EXHIBIT
99.1
ASSET AND FRANCHISE PURCHASE
AGREEMENT
This Asset and Franchise Purchase Agreement
("Agreement") is made as of December 5, 2005, between
NISSAN OF NATICK, INC . a Massachusetts
corporation with an office and principal place of business at 671
Worcester Road, Natick, Massachusetts 01760 (“Seller”)
and HOMETOWN AUTO RETAILERS, INC. , a Delaware
corporation with a principal place of business at 1309 South Main
Street, Waterbury, Connecticut 06706
(“Buyer”).
WHEREAS , Seller desires to sell, and Buyer desires to
purchase Seller’s Nissan Sales and Service franchise and
certain of Seller’s assets on the terms set forth in this
Agreement;
NOW THEREFORE, in consideration of the
mutual covenants and promises contained
herein and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties,
intending to be legally bound, agree as follows:
As used in this Agreement, the following terms
have the meanings specified or referred to in this Section
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“Applicable Contract”-- any Contract
(a) under which the Company has or may acquire any rights, (b)
under which the Company has or may become subject to any obligation
or liability, or (c) by which the Company or any of its assets is
or may become bound.
“Assets” -- the specific assets of
the Seller being acquired by the Buyer, to wit: the Nissan
Franchise rights, customer lists, business telephone and facsimile
numbers, Nissan point-of-sale materials, Nissan literature and
literature display items and paper copies of the Nissan customer
sales and service records or electronic data facsimile however the
case may be, Nissan Special Tools, Nissan Parts and Accessories and
Nissan New Vehicle Inventory. No other asset of the Seller not
hereinabove specifically described herein shall be included in the
sale.
“Best
Efforts”-- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure
that such result is achieved as expeditiously as possible;
provided, however, that an obligation to use Best Efforts under
this Agreement does not require the Person subject to that
obligation to take actions that would result in a materially
adverse change in the benefits to such Person of this Agreement and
the Contemplated Transactions.
“Bill of
Sale” -- the Bill of Sale in the Form attached hereto as
Exhibit “A” .
“Breach”-- a “Breach” of
a representation, warranty, covenant, obligation, or other
provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or material breach of, or any failure to
perform or comply with, such representation, warranty, covenant,
obligation, or other provision, or (b) any claim (by any Person) or
other occurrence or circumstance that is or was materially
inconsistent with such representation, warranty, covenant,
obligation, or other provision, and the term “Breach”
means any such inaccuracy, breach, failure, claim, occurrence, or
circumstance.
“Buyer” - Hometown Auto Retailers,
Inc.
“Closing” -- as defined in Section
2.5.
“Closing
Date”-- the date and time as of which the Closing actually
takes place.
“Company”-- Nissan of Natick,
Inc.
“Consent”-- any approval, consent,
ratification, waiver, or other authorization (including any
required governmental authorization).
“Contemplated Transactions”-- all of
the transactions contemplated by this Agreement,
including:
(a) the Sale of Seller’s
Franchise;
(b) the sale of the Assets by Seller to Buyer;
and
(c) the
performance by Buyer and Seller of their respective covenants and
obligations under this Agreement.
“Contract”-- any agreement,
contract, obligation, promise, or undertaking (whether written or
oral and whether express or implied) that is legally
binding.
“Encumbrance”-- any charge, claim,
community property interest, condition, equitable interest, lien,
option, pledge, security interest, right of first refusal, or
restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of
ownership.
“Escrow
Agreement” -- the Escrow Agreement in the form attached
hereto as Exhibit G.
“Franchise”-- Nissan North America,
Inc. Sales and Service Franchise.
“GAAP”-- generally accepted United
States accounting principles, applied on a basis consistent with
the basis on which the Balance Sheet and the other financial
statements referred to in Section 3.4(b) were prepared.
“Governmental Body” -- means any
supranational, national, state, municipal, local or foreign
governmental, any instrumentality, subdivision, court,
administrative agency, commission or other authority
hereof.
“Knowledge”-- an individual will be
deemed to have "Knowledge" of a particular fact or other matter
if:
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(a)
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such individual
is actually aware of such fact or other matter; or
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(b)
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a prudent
individual could be expected to discover or otherwise become aware
of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of
such fact or other matter.
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“Legal
Requirement”-- any federal, state, local, municipal, foreign,
international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation,
statute, or treaty.
“Location” -- the proposed location
at which BUYER will run the Franchise known as Bay State
Lincoln-Mercury, Inc., 571 Worcester Road, Framingham, MA
01701.
“Nissan” -- Nissan North America,
Inc.
“Nissan
Special Tools” -- those Nissan tools and test equipment
referenced in Section 2.2(d).
“Nissan
Parts and Accessories” -- all new, unused, undamaged and
returnable parts and accessories listed in the current Nissan Parts
and Accessories catalogues which have a turn history not exceeding
one year referenced in Section 2.2(c).
“Nissan
New Vehicle Inventory” -- all new undamaged 2005 and 2006
Nissan vehicles originally ordered from Nissan for the
Company’s own inventory with less than 250 miles, except any
demonstrator vehicles including, without limitation, those vehicles
in transit to the Seller at the date of Closing.
“Order”-- any award, decision,
injunction, judgment, order, ruling, subpoena, or verdict entered,
issued, made, or rendered by any court, administrative agency, or
other Governmental Body or by any arbitrator.
“Ordinary
Course of Business”-- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" if
such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day
operations of such Person and such action is not required to be
authorized by the board of directors of such Person (or by any
Person or group of Persons exercising similar authority) and is not
required to be specifically authorized by the parent company (if
any) of such Person.
“Organizational Documents”-- (a) the
articles or certificate of incorporation and the bylaws of a
corporation and/or a limited liability company; (b) any charter or
similar document adopted or filed in connection with the creation,
formation, or organization of a Person; and (c) any amendment to
any of the foregoing.
“Person”-- any individual,
corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other
entity or Governmental Body.
“Proceeding”-- any action,
arbitration, audit, hearing, investigation, litigation, or suit
(whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Body or
arbitrator.
“Related
Person”-- with respect to a particular individual:
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(a)
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each other
member of such individual's Family;
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any Person that
is directly or indirectly controlled by such individual or one or
more members of such individual's Family;
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any Person in
which such individual or members of such individual's Family hold
(individually or in the aggregate) a Material Interest;
and
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(d)
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any Person with
respect to which such individual or one or more members of
such individual's Family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity) --
with respect to a specified Person other than an
individual:
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any Person that
directly or indirectly controls, is directly or indirectly
controlled by, or is directly or indirectly under common control
with such specified Person;
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(f)
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any Person that
holds a Material Interest in such specified Person;
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each Person
that serves as a director, officer, partner, executor, or trustee
of such specified Person (or in a similar capacity);
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(h)
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any Person in
which such specified Person holds a Material Interest;
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any Person with
respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity); and
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(f)
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any Related
Person of any individual described in clause (b) or (c).
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For purposes of this definition, (a) the
"Family" of an individual includes (i) the individual, (ii) the
individual's spouse, (iii) any other natural person who is related
to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such
individual, and (b) "Material Interest" means direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting
interests representing at least 10% of the outstanding voting power
of a Person or equity securities or other equity interests
representing at least 10% of the outstanding equity securities or
equity interests in a Person.
“Representative”-- with respect to a
particular Person, any director, officer, employee, agent,
consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial
advisors.
“Securities Act”-- the Securities
Act of 1933 or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
“Seller”-- Nissan of Natick,
Inc.
“Tax”, “Taxes”,
“Taxable” -- means all foreign, federal, state, local
and other taxes of any nature, including but not limited to income,
gross receipts, sales, use, advalorem, value added, transfer,
franchise, license, payroll, employment, property or other taxes,
levies, fees, or assessment of any kind whatsoever.
“Tax
Return”-- any return (including any information return),
report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed
with or submitted to, any Governmental Body in connection with the
determination, assessment, collection, or payment of any Tax or in
connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any
Tax.
“Threatened”-- a claim, Proceeding,
dispute, action, or other matter will be deemed to have been
“Threatened” if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in
writing).
2.
SALE AND TRANSFER OF
FRANCHISE AND ASSETS; CLOSING
Subject to the terms and conditions of this
Agreement, at the Closing, Seller will sell, transfer and assign
(to the extent assignable) all of its right, title and interest in
the Franchise and the Assets to Buyer, and Buyer will purchase the
Franchise and the Assets from Seller. To the extent the Franchise
is not assignable, then Nissan must provide in lieu thereof a new
franchise type agreement between it and Buyer in accordance with
Section 2.7(a)(ii). A Closing for the sale of Assets shall occur
not more than seven (7) days after satisfaction of the
Buyer’s and Seller’s conditions precedent to closing
set forth in sections 6 and 7, but in no event not later than
January 31, 2006.
The purchase price (the "Purchase Price") will
be the aggregate sum of items (a), (b), (c) and (d) as
follows:
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(a)
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$2,000,000 for
the goodwill of the Seller;
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an amount equal
to the net invoice price to Seller, adjusted for dealer installed
equipment at cost, holdback, advertising and floor plan assistance
for the Nissan New Vehicle Inventory purchased by Buyer pursuant
hereto;
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the actual
catalog value of the Nissan Parts and Accessories in Seller’s
stock as of the Closing Date. The approximate current value of the
Nissan Parts and Accessories is estimated at $150,000 which amount
may be less as of the Closing Date. If the parties cannot mutually
agree on the actual catalogue value, then the actual catalog value
shall be determined by an audit prior to Closing by a mutually
agreeable independent third party paid equally by Buyer and Seller
and the price for same shall be adjusted accordingly.
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the scaled
value of the Nissan Special Tools to be valued as: (i) 100% of
acquisition price for current tools less than one year old as of
the Closing Date; (ii) 75% of tools one year, but not less than two
years’ old as of the Closing Date, (iii) 50% for tools two
years’ old, but less than three years’ old as of the
Closing Date; and (iv) 25% for tools three years’ old or more
as of the Closing Date. The approximate current value of the Nissan
Special Tools is $20,000. If the parties cannot mutually agree on
the value of the Nissan Special Tools, the actual value shall be
determined by an audit prior to closing by a mutually agreeable
independent third party paid equally by Buyer and Seller and the
price for same shall be adjusted accordingly.
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BUYER has made
an initial deposit toward the Purchase Price in the amount of FORTY
THOUSAND DOLLARS ($40,000) which is being held by GW Marketing
Services, Gordon G. Wisbach, Jr., (herein referred to as the
“Initial Deposit”) and further agrees that an
additional deposit of ONE HUNDRED THOUSAND DOLLARS ($100,000) shall
be made upon execution of this Agreement (herein referred to as the
“Second Deposit”). The Second Deposit shall be made by
check payable to Seller’s counsel, Gadsby Hannah, LLP, as
Trustee, to be held in Escrow, pending Closing in accordance with
the terms of the Escrow Agreement. Upon full execution of this
Agreement, the Initial Deposit will also be transferred to
Seller’s counsel to hold in accordance with the terms of the
Escrow Agreement.
The Initial Deposit and the Second Deposit
(together the “Deposits”) will be paid to Seller upon
the Closing with a credit to the Buyer for such amounts toward the
satisfaction of the Purchase Price. It is expressly understood that
both Deposits and all interest earned thereon are fully refundable
should there be no Closing due to the fact that any conditions
precedent to BUYER’S obligation to close (as set forth in
Section 6, including but not limited to the contingencies in
Sections 2.7(a) or 6.8) are not met. If there is no Closing, due to
the Buyer’s failure to close except as a result of the
failure of the conditions precedent in Sections 6.8 and 2.7(a),
then the Deposits and all interest earned thereon may be retained
by the Seller and retention of such Deposits shall be
Seller’s sole and exclusive remedy for Buyer’s
Breach.
The Purchase
Price shall be payable as follows:
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The 2,000,000
provided for in Section 2.2(a) plus the value determined for the
Nissan Parts and Accessories pursuant to 2.2(c), plus the value
determined for the Nissan Special Tools pursuant to 2.2(d) shall be
payable in certified funds drawn on Boston area banks or by wire
transfer, less credit to the Buyer for the Deposits made pursuant
to 2.3. Seller may apply a portion of the purchase price to the
payoff existing financing facilities with discharge of any liens
arranged at the Closing between the lenders or their counsel with
arrangements for UCC-3 Termination Statements to be delivered and
filed post-closing.
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The net value
of the Nissan New Vehicle Inventory determined pursuant to 2.2(b),
with payment to be coordinated with Seller’s and
Buyer’s floor plan lenders with payment by Buyer’s
floor plan lenders to Seller’s floor plan lenders effectuated
at the date of Closing. If the net value exceeds the Seller’s
floor plan loan balances the net amount shall be paid by Buyer to
Seller as set forth in Section 2.4(a) above. If Seller’s
floor plan balance exceeds the net value, payment of such balance
shall be Seller’s sole responsibility. It is understood and
agreed that all per car Floor Plan Credits shall remain the
property of Seller except Buyer shall receive Floor Plan Credits on
any non-sold new cars received at Seller’s dealership within
the last fifteen (15) days prior to Closing.
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The Closing will take place at the offices of
Seller’s counsel or at a mutually acceptable location in
accordance with Section 2.1 above. Subject to the provisions of
Section 8, failure to consummate the purchase and sale provided for
in this Agreement on the date and time and at the place determined
pursuant to this Section 2.5 will not result in the termination of
this Agreement and will not relieve any party of any obligation
under this Agreement.
Buyer is
purchasing only those assets specifically described herein. All
other assets of the Seller not specifically included herein shall
remain the property of Seller. Additionally, no purchase of used
vehicles is contemplated as part of this transaction. Buyer is
assuming no liabilities of Seller, and Seller shall be solely
responsible for all its liabilities of any nature, including but
not limited to payments due Seller’s vendors, consultants and
taxing authorities for any Tax, including without limitation sales
and use taxes relating to the operation of Seller’s
business.
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(a)
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Seller will
deliver to Buyer:
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a Warranty Bill
of Sale and other related documents for the Assets including a
recitation that the Assets are being sold free and clear of all
liens and encumbrances;
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Assignment of
Seller’s Franchise Agreement in a form reasonably acceptable
to Buyer and/or Nissan. In the alternative, Seller’s
obligation under this item shall be deemed satisfied if Nissan
shall determine, in its discretion, to issue to Buyer a new
Franchise type Agreement in lieu of permitting an
assignment.
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Such further
documents as are reasonably necessary to effectuate the sale and
transfer of the Assets and Franchise as herein
contemplated.
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Waiver of
Massachusetts Department of Revenue under MGL, Chapter 62C,
Sections 51 and 52.
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(b) Buyer will deliver to Seller:
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A bank
cashier's or certified check (each drawn on Boston area banks) or
wired funds payable to the order of Seller or its designee, in
those amounts determined in accordance with Sections 2.2, 2.3 and
2.4.
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Payment to
Seller’s floor plan lender and/or to Seller as determined in
accordance with Section 2.4(b).
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3.
REPRESENTATIONS AND
WARRANTIES OF SELLER
Seller
represents and warrants to Buyer as follows:
3.1
ORGANIZATION AND GOOD
STANDING
The Company is a corporation duly organized,
validly existing, and in good standing under the laws of
Massachusetts, with full corporate power and authority to conduct
its business as it is now being conducted and to perform all its
obligations under this Agreement.
This Agreement constitutes the legal, valid, and
binding obligation of Seller, enforceable against Seller in
accordance with its terms. Upon the execution and delivery by
Seller of the documents identified in Article 2.7 (collectively,
the “Seller’s Closing Documents”), the
Seller’s Closing Documents will constitute the legal, valid,
and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms. Seller has the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Seller’s Closing Documents and
to perform their obligations under this Agreement and the
Seller’s Closing Documents.
Additionally, neither the execution and delivery
of this Agreement by Seller nor the consummation or performance of
any of the Contemplated Transactions by Seller will give any Person
the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:
(i) any provision of Seller's Organizational
Documents;
(ii) any resolution adopted by the board of directors
or the stockholders of Seller;
(iii) any Legal Requirement or Order to which Seller
may be subject; or
(iv) any Contract to which Buyer is a party or by
which Seller may be bound.
Seller is not and will not be required to obtain
any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions, except for the consent and
approval of Nissan and Seller’s Board of
Directors.
3.3
TITLE TO ASSETS;
ENCUMBRANCES
Except for those obligations to be paid from the
proceeds of sale, Seller has good and marketable title to all the
Assets and the Assets will be conveyed free and clear of all
Encumbrances or rights of any kind in third parties. A complete and
accurate list of the Assets, including the list of customers over
the past five (5) years only, is included in the sale. The customer
list will be provided at the Closing. The customer list shall
include the following information: (1) customer name; (2) mailing
address; (3) telephone number, if any; (4) vehicle identification
number; and (5) date of sale. Seller has delivered or will make
available to Buyer copies of the titles (e.g. invoices and
manufacturer’s certificate of origin) by which the Company
acquired the Nissan New Vehicle Inventory and invoices or other
reasonably acceptable evidence (including computer inventories or
Nissan confirmations) relative to the Nissan Special Tools and
Nissan Parts and Accessories.
There are no,
and by reason of the consummation of the Contemplated Transactions,
there will be no Tax liabilities which could result in any
liability to Buyer or could attach to the Assets. The Company has
filed or will cause to be filed all Tax Returns that are or were
required to be filed. The Company has paid, or made provision for
the payment of, all Taxes that have or may have become due pursuant
to those Tax Returns or otherwise, or pursuant to any assessment
received by Seller or any Company, except such Taxes, if any, as
are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided. To the
best of Seller’s knowledge, all Tax Returns filed by (or that
include on a consolidated basis) the Company are true, correct, and
complete in all material respects. There is no tax sharing
agreements that will require any payment by the Company after the
date of this Agreement. Evidence that Seller’s sales tax
obligations through December 31, 2005 have been met shall be
provided at Closing. Funds shall be placed in escrow at Closing
with Seller’s counsel, Gadsby Hannah, LLP, in an amount equal
to 125% of the monthly average of Seller’s previous quarter
sales tax returns on parts and service to be applied to any sales
tax due and owing. Gadsby Hannah, LLP is authorized to apply the
escrowed funds to the sales taxes due for the month that Closing
occurs and may remit any balance to the Seller.
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