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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 1, 1998
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FIRSTAMERICA AUTOMOTIVE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 2-297254-NY 88-0206732
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
601 BRANNAN STREET
SAN FRANCISCO, CA 94107
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 284-0444
(Former name, former address and former fiscal year, if changed
since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On October 1, 1998 FirstAmerica Automotive, Inc. (the "Company") completed
the acquisition of an authorized Toyota automobile dealership commonly
known as Concord Toyota located in Concord, California. Pursuant to a Stock
Purchase Agreement dated July 17, 1998 (the "Purchase Agreement") by and
between the Company, the Graybehl Family Trust (the "Seller") and Vacation
Motors, Inc., the operator of the dealership ("Vacation Motors"), the
Company acquired all of the outstanding capital stock of Vacation Motors
(the "Shares") from the Seller. The purchase price ("Purchase Price") of
the Shares was $12.6 million, which was paid in cash.
The Company funded $12.0 million of the Purchase Price from borrowings
under an existing lending agreement with Trust Company of the West, a
financial company, which is also a significant investor in the Company, and
the balance of the Purchase Price ($0.6 million) was funded by the
Company's working capital.
The Seller's trustee is the father of Steven S. Hallock, an officer of the
Company. The Company believes it purchased the Corporation under terms no
less favorable to the Company than those arranged with other parties.
In connection with the transaction, the Company issued options to purchase
100,000 shares of Class A Common Stock at an exercise price of $2.00 per
share to Mr. Hallock, in accordance with the terms of his employment
agreement with the Company.
(b) Vacation Motors is a corporation specializing in the sale of new and used
automobiles and replacement parts and used its inventory, equipment and
other assets in such capacity. The Company intends to use these assets in
the same capacity.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Pursuant to Item 7(a)(4) of Form 8-K, the financial statements of Vacation
Motors required pursuant to Rule 3-05 of Regulation S-X will be filed as
soon as practicable, but no later than December 15, 1998.
(b) Pursuant to Item 7(a)(4) of Form 8-K, the pro forma financial information
of Vacation Motors required pursuant to Article 11 of Regulation S-X will
be filed as soon as practicable, but no later than December 15, 1998.
(c) The following exhibits are attached hereto and filed herewith:
2.1/(1)/ Stock Purchase Agreement dated as of July 17, 1998 by and between
the Company, Vacation Motors and the Graybehl Family Trust.
2.2 First Amendment to Stock Purchase Agreement dated as of October 1, 1998
by and between the Company, Vacation Motors and the Graybehl Family Trust.
2.3 Second Amendment to Stock Purchase Agreement dated as of October 13,
1998 by and between the Company, Vacation Motors and the Graybehl Family
Trust.
/(1)/ Exhibits to the Stock Purchase Agreement not filed herewith are
identified in the Stock Purchase Agreement. The Company will furnish any
omitted Exhibits to the Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: October 16, 1998 FIRSTAMERICA AUTOMOTIVE, INC.
By: /s/ Debra Smithart
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Debra Smithart
Chief Financial Officer
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 17th day of July 1998, by and
between Graybehl Family Trust, dated March 22, 1978 (the "Seller"), Concord
Toyota Sales, Inc., a California corporation (the "Corporation") and
FirstAmerica Automotive, Inc., a Delaware corporation (the "Purchaser").
R E C I T A L S
WHEREAS, the Corporation owns and operates an authorized Toyota automobile
dealership commonly known as Concord Toyota (the "Dealership") located at 1090
Concord Avenue, Concord, California (the "Premises").
WHEREAS, Seller owns 100% of the total outstanding capital stock of the
Corporation.
WHEREAS, Purchaser desires to acquire all of the shares of capital stock of
the Corporation held by the Seller in accordance with and subject to the terms
and conditions set forth herein.
NOW, THEREFORE, in recognition of the representations set forth above and
in consideration of the mutual covenants hereafter contained, the parties hereto
agree as follows:
A G R E E M E N T
1. INCORPORATION OF RECITALS. The recitals set forth hereinabove are
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incorporated herein by this reference.
2. STOCK PURCHASE. Subject to the terms and conditions set forth in this
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Agreement, Seller agrees to convey, transfer, assign and deliver to Purchaser,
and Purchaser agrees to acquire from Seller, all of the shares of the capital
stock of the Corporation held by Seller which represents 100% of the outstanding
shares of Capital Stock of the Corporation (the "Shares").
3. PURCHASE PRICE.
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3.1 AMOUNT. Subject to adjustments as set forth in Section 3.3 herein
below, Purchaser shall pay to Seller as consideration for the acquisition of the
Shares hereunder, the sum of TWELVE MILLION DOLLARS ($12,000,000).
3.2 PAYMENT OF PURCHASE PRICE. The purchase price to be paid by Purchaser
pursuant to this Agreement shall be paid as follows:
3.2.1 Within three (3) business days of execution of this Agreement
by Purchaser and Seller, Purchaser shall cause the sum of ONE HUNDRED THOUSAND
DOLLARS ($100,000) (the "Deposit") to be delivered to Escrow Holder as
hereinafter defined. The Deposit shall be held
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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
23, the Deposit, together with all accrued interest, shall be disbursed to
Purchaser, unless the provisions of Section 27 are applicable, in which case the
disposition of the Deposit shall be governed by the provisions of Section 27.
3.2.2 The balance of the purchase price shall be paid in cash on the
Closing Date.
3.3 CLOSING VALUE. Seller shall cause the Corporation to have a Closing
Value (as defined below) as of the Closing Date (as defined below) equal to the
sum of TWO MILLION TWO HUNDRED THOUSAND DOLLARS ($2,200,000) provided, however,
in the event the Closing Value as determined pursuant to the Closing Balance
Sheet (as defined below) is not equal to TWO MILLION TWO HUNDRED THOUSAND
DOLLARS ($2,200,000), Purchaser shall receive a credit against the Purchase
Price payable hereunder in an amount equal to the difference between TWO MILLION
TWO HUNDRED THOUSAND DOLLARS ($2,200,000) and the Closing Value. Closing Value
shall be the net worth of the Corporation as reflected on the Closing Balance
Sheet provided for herein below (the "Closing Value"). The Closing Balance
Sheet shall include the assets and liabilities of the Corporation calculated as
of the close of business on the day immediately preceding the Closing Date (the
"Closing Balance Sheet"). The Closing Balance Sheet shall be in the form
attached hereto as Schedule 3.3-A. The Closing Value as reflected on the
Closing Balance Sheet shall be the value of all assets which assets shall be
calculated in accordance with the provisions of Schedule 3.3-B attached hereto
excluding the Excluded Assets (as defined below) minus the amount of all
liabilities of the Corporation including, but not limited to all payables, floor
plan obligations (including accrued interest), payroll (including vacation pay),
real property taxes, federal and state income taxes, local taxes accrued as of
the Closing Date.
3.4 EXCLUDED ASSETS. In preparing the Closing Balance Sheet, the
following assets shall be excluded and shall be retained by Seller: (a) the
value of the condominium on the books of the Corporation together with any other
non-franchise assets held in Account 294; (b) receivables from affiliate
companies of Seller; and (c) other prepaid expenses not in the ordinary business
of the Corporation. The Corporation shall also pay in full prior to determining
the Closing Balance Sheet any capital loans or any loans due Seller or
affiliates of Seller.
3.5 INVENTORIES. 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-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.
3.6 FINANCE, WARRANTY AND FACTORY RESERVE ACCOUNT. The parties
acknowledge and agree that Seller shall deposit the amount of TWO HUNDRED
THOUSAND DOLLARS ($200,000) in a reserve account (the "Reserve Account") which
shall be held in an interest bearing account to pay any finance, warranty or
factory receivables chargebacks from and after the Closing Date related to
contracts or receivables outstanding as of the Closing Date. Such Reserve
Account shall be held
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in an account which will be subject to mutual signatory authority of Purchaser
and Seller. The Reserve Account, including all interest accrued, shall be
disbursed to the Corporation on a monthly basis to cover any such finance,
warranty or factory sums due and owing. At the end of Twenty-four (24) months,
any amount remaining in the Reserve Account, after a further reserve for any
balance of anticipated liability, shall be the property of Seller. Except as
provided for in Section 13.4 herein below, the parties acknowledge and agree
that the Reserve Account shall limit Seller's liability for any and all finance,
warranty and factory chargebacks obligations.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
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warrants to Seller as follows:
4.1 POWER AND AUTHORITY. Purchaser has the requisite power and authority
to enter into and perform this Agreement. This Agreement has been (and each
other agreement, document or instrument contemplated hereby, will at or prior to
the Closing will be) duly executed and delivered by the Purchaser. No approvals
or consents of any person or entity other than the Purchaser are necessary in
connection with the Purchaser's power and authority to perform its obligations
pursuant to this Agreement. This Agreement constitutes (and at the Closing,
each other agreement, document or instrument contemplated hereby will
constitute) the legal, valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms.
4.2 NO MISREPRESENTATION. None of the representations and/or warranties
made by the Purchaser hereunder contains or will 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 they are made, not
misleading.
4.3 EFFECT OF AGREEMENT. The execution, delivery and performance by
Purchaser of this Agreement, and the consummation of the transactions herein
contemplated, will not result in a violation of any law or regulation of any
governmental authority, and the execution, delivery and performance by Purchaser
of this Agreement, and the consummation by it of the transactions herein
contemplated, will not result in a breach of the terms of, or constitute a
default under or violation of, any provision of the Articles of Incorporation or
Bylaws of Purchaser or any statute or regulation, order, judgment or court
decree or any agreement or instrument to which Purchaser is a party or by which
it is bound or to which it is subject.
5. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE CORPORATION. The parties
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acknowledge and agree that all representations and warranties of Seller shall
constitute representations of L. Vaughn Graybehl, the trustor and trustee of
Seller. The Seller and the Corporation jointly and severally represent and
warrant to the Purchaser as follows:
5.1 POWER AND AUTHORITY. The Seller and the Corporation have the
requisite power and authority to enter into and perform this Agreement and to
convey and transfer the capital Shares of the Corporation as provided in this
Agreement. This Agreement has been (and each other agreement, document or
instrument contemplated hereby, will at or prior to the Closing will be) duly
executed and delivered by the Seller and the Corporation. No approvals or
consents of any person or entity is necessary in connection with Seller's and
the Corporation's power and authority to perform their respective obligations
pursuant to this Agreement. This Agreement constitutes (and at the Closing,
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each other agreement, document or instrument contemplated hereby will
constitute) the legal, valid and binding obligation of the Seller and the
Corporation enforceable against Seller and the Corporation in accordance with
its terms.
5.2 CORPORATE ORGANIZATION AND GOOD STANDING. The Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California, and is duly authorized, qualified, and licensed
under all applicable laws, regulations, ordinances and orders of public
authorities to carry on its business in the places and in the manner as now
conducted.
5.3 ARTICLES OF INCORPORATION, BY-LAWS AND MINUTE BOOKS. True, complete
and correct copies of the Articles of Incorporation and By-Laws of the
Corporation, each as amended to date, will be furnished to Purchaser within ten
(10) business days of execution of this Agreement. The stock records and minute
books of the Corporation contain true and complete minutes and records of all
meetings, proceedings and other actions of the stockholders and directors of the
Corporation from the date of organization.
5.4 AUTHORIZED CAPITALIZATION. The number of issued and outstanding
shares of stock of the Corporation acquired by Purchaser represents all of the
outstanding shares of capital stock of the Corporation. All issued and
outstanding shares of the Corporation are owned by the Seller and are validly
issued and outstanding, fully paid and non-assessable, free and clear of all
liens, security interests, pledges, charges, voting trusts, equities,
restrictions, encumbrances and claims of every kind. All of the outstanding
shares of the Corporation were offered, issued, sold and delivered by the
Corporation in compliance with all applicable state and federal laws concerning
the issuance of securities. The Corporation does not have any outstanding
options, warrants, rights or other securities, plans, contracts or agreements
which give the holder thereof or any other person the right to purchase any
shares of the Corporation's capital stock or which are convertible into or
exercisable for any shares of such capital stock or under which any such option,
warrant, or right or security may be issued in the future. The Corporation does
not have any obligation, whether contingent or otherwise, to purchase, redeem,
or otherwise acquire any of its equity securities or interests therein or pay a
dividend or make any distribution with respect thereto.
5.5 UNIONS. Except as set forth on Schedule 5.5 attached hereto and
incorporated herein by this reference, the Corporation is not a party to any
arrangement with any union, and no employees of the Corporation are represented
by any labor union or covered by any collective bargaining agreement, nor, to
the actual knowledge of the Seller, is any effort to establish such
representation in progress. There is no pending or, to the actual knowledge of
the Seller, threatened labor dispute involving the Corporation or any of its
employees.
5.6 INSURANCE. Set forth on Schedule 5.6 attached hereto and incorporated
herein by this reference is an accurate list, as of the date of this Agreement,
of all insurance policies of the Corporation, including an accurate list of all
insurance losses, including workers' compensation claims, of the Corporation for
the past three policy years.
5.7 EMPLOYEE PLANS. Set forth on Schedule 5.7 attached hereto and
incorporated herein by this reference is a complete and accurate list of all
employee benefit plans, including without
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limitation, all pension, profit sharing, deferred compensation, bonus, and
multi-employer plans and other plans currently maintained or sponsored by the
Corporation, or to which the Corporation contributes or has an obligation to
contribute in the future. To the actual knowledge of the Seller, each of the
plans referenced on Schedule 5.7 attached is in substantial compliance with all
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). To the actual knowledge of Seller no plan has incurred an
accumulated funding deficiency, as defined for purposes of the Internal Revenue
Code and ERISA, and the Corporation does not have any direct or indirect
obligation or liability to the Pension Benefit Guaranty Corporation or to the
Internal Revenue Service for any excise tax or penalty. To the actual knowledge
of Seller neither the Corporation nor any ERISA Affiliate (i.e., each business
which is treated together with the Corporation as a single employer under
Section 4001(a)(14) of ERISA or Internal Revenue Code Section 414(b), (c), (m),
(n) or (o)) has incurred or expects to insure any withdrawal liability to any
multi-employer plan.
5.8 LITIGATION; CONFORMITY WITH THE LAW. Except as set forth on Schedule
5.8 attached hereto and incorporated herein by this reference, there are no
claims, actions, suits or proceedings, pending or, to the actual knowledge of
the Seller, threatened against or affecting the Corporation or any of its
properties at law or in equity, or before or by any federal, state, municipal,
or any other governmental department, commission, board, bureau, agency, or
instrumentality, having jurisdiction with respect to the Corporation, and no
notice of any claim, action, suit, or proceeding, whether pending or threatened,
has been received. The Corporation has conducted its business in substantial
compliance with all federal, state and local statutes, ordinances, permits,
licenses, orders, variances, rules and regulations. Except as set forth on
Schedule 5.8, the Corporation is not subject to any order or judgment issued by
any Court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality.
5.9 ENVIRONMENTAL COMPLIANCE NOTICES. Seller and Corporation have
received no written notice advising them of any defects, defaults or non-
compliance in connection with the Corporation's 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
government agency.
5.10 REPRESENTATIONS AND WARRANTIES ON CLOSING DATE. The representations
and warranties of the Seller contained in this Agreement shall be true and
correct in all material respects to the best of Seller's actual knowledge 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.
5.11 TITLE TO STOCK OF SELLER. The Seller has good title to all of the
Shares held by the Seller. All of the Shares are free and clear of restrictions
on or conditions to transfer or assignment, other than any restrictions imposed
by any governmental agency, and are free and clear of all mortgages, liens,
options, pledges, charges, encumbrances, equities, claims, easements or
restrictions.
5.12 TITLE TO ASSETS, LIENS AND ENCUMBRANCES. The assets of the
Corporation are free and clear of all security interests, liens, claims,
restrictions, equities and encumbrances whatsoever other than as set forth in
Schedule 5.12 attached hereto. All the furniture, fixtures and equipment
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owned by the Corporation shall be in substantially the same condition as the
furniture, fixtures and equipment are at the expiration of the Due Diligence
period provided for in Section 7.6 herein below.
5.13 REAL PROPERTY LEASES. The Corporation has the right to occupy the
premises at 1090 Concord Avenue, Concord, Concord, California pursuant to a
lease attached hereto as Schedule 5.13. Neither the Corporation or the Landlord
is in default under the terms of such lease.
5.14 FINANCIAL REPORTS. Seller has delivered to Purchaser dealer
financial statements for the Corporation for the calendar years 1996, 1997 and
April 1998 (collectively, "Dealer Financial Statements"). The Dealer Financial
Statements have been prepared in accordance with past practices of the
Corporation, and are true and correct in all material respects as of the date
specified therein.
6. CONDUCT PRIOR TO CLOSING DATE.
6.1 ONGOING OPERATIONS. From the date hereof to the Closing, Seller will
use its best effort to preserve intact the assets of the Corporation and to
continue to operate the Dealership as a going concern, including, but not
limited to, maintaining commercially reasonable inventories. Seller will not
cause the Corporation to dispose of any of its 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.
6.1.1 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. Purchaser and Seller shall proceed as promptly
as practicable after the date hereof to prepare all materials necessary to
obtain the consent of the Franchisor as is necessary for Purchaser to consummate
the transaction contemplated hereby.
6.1.2 COVENANT TO COMPLY. Each of Seller, the Corporation, and
Purchaser 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. Each of Seller, Corporation, and Purchaser shall
use their best efforts to satisfy or cause to be satisfied all of the conditions
precedent to the other parties' obligations hereunder. Each party shall give
prompt written notice of any material change in any of the information contained
in the representations and warranties made in Sections 4 and 5 hereof or the
schedules referred to herein which occur prior to the Closing Date; provided,
however, except as otherwise provided in Sections 4 and 5, that any change in
the information contained in the representations and warranties or schedules
will not relieve the other party of any obligations hereunder if such changes
result in a breach of the representations and warranties contained herein.
7. CONDITIONS TO PURCHASER'S OBLIGATIONS TO CLOSE. The obligations of
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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 the
Corporation from any liability for any loss or damage sustained by Purchaser by
reason of the breach by Seller or the Corporation of any covenant, obligation or
agreement contained herein, or
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by reason of any misrepresentation made by Seller or the Corporation 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
the Corporation shall have complied with and duly performed in all material
respects all agreements and conditions on their part to be complied with and
performed pursuant to or in connection with this Agreement, including the
delivery of all items set forth in Section 9.1 hereof.
7.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller and the Corporation 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.
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 Shares or which might result in any material
adverse change in the business, prospects or financial or other condition of the
Corporation.
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 of the
assets of the Corporation, and there shall have been no development which would
have a material adverse effect on the Corporation.
7.5 CONSENTS. Purchaser shall have received the written approval of
Toyota Motor Corporation U.S.A. ("Franchiser") designating the Corporation with
Purchaser as owner as the duly authorized dealer for the sales and service of
such Franchiser's automobiles at 1090 Concord Avenue, Concord, California, free
of any material condition which is adverse to Purchaser, and Purchaser and
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 have the right to and including August
14, 1998 to review the books and records of the Corporation, the physical
condition of the Corporation property and any other items reasonably necessary
or appropriate to evaluate the Corporation. 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 Corporation. Seller shall cooperate and
provide such information reasonably necessary for Purchaser to conduct such due
diligence review to and including August 14, 1998. Purchaser will use its best
efforts to have no more than three (3) representatives on the Premises of the
Corporation at any one time. In the event Purchaser does not approve of the
physical condition of the Corporation and the review of the books and records by
written notice to Seller on or before August 14, 1998, this Agreement shall
terminate with all deposits (if any shall have been made) returned to Purchaser
and no further rights or obligations to either party.
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7.7 ENVIRONMENTAL ASSESSMENT. From the date of execution of this
Agreement to and including August 14, 1998 (the "Testing Period"), Purchaser may
conduct an environmental assessment (the "Environmental Assessment") of the real
property at the Corporation (the "Real Property"). Expenses of any
environmental consultant engaged by Purchaser and Seller to conduct the
Environmental Assessment shall be paid one half by Purchaser and one half by
Seller provided that Seller shall only be obligated to pay its share of the
expenses to a maximum of FIVE THOUSAND DOLLARS ($5,000). Purchaser may
terminate all of its obligations under this Agreement by written notice to
Seller on or before the expiration of the Testing Period, if Purchaser
determines that a release or threatened release of a hazardous substance has
occurred on the Real Property. Failure to timely notify Seller under this
Section 7.7 is deemed to constitute a waiver of Purchaser's right to terminate
this Agreement under this Section 7.7.
7.8 DELIVERY OF SCHEDULES. Seller shall prepare and deliver to Purchaser
the schedules specified in Sections 5.5, 5.6, 5.7, 5.8, and 5.12 of this
Agreement not later than 5:00 p.m. Pacific Time on the date fifteen (15)
business days following execution of this Agreement. All other schedules
specified in this Agreement shall be attached at the Closing.
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, including the delivery of all items set forth in
Section 9.2 below.
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.
9. DELIVERIES AND PROCEEDINGS AT CLOSING.
9.1 DELIVERIES BY SELLER. Seller shall deliver or cause to be delivered
to Buyer at the Closing:
9.1.1 Stock certificates (or lost stock certificate affidavits with
indemnification provisions in form and substance acceptable to Buyer covering
any lost or destroyed certificates) representing all of the Shares, free and
clear of all Encumbrances, duly endorsed in blank by the record holders thereof.
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9.1.2 A Certificate of the Secretary of State for the State of
California to the effect that the Corporation is a validly existing corporation
in good standing in the State of California as of a date not more than twenty
(20) days prior to the Closing Date.
9.1.3 True and correct copies of (a) the Governing Documents (other
than the bylaws) of the Corporation as of a date not more than twenty (20) days
prior to the Closing Date, certified by the Secretary of the Corporation; and
(b) the bylaws of the Corporation as of the Closing Date, certified by the
Secretary of the Corporation.
9.1.4 General releases of all officers and directors of the
Corporation and Seller releasing all liability of the Corporation of any claim
that they or any of them may have against the Corporation.
9.1.5 The minute books, stock ledgers and corporate seal of the
Corporation.
9.1.6 Resignations of the officers and directors of the Corporation
effective at the Closing.
9.1.7 Such other agreements and documents as Purchaser may reasonably
request.
9.2 DELIVERIES BY PURCHASER. Purchaser shall deliver or cause to be
delivered to the Corporation and Seller at the Closing:
9.2.1 Cash in the amount of the Purchase Price.
9.2.2 Incumbency and specimen signature certificates signed by the
officers of the Purchaser and certified by the Secretary of Purchaser.
9.2.3 The payment in full of the Floor Plan Financing of the
Corporation and the release of Seller as a guarantor of the Floor Plan Financing
in favor of Bank of America, N.T.S.A.
9.2.4 Such other agreements and documents as Sellers may reasonably
request.
100 NO OTHER REPRESENTATIONS. Except as specifically set forth herein, no
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party to this Agreement makes any representations or warranties.
110 CLOSING. Provided that the conditions set forth in Sections 6 and 7 above
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are satisfied or waived, the closing of this transaction (the "Closing" or the
"Closing Date") shall take place on September 30, 1998.
120 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 the Corporation, or to its
successors and
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assigns, or for the aiding, assisting, collecting and reducing to possession of,
any or all of the assets of the Corporation as provided herein.
12.2 COOPERATION. Seller will cooperate and use its best efforts to
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 the
Corporation 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 the Corporation's books and records relating
to the Dealership for periods prior to the Closing Date. Seller shall assist
Purchaser after the Closing with audits required in connection with any public
filings of the Purchaser provided Seller shall not be required to expend funds
or institute litigation.
130 INDEMNIFICATION.
----------------
13.1 INDEMNIFICATION BY SELLER. Seller agrees to indemnify and hold
harmless Purchaser and the Corporation from and against any and all losses,
costs, damages, claims and expenses (including reasonable attorney's fees) which
Purchaser or the Corporation may sustain at any time by reason of (a) any debt,
liability, or obligation of the Corporation not reflected on the Closing Balance
Sheet prepared in accordance with Section 3.3 hereinabove except other
obligation assumed by Purchaser; (b) any liability to any federal, state or
local taxing authorities for any taxes for the period prior to the date of
Closing due or owing by the Corporation including interest or penalties which
obligations are not reflected on the Closing Balance Sheet prepared in
accordance with Section 3.3 hereinabove except other obligation assumed by
Purchaser; (c) any lawsuit pending as of the date of Closing and/or filed
thereafter if related to any act or omission of the Corporation or Seller prior
to the date of Closing; (d) any presence of hazardous materials or toxic
substances located as of the Closing Date in or around the Premises including
without limitation any such materials related to the underground storage tanks
except related to underground hoists; or (e) 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 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, provided that Purchaser makes a written claim
for indemnification against Seller pursuant to Section 17 within the Survival
Period.
13.2 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
Corporation or the Dealership on or 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 this Agreement or in any agreement or
document delivered pursuant hereto or in connection herewith or with the closing
of the transactions contemplated hereby.
13.3 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
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indemnifying party shall have the right to assume the defense of such action at
its cost with counsel reasonably satisfactory to the indemnified party. Any
settlement shall require the approval of the indemnified party at no cost to
said party. The indemnified party shall have the right to participate in such
defense with its own counsel at its cost.
13.4 LIMITATIONS. The parties acknowledge and agree that Purchaser shall
have the right to repair automobiles sold and/or serviced by Corporation to
correct miscellaneous customer complaints that Purchaser determines in
Purchaser's reasonable judgment are an obligation of Corporation provided that
the total of all such repairs without Seller's prior approval shall not exceed
the sum of TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500). Notwithstanding any
other provision of this Agreement, Seller shall not be liable to Purchaser for
breach of, or failure to perform any, warranty, representation, or covenant made
by Seller or Corporation in this Agreement, or under any of their indemnities in
this Agreement, until the Purchaser has suffered Adverse Consequences by reason
of all such breaches in excess of a TEN THOUSAND DOLLARS ($10,000) aggregate
deductible (after which point the Seller will be obligated only to indemnify the
Purchaser from and against further such Adverse Consequences to the extent the
Adverse Consequences the Purchaser has suffered by reason of all such breaches
do not exceed a TWO HUNDRED THOUSAND DOLLARS ($200,000) aggregate ceiling, which
aggregate ceiling is over and above the TWO HUNDRED THOUSAND DOLLARS ($200,000)
held in the Reserve Account pursuant to Section 3.6 herein above, after which
point the Seller will have no obligation to indemnify the Purchaser from and
against further such Adverse Consequences). "Adverse Consequences" means all
actions, suits, proceedings, hearings, investigations, finance, warranty or
factory receivables chargebacks, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, liabilities, obligations, taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
140 CONSULTING. In consideration of consulting services to provided by Seller
to Purchaser which consulting services shall be set forth on Schedule 14
attached hereto, Purchaser shall reimburse Seller for the cost of two (2)
automobiles including maintenance for the period of three (3) years up to the
total monthly cost of ONE THOUSAND TWO HUNDRED DOLLARS ($1,200). In addition
thereto, Purchaser shall cause the Corporation to reimburse Seller the costs of
medical, dental and vision insurance for such three (3) year period.
150 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties hereto agree that
-------------------------------------------
the representations and warranties contained herein and the obligations set
forth in Sections 6 and 7 hereof shall survive the execution and delivery hereof
and the Closing hereunder for a period of two (2) years subsequent to the
Closing.
160 FURTHER ASSURANCES. The parties hereto each agree to execute such other
-------------------
documents or agreements as may be necessary or desirable for the implementation
of this Agreement and the consummation of the transactions contemplated hereby.
170 NOTICES. Any notice or other communication required or permitted to be
--------
given under this Agreement ("Notices") shall be in writing and shall be (a)
personally delivered; (b) delivered by a reputable overnight courier; or (c)
delivered by certified mail, return receipt required and deposited in the U.S.
Mail, postage prepaid. Notices shall be deemed received at the earlier of
actual receipt
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or (a) one (1) business day after deposit with an overnight courier as evidenced
by a receipt of deposit; or (b) three (3) business days following deposit in the
U.S. Mail, as evidenced by a return receipt. Notices shall be directed to the
parties at their respective addresses shown below and to the Escrow Holder at
the address shown below or such other address as either party may, from time to
time, specify in writing to the other in the manner described above:
THE PURCHASER: FirstAmerica Automotive, Inc.
601 Brannan Street
San Francisco, CA 94107
Attn: Thomas A. Price
Fax No.: (415) 808-4838
WITH COPY TO: W. Bruce Bercovich, Esq.
Kay & Merkle
100 The Embarcadero, Penthouse
San Francisco, California 94105
Fax No.: (415) 512-9277
THE SELLER: L. Vaughn Graybehl, Trustee
Graybehl Family Trust
3405 Deer Ridge Drive
Danville, CA 94506
Fax No.: (925) 648-3437
TO CORPORATION: Concord Toyota Sales, Inc.
1090 Concord Avenue
Concord, CA 94520
Attn: L. Vaughn Graybehl
Fax No.: (925) 609-7613
WITH COPY TO: Nickolas P. Tooliatos, II
Hallgrimson McNichols McCann LLP
5000 Hopyard Road, Suite 400
Pleasanton, CA 94588
Fax No.: (925) 460-0969
180 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
-----------------
the parties pertaining to the subject matter contained in it and supersedes all
prior and contemporaneous agreements, representations and understandings of the
parties.
190 INUREMENT. This Agreement shall be binding on and shall inure to the
---------
benefit of the parties hereto, their respective heirs, legal representatives,
successors and assigns.
12
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200 CALIFORNIA LAW. This Agreement shall be governed by and be construed
--------------
according to the laws of the State of California.
210 ATTORNEYS' FEES. In the event of any litigation or arbitration between the
----------------
parties, the prevailing party shall be entitled to recover reasonable attorneys'
fees and all other costs and expenses incurred in connection with such
litigation or arbitration.
220 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.
230 TERMINATION. If the Closing Date shall not have occurred on or prior to
-----------
September 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.
240 CONFIDENTIALITY. Unless and until the transactions contemplated by this
---------------
Agreement are consummated, Purchaser agrees to maintain in confidence and not to
disclose, give, sell, license, use or otherwise dispose of any information of
Seller and Corporation which Seller and Corporation furnish to Purchaser or
which Purchaser obtains as a result of the exercise of its rights herein.
Purchaser shall disclose such confidential information only to Purchaser's
employees, legal counsel, financial advisors or accountants on a "need to know"
basis and such information shall be used only for the purpose of ascertaining
whether the representations and warranties of Seller and Corporation contained
in this Agreement are true and correct. In the event this Agreement is not
consummated, Purchaser agrees to maintain such confidentiality and not to
disclose or use the information it has obtained from Seller or Corporation for a
period of three (3) years from the date of the disclosure of this information.
The confidentiality obligations set forth in this Section shall not apply to any
information Purchaser receives from Seller or Corporation that is in the public
domain at the time of its disclosure. Purchaser shall take reasonable measures
to assure that its employees, legal counsel and financial advisors maintain the
confidentiality of the information provided by Seller or Corporation or obtained
by Purchaser pursuant to Section 7.6.
250 NO BROKER. Purchaser on the one hand, and Seller 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 on the one hand, or by
Purchaser on the other, Seller or Purchaser, as the case may be, agrees to
indemnify and save harmless the other in respect of such claim.
260 COUNTERPARTS. This Agreement may be executed in 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.
270 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
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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.
______________________ _____________________
Seller's Initials Purchaser's Initials
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
PURCHASER: SELLER:
FirstAmerica Automotive, Inc. Graybehl Family Trust u/t/d March 22, 1978
a Delaware corporation
By: ___________________________ By: _______________________________
L. Vaughn Graybehl, Trustee
THE CORPORATION:
Concord Toyota Sales, Inc.,
a California corporation
By: _______________________________
L. Vaughn Graybehl, President
14
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SCHEDULES
Schedule 3.3-A Form of Closing Balance Sheet
Schedule 3.3-B Valuation of Acquired Assets
Schedule 5.5 Schedule of Unions
Schedule 5.6 Schedule of Insurance
Schedule 5.7 Schedule of Employee Plans
Schedule 5.8 Schedule of Litigation; Conformity with the Law
Schedule 5.12 Schedule of Liens and Encumbrances
Schedule 5.13 Schedule of Real Property Leases
Schedule 14 Form of Consulting Agreement
15
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Schedule 3.3-A
Form of Closing Balance Sheet
Attached
16
<PAGE>
SCHEDULE 3.3 B
VALUATION OF ACQUIRED ASSETS.
The assets of the Corporation shall be determined as set forth below:
(a) The price for current model new unregistered and undamaged
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,
provided, however, the Corporation shall not install any optional parts or
accessories on new vehicles from and after the day of execution of this
Agreement; LESS
(iii) The sum of all distributor's allowances as of the Closing
Date including, but not limited to, inventory carry-over allowances, discounts,
holdbacks, rebates, contests, floor plan assistance, model changes and similar
distributor's allowances related to specific automobiles transferred on the
Closing Date.
(b) The price for current model new unregistered and undamaged
demonstrator model vehicles with not more than Seven Thousand Five Hundred
(7,500) miles purchased hereunder shall be valued in accordance with subsections
(a)(i), (a)(ii) and (a)(iii) above LESS the sum of TWENTY CENTS ($0.20) per
mile.
(c) All vehicles not described in subsections (a) and (b) above which
have been in Seller's Inventory sixty (60) days prior to the Closing Date, which
are to be purchased hereunder shall be valued at the actual cash value of such
vehicle as reasonably determined by Seller and Purchaser, provided that Seller
and the Corporation shall deliver to Purchaser as of the Closing Date, a
complete list of each vehicle together with the actual cash value. Vehicles
acquired by Seller in the ordinary course of business on a date less than sixty
(60) days prior to the Closing Date, shall be purchased at Seller's cost.
Purchaser shall have a period of five (5) days to review such cash value set by
Seller and the Corporation. In the event Purchaser disagrees, Seller and the
Corporation on the one hand and Purchaser on the other, shall attempt to resolve
such dispute, provided, however, in the event Seller and the Corporation and
Purchaser are unable to resolve such dispute within fifteen (15) days, any such
automobile shall be sent to wholesale auction and the auction price shall be
determined as the value of such vehicle.
(d) All new, undamaged, and returnable genuine factory parts,
accessories and jobber parts which are in the possession of the Corporation 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 ($0.00). "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 ($0.00), parts which are not returnable to the
manufacturer (as defined by the Franchiser), or parts indicated as discontinued,
and broken or damaged parts, regardless of whether listed in the most current
manufacturer's wholesale price book.
17
<PAGE>
(e) All new undamaged nonfactory parts and accessories which are in
possession of the Corporation as of the Closing Date shall be valued at dealer
cost, provided, however, such nonfactory parts and accessories shall not be in
excess of TEN THOUSAND DOLLARS ($10,000).
(f) All sublet repairs, miscellaneous inventory and work-in-progress
shall be valued at cost.
(g) All furniture, fixtures, equipment, supplies, forms and special
tools shall be valued at the Corporation's book value, provided, however, that
in the event that any item of furniture, fixtures, supplies, equipment, or
special tools is materially damaged, destroyed or removed from the Dealership
between the date of determination of book value and the Closing Date, the value
of said item damaged, destroyed or removed from the Dealership shall be credited
against the Purchase Price.
(h) All factory and customer receivables on the books of the
Corporation, which receivables are in the ordinary course of business shall be
valued at their book value, provided, however, that any contracts in transit
and/or vehicle receivables not collected within fifteen (15) days shall be
valued at ZERO ($0.00) and any and all customer or factory receivables not
collected within ninety (90) days shall be valued at ZERO ($0.00).
(i) All finance and insurance receivables on the books of the
Corporation shall be valued at their book value, provided, however, any and all
finance and insurance receivables not collected within ninety (90) days shall be
valued at ZERO ($0.00).
(j) There shall be no additional value for franchise value, goodwill
or other intangible rights.
(k) All cash on hand, contracts in transit shall be value at actual
book value, provided, however, any and all contracts in transit not collected
within sixty (60) days shall be valued at ZERO ($0.00).
(l) Prepaid expenses shall be valued at book value, provided, however,
that such prepaid expenses are reasonable prepaid expenses and determined in
accordance with U.S. GAAP.
(m) An amount shall be deducted from the values of the inventories set
forth herein above, for any deferred tax due on any LIFO Reserve carried on the
books of the Corporation.
18
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SCHEDULE 5.5
SCHEDULE OF UNIONS
[Pursuant to Section 7.8 herein above, to be attached 15 business days
following execution of this Agreement]
19
<PAGE>
SCHEDULE 5.6
SCHEDULE OF INSURANCE
[Pursuant to Section 7.8 herein above, to be attached 15 business days
following execution of this Agreement]
20
<PAGE>
SCHEDULE 5.7
SCHEDULE OF EMPLOYEE PLANS
[Pursuant to Section 7.8 herein above, to be attached 15 business days following
execution of this Agreement]
21
<PAGE>
SCHEDULE 5.8
SCHEDULE OF LITIGATION; CONFORMITY WITH THE LAW
[Pursuant to Section 7.8 herein above, to be attached 15 business days following
execution of this Agreement]
22
<PAGE>
SCHEDULE 5.12
SCHEDULE OF LIENS AND ENCUMBRANCES
[Pursuant to Section 7.8 herein above, to be attached 15 business days following
execution of this Agreement]
23
<PAGE>
SCHEDULE 5.13
SCHEDULE OF REAL PROPERTY LEASES
[Pursuant to Section 7.8 herein above, to be attached at the Closing]
24
<PAGE>
SCHEDULE 14
FORM OF CONSULTING AGREEMENT
[Pursuant to Section 7.8 herein above, to be attached at the Closing]
25
<PAGE>
EXHIBIT 2.2
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
This First Amendment to Stock Purchase Agreement ("Amendment") is entered
into as of October 1, 1998 by and between FirstAmerica Automotive, Inc., a
Delaware corporation ("Purchaser"), Vacation Motors, a California corporation
(the "Corporation") and The Graybehl Family Trust, dated March 22, 1978
("Seller"), and is made with respect to the following facts and circumstances:
A. Purchaser and Seller are parties to that certain Stock Purchase
Agreement dated July 17, 1998 (the "Agreement") whereby Seller has agreed to
sell, and Purchaser has agreed to buy, all of the outstanding stock of Concord
Toyota Sales, Inc., a California corporation. The reference to Concord Toyota
Sales, Inc. as the corporation which Purchaser has agreed to buy from Seller is
erroneous; the true and correct name of the corporation which Purchaser has
agreed to buy, and wishes to buy, from Seller is Vacation Motors, Inc., a
California corporation, said entity having changed its name from Concord Toyota
Sales, Inc. in May of 1997.
B. The parties now desire to amend the Agreement to correct the
aforementioned error, and to provide for such additional terms and conditions as
set forth herein. All capitalized terms used herein shall have the meaning
ascribed to them in the Agreement, unless otherwise noted.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Purchaser, Seller and the
Corporation agree as follows:
1. Each and every reference in the Agreement to Concord Toyota Sales,
Inc., a California corporation as the "Corporation" which is the subject of the
Agreement, or otherwise, is hereby deleted, and Vacation Motors, a California
corporation is hereby inserted in its place and stead. It is the parties'
intention that the Agreement be among Purchaser, Seller and Vacation Motors, a
California corporation in the first instance, and as if all references to
Concord Toyota Sales, Inc., a California corporation had never existed in the
Agreement.
2. Seller shall prepare and deliver to Purchaser all documentation
necessary to cause the name of the Corporation to be changed from Vacation
Motors, a California corporation to FAA Concord T, Inc., a California
corporation on or before the Closing Date (as defined in the Agreement).
3. Section 3.1 of the Agreement is hereby deleted and the following
language is inserted in lieu thereof:
3.1 AMOUNT. Subject to adjustments as set forth in Section 3.3 herein
below, Purchaser shall pay to Seller as consideration for the acquisition of the
Shares hereunder, the sum of TWELVE MILLION SEVEN HUNDRED EIGHTY-EIGHT THOUSAND
SIX HUNDRED SIXTY-SIX DOLLARS ($12,788,666).
4. Section 3.2.1 of the Agreement is hereby modified to provide that the
Deposit, less any accrued interest thereon, shall be paid to Seller on the
Closing Date. All interest on the Deposit shall be returned to Purchaser.
5. Section 3.2 of the Agreement is hereby deleted in its entirety, and the
following language is inserted in lieu thereof:
3.2.2 The balance of the purchase price shall be paid pursuant to the
terms of a promissory note made by Purchaser in favor of Seller on the terms and
conditions set forth in the form of promissory note
-1-
<PAGE>
(the "Note") attached hereto as Exhibit 3.2.2(a). The Note shall be secured by
granting Seller a security interest in the Shares pursuant to a written security
pledge agreement (the "Pledge Agreement") in the form attached hereto as Exhibit
3.2.2(b).
6. Section 3.3 is hereby modified to replace all references therein to
the sum of "TWO MILLION TWO HUNDRED THOUSAND DOLLARS ($2,200,000)" with the sum
of "THREE MILLION THREE HUNDRED FOUR THOUSAND TWO HUNDRED THIRTEEN DOLLARS
($3,304,213)".
7. Section 3.6 is hereby deleted and the following language is inserted in
lieu thereof:
3.6 FINANCE, WARRANTY AND FACTORY CHARGEBACKS. Purchaser shall be
responsible for payment of all finance, warranty and factory chargeback
obligations related to the operation of the Dealership prior to the Closing Date
(the "Chargebacks") up to the sum of TWO HUNDRED THOUSAND DOLLARS ($200,000).
In the event the Chargebacks exceed said amount, Seller shall then be
responsible pursuant to the terms and conditions of Section 13.1, as limited by
Section 13.4. Purchaser shall thereafter be responsible for all subsequent
Chargebacks. Purchaser shall provide Seller with written quarterly reports
containing information reasonably sufficient to inform Seller of the running
Chargeback balance for purposes of determining when Seller's Chargeback
obligations accrue, if any. At such time as the quarterly reports submitted to
Seller indicate the Chargebacks are at a level which are Seller's
responsibility, Seller shall promptly reimburse Purchaser for all appropriate
sums within fifteen (15) days of receipt of the quarterly report indicating such
obligation.
8. Section 11 of the Agreement is hereby modified to provide that the
Closing Date shall be October 1, 1998.
9. The parenthetical contained in the second sentence of section 13.4 is
hereby deleted, and the following language is inserted in lieu thereof:
(after which point Seller will be obligated only to indemnify Purchaser
from and against further such Adverse Consequences to the extent the Adverse
Consequences Purchaser suffers by reason of all such breaches do not exceed a
TWO HUNDRED THOUSAND DOLLAR ($200,000) aggregate ceiling).
10. The following language is hereby inserted as a new Section 27:
27. SECTION 338(h)(10) ELECTION. At Purchaser's option, an election under
---------------------------
Section 338(h)(10) of the Code and equivalent elections under applicable state
Law (the "338(H)(10) ELECTION") may be made in connection with the transactions
contemplated by this Agreement. If Purchaser chooses to make the 338(h)(10)
election, then Purchaser, Sellers, and the Corporation shall cooperate in the
completion and timely filing (and amendment or correction, if any) of an IRS
Form 8023-A for the 338(h)(10) election, and all other documents and instruments
which may be necessary or appropriate in accomplishing the 338(h)(10) Election.
Allocation of the Purchase Price among the assets purchased hereunder for the
purposes of the 338(h)(10) Election shall be in accordance with the principles
of Treasury Regulation Section 1.338(h)(10)-1(f)(1)(ii) in the case of Seller,
and Treasury Regulation Section 1.338(h)(10)-1(e)(5) in the case of Purchaser.
Purchaser hereby agrees to reimburse Seller for any reasonable accounting
expenses incurred by Seller as a result of a federal or state tax audit
specifically related to the 338(h)(10) Election up to a maximum of $25,000.
-2-
<PAGE>
11. The following language is hereby inserted as a new Section 28:
28. Notwithstanding any other provision of the Agreement, Seller shall
retain all rights to the slogan "The Dealer with a Heart"; provided, however,
that Purchaser shall have the right to use such slogan for a reasonable time
period after the Closing Date not to exceed one (1) year.
12. Except as set forth specifically herein, all remaining terms and
conditions of the Agreement shall remain in full force and effect, binding upon
Seller, Purchaser and Vacation Motors, Inc., a California corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
PURCHASER: SELLER:
FirstAmerica Automotive, Inc. Graybehl Family Trust u/t/d March 22, 1978
a Delaware corporation
By: By:
--------------------------- -------------------------------
L. Vaughn Graybehl, Trustee
THE CORPORATION:
Vacation Motors,
a California corporation
By:
-------------------------------
L. Vaughn Graybehl, President
-3-
<PAGE>
EXHIBIT 2.3
SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT
This Second Amendment to Stock Purchase Agreement ("Amendment") is entered
into as of October 13, 1998 by and between FirstAmerica Automotive, Inc., a
Delaware corporation ("Purchaser") and The Graybehl Family Trust, dated March
22, 1978 ("Seller"), and is made with respect to the following facts and
circumstances:
A. Purchaser and Seller are parties to that certain Stock Purchase
Agreement dated July 17, 1998 (the "Agreement"), as amended pursuant to that
certain First Amendment to Stock Purchase Agreement dated as of October 1, 1998
(the "First Amendment"), whereby Seller has agreed to sell, and Purchaser has
agreed to buy, all of the outstanding stock of FAA Concord T, Inc., a California
corporation, formerly known as Vacation Motors, a California corporation,
formerly known as Concord Toyota Sales, Inc., a California corporation (the
"Corporation").
B. The parties now desire to further amend the Agreement to provide for
such additional terms and conditions as set forth herein. All capitalized terms
used herein shall have the meaning ascribed to them in the Agreement or the
First Amendment, unless otherwise noted.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Purchaser, Seller and the
Corporation agree as follows:
1. Section 3.1 of the Agreement, and the First Amendment, is hereby
deleted and the following language is inserted in lieu thereof:
3.1 AMOUNT. Subject to adjustments as set forth in Section 3.3 herein
below, Purchaser shall pay to Seller as consideration for the acquisition of the
Shares hereunder, the sum of TWELVE MILLION SEVEN HUNDRED SIXTY THOUSAND NINTY-
ONE DOLLARS ($12,760,091).
2. The parties acknowledge that the Closing Value of the Corporation at
Closing was ONE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED THIRTY DOLLARS
($132,630) less than as required pursuant to Section 3.3 of the Agreement, as
modified by the First Amendment. The parties therefore agree that Purchaser
shall receive a credit against the purchase price, as calculated pursuant to
Section 3, equal to this same amount.
3. The parties further agree that, taking into account (i) the adjustment
to the purchase price set forth in section one above, (ii) the credit due
Purchaser set forth in section two above, and (iii) the delivery of the Deposit
to Seller at Closing (which Seller acknowledges having received), the total
amount due Seller, and to pay off the Note in full, is and shall be the sum of
TWELVE MILLION FIVE HUNDRED TWENTY-SEVEN THOUSAND FOUR HUNDRED SIXTY-ONE DOLLARS
($12,527,461). Upon payment in full of such amount by Purchaser to Seller,
Seller shall deliver the original and all copies of the Note to Purchaser for
cancellation.
4. Except as set forth specifically herein, all remaining terms and
conditions of the Agreement shall remain in full force and effect, binding upon
Seller, Purchaser and Vacation Motors, Inc., a California corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
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<PAGE>
PURCHASER: SELLER:
FirstAmerica Automotive, Inc. Graybehl Family Trust u/t/d March 22, 1978
a Delaware corporation
By: By:
------------------------------- --------------------------------
W. Bruce Bercovich, Secretary L. Vaughn Graybehl, Trustee
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