HOMETOWN AUTO RETAILERS, INC.
c/o MORSE, ZELNICK, ROSE & LANDER, LLP
450 Park Avenue
New York, NY 10022
July 2, 1997
Brattleboro Chrysler Plymouth Dodge, Inc.
P.O. Box 8068
North Brattleboro, VT 05304
Attention: Philip Price, President
Gentlemen:
This will set forth the agreement under which Dealerco, Inc.,
("Purchaser") will purchase, or obtain rights to use, substantially all of the
business and assets owned or used by Brattleboro Chrysler Plymouth Dodge, Inc.
("Seller") in the conduct of its business (the "Business"), other than cash,
receivables and inventories of used vehicles (the "Acquired Assets").
1. The Acquired Assets shall include, without limitation, (a) all
equipment, tools, supplies, inventories, (except used vehicles), software,
manuals, product brochures, business methods and procedures, trade names,
vehicle franchises and furniture and fixtures, (b) the customer list of the
Business, and (c) all of Seller's rights under contracts wherein Seller has
agreed to provide to any third party products or services or under which any
third party provides products, services, financing or equipment to Seller,
including each vehicle manufacturer whose new vehicles were sold or leased by
Seller and any existing equipment leases (the "Assumed Contracts").
2. The purchase price for the Acquired Assets, payable at Closing, shall
be $2.6 million, including $100,000 for fixtures, equipment and acquired
inventories, other than the parts inventory, plus an amount equal to the
manufacturer's current catalog price for the parts inventory, excluding any
parts which are obsolete, damaged or not usable in the ordinary course of
business within 12 months.
3. The Purchaser shall assume all liabilities and obligations of Seller
under the Assumed Contracts arising from and after the closing of the
transaction contemplated hereby (the "Closing") including Seller's obligations
under its "floor planning" finance agreements with respect to all new vehicles
in inventory at the Closing and Seller shall assign to Purchaser all refunds or
rebates from the manufacturers with respect to such vehicles. Purchaser may
elect to assume any unpaid liabilities prior to the closing and adjust same
against the purchase price payable at Closing. Purchaser shall also assume all
continuing obligations of Seller to those employees of the business hired by
purchaser; provided that all compensation, fees or commissions, the cost of any
applicable employee benefit plans and accrued sick leave and vacation pay shall
be adjusted at Closing.
4. Thomas E. Cosenzi ("Cosenzi") shall, at or prior to the Closing, enter
into an employment agreement with Purchaser at an annual base salary of $150,000
plus a bonus payable monthly, equal to 5% of the income before income taxes of
the Business and any other business managed by Cosenzi during the term thereof
up to $800,000 and 10% of the pre-tax income in excess of $800,000. It shall
provide that he shall be permitted to provide services to certain specified
dealerships so long as such other services do not prevent him from meeting his
responsibilities as executive in charge of the Business and such other
dealerships for which he accepts responsibility. The employment term shall
commence on Closing and end on the fifth anniversary thereof. The employment
agreement shall also provide that Cosenzi will be granted an incentive stock
option to purchase such number of Purchaser's Common Shares as have an aggregate
value of $500,000, at the per share initial public offering price (the "IPO
Price"). The per share option exercised price will be the IPO price. The option
will be exercisable during a six-year term, but will be first exercisable for
not more than 1/5 of the covered shares at the end of each year. However, the
option will become exercisable in full on any breach by Purchaser of the
employment agreement or failure of the Purchaser to continue to offer employment
to Cosenzi following the expiration of the employment term, except in case of
termination of the employment agreement by Purchaser for cause.
5. The employment agreement shall provide for appropriate non-competition
covenants from Cosenzi for the longer of five years from the closing or one year
from the expiration of the employment term; provided that Cosenzi will not be
restricted from continuing present permitted employment arrangements at other
specified dealerships.
6. Purchaser and the landlord (an entity controlled by Seller's
Shareholders) will enter into a new lease for a five-year term commencing on the
Closing, at a monthly rental of $20,000. The lease will provide that purchaser
shall have a renewal option for an additional five-year term at the same rental
and an option to purchase the premises, at any time, for cash, at the then fair
market value of the property as determined through independent appraisals but
not less than $1.5 million, all as specified in the lease. The lease shall be a
triple net lease and shall provide that Purchaser shall bear all ordinary and
necessary repair and maintenance expenses and all taxes on the premises, except
that structural repairs, capital additions and replacement of the roof if
required, shall remain the responsibility of the landlord.
7. Seller and its Shareholders (who have signed this agreement at the foot
hereof) represent and warrant that Seller at the date hereof and at the Closing
(i) has duly authorized the transaction contemplated hereby; (ii) operates its
business, uses its assets and occupies its properties in compliance with all
material applicable laws, ordinances, rules or regulations, and that Seller has
received no notice of violation of any of the foregoing; (iii) has obtained all
necessary licenses and permits, which will be available to Purchaser upon the
consummation of the transaction; (iv) has filed all required federal and state
income tax returns and that there is no material liability for past income taxes
and (v) has delivered to Purchaser unaudited financial statements for the years
ended December 31, 1995 and 1996 and the four months ended April 30, 1997 which
fairly present the results of operation and the financial position of Seller as
at and for the periods therein presented in accordance with generally accepted
accounting principles, consistently applied. The representations and warranties
contained herein shall survive the Closing.
8. The obligations of each party at Closing are subject to (a) the closing
of an initial public offering (the "IPO") by Purchaser (b) the receipt of all
third party consents required to transfer assets, assign leases or otherwise
consummate the transaction, including consents from each manufacturer
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whose vehicles are being offered for sale or lease by Seller now or at the
Closing and (c) the performance by the other party of all obligations to be
performed at or prior to Closing. Each of us will use our best efforts to obtain
all material third-party consents
The obligations of Purchaser are also subject to (a) a review of Seller's
business and prospects confirming that there has been no material adverse change
to Seller's business or business prospects. (b) the execution by Cosenzi of the
employment agreement and the landlord of the lease for the Business' premises
contemplated hereby; (c) a review of audited financial statements for Seller
showing income before income taxes for l996 of at least $1.5 million, after
adjustment to add back any salary or bonuses to Cosenzi exceeding $300,000 and
(d) compliance with bulk sales laws or other assurance that Purchaser has no
liability for Seller's obligations other than those specifically assumed
hereunder.
9. The Closing shall be held simultaneously with the closing of the IPO.
Pending the Closing the business of Seller shall be operated only in the
ordinary course and Seller shall make or enter into no extraordinary
transactions nor dispose of any material assets, except as contemplated herein
or take any other steps that are not in the ordinary course of business and
consistent with past practices without the advance written approval of
Purchaser. At its option either party may terminate this agreement if the
Closing has not occurred by December 31, l997.
10. Until Closing the Seller and Purchaser will make available to the
other all information which may be reasonably requested in connection with the
transaction.
11. Until Closing Seller will not, directly or indirectly, solicit,
initiate or engage in any discussions with any person (other than the Purchaser)
relating to the sale of all or any part of the Business.
12. Each of the parties shall be responsible for its own counsel,
accounting and professional fees and expenses incurred in connection with this
agreement and the transactions contemplated hereby, except that the costs of
preparing audited financial statements for Seller, as required under the rules
of the Securities and Exchange Commission, shall be borne by Purchaser. Seller
and its Shareholder shall cooperate with Purchaser and its auditors in the
preparation of such financial statements.
13. At its option Purchaser may purchase the Acquired Assets through a
wholly-owned subsidiary and may effect the transaction through the merger of
Seller into such subsidiary following the transfer of all assets not included in
the Acquired Assets. If a subsidiary is used, then all of its obligations are
hereby guaranteed by Purchaser.
Hometown Auto Retailers, Inc.
by: /s/ Joseph Lauria, Vice President
-------------------------------------
Joseph Lauria, Vice President
Accepted and agreed to
this 2nd day of July, 1997
Brattleboro Chrysler Plymouth Dodge, Inc.
by:
---------------------------------------
Philip Price, President
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whose vehicles are being offered for sale or lease by Seller now or at the
Closing and (c) the performance by the other party of all obligations to be
performed at or prior to Closing. Each of us will use our best efforts to obtain
all material third-party consents
The obligations of Purchaser are also subject to (a) a review of Seller's
business and prospects confirming that there has been no material adverse change
to Seller's business or business prospects. (b) the execution by Cosenzi of the
employment agreement and the landlord of the lease for the Business' premises
contemplated hereby; (c) a review of audited financial statements for Seller
showing income before income taxes for l996 of at least $1.5 million, after
adjustment to add back any salary or bonuses to Cosenzi exceeding $300,000 and
(d) compliance with bulk sales laws or other assurance that Purchaser has no
liability for Seller's obligations other than those specifically assumed
hereunder.
9. The Closing shall be held simultaneously with the closing of the IPO.
Pending the Closing the business of Seller shall be operated only in the
ordinary course and Seller shall make or enter into no extraordinary
transactions nor dispose of any material assets, except as contemplated herein
or take any other steps that are not in the ordinary course of business and
consistent with past practices without the advance written approval of
Purchaser. At its option either party may terminate this agreement if the
Closing has not occurred by December 31, l997.
10. Until Closing the Seller and Purchaser will make available to the
other all information which may be reasonably requested in connection with the
transaction.
11. Until Closing Seller will not, directly or indirectly, solicit,
initiate or engage in any discussions with any person (other than the Purchaser)
relating to the sale of all or any part of the Business.
12. Each of the parties shall be responsible for its own counsel,
accounting and professional fees and expenses incurred in connection with this
agreement and the transactions contemplated hereby, except that the costs of
preparing audited financial statements for Seller, as required under the rules
of the Securities and Exchange Commission, shall be borne by Purchaser. Seller
and its Shareholder shall cooperate with Purchaser and its auditors in the
preparation of such financial statements.
13. At its option Purchaser may purchase the Acquired Assets through a
wholly-owned subsidiary and may effect the transaction through the merger of
Seller into such subsidiary following the transfer of all assets not included in
the Acquired Assets. If a subsidiary is used, then all of its obligations are
hereby guaranteed by Purchaser.
Hometown Auto Retailers, Inc.
by:
-------------------------------------
Accepted and agreed to
this 2nd day of July, 1997
Brattleboro Chrysler Plymouth Dodge, Inc.
by: /s/ Philip Price
---------------------------------------
Philip Price, President
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Hometown Auto Retailers, Inc.
c/o Morse, Zelnick, Rose & Lander, LLP
450 Park Avenue
New York, N.Y. 10022
(212) 838-1177
November 11, 1997
Brattleboro Chrysler Plymouth Dodge, Inc.
P.O. Box 8068
North Brattleboro, VT 05304
Attention: Philip Price, President
Gentlemen:
Hometown Auto Retailers, Inc. ("Purchaser") is party to an acquisition
agreement with Brattleboro Chrysler Plymouth Dodge, Inc. ("Seller") dated July
2, 1997 (the "Agreement"). Except as otherwise herein provided, the terms herein
shall be defined as under the Agreement.
The Agreement is hereby amended as follows:
The last sentence of Section 9 of the Agreement is modified by deleting
the date "December 31, 1997" and substituting in its place "May 31, 1998".
The Agreement, as modified by this amendment, is hereby ratified and
reaffirmed.
Very truly yours,
Hometown Auto Retailers, Inc.
by: /s/ Stephen A. Zelnick
-----------------------------
Stephen A. Zelnick
Vice President
Accepted and Agreed to this
11th day of November, 1997
Brattleboro Chrysler Plymouth Dodge, Inc.
by: /s/ Philip Price
-----------------------------
Philip Price, President
Shareholders Consent:
/s/ Philip Price
- ---------------------------------
Philip Price
SHAREHOLDER CONSENT
Philip Price, being the holder of all of Seller's outstanding shares,
hereby consents to the transaction with Purchaser provided for herein and joins
in the representation and warranties set forth in Section 7 above.
/s/ Philip Price
- ----------------------------------------
Philip Price
4
Hometown Auto Retailers, Inc.
c/o Morse, Zelnick, Rose & Lander, LLP
450 Park Avenue
New York, N.Y. 10022
(212) 838-1177
April 14, 1998
Brattleboro Chrysler Plymouth Dodge, Inc.
P.O. Box 8068
North Brattleboro, VT 05304
Attention: Philip Price, President
Gentlemen:
Hometown Auto Retailers, Inc. ("Purchaser") is party to an acquisition
agreement with Brattleboro Chrysler Plymouth Dodge, Inc. ("Seller") dated July
2, 1997 (the "Agreement"). By an amendment dated November 11, 1997, the last
sentence of Section 9 of the Agreement was modified by deleting the date
"December 31, 1997" and substituting in its place "May 31, 1998".
Except as otherwise herein provided, the terms herein shall be defined as under
the Agreement.
The Agreement is hereby amended as follows:
The last sentence of Section 9 of the Agreement is modified by deleting
the date "May 31, 1998" and substituting in its place "July 31, 1998".
The Agreement, as modified by this amendment, is hereby ratified and
reaffirmed.
Very truly yours,
Hometown Auto Retailers, Inc.
by:
--------------------------
Stephen A. Zelnick
Vice President
Accepted and Agreed to this
14th day of April, 1998
Brattleboro Chrysler Plymouth Dodge, Inc.
by:
--------------------------------
Philip Price, President
Shareholders Consent:
--------------------------------
Philip Price