Exhibit 10.25
HOMETOWN AUTO RETAILERS, INC.
831 STRAITS TURNPIKE
WATERTOWN, CT O6795
May 28,1998
Pride Auto Center, Inc.
2101 Baldwin Street
Waterbury, CN 06706
Attention: Benjamin Graziano, Dealer Principal
Gentlemen:
This will set forth the agreement under which Hometown Auto Retailers, Inc.
("Purchaser") will purchase, or obtain rights to use, substantially all of the
business and assets owned or leased by Pride Auto Center, Inc. ("Seller") in the
conduct of its dealership business (the "Business"), other than cash and
receivables (the "Acquired Assets").
1. The Acquired Assets shall include, without limitation, (a) all
furniture and fixtures, equipment, tools, lifts, signage, (b) parts inventories
and supplies (c) software, manuals, product brochures, business methods and
procedures, trade names, vehicle franchises and the customer list of the
Business, (d) used cars inventory (e) new car inventory and (f) 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 are, or at the closing will be, sold or leased by Seller and the
Seller's lease with Reynolds & Reynolds it being understood that Seller will
retain any reserves previously paid under 1 (f) (the "Assumed Contracts").
2. The purchase price for the Acquired Assets shall be the sum of the
following amounts:
(a) $50,000 for the items specified in 1 (a) above
(b) an amount equal to the book value of all factory fresh parts
inventory
(c) $500,000 for the items specified in 1(c), above
(d) an amount equal to the book value of all used car inventory, but
in no event more than the lower of the prices specified for any
vehicle in the NADA Official Used Car Guide or the Galves Auto
Price List
(e) an amount equal to the aggregate net invoice price (after all
hold backs, "Credits") credited to Seller by Chrysler Corp. or
any affiliate thereof for all new car inventory.
The above sum shall be payable $55,000 upon the execution hereof and the balance
in cash at Closing, except that new car inventory shall be paid through the
assumption of "floor plan" obligations, to the greatest extent feasible, and
$200,000 thereof shall be payable pursuant to a self amortizing 36 month
Promissory Note bearing interest at 8% APR and payable in equal monthly
installments commencing one month after the Closing. The Note may be assigned
to Benjamin Graziano, per separate agreement and on such other terms and
conditions acceptable to Seller's attorney. The $55,000 deposit shall be
retained by Seller, as liquidated damages if Purchaser does not close the
transaction, except if such
failure occurs because any of the conditions to Purchaser's obligations set
forth in Section 5 are not satisfied.
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 it being understood that Purchaser shall have the
right to receive all holdbacks from the manufacturers with respect to such
vehicles under arrangements now in effect and if any such holdbacks have
theretofore been received by Seller they shall be offset against the Purchase
Price. All unpaid liabilities of Seller existing at the Closing, including
taxes or other liabilities accrued as a result of the transaction contemplated
hereby, shall remain the responsibility of Seller. Purchaser shall consider,
but shall not be obligated to offer continuing employment to Seller's employees,
but, in any event, all compensation, fees or commissions, the cost of any
applicable employee benefit plans shall be paid by Seller prior to Closing.
Subsequent to the Closing, Purchaser will make available to Seller, without
charge, two mid-sized automobiles for two years, provided that Seller or its
shareholders shall pay for registration and insurance on such vehicles.
4. Seller and its Shareholders (who have signed this Agreement at the
foot hereof) represent and warrant to Purchaser that Seller at the date hereof
and at the Closing (a) has duly authorized the transaction contemplated hereby;
(b) 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; (c)
has obtained all necessary licenses and permits, which will be available to
Purchaser upon the consummation of the transaction, and (d) has delivered to
Purchaser unaudited financial statements (including balance sheet, profit and
loss statement and cash flow statement) for each of the two years ended December
31, 1997 and the three months ended March 31, 1998, each of which fairly
presents 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. In addition, all federal and state
income tax and other tax liabilities accrued through the Closing, including
liability as a result of the transaction contemplated hereby, shall remain the
responsibility of Seller and its Shareholders
5. The obligations of each party at Closing are subject to (a) the
receipt of all third party consents required to transfer assets, assign leases
or otherwise consummate the transaction, including consents from each
manufacturer whose vehicles are being offered for sale or lease by Seller now or
at the Closing and the consent of Reynolds and Reynolds to the assignment of its
computer lease to Purchaser; (b) the agreement by every manufacturer whose
vehicles are offered for sale or lease by Seller to pay all holdbacks from and
after the Closing to Purchaser and not to Seller if not previously adjusted
pursuant to paragraph 3; (c) the payment by Chrysler Corp. to Purchaser of
$35,000 to be used as moving expenses; (d) the agreement by Chrysler Corp. to
accept from Purchaser, for a full and prompt refund of all amounts theretofore
paid by Seller, automotive parts acquired by Purchaser from Seller, such return
to be permitted on two occasions,once on or, at the option of Purchaser, within
ten days following the Closing and the second on or before the first anniversary
of the Closing; (e) the closing of an initial public offering of Purchaser's
Class A Common Stock; and (f) 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.
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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; and (b) with bulk sales laws or
other assurance that Purchaser has no liability for Seller's obligations other
than those specifically assumed hereunder.
6. The Closing shall be held within 30 days of the satisfaction of the
conditions specified in Section 5 on such date as is reasonably acceptable to
the parties. 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 July 31, 1998.
7. Until Closing the Seller and Purchaser will make available to the
other all information which may be reasonably requested in connection with the
transaction.
8. 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.
9. 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. Seller and its Shareholder
shall cooperate with Purchaser and its auditors in the preparation of such
financial statements.
HOMETOWN AUTO RETAILERS, INC.
By: /s/ Joseph Shaker
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Joseph Shaker, President
Accepted and agreed to
this day of May, 1998
Pride Auto Center, Inc.
By: /s/ Benjamin Graziano
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Benjamin Graziano, Dealer Manager,
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SHAREHOLDERS CONSENT
The undersigned, being the holders of all of Seller's outstanding shares,
hereby consent to the transaction with Purchaser provided for herein and joins,
jointly and severally, in the representations and warranties set forth in
Section 4 above.
/s/ Benjamin Graziano
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