ASSET PURCHASE AGREEMENT
By and Between
FIRSTAMERICA AUTOMOTIVE, INC.
("Purchaser")
and
BEVERLY HILLS BW, LTD., DBA BEVERLY HILLS BMW
("Seller")
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made and entered effective January ___ ,
1998 (the "Effective Date") by and among FirstAmerica Automotive, Inc., a
Delaware corporation or nominee ("Purchaser"), Beverly Hills BW, Ltd., a
California general partnership, dba Beverly Hills BMW ("Seller"), and Ross
Gilbert ("Owner ").
RECITALS
WHEREAS, Seller owns and operates a BMW automobile dealership (the
"Dealership") commonly known as Beverly Hills BMW, located at 8825 and 8833
Wilshire Boulevard, Beverly Hills, California 90211 (collectively, the
"Premises").
WHEREAS, Owner owns indirectly all of the outstanding partnership interest
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 connection with the Dealership.
Now, THEREFORE, in recognition of the foregoing representations, and in
consideration of the covenants set forth herein, the parties hereto agree as
follows:
AGREEMENT
1. DEFINITIONS. The capitalized terms as used in this Agreement shall be
defined as hereinafter set forth in this Section 1, or as otherwise provided in
this Agreement.
1.1 ACQUIRED ASSETS. The term "Acquired Assets" shall be defined
as all of the assets and property to be acquired by Purchaser hereunder, as
described in Section 2.1 hereof.
1.2 CLOSING. The term "Closing" shall be defined as the
consummation of all of the transactions provided for in this Agreement,
including the exchange of the Acquired Assets for the consideration provided for
herein. The Closing shall occur at the offices of Escrow Holder, 4270 Wilshire
Boulevard, Los Angeles, California, 90010 on the Closing Date commencing at
10:00 a.m.
1.3 CLOSING DATE. The "Closing Date" shall be defined as the date
which falls 5 business days following the earliest date on which the conditions
specified in Sections 7 and 8 hereof are satisfied; subject, however, to the
provisions of Section 18 below.
1.4 FRANCHISE. The term "Franchise" shall be defined as the BMW
Franchise currently held by Seller.
1.5 FRANCHISOR. The term "Franchisor" shall be defined as BMW North
America.
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1.6 OBSOLETE PARTS. The term "Obsolete Parts" shall be defined as
all (i) 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),
(ii) parts which are not returnable to the manufacturer (as defined by the
Franchisor), (iii) parts indicated as discontinued, and (iv) parts which are
broken or damaged, regardless of whether listed in the most current
manufacturer's wholesale price book.
2. PURCHASE AND SALE OF ASSETS.
2.1 ACQUIRED ASSETS. The assets subject to this Agreement (the
"Acquired Assets") shall consist of all the assets 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 attached hereto, all BMW
special tools and all furniture, fixtures and equipment (which special tools,
furniture, fixtures and equipment shall be in good working order, normal wear
and tear excepted, as of the Closing Date), all leasehold improvements at the
Premises used by Seller in operation of the BMW Franchise, all 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) and excess non-factory parts in accordance
with Section 3.2(e)), tires, work-in-progress, advertising literature, forms,
supplies, customer files and data bases, parts return privileges from the
Franchisor, rights under new car purchase orders and deposits relating thereto,
goodwill, Seller's customer files, all books and records relating to the
Acquired Assets, all telephone numbers of Seller, the tradename "Beverly Hills
BMW", or any derivative thereof, and all trademarks and/or logos related
thereto, the right of occupancy of the Premises, and all contracts, agreements
or commitments which have been approved by Purchaser as the same shall exist on
the Closing Date. The parties agree that Schedule 2.1 shall be prepared in
conjunction with the physical inventory described in Section 3.2(i) hereinbelow.
2.2 PURCHASE. Seller hereby agrees to sell, convey, transfer,
assign and deliver to Purchaser, and Purchaser hereby agrees to purchase and
acquire, on the Closing Date, all of the Acquired Assets.
3. CONSIDERATION FOR ACQUIRED ASSETS.
3.1 PURCHASE PRICE. Subject to the terms and conditions of this
Agreement, the purchase price to be paid by Purchaser for the Acquired Assets
shall be that amount which is equal to the aggregate value of the Acquired
Assets as of the Closing Date determined in accordance with Section 3.2.
3.2 VALUATION OF ACQUIRED ASSETS. Those Acquired Assets which are
listed below shall be valued as provided below in this Section 3:2.
(a) The price for each 1998 new unregistered and undamaged BMW
model vehicle with not more than three hundred (300) miles shall be the sum of
the following:
(i) The wholesale cost of each such vehicle determined
in accordance with the factory invoice, including advertising charges; plus
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(ii) The wholesale cost of all optional parts and
accessories installed in such vehicle plus the cost of labor (determined at the
internal rate pursuant to the standard factory formula) for installation of the
same; plus
(iii) The cost of pre-delivery expense actually performed
related to specific automobiles transferred at closing, but only to the extent
that such pre-delivery expense is not previously reimbursed to Seller, in which
event the right to such expense reimbursement shall be assigned to Purchaser at
the closing; less
(iv) The sum of all distributor's allowances as of the
Closing Date including, but not limited to, inventory carry-over allowances,
discounts, floor plan assistance, holdbacks, rebates, contests, model changes,
incentives and similar distributor's allowances related to such vehicle to the
extent paid or payable to Seller.
(b) The price for each 1998 unregistered and undamaged BMW
demonstrator vehicle with not more than three thousand (3,000) miles shall be
the value determined in accordance with subsections (a)(i) through (a)(iii)
hereinabove, less the curtailment on each such vehicles as currently taken on
the books of Seller as of the Closing Date.
(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 and shall be removed by Seller within ten
(10) days of the Close of Escrow.
(d) All new undamaged returnable genuine BMW 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 manufacturer's current wholesale 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, and removed by
Seller from the Premises not later than ten (10) days following the Closing
Date.
(e) All non-factory parts, accessories and miscellaneous
inventory which are in the possession of Seller as of the Closing Date, shall be
valued at dealer cost, provided, however, that Purchaser shall have no
obligation to purchase in excess of TWENTY THOUSAND DOLLARS ($20,000) of such
items.
(f) All miscellaneous inventories, including gas, oil, grease,
sublet repairs and work in process shall be valued at cost as of the Closing
Date.
(g) All furniture, fixtures, equipment, and BMW special tools
shall be valued at Seller's depreciated book value as of the Closing; 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 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 if said items are
included in the Purchase Price. The parties acknowledge and agree that
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there shall be no addition to the purchase price for leasehold improvements.
(h) The sum of ten million two hundred and fifty thousand
dollars ($10,250,000) which sum shall be allocated as and for goodwill.
(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-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 pans 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 determined in
accordance with Section 3.2 above to be paid by Purchaser pursuant to this
Agreement shall be paid as follows:
(a) Within three (3) business days of execution of this
Agreement by Purchaser and Seller, Purchaser shall cause the sum of FIVE HUNDRED
THOUSAND DOLLARS ($500,000) (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, the Deposit,
together with all accrued interest, shall be disbursed to Purchaser, unless the
provisions of Section 22.9 are applicable, in which case the disposition of the
Deposit shall be governed by the provisions of Section 22.9.
(b) The balance of the purchase price shall be paid in cash on
the Closing Date.
3.4 CLOSING AND POST-CLOSING ADJUSTMENTS. All deposits and expenses
of a nature which are customarily subject to proration in a transaction
involving the purchase and sate of assets of an ongoing business 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 the number of such days subsequent to the Closing Date. Those items subject
to proration hereunder shall include, without limitation, rent and all other
amounts payable with respect to any lease for the Premises, employee
compensation, utilities, personal property taxes, Beverly Hills Gross Receipts
Tax, and customer prepayments. The aggregate amount of any adjustment shall be
determined and paid as of the Closing Date. Any additional proration 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 other than those liabilities which
Purchaser specifically agrees to assume all of which shall be set forth on
Schedule 3.5 attached hereto, including without limitation all contracts,
agreements and commitments of Seller, which Purchaser agrees to assume.
Purchaser shall be responsible solely for that portion of any such obligations,
which first accrue on or subsequent to the Closing Date. Purchaser shall have no
obligation with respect to any liability arising under any such contract,
agreement or
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commitment prior to the Closing Date, all of which liability shall remain the
responsibility of Seller. 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.
3.7 ALLOCATION OF PURCHASE PRICE. The Purchase Price as provided
for herein shall be allocated as set forth on Schedule 3.7 attached hereto.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND OWNER. Seller and Owner
hereby jointly and severally represent, warrant and agree with Purchaser as
follows:
4.1 GOOD STANDING. Seller is a partnership duly organized, validly
existing and in good standing under the laws of the State of California and is
entitled to and has the 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, other than liens for taxes not yet due and payable as set forth on
Schedule 4.2 attached hereto. Except as set forth in Schedule 4.2, all of the
tangible Acquired Assets are in good working order and condition, ordinary wear
and tear excepted.
4.3 AUTHORIZATION. The execution and delivery of this Agreement and
each other document, agreement and instrument contemplated hereby, and the
consummation of the transactions contemplated hereby has been duly authorized
and all other action, including all approvals necessary to authorize the
execution and delivery of this Agreement and each other document, agreement and
instrument contemplated hereby, and the consummation of the transactions
contemplated hereby, have also been taken. Except for consent of the Franchisors
and landlords with leases, 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 the valid and binding obligation of Seller and Owner
enforceable in accordance with its terms, except as may be limited as applicable
bankruptcy law and equity. Except as to the terms of the Franchise, 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
Owner is a party, under which they are obligated or to which any of the Acquired
Assets are subject, (b) do not violate any judgment, order, statute, rule or
regulation to which Seller, Owner 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 Owner contained in this Agreement
shall be true and correct in all material
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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, Seller has not received service of process for, and to Seller's actual
knowledge there is no pending or threatened suit, action, arbitration, or legal,
administrative, or other proceeding, or governmental investigation against or
affecting any of the Acquired Assets. To the actual knowledge of Seller and
Owner, Seller is not in default with respect to any order, writ, injunction, or
decree of any federal, state, or local court. Subject to Franchisor's rights, to
the best knowledge of Seller, use of the name "Beverly Hills BMW" by Seller does
not infringe upon the rights of any other person and Seller is not aware of any
claim of any nature to the effect that any person other than Seller holds any
rights with respect to such names.
4.6 DEFAULTS. Seller is not in material default, and to the best of
Seller's actual knowledge, no event has occurred which, with the passage of time
will constitute a default, with respect to any obligation or liability to be
assumed by Purchaser hereunder, which are listed on Schedule 3.5 attached
hereto. To the best knowledge of Seller, no other party to any obligation or
liability set forth in Schedule 3.5 is in default with respect to any material
provision thereof.
4.7 ENVIRONMENTAL COMPLIANCE NOTICES. Except as set forth on
Schedule 4.7 Seller has received no written notice advising Seller of any
defects, defaults or non-compliance in connection with the Acquired Assets or
the Premises from any governmental agency dealing with environmental laws,
except notices which have been previously complied with or waived by the
governmental agency.
4.8 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 continuing operation of the Dealership.
4.9 FINANCIAL REPORTS. Seller has delivered to Purchaser dealer
financial statements for Seller for the calendar years 1996 and 1997 ("Dealer
Financial Statement"). The income and expenses reflected in the Dealer Financial
Statement have been prepared in accordance with past practices of Seller and are
true and correct in all material respects. Purchaser acknowledges that it has
examined and reviewed the Dealer Financial Statements to its full and complete
satisfaction and represents that it is relying on the results of its own review
and examination thereof in connection to the transaction to be consummated
hereunder.
4.10 UNIONS. Except as set forth on Schedule 4.10 as attached
hereto, Seller is not a party to any arrangement with any union, and no
employees of the Seller are represented by any labor union or covered by any
collective bargaining agreement or, to the knowledge of Seller, is any effort to
establish such representation in progress.
4.11 FRANCHISE NOTICE. Seller and Owner have received no written
notice from Franchisor regarding a proposed appointment of a new BMW Dealership
within a ten (10) mile radius of the Dealership. Further, Seller and Owner have
received no written notice from Franchisor regarding any material adverse action
by Franchisor material to the continuing operation of the Dealership including
any
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adverse change in the allocation of new BMW automobiles.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents,
warrants and agrees with Seller and Owner 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 consummation of 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 Franchisors, landlords under leases, 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. From the date hereof to the Closing, 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. 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 Franchisors 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. Each of Seller, Owner, 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, Owner, 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
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 Owner
from any liability for any loss or damage sustained by Purchaser by reason of
the breach by Seller or Owner of any covenant, obligation or agreement contained
herein, or by reason of any misrepresentation made by Seller or Owner 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 Owner 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 on or before the
Closing Date.
7.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller and Owner 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 the General
Partner of Seller.
7.3 NO LEGAL PROCEEDINGS. No action or proceeding shall have been
instituted against Owner and/or Seller which has not been dismissed or
threatened to restrain or prohibit the acquisition by Purchaser or the
conveyance by Seller of the Acquired Assets.
7.4 CONSENTS. Purchaser shall have received the written approval of
Franchisor designating Purchaser or its designee as a duly authorized dealer for
the sales and service of such Franchisor's automobiles at 8825 and 8833 Wilshire
Boulevard, Beverly Hills, California 90211, free of any material condition which
is materially adverse to Purchaser and such Franchisor 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 facility at the
Premises shall have been obtained. All other requisite consents and approvals
shall have been obtained.
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7.5 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, Escrow
Holder shall withhold in escrow 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.
7.6 LIST OF EMPLOYEES. Seller shall have furnished to Purchaser a
list of all employees, their rates of pay, including, separately, base pay, and
incentive and commission plans. Seller shall have terminated all employees as of
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.
7.7 BULK SALE. Seller shall have furnished in a timely manner 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.
7.8 LEASE OF REAL PROPERTY. Seller shall have assigned to Purchaser
the right to occupy the Premises commonly known as 8825 Wilshire Boulevard,
Beverly Hills, California 90211, 8833 Wilshire Boulevard, Beverly Hills,
California 90211 and the Storage Lot located at Robertson and Wilshire
Boulevard, Beverly Hills, California 90211 (collectively referred to as
"Dealership Properties"). Such leases for the Dealership Properties shall be in
form and substance as set forth in Section 11 herein below.
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 LEASE OF REAL PROPERTY. Seller shall have assigned to Purchaser
the right to occupy the Dealership Properties. Such leases for the Dealership
Properties shall be in form and substance as set forth in Section 11 herein
below.
8.4 NO LEGAL PROCEEDINGS. No action or proceeding shall have been
instituted or threatened against Purchaser to restrain or prohibit the
acquisition by Purchaser or the conveyance by
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Seller of the Acquired Assets.
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 reasonably 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 the General
Partner 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 Franchisor.
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 mounts 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. LEASES. The parties acknowledge that the Dealership currently operates
at the Dealership Properties. The lease for the property commonly known as 8833
Wilshire Boulevard, Beverly Hills, California shall be modified to provide for a
term of ten (10) years from and after the Closing Date. The rent under such
lease shall be the sum of FIFTY NINE THOUSAND DOLLARS ($59,000) per month for
the first six (6) years. Thereafter, the rent shall increase to SIXTY NINE
THOUSAND DOLLARS ($69,000) per month for the balance of the term. The parties
hereto acknowledge and agree that the lease for the property commonly known as
8825 Wilshire Boulevard, Beverly Hills, California shall provide for a term of
ten (10) years from and after the Closing Date. The rent under such lease shall
be as currently set forth in the existing lease. The rent during the remainder
of the ten (10) year term shall not be in
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excess of the current rent. The parties hereto further acknowledge and agree
that the leases for the properties commonly known as 8825 and 8833 Wilshire
Boulevard, Beverly Hills, California shall be in form and substance reasonably
satisfactory to Purchaser and its counsel. The leases for the Dealership
Properties shall be either direct leases to the Purchaser or assigned to
Purchaser in a form and substance reasonably satisfactory to Purchaser and its
counsel. Such leases shall be attached hereto as Schedule 11 and incorporated
herein by this reference.
12. ESCROW. The parties, upon execution of this Agreement shall open an
escrow with Wilshire Escrow Company 4270 Wilshire Boulevard, Los Angeles,
California 90010, Larry Shuffle, Escrow Officer ("Escrow Holder"). The parties
shall forthwith provide to Escrow Holder any and all documentation necessary for
Escrow Holder to publish such notices as may be required by the bulk sale laws
of the State of California. Any and all costs of such escrow shall be paid one-
half by Purchaser and one-half by Seller.
13. COVENANTS AFTER CLOSING DATE.
13.1 TRANSFER OF ACQUIRED ASSETS. Seller agrees from and 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 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.
13.2 COOPERATION. Seller will cooperate and use its reasonable
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 upon notice and during normal business hours. From and after the
Closing Date, Purchaser will permit Seller and its representatives to have
access to Seller's books and retained by Purchaser for the period prior to the
Closing Date upon notice during normal business hours. Seller shall assist
Purchaser after the Closing related to audits required in connection with any
public offering contemplated by Purchaser; provided Seller shall not be required
to expend funds or institute litigation. Purchaser shall keep any information
delivered to Purchaser hereunder confidential; provided, however, Purchaser
shall have the right as required by law to use such final information in
connection with financial reporting or filing of any required documents with the
Securities Exchange Commission or other similar or necessary use.
14. INDEMNIFICATION.
14.1 INDEMNIFICATION BY SELLER AND OWNER. Seller and Owner agree to
defend, indemnify and hold Purchaser harmless 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 Owner which were not assumed by
Purchaser, (b) any
11
liability or obligation of any kind relating to the operations of the Acquired
Assets, the Dealership and/or the Premises prior to the Closing Date, (c) the
existence or presence of hazardous materials or toxic substances (as said terms
may be defined by any applicable laws, statutes or ordinances) located at, on,
under or emanating from the Premises related to the prior use of the Premises as
an automobile dealership as of the Closing Date, or (d) the breach or inaccuracy
of, or failure to comply with, any of the warranties, representations, covenants
or agreements of Seller or Owner 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 prior to the Closing Date to
correct any customer complaints associated therewith, and Purchaser shall have
the fight of reimbursement therefore from Seller and/or Owner pursuant to the
terms of this section.
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 Purchaser's operation of the
Acquired Assets, the Dealership and/or the Premises after the Closing Date, (c)
the existence or presence of hazardous materials or toxic substances (as said
terms may be defined by any applicable laws, statutes or ordinances) located at,
on, under or emanating from the Premises after the Closing Date, or (d) the
breach or inaccuracy of, or failure to comply with, 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.
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.
14.4 INDEMNIFICATION COSTS. Except for warranty obligations of
Seller pursuant to Section 14.5 below, each party shall not be deemed to have
sustained any costs for which it is entitled to indemnification from the other
party pursuant to this Agreement or any Ancillary Agreement until such time as
the aggregate costs actually incurred by said party exceed TWENTY THOUSAND
DOLLARS ($20,000) in the aggregate, in which event, the responsible party shall
be liable for all costs, including the original TWENTY THOUSAND DOLLARS
($20,000).
14.5 SERVICE/REPAIR WARRANTIES. Notwithstanding any other provision
in this Agreement to the contrary, Seller will be fully liable for and will
indemnify and hold Purchaser harmless from any cost in connection with or
arising out of the Seller's warranty of service or repairs performed or made by
Seller on or prior to the Closing, if and to the extent Seller would have been
liable for such rework had the claim been made prior to the Closing under
Seller's limited service and parts warranty and such cost of repair exceeds ONE
HUNDRED DOLLARS ($100) per automobile, and, provided further, that if the cost
with respect thereto is estimated to be in excess of FIVE HUNDRED DOLLARS
($500), Purchaser
12
will provide notice to Seller in writing of such work prior to starting such
work.
14.6 TIME LIMIT OF INDEMNITY. An indemnitee shall not be entitled to
indemnification under this Section 14 unless and to the extent that indemnitee
asserts a claim for indemnification in writing to the indemnitor during the
applicable "Claims Period". "Claims Period" means:
(a) for real or personal title matters, a period extending in
perpetuity;
(b) for environmental matters, a period extending in
perpetuity;
(c) for tax matters, a period ending on the date five (5)
years after the Closing; and
(d) for all other matters not expressly specified in
Subsections (a), (b) and (c) above, a period ending on the date two (2) years
after the Closing Date.
14.7 DISCLAIMER OF WARRANTIES. Except as otherwise provided in this
Agreement, the new vehicles, used vehicles, fixed assets and inventories shall
be sold to Purchaser "As Is" without any warranty whatsoever. Except as
otherwise provided in this Agreement, Owners disclaim all other warranties,
including, without limitation, (a) the value, nature, quality or condition of
these assets, (b) the income to be derived from these assets, (c) the
suitability of these assets for any and all activities and uses which Purchaser
may conduct thereof, (d) the compliance of or by these assets or its operation
with any laws, rules, ordinances or regulations of any applicable governmental
authority or body, (e) the merchantability, marketability, profitability or
fitness for a particular purpose of these assets, (f) the manner, quality, state
of repair or lack of repair of these assets, or (g) any other matter with
respect to these assets, specifically, that Owners have not made, do not make,
and specifically disclaim any representations regarding compliance with any
environmental protection, pollution or land use laws, rules, regulations, orders
or requirements, including solid waste, as defined by the U.S. Environmental
Protection Agency Regulations at 40 C.F.R., Part 261, or the disposal or
existence, in or on the property, or any hazardous substance, as defined by the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended, and Regulations promulgated thereunder.
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 for a period of twenty-four (24) months
following the Closing.
16. NO BROKER. Except for the obligation of Seller to Robertson Stephens &
Co., which obligation shall the sole responsibility of Seller, Purchaser on the
one hand, and Seller and Owner 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 Owner on the one hand, or by
Purchaser on the other, Seller, Owner 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 transfer all rights, as Seller has, to the name "Beverly Hills
BMW" or any derivative thereof or similar
13
name in connection with the operation of the Dealership acquired hereunder, and
that Seller shall not subsequent to the Closing, use such name.
18. TERMINATION. If the Closing Date shall not have occurred on or prior
to that date which is ninety (90) days after the Effective Date, any party that
is not in default of its performance of its obligations under this Agreement may
terminate this Agreement by giving written notice to the other party; provided,
however, that if the transaction contemplated by this Agreement has not closed
within ninety (90) days of the Effective Date due solely as a result of
Purchaser not yet receiving the required consents from the Franchisor and/or
Landlord as provided in sections 7.4 and 7.8 hereof, then either Purchaser or
Seller may extend the Closing Date an additional sixty (60) days as necessary to
obtain such consents.
19. RISK OF LOSS AND INSURANCE PROCEEDS. Seller shall give Purchaser
notice of the occurrence of damage or destruction of, or the commencement of
condemnation proceedings affecting any portion of the Premises. In the event
that all or any material portion of the Premises is condemned, or destroyed or
damaged by fire or other casualty prior to the Closing and the cost to repair or
restore any loss or damage caused thereby is greater than FIVE HUNDRED THOUSAND
DOLLARS ($500,000), then Purchaser may, at its option to be exercised within
fifteen (15) days of Seller's notice of the occurrence of the damage or
destruction or the commencement of the condemnation proceedings, either
terminate this Agreement or consummate-the purchase for the full consideration
as required by the terms hereof. If Purchaser elects to terminate this Agreement
or fails to give Seller notice within such fifteen (15) days period that
Purchaser will proceed with the purchase, then this Agreement shall terminate at
the end of such fifteen (15) day period and the Deposit shall be returned to
Purchaser less cost and expenses, including legal fees incurred in collection of
the proceeds and neither party shall have any further rights or obligations
hereunder. If (a) a portion of the Premises is condemned or destroyed or damaged
by fire or other casualty prior to the Closing and the cost to repair or restore
any loss or damage caused thereby is equal to or less than FIVE HUNDRED THOUSAND
DOLLARS ($500,000); or (b) Purchaser elects within the aforesaid fifteen (15)
day period to proceed with the purchase, then this Agreement shall not terminate
and upon the Closing, there shall be a credit against the Purchase Price due
hereunder equal to the amount of any net insurance proceeds or condemnation
awards collected by Seller as a result of any such damage or destruction or
condemnation, plus the amount of any insurance deductible, less any sums
expended by Seller toward the restoration or repair of the premises (but in no
event shall the mount of such credit exceed the Purchase Price); provided,
however, in the event the insurance or condemnation proceeds are less than the
actual amount necessary to replace such damage, Purchase shall receive a credit
against the Purchase Price on the Closing in the amount of such difference. If
the proceeds or awards have not been collected as of the Closing, then such
proceeds or awards shall be assigned to Purchaser, except to the extent needed
to reimburse Seller for sums expended to collect such proceeds or repair or
restore the Premises, and Purchase shall not receive any credit against the
Purchase Price with respect to such proceeds or awards; provided, that if the
amount of proceeds or awards subsequently received by Purchaser exceeds the
Purchase Price, then Purchaser shall pay to Seller any such excess within
ten(10) days after Purchaser's receipt of such proceeds or awards. The
provisions of this Section 19 shall survive the Closing.
20. CONFIDENTIALITY. In the event this Agreement is terminated for any
reason other than the default of Seller, Purchaser shall deliver to the Seller,
at no expense to Purchaser, without representation or warranty of any kind, all
of the documents and papers which were supplied by the Seller to Purchaser
14
or its agents, including, without limitation, financial statements, tax returns,
appraisals; inspections, investigations, studies, tests, surveys, and reports
concerning the Assets, but excluding any documents or other papers which are
proprietary property or trade secrets of Purchaser. Unless and until the Closing
occurs, none of the parties to this Agreement shall disclose, publish or
communicate either directly or indirectly, any of the terms, conditions or the
subject or content of the parties' negotiations concerning purchase of the
Dealership, except (a) in response to any lawful process requiting disclosure of
the same as reasonably required by law or public reporting requirements, or (b)
to prospective sources of financing, to mortgage brokers, franchisers,
investment bankers, investors or purchasers, attorneys, accountants,
consultants, experts and professionals engaged by Purchaser in connection with
its due diligence investigation. The parties each agree that it shall at all
times keep the contents of the negotiations confidential (subject to the
exceptions stated in the preceding sentence) and that no publicity or press
release with respect to any proposed transaction shall be made by either party
without the prior written consent of either party.
21. 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.
To Purchaser: FirstAmerica Automotive, Inc.
485 Serramonte Boulevard
Colma, CA 94014
Fax No.: (650) 756-3945
With a copy to: W. Bruce Bercovich, Esq.
Kay & Merkle
100 The Embarcadero, Penthouse
San Francisco, California 94105
Fax No.: (415) 512-9277
Phone No.: (415) 357-1200
15
To Owner: Ross Gilbert
Beverly Mercedes Place
9242 Beverly Blvd., Suite 281
Beverly Hills, CA 90210
Phone No.: (310) 271-4597
To Seller: Beverly Hills BW, Ltd.
c/o Ross Gilbert
Beverly Mercedes Place
9242 Beverly Blvd., Suite 281
Beverly Hills, CA 90210
Phone No.: (310) 271-4597
With a copy to: Norman Hoffman, Esq.
16133 Ventura Blvd., Suite "A"
Encino, CA 91436
Fax No.: (818) 379-4017
Phone No.: (818) 986-8080
22. MISCELLANEOUS.
22.1 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.
22.2 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 giving effect to principles of conflict of laws.
22.3 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.
22.4 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.
22.5 NECESSARY DOCUMENTS. Each of the parties does hereby agree to
do any act and to execute any other or further documents reasonably necessary or
convenient to the carrying out of the
16
provisions of this Agreement.
22.6 HEADINGS. The headings in the sections of this Agreement are
inserted for convenience of reference only and shall not constitute a part
hereof.
22.7 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 Owner, 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.
22.8 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.
22.9 TERMINATION AND REMEDIES.
(a) 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/
___________________ ----------------------------
Seller's Initials Purchaser's Initials
17
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., Beverly Hills BW, Ltd.,
a Delaware corporation a California general partnership
By: /s/ Thomas Price By: RGBW, Inc., a California corporation
-------------------------------
Thomas A. Price, President
By: /s/ Ross Gilbert
-------------------------------------
Ross Gilbert, President
RGMB Corporation, a California
corporation
By: /s/ Ross Gilbert
-------------------------------------
Ross Gilbert, President
OWNER:
/s/ Ross Gilbert
----------------------------------------
Ross Gilbert
18
LIST OF SCHEDULES
SCHEDULE 2.1 Acquired Assets
SCHEDULE 3.5 Liabilities
SCHEDULE 3.7 Allocation of Purchase Price
SCHEDULE 4.2 Title to Assets; Liens and Encumbrances
SCHEDULE 4.5 Litigation
SCHEDULE 4.10 Unions
SCHEDULE 11 Lease
19
[LOGO OF BMW APPEARS HERE]
BMW OF NORTH AMERICA, INC.
DEALER AGREEMENT
This DEALER AGREEMENT is effective as of the 20th day of April,
---- -----
1998, by and between BMW of North America, Inc., a Delaware Corporation having
its principal place of business at Woodcliff Lake, New Jersey 07675 ("BMW NA")
and
DEALER NAME: FAA Beverly Hills, Inc.
-------------------------------------------------------------------
Dealer Location: Beverly Hills, California , a
------------------------------------------------------------
BUSINESS TYPE: Corporation
--------------------------------------------------------------,
(if a corporation or partnership) organized or incorporated under the laws of
the
STATE OF: California and
-------------------------------------------
DOING BUSINESS AS: Beverly Hills BMW
--------------------------------------------------------------
having its principal place of business at
ADDRESS: 8825 and 8833 Wilshire Blvd. , in
-------------------------------------------------------------------
CITY/TOWN: Beverly Hills , in the
--------------------------------------------------------------
COUNTY OF: Los Angeles , in the
--------------------------------------------------------------
STATE OF: California , (as "Dealer").
-------------------------------------------------------
All terms defined in the DEALER STANDARD PROVISIONS (Form 93/B) are incorporated
herein by reference.
PURPOSE OF AGREEMENT
The purpose of this Agreement is to authorize Dealer to operate a BMW automobile
dealership and to set forth the responsibilities of both BMW NA and Dealer in
providing BMW Products and services to the consuming public.
The United States automotive market requires a fluid relationship between BMW NA
and authorized BMW dealers who represent BMW Products. Mutual compliance with
the terms of this Agreement will promote the interests of both BMW NA and Dealer
by providing each party an opportunity to earn a reasonable return on its
investment through developing and retaining satisfied customers and by building
a spirit of cooperation between BMW NA and authorized BMW dealers (collectively
the "BMW Dealers") which will increase the value and customer perception of BMW
trademarks.
BMW NA and Dealer have entered into this Agreement with confidence in each
others integrity, ability and expressed intention to deal fairly with the other
party and the consuming public. Dealer is relying upon BMW NA's commitment to
distribute quality BMW Products which meet the needs and expectations of the BMW
customers in Dealers primary market and to provide Dealer with a broad range of
support activities to assist Dealer in its retail operations. BMW NA is relying
upon Dealers commitment to perform and carry out the responsibilities of an
authorized BMW dealer, as set forth in this Agreement. Each party recognizes
that it must rely upon the efforts of the other party in performing successfully
under this Agreement.
IN CONSIDERATION OF the foregoing and the mutual covenants herein contained, the
parties hereto agree as follows:
A. APPOINTMENT OF DEALER
BMW NA appoints Dealer as a dealer of BMW Products. Subject to the terms of this
Agreement, Dealer is granted the non-exclusive right to buy BMW Products. Dealer
accepts such appointment and agrees to be bound by this Agreement.
While dealer recognizes that its performance will be primarily measured based
upon its activities in its Primary Market Area, Dealer agrees that this
appointment does not confer upon it the exclusive right to deal in BMW Products
in any specific geographic area within the 50 United States, nor does it limit
the persons within the 50 United States to whom Dealer may sell BMW Products for
use therein.
Dealer agrees that it will not sell BMW Products for resale or use outside the
50 United States. Dealer further agrees to abide by any Export Policy
established by BMW NA.
Dealer acknowledges that BMW NA reserves the right to appoint additional
dealers, whether located near Dealer's location or elsewhere, as BMW NA in its
sole discretion deems necessary or appropriate. BMW NA agrees that it will not
explore additional representation without first conferring individually with the
BMW Dealer(s) surrounding the proposed location to determine whether other
alternatives to additional representation are satisfactory to BMW NA. If a
decision is made to proceed with establishment of additional representation, BMW
NA will provide such BMW Dealer(s) no less than thirty (30) days written notice
of such decision.
B. DEALER STANDARD PROVISIONS AND
DEALER OPERATING REQUIREMENTS
The accompanying DEALER STANDARD PROVISIONS (Form 93/B), DEALER OPERATING
REQUIREMENTS, DEALER FACILITY GUIDELINES, and all currently effective Addenda
issued to Dealer by BMW NA, all of which may be amended, cancelled or superseded
from time to time, are hereby incorporated into this Dealer Agreement
("Incorporated Documents"). Unless the context otherwise indicates, the term
"Agreement" shall mean this document, the Incorporated Documents, and the
documents referred to therein. Dealer hereby acknowledges receipt of this
Agreement and agrees to become familiar with its terms.
While Dealer is not contractually required to comply with the BMW DEALER
OPERATING SYSTEM, Dealer agrees to consider conforming its operations to the
guidelines and recommendations of the BMW Dealer Operating System.
C. DEALER OWNERSHIP AND MANAGEMENT
This is a PERSONAL SERVICES AGREEMENT. BMW NA is entering into this Agreement in
reliance upon the qualifications, abilities and integrity of the Dealer Operator
and upon the representation of the Dealer's Owner(s) that the Dealer Operator
will have full managerial authority for operations and activities of Dealer. In
order to induce BMW NA to enter into this Agreement, Dealer states that:
(I) DEALER'S OWNERS. The beneficial owners, record owners and partners, if any
- --------------------
of Dealer are (include Record Owners if different from Beneficial):
NAME % RECORD OR BENEFICIAL
FirstAmerica, Automotive, Inc. 100%
(Shareholders:
Donald V. Strough 10.49
Thomas A. Price 39.93
Steven Hallock 3.19
Fred Cziska 4.57
Al Babbington 4.16
John Driebe 1.36
Trust Co. of The West 20.14
Management Options 3.02
Embarcadero Automotive, LLC. 3.92
Raintree Capital, LLC. 3.92
Brown, Gibbons, Lang, LLC. 2.01
BB Investments 2.26
H. Matthews Travis .13
Public Shareholders .90
-----
100%)
Additional Names Attached []
C. DEALER OWNERSHIP AND MANAGEMENT - CONTINUED
(II) DEALER'S OFFICERS. The following persons are Dealer's Officers:
- ----------------------
NAME TITLE
Thomas A. Price President
Donald V. Strough Vice President
Steven S. Hallock Treasurer / Secretary
(III) DEALER'S CORPORATE DIRECTORS. If Dealer is a corporation, the following
- -----------------------------------
are its Corporate Directors:
NAME TITLE
Thomas A. Price CEO
Donald V. Strough Chairman
Steven S. Hallock
(IV) DEALER OPERATOR. The following person shall be in complete charge of
- ---------------------
Dealer's BMW Operations with authority to make all operating decisions on behalf
of Dealer with respect to Dealer's BMW Operations and is the person upon whom
BMW NA can rely to act on Dealer's behalf:
Name: Robert Reehtwig
------------------------------------------------------------------------
(V) GENERAL MANAGER. The following is Dealer's General Manager (if none, enter
- --------------------
"NONE"):
Name: Stephan Jones
------------------------------------------------------------------------
C. DEALER OWNERSHIP AND MANAGEMENT - CONTINUED
(VI) SUCCESSOR. The Dealer's Owners have nominated the following individual(s)
- ---------------
as proposed Dealer Owner(s) of a Successor Dealer to be established if this
Agreement is terminated because of the death or permanent disability of any of
the Dealers Owners (if none, enter "NONE"):
Name: None
----------------------------------------------------------------
Name: None
----------------------------------------------------------------
Because of the importance that BMW NA places on the statements and
representations of the Dealer's Owners and the qualifications of the Dealer
Operator, Dealer agrees that there will be no change in the (a) identity of the
Dealer's Owners (i above);(b) the Dealer Operator (iv above); or (c) Dealer's
name, identity, business organization or structure without the prior written
consent of BMW NA.
To enable BMW NA to maintain effectively the BMW NA dealer network, Dealer
further agrees to provide BMW NA with forty-five (45) days prior written notice
of any proposed change in the ownership of Dealer, which would change the
majority interest or control of Dealer, or of any proposed disposition of
Dealer's BMW assets. Any such change in ownership or disposition of Dealer's BMW
assets shall not be effective without the prior written consent of BMW NA which
consent shall not be unreasonably withheld. BMW NA shall respond to Dealer's
notification within forty-five (45) days after Dealer has furnished to BMW NA
all applications and information reasonably requested to evaluate the proposal.
Without limiting other considerations in determining whether BMW NA will provide
consent, this Agreement may not be transferred, assigned or assumed until all
indebtedness of Dealer to BMW NA, its subsidiaries or affiliates has been fully
satisfied and unless the transferee, assignee or party assuming this Agreement
agrees and commits to fulfill and complete all of the obligations under this
Agreement and the Improvement Addendum (if applicable).
C. DEALER OWNERSHIP AND MANAGEMENT - CONTINUED
Dealer recognizes that BMW NA has a vital interest in ensuring that qualified
personnel are employed by BMW Dealers. Therefore, Dealer agrees to employ
personnel who meet the qualifications for each position. BMW NA agrees that
Dealer has the right to decide reasonably all matters concerning management and
personnel.
Dealer has designated herein certain individuals as officers, directors,
managers and/or individuals with responsibility for Dealer's BMW Operations.
Dealer agrees to notify BMW NA in writing of any change in the designated
individuals (ii, iii and v above) and recognizes that such designation shall not
relieve Dealer of its responsibility for performance under this Agreement.
Dealer agrees that BMW NA may rely upon the Dealer Operator and General Manager
(if applicable) to act on Dealer's behalf and that such reliance will not alter
Dealer's responsibilities under this Agreement.
D. DEALER'S FACILITIES
Dealer agrees that Dealer's Facilities shall satisfy all applicable provisions
of this Agreement, including reasonable space, facility and BMW Corporate
Identification requirements in the Dealer Operating Requirements Addendum and/or
Dealer Facilities Guidelines. BMW NA recognizes the investment Dealer has in its
facilities and hereby approves the location of the following Dealer's Facilities
for the exclusive purpose of:
1) A showroom and sales facility for BMW Vehicles at:
Address: 8825 Wilshire Blvd. Beverly Hills, CA
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2) Service and Pans facilities for BMW Vehicles at:
Address: 8833 Wilshire Blvd. Beverly Hills, CA
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3) Facilities for the display and sale of used BMW Vehicles at:
Address: 8833 Wilshire Blvd. Beverly Hills, CA
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4) Other facilities (indicate the nature of the facility; e.g., storage
facility):
Address: ____________________________________________________________
Unless otherwise provided herein, Dealer shall conduct Dealer's BMW Operations
and keep BMW Products exclusively at Dealer's Facilities designated above.
In the event that Dealer desires to (i) change its principal place of business
from that first set forth in this Agreement; (ii) change any location of
Dealer's Facilities; (iii) establish any additional locations for either
operating its business or storage of BMW Products; (iv) make any major
structural or design change in Dealer's Facilities; or (v) change the usage or
function of any locations or facility approved herein or otherwise utilize such
locations or facilities for any functions other than the approved functions,
Dealer must obtain the prior written approval of BMW NA for any such change or
establishment.
D. DEALER'S FACILITIES - CONTINUED
In the event Dealer desires to establish or add any additional automobile
franchise, line, make or dealership at Dealer's Facilities simultaneously with
Dealer's BMW Operations, Dealer agrees to provide BMW NA thirty (30) days prior
written notice of such establishment or addition. At the time notice is
provided, Dealer shall demonstrate in writing to BMW NA that Dealer will
continue to comply with the Dealer Operating Requirements Addendum and will not
adversely impact the representation or sale of BMW Products. If Dealer is unable
to comply, Dealer shall not pursue such establishment or addition, but may
submit a detailed plan of compliance with the Dealer Operating Requirements and
Dealer Operating Requirements Addendum to BMW NA. If BMW NA approves the
detailed plan of compliance, Dealer may proceed with the establishment or
addition. Dealer understands that BMW NA may, at its sole option, reject the
plan or require issuance or modification of an Improvement Addendum in the event
the plan is approved. Such approval shall not be unreasonably withheld.
E. EXCLUSION OF WARRANTIES
EXCEPT AS SPECIFICALLY PROVIDED FOR IN THE NEW CAR LIMITED WARRANTY, THE LIMITED
WARRANTY ON EMISSION CONTROLS, THE LIMITED WARRANTY AGAINST RUST PERFORATION,
THE LIMITED WARRANTY ON ORIGINAL BMW PARTS AND THE LIMITED WARRANTY ON ORIGINAL
PARTS SOLD OVER THE COUNTER; ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE
EXCLUDED. THE EXCLUSION ALSO APPLIES TO INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
INDIRECT DAMAGES FOR ANY BREACH OF EXPRESS OR IMPLIED WARRANTY, INCLUDING THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND/OR FITNESS, IF ANY, APPLICABLE TO BMW
PRODUCTS.
F. BMW DEALER FORUM
BMW NA and Dealer agree that it is in their mutual interest to have an
independent group of BMW dealer representatives serve on the BMW Dealer Forum
("DEALER FORUM"). The DEALER FORUM shall represent BMW Dealers and will
communicate the position of BMW Dealers to BMW NA on various common issues. BMW
NA and the DEALER FORUM shall establish a mechanism to foster open and frequent
communication on substantive issues affecting BMW NA and BMW Dealers.
Each BMW dealer is entitled and encouraged to serve on the DEALER FORUM or on a
committee of the DEALER FORUM pursuant to its by-laws and each BMW dealer is
expected to support and participate in the DEALER FORUM.
The DEALER FORUM shall adopt by-laws as BMW Dealers deem reasonable and
necessary. The DEALER FORUM may establish committees to study various aspects of
the retail environment and the BMW NA - BMW Dealers' relationship.
Before any material change may be made to this Agreement, BMW NA agrees to
notify the DEALER FORUM and consider BMW Dealers' position regarding the
proposed change.
G. TERM
This Agreement shall continue in full force and effect and shall govern all
relations and transactions between the parties commencing on the effective date
hereof and continuing as follows:
O If Dealer has fulfilled all of its obligations hereunder and no
Improvement Addendum is currently in force, this Agreement shall expire
five years from the effective date hereof, unless terminated earlier in
accordance with the applicable provisions of this Agreement. In such event
BMW NA will renew this Agreement or offer Dealer an opportunity to enter
into a superseding Agreement.
O If Dealer has outstanding obligations as of the effective date of this
Agreement and/or an Improvement Addendum is in force, this Agreement shall
expire on the earlier of three years from the effective date hereof or
sixty (60) days following the earliest "Compliance Date" specified in said
Addendum, unless otherwise terminated in accordance with the applicable
provisions of this Agreement.
H. ALTERNATE DISPUTE
BMW NA and Dealer agree to minimize disputes between them. However, in the event
that disputes arise, BMW NA and Dealer agree that they will attempt to resolve
all matters between them before any formal action is taken to seek any
administrative or judicial adjudication or governmental review.
A BMW BOARD ("BOARD") will act as the Administrator of all disputes between BMW
NA and Dealer arising out of this Agreement. The BOARD will consist of three
representatives who will be selected by BMW NA and three representatives of BMW
Dealers who will be selected by the DEALER FORUM. The BOARD will determine
eligibility requirements, develop procedures to ensure a fair and equitable
decision ("ADR PROCEDURES") and select individuals to participate in a DISPUTE
RESOLUTION PANEL ("PANEL") to hear an eligible dispute. The PANEL shall consist
of at least one BMW NA employee, one BMW dealer and one independent person
selected by the BOARD.
The BOARD shall also monitor the dispute resolution process, report to BMW NA
and the DEALER FORUM annually on the effectiveness of this process and, when
required, make recommendations for changes in this process.
BMW NA and Dealer agree that the process outlined in this Article H and
developed by the BOARD in the ADR PROCEDURES will be mandatory. The PANEL's
recommendation will be non-binding, unless the parties agree to be bound by the
decision of the PANEL. The purpose of the PANEL will be to recommend a
resolution and work with the parties to reach a fair and equitable solution to
their dispute in a cost-effective, efficient manner and to avoid formal
adjudication or government intervention.
H. ALTERNATE DISPUTE RESOLUTION - CONTINUED
If either party to this Agreement initiates any action in court or an
administrative agency prior to issuance of a PANEL recommendation on a dispute,
that party shall pay all costs, fees and expenses, including attorneys fees, of
the other party which arise out of the enforcement of this Article H.
I. RIGHT OF FIRST REFUSAL
BMW NA recognizes the investment which Dealer has committed to remain a BMW
dealer. Dealer recognizes the importance to BMW NA of continuing dealership
operations from approved locations to provide for effective sale and service of
BMW Products. Accordingly, whenever Dealer intends to dispose of Dealer's BMW
assets or to change majority ownership from that listed in Article C (i), BMW NA
shall have the first right to purchase Dealer's BMW assets or ownership
interests pursuant to this Article. Dealer agrees to disclose to the prospective
buyer that any sale or disposition shall be subject to the terms of this Dealer
Agreement.
BMW NA will advise Dealer if it will exercise the right of first refusal within
forty-five (45) days after Dealer has furnished all applications and information
in accordance with Article C. If BMW NA exercises the right, BMW NA will assume
the proposed buyers rights and obligations under the written agreement the
proposed buyer negotiated with Dealer (the "Buy/Sell Agreement"). The purchase
price shall be that set forth in the Buy/Sell Agreement.
In the event BMW NA exercises its right of first refusal, BMW NA may assign the
Buy/Sell Agreement to any party. BMW NA shall remain responsible to guarantee
the purchase price to be paid by the assignee.
Dealer shall transfer the assets and any applicable real estate free and clear
of all liens and encumbrances. Any property shall be transferred by Warranty
Deed, where possible, conveying marketable title. Deeds will be in the proper
form for recording. Possession will be deemed transferred when the deed is
delivered. Dealer will furnish copies of, and will assign where required, all
agreements, licenses, easements, permits or other documents necessary for the
conduct of Dealer's BMW Operations.
If it exercises its right under this Article, BMW NA will reimburse Dealer for
all acceptable expenses, excluding brokerage commissions, incurred by Dealer in
connection with the development of the Buy/Sell Agreement. Dealer will supply
BMW NA with reasonable documentation to support all those expenses and all
copies of materials generated during the negotiation and development of the
Buy/Sell Agreement in anticipation of the sale (including environmental reports,
accounting reviews, among others.) Any dispute regarding reimbursement shall be
presented for review under Article H.
This Article shall not apply in the event that Dealer proposes to change
majority ownership, dispose of its assets or otherwise enter into a proposed
Buy/Sell Agreement with a member of Dealer's immediate family (spouse, child,
brother, sister, parent, grandchild, or spouse of child); to an individual who
is listed on the Successor Addendum; to an individual who is currently employed
by Dealer and has been actively employed by Dealer for at least three
consecutive years in the BMW Operations and is otherwise qualified as a Dealer
Operator; or to an individual who is currently listed as a Dealer's Owner in
Article C and has been so listed for the past three consecutive years and is
otherwise qualified as a Dealer Operator.
J. CUSTOMER SATISFACTION
BMW NA and Dealer agree to conduct their respective businesses to promote and
support the image and reputation of BMW NA, BMW Products and BMW Dealers. BMW
Products must be perceived as the finest available. BMW NA and BMW Dealers must
be recognized as providing the best service in the industry.
Dealer, as the direct link to the BMW customer, is responsible for satisfying
customers in all matters, except those directly related to product design and
manufacturing. Dealer will take reasonable steps to ensure that each customer is
satisfied with BMW Products, and with the services and the practices of Dealer.
Dealer will recommend to BMW NA methods of reasonably satisfying customers. BMW
NA will support Dealer's customer satisfaction efforts through counseling,
training opportunities and providing survey results.
When requested by BMW NA, Dealer shall submit a plan detailing its customer
satisfaction programs. That plan shall include continuous reinforcement to all
dealership personnel of the importance of customer satisfaction, necessary
training for dealership personnel and methods of conveying to customers that
Dealer is committed to their satisfaction.
Following consultation with and notice from BMW NA or its authorized
representative, Dealer shall remedy to the satisfaction of BMW NA any practice
or method of operation which would have a detrimental effect upon customer
satisfaction or would impair the reputation or image of BMW NA, BMW Products or
Dealer.
K. EXECUTION OF AGREEMENT
This Agreement shall not become effective until signed by a duly authorized
officer of Dealer, if a corporation; or by one of the general partners of
Dealer, if a partnership; or by the named individual if a sole proprietorship;
and countersigned by authorized representatives of BMW NA.
L. MODIFICATION OF AGREEMENT
No representative of BMW NA shall have the authority to waive any of the
provisions of this Agreement or to make any amendment or modification of or any
other change in, addition to, or deletion of any portion of this Agreement or to
make any other agreement which imposes any obligation on either BMW NA or Dealer
which is not specifically imposed by this Agreement or which renews or extends
this Agreement; unless such waiver, amendment, modification, change, addition,
deletion or agreement is reduced to writing and signed by two authorized
representatives of BMW NA and by the authorized representative of Dealer as set
forth in Article K of this Agreement.
BMW OF NORTH AMERICA, INC.
BY: /S/ BY: /S/
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TITLE: Senior Vice President. General TITLE: President. FAA Beverly Hills.
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Manager, Western Region Inc.
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FEDERAL TAX ID # ___________________
BY: /S/
---------------------------------
TITLE: Business Development Manager ATTEST: (If Dealer is a Corporation)
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Western Region
/S/
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Secretary
WITNESS: (If Partnership or
Proprietorship)
____________________________________
Name
____________________________________
Address