Xxxxxxx British Cars, Inc., a California corporation ("Seller")
and Xxxxx Xxxxxxx ("Xxxxxxx").
R E C I T A L S
WHEREAS, Seller owns and operates a Honda automobile dealership commonly
known as Xxxxxxx Honda at 0000 Xxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx (the
"Dealership").
WHEREAS, Xxxxxxx owns all of the outstanding stock of Seller.
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller certain of the assets, properties and business of Seller
utilized in its authorized Honda automobile dealership located in Daly City,
California.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereto agree as
follows:
A G R E E M E N T
1. DEFINITIONS. For the purposes of this Agreement, the herein below
terms shall have the following meanings:
1.1 ACQUIRED ASSETS. The "Acquired Assets" are the assets and property
to be purchased by Purchaser hereunder, as more fully described in Section 2.1
hereof.
1.2 CLOSING DATE. Unless otherwise mutually agreed between Purchaser
and Seller, the "Closing Date" means the 5th business day after the date on
which the conditions specified in Sections 7 and 8 hereof are satisfied, but no
sooner than April 15, 1998; subject, however, to the provisions of Section 18
below. The Closing shall take place at the offices of Xxx & Xxxxxx, 000 Xxx
Xxxxxxxxxxx, Xxxxxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx on the Closing Date commencing
at 10:00 a.m.
1.3 FRANCHISE. "Franchise" means the Honda franchise as currently held
by Seller.
1.4 FRANCHISER. "Franchiser" means American Honda.
1.5 OBSOLETE PARTS. "Obsolete Parts" means factory parts which are not
listed in the most current manufacturer's wholesale price book or, if listed
therein, are valued at ZERO DOLLARS ($0), parts which are not returnable to the
manufacturer (as defined by the
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Franchiser), parts which have been in stock more than one (1) year and/or parts
which are in excess of a one (1) year supply, or parts indicated as
discontinued, and broken or damaged parts, regardless of whether listed in the
most current manufacturers' wholesale price book.
2. SALE OF ASSETS.
2.1 ACQUIRED ASSETS. Seller hereby agrees to, sell, convey, transfer,
assign and deliver to Purchaser on the Closing Date, and Purchaser agrees to buy
and accept as hereinafter provided all the assets related to or used in
connection with the Franchise, including but not limited to those assets to be
listed on Schedule 2.1 to be prepared prior to the Closing Date and then
attached hereto, Honda special tools, furniture, fixtures and equipment, which
special tools, furniture, fixtures and equipment shall be in good working order,
and leasehold improvements used by Seller in operation of the Honda franchise,
motor vehicles (new and used) (subject to exclusion of certain used vehicles in
accordance with Section 3.2(c)), parts and accessories (subject to exclusion of
Obsolete Parts in accordance with Section 3.2(d)), tires, work-in-progress,
advertising literature, forms, supplies, customer files and data bases, parts
return privileges from the Franchiser, rights under new car purchase orders and
deposits relating thereto, goodwill, and Seller's customer files and books and
records relating to the Acquired Assets, telephone number of Seller, all
contracts, agreements or commitments which are approved by Purchaser as the same
shall exist on the Closing Date; provided, however, that Seller shall retain all
other assets. The parties agree that they will prepare Schedule 2.1 in
conjunction with the physical inventory described in Section 3.2. hereinbelow.
3. CONSIDERATION FOR ACQUIRED ASSETS.
3.1 PURCHASE PRICE. Subject to the terms and conditions of this
Agreement, the consideration to be paid by Purchaser for the Acquired Assets
shall be cash equal to the sum of the aggregate value of the Acquired Assets
determined in accordance with Section 3.2.
3.2 VALUATION OF ACQUIRED ASSETS. The assets set forth below shall be
valued as provided below:
(a) The price for all 1998 new unregistered and undamaged Honda
model vehicles with not more than three hundred (300) miles purchased hereunder
shall be the sum of the following:
(i) The wholesale cost of each new vehicle determined in
accordance with the factory invoice, including advertising charges; plus
(ii) The wholesale cost of all optional parts and accessories
installed in the new vehicles plus the cost of labor (determined at the internal
rate pursuant to the standard factory formula) for installation of the same;
LESS
(iii) The sum of all distributor's allowances as of the
Closing
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Date including, but not limited to, inventory carry-over allowances, discounts,
holdbacks, rebates, contests, model changes and similar distributor's allowances
related to specific automobiles transferred on the Closing Date.
(b) The price for all 1998 unregistered and undamaged Honda
demonstrator vehicles with not more than three thousand (3,000) miles purchased
hereunder shall be valued in accordance with (a)(i) through (a)(iii) hereinabove
less five percent (5%).
(c) All vehicles not described in subsections (a) and (b) above
which are to be purchased hereunder shall be valued at a price mutually agreed
upon by Seller and Purchaser; provided, however, that if Seller and Purchaser
are unable to agree on a price with respect to any individual vehicle prior to
the Closing Date, then such vehicle shall be excluded from the Acquired Assets
and not purchased hereunder.
(d) All new undamaged returnable genuine Honda factory parts and
accessories which are in possession of Seller as of the Closing Date and which
are listed in the manufacturer's most current wholesale parts and accessories
price book shall be valued at dealer cost in accordance with the manufacturer's
most current wholesale parts and accessories price book as of the Closing Date;
provided, however, that Obsolete Parts shall be valued at ZERO DOLLARS ($0) and
shall be retained by Seller, provided that Seller removes such parts within ten
(10) days of the Closing Date.
(e) All non-factory parts, accessories and miscellaneous inventory
which are in the possession of Seller as of the Closing Date, which shall be
valued at dealer cost, provided, however, that Purchaser shall have no
obligations to purchase in excess of TEN THOUSAND DOLLARS ($10,000) of such
items.
(f) All work-in-progress shall be valued at cost.
(g) All moveable furniture, fixtures, equipment and special tools
shall be valued in accordance with an appraisal conducted by Xxxxxx Xxxx,
provided, however, that in the event that any item of furniture, fixtures,
equipment, special tools or leasehold improvement is materially damaged,
destroyed or removed from the Dealership between the date of the execution of
this Agreement and the Closing Date, the value of said item damaged, destroyed
or removed from the Dealership shall be credited against the Purchase Price. The
parties acknowledge that there shall be no additional charge for leasehold
improvements.
(h) In further consideration for all other assets described in
Section 2.1 hereinabove and goodwill Purchaser shall pay to Seller the sum of
THREE MILLION TWO HUNDRED THOUSAND DOLLARS ($3,200,000).
(i) As of the close of business on the day immediately preceding
the Closing Date or on such other date as mutually agreed upon by Purchaser and
Seller, a physical inventory to determine the value of the new, used and
demonstrator vehicles, and work-in-
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progress shall be taken jointly by the parties. Each party shall bear the
expenses associated with its own personnel in connection with the valuation of
the assets. The parties shall jointly employ an independent inventory service
to take a parts and accessories inventory immediately prior to the Closing. The
cost of such inventory shall be paid one-half by Purchaser and one-half by
Seller.
3.3 PAYMENT OF PURCHASE PRICE. The purchase price to be paid by
Purchaser pursuant to this Agreement shall be paid in cash on closing.
3.4 CLOSING AND POST-CLOSING ADJUSTMENTS. All adjustments normal in
asset acquisitions, including but not limited to rents and employee
compensation, personal property taxes, customer prepayments, if relating to a
period before and after the Closing Date, shall be apportioned between Seller
and Purchaser according to the number of days in the period covered thereby
which occurred prior to and including the Closing Date and subsequent to the
Closing Date. The aggregate amount of any adjustment shall be determined and
paid as of the Closing Date. Any additional amounts determined after the
Closing Date to be paid by either party under this Section 3.4 shall be paid by
check delivered within seven (7) days following determination of the amount of
any such adjustment.
3.5 LIABILITIES. Purchaser shall have no obligation for any
liabilities of any kind whatsoever of Seller except that Purchaser shall assume
Seller's obligations as set forth on Schedule 3.5 attached hereto and all
liabilities under contracts, agreements or commitments assumed by Purchaser in
each case for the period commencing on the Closing Date and continuing
thereafter. Seller shall be fully responsible for any and all costs or charges
of any kind whatsoever arising out of such agreements for the period prior to
the Closing Date. The parties acknowledge and agree that Purchaser is not
assuming any employment agreements, labor agreements, collective bargaining
agreements or other similar contracts.
3.6 TRANSFER TAXES. Purchaser agrees to pay any and all sales,
transfer or other similar taxes which may be imposed or payable on or in
connection with the transfer of the Acquired Assets.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND XXXXXXX. Seller and
Xxxxxxx hereby represent, warrant and agree with Purchaser as follows:
4.1 GOOD STANDING. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and is
entitled to and has the corporate power and authority to own or lease its
property and to carry on its business in the manner and in the places where such
property are now owned, leased or operated and such business is now conducted.
4.2 TITLE TO ASSETS; LIENS AND ENCUMBRANCES. Seller will convey to
Purchaser good and marketable title to the Acquired Assets, free and clear of
all security interests, liens, claims, restrictions, equities and encumbrances
whatsoever.
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4.3 AUTHORIZATION. The execution and delivery of this Agreement and
the transactions contemplated hereby has been duly authorized by the Board of
Directors of the Seller and all other corporate action, including all
shareholders' approvals necessary to authorize the execution and delivery of
this Agreement and the transactions contemplated hereby, have also been taken.
Except for consent of the Franchiser, landlords under leases and floor plan
lenders, no consent of any lender, trustee, security holder, lessor or any other
person or entity is required to be obtained by Seller in connection with the
execution, delivery and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby. This Agreement constitutes
a valid and binding obligation of Seller and Xxxxxxx enforceable in accordance
with its terms. Except pursuant to the Franchise, lessors, and floor plan
financing, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby (a) do not violate or
constitute a breach of or default under any contract, agreement or commitment to
which Seller or Xxxxxxx is a party, under which they are obligated or to which
any of the Acquired Assets are subject to, (b) do not violate any judgment,
order, statute, rule or regulation to which Seller, Xxxxxxx or any of the
Acquired Assets are subject or the articles of incorporation or bylaws of the
Seller, and (c) will not result in the creation of any lien, charge or
encumbrance on any of the Acquired Assets.
4.4 REPRESENTATIONS AND WARRANTIES ON CLOSING DATE. The
representations and warranties of Seller and Xxxxxxx contained in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same force and effect as though such representations and warranties
have been made on and as of the Closing Date.
4.5 LITIGATION. Except as set forth on Schedule 4.5 attached hereto,
there is not pending, or, to best knowledge of Seller, threatened, any suit,
action, arbitration, or legal, administrative, or other proceeding, or
governmental investigation against or affecting any of the Acquired Assets. To
the best knowledge of Seller and Xxxxxxx, Seller is not in default with respect
to any order, writ, injunction, or decree of any federal, state, or local court.
4.6 ENVIRONMENTAL COMPLIANCE NOTICES. Seller has received no written
notice advising Seller of any defects, defaults or non-compliance in connection
with the Acquired Assets pursuant to the laws, rules and regulations from any
governmental agency dealing with environmental laws, except notices which have
been previously complied with or waived by the governmental agency.
4.7 COMPLIANCE WITH LAW. To the actual knowledge of Seller, Seller
has complied with, and is not in violation of, applicable federal, state or
local statutes, laws or regulations the violation of which would have a material
adverse effect on the financial condition of the Dealership.
4.8 FINANCIAL REPORTS. Seller has delivered to Purchaser dealer
financial statements for Seller for the calendar years 1995, 1996 and 1997
("Dealer Financial Statements"). The Dealer Financial Statements have been
prepared in accordance with past practices of Seller and are true and correct in
all material respects.
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5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents,
warrants and agrees with Seller and Xxxxxxx as follows:
5.1 GOOD STANDING. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
entitled to and has the corporate power and authority to own or lease its
property and to carry on its business in the manner and in the places where such
property are now owned, leased or operated and such business is now conducted.
5.2 AUTHORIZATION. The execution and delivery of this Agreement and
the transactions contemplated hereby has been duly authorized by the Board of
Directors of the Purchaser and all other corporate action, including all
shareholders' approvals necessary to authorize the execution and delivery of
this Agreement and the transactions contemplated hereby, have also been taken.
This Agreement is a valid and binding obligation of Purchaser enforceable
against Purchaser in accordance with its terms. Except for consent of the
Franchiser, lessors, and lenders, no consent of any trustee, security holder or
any other person or entity is required to be obtained by Purchaser in connection
with the execution, delivery and performance of this Agreement by Purchaser and
the consummation of the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby (a) do not violate or constitute a breach of or
default under any contract, agreement or commitment to which Purchaser is a
party or under which it is obligated, and (b) do not violate any judgment,
order, statute, rule or regulation to which Purchaser is subject.
5.3 REPRESENTATIONS AND WARRANTIES ON CLOSING DATE. The
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date.
6. CONDUCT PRIOR TO CLOSING DATE.
6.1 ONGOING OPERATIONS. Seller will use its best effort to preserve
intact the Acquired Assets and to continue to operate the Dealership as a going
concern, including, but not limited to, maintaining commercially reasonable
inventories and receivables. Seller will not dispose of any of the Acquired
Assets except in the ordinary course of business consistent with past practices,
and will not, without limiting the foregoing, hold a "going-out-of-business" or
"liquidation" sale.
6.2 APPROVALS. Each of Purchaser and Seller will use its best efforts
to obtain all permits, approvals, authorizations and consents of third parties
necessary or desirable for the consummation of the transactions contemplated by
this Agreement and for the ownership and operation by Purchaser of the Acquired
Assets and the Dealership related thereto. Purchaser and Seller shall proceed as
promptly as practicable after the date hereof to prepare all materials necessary
to obtain the consent of the Franchiser as is necessary for Purchaser to acquire
the Acquired Assets and for consummation of the transactions contemplated
hereby.
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6.3 COVENANT TO COMPLY. Seller and Xxxxxxx shall not take any action
or fail to take any action which will make any of their representations and
warranties not true and correct in all material respects on the Closing Date.
Seller and Xxxxxxx shall use their best efforts to satisfy or cause to be
satisfied all of the conditions precedent to Purchaser's obligations hereunder.
Seller shall give Purchaser prompt written notice of any material change in any
of the information contained in the representations and warranties made in
Section 4 hereof or the schedules referred to herein which occur prior to the
Closing Date; provided, however, that any change in the information contained in
the representations and warranties or schedules will not relieve Seller of any
obligations hereunder if such changes result in a breach of the representations
and warranties contained herein.
7. CONDITIONS OF PURCHASER'S OBLIGATIONS TO CLOSE. The obligations of
Purchaser under this Agreement are subject to fulfillment of the conditions set
forth below. Purchaser shall have the right to waive in writing all or part of
any one or more of the following conditions without releasing Seller or Xxxxxxx
from any liability for any loss or damage sustained by Purchaser by reason of
the breach by Seller or Xxxxxxx of any covenant, obligation or agreement
contained herein, or by reason of any misrepresentation made by Seller or
Xxxxxxx and upon such waiver may proceed with the transactions contemplated by
this Agreement.
7.1 AGREEMENTS AND CONDITIONS. On or before the Closing Date, Seller
and Xxxxxxx shall have complied with and duly performed in all material respects
all agreements and conditions on its part to be complied with and performed
pursuant to or in connection with this Agreement on or before the Closing Date.
7.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller and Xxxxxxx contained in this Agreement, or otherwise made in writing
in connection with the transactions contemplated hereby, shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date and Purchaser shall have received a certificate to
that effect dated the Closing Date and executed by the President of Seller.
7.3 NO LEGAL PROCEEDINGS. No action or proceeding shall have been
instituted or threatened to restrain or prohibit the acquisition by Purchaser or
the conveyance by Seller of the Acquired Assets or which might result in any
material adverse change in the business, prospects or financial or other
condition of the Acquired Assets.
7.4 LOSS, DAMAGE OR DESTRUCTION. Between the date hereof and the
Closing Date, there shall not have been any material loss, damage or destruction
to or of any of the Acquired Assets, and there shall have been no development
which would have a material adverse effect on the Dealership.
7.5 CONSENTS. Purchaser shall have received the written approval of
the Franchiser designating Purchaser or its designee as the duly authorized
dealer for the sales and service of the Franchiser's automobiles at a location
to be designated by Purchaser free of any
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material condition which is adverse to Purchaser, and Purchaser and such
Franchiser shall have entered into a customary dealer sales and service
agreement. All permits and licenses necessary to enable Purchaser to conduct
the Franchise and service facilities shall have been obtained. All other
requisite consents and approvals shall have been obtained.
7.6 DUE DILIGENCE. Purchaser shall for a period of thirty (30) days
from the date of execution of this Agreement have the right to review the books
and records of the Dealership, and any other items reasonably necessary or
appropriate to evaluate the Dealership. Such review shall be done at times and
locations as mutually agreed between Purchaser and Seller provided that
Purchaser shall use all reasonable efforts to have such review of books and
records at locations away from the Dealership. Seller shall cooperate and
provide such information reasonably necessary for Purchaser to conduct such due
diligence review during such thirty (30) day period. In the event Purchaser does
not approve of the review of the books and records by written notice to Seller
within such thirty (30) day period, this Agreement shall terminate with all
deposits returned to Purchaser and no further rights or obligations to either
party.
7.7 PHYSICAL AUDIT. On or before the Closing Date the valuation of the
Acquired Assets pursuant to the physical audit specified in Section 3.2 shall be
completed.
7.8 TAX CLEARANCE. Seller shall have furnished to Purchaser,
certificates from all appropriate federal, state, county and local authorities
that all taxes and contributions payable by Seller have been paid in full. If
all appropriate tax certificates are not available on the Closing Date,
Purchaser shall withhold from the estimated amount of maximum unpaid tax
liability reasonably determined by Purchaser which sum shall be held by
Purchaser until such time as all certificates are presented in a form
satisfactory to Purchaser's counsel.
7.9 TELEPHONE CHARGES. Seller shall have obtained from its telephone
company a statement that all sums billed before the Closing Date have been paid
(Purchaser shall withhold from the Purchase Price, the estimated amount of the
maximum unbilled liability of Seller from said telephone company for all
services rendered before said date, less the pro rata amount of any xxxxxxxx
paid by Seller for services to be rendered after the Closing Date).
7.10 LIST OF EMPLOYEES. Seller shall furnish to Purchaser a list of
all employees, their rates of pay, including, separately, base pay, and
incentive and commission plans. Further Seller shall deliver to Purchaser a
certificate from each of such employees showing that such employee has received
from Seller all compensation including all sick leave, vacation, and any and all
other compensation due such employee through the Closing Date. In addition
thereto, Seller shall have complied with any and all obligation of Seller under
any collective union agreements and/or collective bargaining agreements.
7.11 BULK SALE. Seller shall furnish, in an appropriate time to
comply, all affidavits and lists of creditors and such other instruments or
documents as Escrow Holder shall require for Seller and Purchaser to comply with
all applicable bulk sales laws.
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8. CONDITIONS OF SELLER'S OBLIGATIONS TO CLOSE. The obligations of Seller
under this Agreement are subject to fulfillment of the conditions set forth
below. Seller shall have the right to waive in writing all or part of any one
or more of the following conditions without, however, releasing Purchaser from
any liability for any loss or damage sustained by Seller by reason of the breach
by Purchaser of any covenant, obligation or agreement contained herein, or by
reason of any misrepresentation made by Purchaser and upon such waiver may
proceed with the transactions contemplated by this Agreement.
8.1 AGREEMENTS AND CONDITIONS. On or before the Closing Date,
Purchaser shall have complied with and duly performed in all material respects
all of the agreements and conditions on its part required to be complied with or
performed pursuant to this Agreement on or before the Closing Date.
8.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. The representations
and warranties of Purchaser contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date and Seller shall have received a certificate to that
effect dated the Closing Date and executed by the President or a Vice President
of Purchaser.
8.3 PHYSICAL AUDIT. On or before the Closing Date the valuation of the
Acquired Assets pursuant to Section 3.2 shall be completed.
9. DELIVERIES OF SELLER ON THE CLOSING DATE. Seller agrees on the
Closing Date to deliver to Purchaser:
9.1 TITLE TO ACQUIRED ASSETS. All conveyances, covenants, warranties,
deeds, assignments, bills of sale, motor vehicle titles, confirmations, powers
of attorney, approvals, consents and any and all further instruments as may be
necessary, expedient or proper in order to complete any and all conveyances,
transfers and assignments herein provided for and to convey to Purchaser such
title to the Acquired Assets as Seller is obligated hereunder to convey.
9.2 CERTIFICATE OF SECRETARY. Certificate of the Secretary of the
Seller setting forth a copy of the resolutions adopted by Seller's Board of
Directors and shareholders authorizing and approving the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby.
9.3 CERTIFICATE. Certificate of the President of Seller referred to in
Section 7.2.
9.4 CONSENTS. All consents, approvals, authorizations or orders of any
person or entity or court or governmental agency required or necessary for the
consummation of the transactions contemplated hereby, provided that Seller shall
not be obligated to deliver the consent of the Franchiser.
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10. DELIVERIES OF PURCHASER ON THE CLOSING DATE. Purchaser agrees on the
Closing Date to deliver or cause to be delivered:
10.1 CONSIDERATION. The amounts to be delivered pursuant to Section
3.3 hereof.
10.2 CERTIFICATE OF SECRETARY. Certificate of the Secretary of the
Purchaser setting forth a copy of the resolutions adopted by Purchaser's Board
of Directors and shareholders authorizing and approving the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
10.3 CERTIFICATE. The Certificate of the President or a Vice
President of the Purchaser referred to in Section 8.2.
11. ESCROW. The parties, upon execution of this Agreement shall open an
escrow with Business and Escrow Service Center, 0000 Xxxxx Xxx, Xxxxx 0000, Xxx
Xxxx, XX 00000, PH: 408-296-7373, FX: 000-000-0000, ("Escrow Holder"). The
parties shall forthwith provide to Escrow Holder any and all documentation
necessary for Escrow Holder to publish its notices as required by the Bulk Sale
Laws of the State of California. Any and all costs of such escrow shall be paid
fifty percent (50%) by Purchaser and fifty percent (50%) by Seller.
12. COVENANTS AFTER CLOSING DATE.
12.1 TRANSFER OF ACQUIRED ASSETS. Seller agrees, at any time and from
time to time after the Closing Date, upon the request of Purchaser, to do,
execute, acknowledge and deliver, or to cause to be done, executed, acknowledged
and delivered, all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may be required for the better
assigning, transferring, conveying, and confirming to Purchaser, or to its
successors and assigns, or for the aiding, assisting, collecting and reducing to
possession of, any or all of the Acquired Assets as provided herein.
12.2 COOPERATION. Seller will cooperate and use its best efforts to
have its officers and employees cooperate with Purchaser at Purchaser's request,
on and after the Closing Date, in furnishing information, evidence, testimony
and other assistance in connection with any actions, proceedings, arrangements
or disputes involving Purchaser and based upon contracts, arrangements,
commitments or acts of Seller which were in effect or occurred on or prior to
the Closing Date. From and after the Closing Date, Seller will permit Purchaser
and its representatives to have access to Seller's books and records relating to
the Acquired Assets for periods prior to the Closing Date.
13. RIGHT OF FIRST PURCHASE
13.1 RIGHT OF FIRST PURCHASE. As material additional consideration
for the
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performance by Purchaser of each of Purchaser's obligations hereunder, including
acquisition of the Acquired Assets as provided for herein, Xxxxxxx and Xxxxx
Enterprises, Inc., dba Menlo Honda ("Tudor") hereby grant to Purchaser a right
of first purchase as provided herein. The right of first purchase provided in
this section shall apply to any proposed sale of all or substantially all of the
capital stock of Tudor, and shall further apply to any proposed sale of all or
substantially all of the assets of Tudor. In the event that Xxxxxxx or Xxxxx
shall receive an offer, whether or not solicited, to purchase all or
substantially all of the outstanding capital stock of Tudor, or all or
substantially all of the assets of Tudor, or in the further event that Xxxxxxx
or Xxxxx shall intend to sell all or substantially all of the outstanding stock
of Tudor or all or substantially all of the assets of Tudor whether or not an
offer to purchase has been received, then Xxxxxxx and Xxxxx shall give to
Purchaser written notice ("Notice") of the terms and conditions of any proposed
sale of stock or assets, or pursuant to which Xxxxxxx or Tudor are willing to
sell stock or assets. Purchaser shall have a period of thirty (30) days after
the date on which such written Notice is deemed given within which to exercise
its rights herein. Any exercise by Purchaser of its purchase rights hereunder
shall be deemed to constitute the election by Purchaser to purchase all of the
assets of Tudor that are related to or used in connection with the Honda
franchise held by Tudor including all assets which, if purchased pursuant to
this Agreement, would be categorized as Acquired Assets. The exercise by
Purchaser hereunder shall result in an asset purchase without regard to whether
the proposed sale, giving rise to the right hereunder, is proposed to be in the
form of an asset sale or in the form of a sale of stock of Tudor. In the event
of a stock sale, the purchase price which is attributable to the assets which
may be acquired hereunder shall be that proportion of the purchase price payable
for the stock of Tudor, which the value of the assets that would constitute
acquired assets bears to the total value of all assets of Tudor. In no event,
shall Purchaser be obligated on exercising its rights hereunder to purchase
stock of Tudor.
Xxxxxxx shall deliver to Purchaser together with the Notice, the current
year-to-date, monthly dealer financial statement for Tudor, together with two
(2) prior year end dealer financial statements for Tudor. Further, Xxxxxxx
shall deliver to Purchaser a copy of any and all leases of the premises occupied
by Tudor.
Purchaser shall exercise its rights hereunder, if at all, by written notice
given to Xxxxxxx and Xxxxx within the thirty (30) day period referenced above.
In the event that Purchaser does not exercise its rights of first purchase
hereunder, then Xxxxxxx and Tudor shall thereafter have the right to complete
the sale to the third party buyer, provided that the close of such transfer and
conveyance shall occur within ninety (90) days following expiration of the
thirty (30) day period referenced above, and further provided that the price
shall be no less than, and the terms no more favorable to the buyer than the
price and terms set forth in the Notice given to the Purchaser. Such sale shall
be free of the right of first purchase or option to purchase provided for
herein. Any sale which closes subsequent to expiration of such ninety (90) day
period, or which is for a lesser price or more favorable terms (to the buyer)
than set forth in the Notice, shall be deemed a new proposed sale subject to the
first right of purchase rights provided to Purchaser as set forth above.
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The Closing of the transaction shall occur upon receipt by Purchaser of
approval of the transaction from American Honda. Upon the exercise of the right
of first purchase as provided herein, the parties shall execute a formal
Agreement of Purchase and Sale, which form shall be substantially similar to
this Agreement modified to set forth the terms and conditions in the Notice. The
parties further agree to execute any and all documents reasonably necessary to
consummate such transaction. In the event escrow is not closed within 180 days
of Purchaser's exercising its right of first purchase hereunder, Purchaser's
right to acquire the assets of Tudor shall terminate.
13.2 CONSIDERATION. As consideration for the right of first purchase
as provided for in this Section 13 herein, Purchaser shall pay to Tudor the sum
of TWO HUNDRED THOUSAND DOLLARS ($200,000) in cash on the Close of Escrow of the
acquisition of the assets of Xxxxxxx Honda pursuant to this Agreement. Such sum
of TWO HUNDRED THOUSAND DOLLARS ($200,000) shall not apply against the purchase
price upon the exercise of the right of first purchase as provided for in this
Section 13.
14. INDEMNIFICATION.
14.1 Indemnification by Seller and Xxxxxxx. Seller and Xxxxxxx agree
to indemnify and hold harmless Purchaser from and against any and all losses,
costs, damages, claims and expenses (including reasonable attorneys' fees) which
Purchaser may sustain at any time by reason of (a) any debt, liability or
obligation of Seller and/or Xxxxxxx except obligations assumed by Purchaser, (b)
any liability or obligation of any kind relating to the operations of the
Acquired Assets or Dealership prior to the Closing Date, (c) any presence of
hazardous materials or toxic substances located at the Closing Date in or around
the premises to be assigned from Seller to Purchaser related to the underground
storage tanks or other hazardous substances, or (d) the breach or inaccuracy of
or failure to comply with, or the existence of any facts resulting in the
inaccuracy of, any of the warranties, representations, covenants or agreements
of Seller or Xxxxxxx contained in this Agreement or in any agreement or document
delivered pursuant hereto or in connection herewith or with the closing of the
transactions contemplated hereby. The parties acknowledge and agree that
Purchaser shall have the right to repair automobiles sold and/or serviced by
Seller to correct miscellaneous customer complaints that Purchaser determines in
Purchaser's reasonable judgment are an obligation of Seller provided that the
total of all such repairs without Seller's prior approval shall not exceed the
sum of TEN THOUSAND DOLLARS ($10,000).
14.2 INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify and
hold harmless Seller from and against any and all losses, cost, damages, claims
and expenses (including reasonable attorneys' fees) which Seller may sustain at
any time by reason of (a) any debt, liability or obligation of Purchaser, (b)
any liability or obligation of any kind relating to the operations of the
Acquired Assets or Dealership after the Closing Date, or (c) the breach or
inaccuracy of or failure to comply with, or the existence of any facts resulting
in the inaccuracy of, any of the warranties, representations, covenants or
agreements of Purchaser contained in
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this Agreement or in any agreement or document delivered pursuant hereto or in
connection herewith or with the closing of the transactions contemplated hereby.
14.3 DEFENSE. Any party who receives notice of a claim for which it
will seek indemnification shall promptly notify the indemnifying party in
writing of such claim. The indemnifying party shall have the right to assume the
defense of such action at its cost with counsel reasonably satisfactory to the
indemnified party. The indemnified party shall have the right to participate in
such defense with its own counsel at its cost.
15. SURVIVAL OF REPRESENTATIONS. The parties hereto each agree that all
representations, warranties and agreements contained herein shall survive the
execution and delivery of this Agreement, the closing hereunder and any
investigation made by any party hereto.
16. NO BROKER. Purchaser on the one hand, and Seller and Xxxxxxx on the
other, represent to the other that no broker or finder has been connected with
the transactions contemplated by this Agreement. In the event of a claim by any
broker or finder based upon his representing or being retained by Seller or
Xxxxxxx on the one hand, or by Purchaser on the other, Seller, Xxxxxxx or
Purchaser, as the case may be, agrees to indemnify and save harmless the other
in respect of such claim.
17. USE OF THE NAME. Seller agrees that from and after the Closing Date,
Purchaser shall have the right to use the name "Xxxxxxx Honda" or any derivative
thereof or similar name in connection with the operation of the Dealership
acquired hereunder.
18. TERMINATION. If the Closing Date shall not have occurred on or prior
to May 30, 1998 or if Purchaser shall receive disapproval from the Franchiser
prior thereto, any party that is not in default in the performance of its
obligations under this Agreement may, thereafter, terminate this Agreement by
giving written notice to the other party.
19. NOTICES. All notices, requests or demands to a party hereunder shall
be in writing and shall be given or served upon the other party by personal
service, by certified return receipt requested or registered mail, postage
prepaid, or by Federal Express or other nationally recognized commercial
courier, charges prepaid, addressed as set forth below. Any such notice,
demand, request or other communication shall be deemed to have been given upon
the earlier of personal delivery thereof, three (3) business days after having
been mailed as provided above, or one (1) business day after delivery through a
commercial courier, as the case may be. Notices may be given by facsimile and
shall be effective upon the transmission of such facsimile notice provided that
the facsimile notice is transmitted on a business day and a copy of the
facsimile notice together with evidence of its successful transmission
indicating the date and time of transmission is sent on the day of transmission
by recognized overnight carrier for delivery on the immediately succeeding
business day. Each party shall be entitled to modify its address by notice
given in accordance with this Section.
13
To Purchaser: c/o Concord Honda
Attn: Xxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
With a copy to: W.Xxxxx Xxxxxxxxx, Esq.
Xxx & Xxxxxx
000 Xxx Xxxxxxxxxxx, Xxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
To Seller: Xxxxxxx British Cars, Inc.
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxxx
Fax No.:(000) 000-0000
To Xxxxxxx: Xx. Xxxxx Xxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Fax No. (000) 000-0000
With a copy to: Xxxxxx Xxxxxxxx, Esq.
000 Xxxxxx Xxxxxx, Xxx. 000
Xxx Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
20. MISCELLANEOUS.
20.1 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules hereto, sets forth the entire agreement and understanding between the
parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of every kind and nature between them
and no party hereto shall be bound by any condition, definition, warranty or
representation other than as expressly provided for in this Agreement or as may
be on a date subsequent to the date hereof duly set forth in writing signed by
the party hereto which is to be bound thereby. This Agreement shall not be
changed, modified or amended except by a writing signed by the party to be
charged and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
20.2 GOVERNING LAW. This Agreement and its validity, construction and
performance shall be governed in all respects by the laws of the State of
California, without
14
giving effect to principles of conflict of laws.
20.3 SEVERABILITY. If any provision of this Agreement or the
application of any provision hereof to any person or circumstance is held
invalid, the remainder of this Agreement and the application of such provision
to other persons or circumstances shall not be affected unless the provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
20.4 BENEFIT OF PARTIES. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs, legal representatives and assigns. This agreement may not be assigned by
either party hereto except with the prior written consent of the other party
hereto; provided, however, that prior to the closing date Purchaser shall have
the right to assign this Agreement and its rights and obligation hereunder to a
corporation owned by Purchaser, and after such assignment all references to
Purchaser herein shall be to such new corporation.
20.5 NECESSARY DOCUMENTS. Each of the parties does hereby agree to do
any act and to execute any other or further documents necessary or convenient to
the carrying out of the provisions of this Agreement.
20.6 HEADINGS. The headings in the sections of this Agreement are
inserted for convenience of reference only and shall not constitute a part
hereof.
20.7 ATTORNEYS' FEES. In the event that any action or proceeding is
brought to enforce or interpret any provision, covenant or condition contained
in this Agreement on the part of Purchaser, Seller or Xxxxxxx, the prevailing
party in such action or proceeding (whether after trial or appeal) shall be
entitled to recover from the party not prevailing its expenses therein,
including reasonable attorneys' fees and allowable costs.
20.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
PURCHASER: SELLER:
FirstAmerica Automotive, Inc. Xxxxxxx British Cars, Inc.,
a Delaware corporation a California corporation
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ X.X. Xxxxxxx
--------------------------- -------------------------
Xxxxxx X. Xxxxxxx, Chairman Xxxxx Xxxxxxx, President
XXXXXXX:
/s/ X.X. Xxxxxxx
--------------------------
Xxxxx Xxxxxxx
The undersigned hereby agrees to
the terms of Section 13 only:
TUDOR ENTERPRISES, INC.
a California corporation
By: /s/ X.X. Xxxxxxx
------------------------
Xxxxx Xxxxxxx, President
16
SCHEDULE 2.1
ACQUIRED ASSETS
17
SCHEDULE 3.5
LIABILITIES
18
SCHEDULE 4.5
LITIGATION
1.
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FIRST ADDENDUM TO ASSET PURCHASE AGREEMENT
This Addendum to Purchase and Sale Agreement ("Addendum") is entered into
as of January 30, 1998 by and between FirstAmerica Automotive, Inc., a Delaware
corporation ("Purchaser"), Xxxxxxx British Cars, Inc., a California corporation
("Seller") and Xxxxx Xxxxxxx ("Xxxxxxx") and is made with respect to the
following facts and circumstances:
A. Purchaser, Seller and Xxxxxxx are parties to that certain Asset
Purchase Agreement dated January 29, 1998 (the "Agreement") concerning the
purchase and sale of that certain automobile dealership business known as
Xxxxxxx Honda (the "Dealership") located at 0000 Xxxxxxx Xxxxxx, Xxxx Xxxx,
Xxxxxxxxxx.
B. Purchaser and Seller desire to modify the terms and conditions of the
Agreement as specifically set forth in this Addendum.
NOW THEREFORE, the parties agree to the following additions and/or
modifications to the Agreement:
1. Section 3.3 of the Agreement is hereby amended and restated in its
entirety as follows:
3.3 PAYMENT OF PURCHASE PRICE.
(a) Within three (3) business days of execution of this First
Addendum by Purchaser and Seller, Purchaser shall cause the sum of FIFTY
THOUSAND DOLLARS ($50,000) (the "Deposit") to be delivered to Escrow Holder as
hereinafter defined. The Deposit shall be held by the Escrow Holder in an
interest bearing account, and shall be applied to the benefit of Purchaser
toward the purchase price of the Dealership upon Closing. If escrow does not
close, and this Agreement is terminated pursuant to Section 18 of the Agreement,
the Deposit, together with all accrued interest, shall be disbursed to
Purchaser, unless the provisions of Section 2 of this First Addendum are
applicable, in which case the disposition of the Deposit shall be governed by
the provisions of Section 2 of this First Addendum.
(b) The balance of the purchase price determined in accordance
with Section 3.2 of the Agreement to be paid by Purchaser pursuant to the
Agreement shall be paid in cash on the Closing Date.
2. LIQUIDATED DAMAGES. If Purchaser breaches this Agreement, and the
transaction contemplated by this Agreement fails to close by reason thereof,
Seller shall be entitled to terminate this Agreement and retain the amount of
the Deposit plus any accrued interest thereon (the "Specified Sum") as
liquidated damages. SELLER AND PURCHASER ACKNOWLEDGE THAT SELLER'S DAMAGES WOULD
BE DIFFICULT TO DETERMINE, AND THAT THE SPECIFIED SUM IS A REASONABLE ESTIMATE
OF SELLER'S DAMAGES. SELLER AND PURCHASER FURTHER AGREE THAT THIS SECTION IS
INTENDED TO AND DOES LIQUIDATE THE AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE
SELLER'S EXCLUSIVE REMEDY AGAINST PURCHASER, BOTH AT LAW AND IN EQUITY ARISING.
FROM OR RELATED TO A BREACH BY PURCHASER OF ITS OBLIGATIONS TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
/s/ /s/
----------------- --------------------
Seller's Initials Purchaser's Initials
3. Except as set forth herein, all other terms, conditions, covenants and
agreements set forth in the Agreement shall remain unaltered, and in full force
and effect.
4. This First Addendum may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.
WHEREFORE, Purchaser, Seller and Xxxxxxx execute this First Addendum as of
the date first above written.
PURCHASER: SELLER:
FirstAmerica Automotive, Inc. Xxxxxxx British Cars, Inc.,
a Delaware corporation a California corporation
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ X.X. Xxxxxxx
--------------------------- --------------------------------
Xxxxxx X. Xxxxxxx, Chairman Xxxxx Xxxxxxx, President
XXXXXXX:
/s/ X.X. Xxxxxxx
------------------------------------
Xxxxx Xxxxxxx
SECOND ADDENDUM TO ASSET PURCHASE AGREEMENT
This Second Addendum to Asset Purchase Agreement ("Second Addendum") is
entered into effective May 30, 1998 by and between FirstAmerica Automotive,
Inc., a Delaware corporation or nominee ("Purchaser") and Xxxxxxx British Cars,
Inc., a California corporation ("Seller") and Xxxxx Xxxxxxx ("Xxxxxxx") and is
made with respect to the following facts and circumstances:
A. Purchaser and Seller are parties to that certain written Asset Purchase
Agreement dated January 29, 1998 (the "Agreement") setting forth the terms of
sale of Xxxxxxx Honda, an automobile dealership located at 0000 Xxxxxxx Xxxxxx,
Xxxx Xxxx, Xxxxxxxxxx (the "Dealership") and that certain First Addendum to
Asset Purchase Agreement dated January 30, 1998 ("First Addendum").
B. Purchaser and Seller now desire to amend and modify the terms and
conditions of the Agreement as set forth in this Second Addendum.
NOW THEREFORE, in exchange of the covenants, conditions and agreements set
forth herein, the parties agree to amend the Agreement as follows:
1. The date set forth in section 18 of the Agreement is hereby extended to
and including June 30, 1998.
2. Except as modified expressly in this Second Addendum, the First
Addendum and the Agreement and each and every term and condition set forth
therein, shall remain unchanged, and in full force and effect.
WHEREFORE, Purchaser, Seller and Xxxxxxx enter into this Second Addendum on
the day and year first above written.
PURCHASER: SELLER:
FirstAmerica Automotive, Inc. Xxxxxxx British Cars, Inc.,
a Delaware corporation a California corporation
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ X.X. Xxxxxxx
--------------------------- ----------------------------
Xxxxxx X. Xxxxxxx, Chairman Xxxxx Xxxxxxx, President
XXXXXXX:
/s/ X.X. Xxxxxxx
----------------------------
Xxxxx Xxxxxxx
