-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BdhPBIlflG+Mw4Q6QwSkLOHkUd+Tw4lwDNlJT4yiuIGupJV6+zR/WduWDRHFMOg5 9XwWz9hLMCE2qDFiRkXXBw== 0001032210-98-001141.txt : 19981019 0001032210-98-001141.hdr.sgml : 19981019 ACCESSION NUMBER: 0001032210-98-001141 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981001 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981016 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTAMERICA AUTOMOTIVE INC /DE/ CENTRAL INDEX KEY: 0000766886 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO DEALERS & GASOLINE STATIONS [5500] IRS NUMBER: 880206732 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 002-97254-NY FILM NUMBER: 98727022 BUSINESS ADDRESS: STREET 1: 601 BRANNAN STREET STREET 2: C/O S EDMUND RESCINITI CITY: SAN FRANCISCO STATE: CA ZIP: 94107 BUSINESS PHONE: 7023294990 MAIL ADDRESS: STREET 1: 601 BRANNAN STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94107 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC NATIONAL VENTURE INC DATE OF NAME CHANGE: 19980501 8-K 1 FORM 8-K FOR FIRSTAMERICA AUTOMOTIVE, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 1, 1998 ------------------ FIRSTAMERICA AUTOMOTIVE, INC. (Exact name of registrant as specified in its charter) DELAWARE 2-297254-NY 88-0206732 (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation or organization) Identification No.) 601 BRANNAN STREET SAN FRANCISCO, CA 94107 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 284-0444 (Former name, former address and former fiscal year, if changed since last report) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS (a) On October 1, 1998 FirstAmerica Automotive, Inc. (the "Company") completed the acquisition of an authorized Toyota automobile dealership commonly known as Concord Toyota located in Concord, California. Pursuant to a Stock Purchase Agreement dated July 17, 1998 (the "Purchase Agreement") by and between the Company, the Graybehl Family Trust (the "Seller") and Vacation Motors, Inc., the operator of the dealership ("Vacation Motors"), the Company acquired all of the outstanding capital stock of Vacation Motors (the "Shares") from the Seller. The purchase price ("Purchase Price") of the Shares was $12.6 million, which was paid in cash. The Company funded $12.0 million of the Purchase Price from borrowings under an existing lending agreement with Trust Company of the West, a financial company, which is also a significant investor in the Company, and the balance of the Purchase Price ($0.6 million) was funded by the Company's working capital. The Seller's trustee is the father of Steven S. Hallock, an officer of the Company. The Company believes it purchased the Corporation under terms no less favorable to the Company than those arranged with other parties. In connection with the transaction, the Company issued options to purchase 100,000 shares of Class A Common Stock at an exercise price of $2.00 per share to Mr. Hallock, in accordance with the terms of his employment agreement with the Company. (b) Vacation Motors is a corporation specializing in the sale of new and used automobiles and replacement parts and used its inventory, equipment and other assets in such capacity. The Company intends to use these assets in the same capacity. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Pursuant to Item 7(a)(4) of Form 8-K, the financial statements of Vacation Motors required pursuant to Rule 3-05 of Regulation S-X will be filed as soon as practicable, but no later than December 15, 1998. (b) Pursuant to Item 7(a)(4) of Form 8-K, the pro forma financial information of Vacation Motors required pursuant to Article 11 of Regulation S-X will be filed as soon as practicable, but no later than December 15, 1998. (c) The following exhibits are attached hereto and filed herewith: 2.1/(1)/ Stock Purchase Agreement dated as of July 17, 1998 by and between the Company, Vacation Motors and the Graybehl Family Trust. 2.2 First Amendment to Stock Purchase Agreement dated as of October 1, 1998 by and between the Company, Vacation Motors and the Graybehl Family Trust. 2.3 Second Amendment to Stock Purchase Agreement dated as of October 13, 1998 by and between the Company, Vacation Motors and the Graybehl Family Trust. /(1)/ Exhibits to the Stock Purchase Agreement not filed herewith are identified in the Stock Purchase Agreement. The Company will furnish any omitted Exhibits to the Commission upon request. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: October 16, 1998 FIRSTAMERICA AUTOMOTIVE, INC. By: /s/ Debra Smithart ------------------ Debra Smithart Chief Financial Officer EX-2.1 2 STOCK PURCHASE AGREEMENT 7/17/98 EXHIBIT 2.1 STOCK PURCHASE AGREEMENT THIS AGREEMENT is made and entered into this 17th day of July 1998, by and between Graybehl Family Trust, dated March 22, 1978 (the "Seller"), Concord Toyota Sales, Inc., a California corporation (the "Corporation") and FirstAmerica Automotive, Inc., a Delaware corporation (the "Purchaser"). R E C I T A L S WHEREAS, the Corporation owns and operates an authorized Toyota automobile dealership commonly known as Concord Toyota (the "Dealership") located at 1090 Concord Avenue, Concord, California (the "Premises"). WHEREAS, Seller owns 100% of the total outstanding capital stock of the Corporation. WHEREAS, Purchaser desires to acquire all of the shares of capital stock of the Corporation held by the Seller in accordance with and subject to the terms and conditions set forth herein. NOW, THEREFORE, in recognition of the representations set forth above and in consideration of the mutual covenants hereafter contained, the parties hereto agree as follows: A G R E E M E N T 1. INCORPORATION OF RECITALS. The recitals set forth hereinabove are -------------------------- incorporated herein by this reference. 2. STOCK PURCHASE. Subject to the terms and conditions set forth in this --------------- Agreement, Seller agrees to convey, transfer, assign and deliver to Purchaser, and Purchaser agrees to acquire from Seller, all of the shares of the capital stock of the Corporation held by Seller which represents 100% of the outstanding shares of Capital Stock of the Corporation (the "Shares"). 3. PURCHASE PRICE. --------------- 3.1 AMOUNT. Subject to adjustments as set forth in Section 3.3 herein below, Purchaser shall pay to Seller as consideration for the acquisition of the Shares hereunder, the sum of TWELVE MILLION DOLLARS ($12,000,000). 3.2 PAYMENT OF PURCHASE PRICE. The purchase price to be paid by Purchaser pursuant to this Agreement shall be paid as follows: 3.2.1 Within three (3) business days of execution of this Agreement by Purchaser and Seller, Purchaser shall cause the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000) (the "Deposit") to be delivered to Escrow Holder as hereinafter defined. The Deposit shall be held 1 by the Escrow Holder in an interest bearing account, and shall be applied to the benefit of Purchaser toward the purchase price of the Dealership upon Closing. If escrow does not close, and this Agreement is terminated pursuant to Section 23, the Deposit, together with all accrued interest, shall be disbursed to Purchaser, unless the provisions of Section 27 are applicable, in which case the disposition of the Deposit shall be governed by the provisions of Section 27. 3.2.2 The balance of the purchase price shall be paid in cash on the Closing Date. 3.3 CLOSING VALUE. Seller shall cause the Corporation to have a Closing Value (as defined below) as of the Closing Date (as defined below) equal to the sum of TWO MILLION TWO HUNDRED THOUSAND DOLLARS ($2,200,000) provided, however, in the event the Closing Value as determined pursuant to the Closing Balance Sheet (as defined below) is not equal to TWO MILLION TWO HUNDRED THOUSAND DOLLARS ($2,200,000), Purchaser shall receive a credit against the Purchase Price payable hereunder in an amount equal to the difference between TWO MILLION TWO HUNDRED THOUSAND DOLLARS ($2,200,000) and the Closing Value. Closing Value shall be the net worth of the Corporation as reflected on the Closing Balance Sheet provided for herein below (the "Closing Value"). The Closing Balance Sheet shall include the assets and liabilities of the Corporation calculated as of the close of business on the day immediately preceding the Closing Date (the "Closing Balance Sheet"). The Closing Balance Sheet shall be in the form attached hereto as Schedule 3.3-A. The Closing Value as reflected on the Closing Balance Sheet shall be the value of all assets which assets shall be calculated in accordance with the provisions of Schedule 3.3-B attached hereto excluding the Excluded Assets (as defined below) minus the amount of all liabilities of the Corporation including, but not limited to all payables, floor plan obligations (including accrued interest), payroll (including vacation pay), real property taxes, federal and state income taxes, local taxes accrued as of the Closing Date. 3.4 EXCLUDED ASSETS. In preparing the Closing Balance Sheet, the following assets shall be excluded and shall be retained by Seller: (a) the value of the condominium on the books of the Corporation together with any other non-franchise assets held in Account 294; (b) receivables from affiliate companies of Seller; and (c) other prepaid expenses not in the ordinary business of the Corporation. The Corporation shall also pay in full prior to determining the Closing Balance Sheet any capital loans or any loans due Seller or affiliates of Seller. 3.5 INVENTORIES. As of the close of business on the day immediately preceding the Closing Date or on such other date as mutually agreed upon by Purchaser and Seller, a physical inventory to determine the value of the new, used and demonstrator vehicles, and work-in-progress shall be taken jointly by the parties. Each party shall bear the expenses associated with its own personnel in connection with the valuation of the assets. The parties shall jointly employ an independent inventory service to take a parts and accessories inventory immediately prior to the Closing. The cost of such inventory shall be paid one-half by Purchaser and one-half by Seller. 3.6 FINANCE, WARRANTY AND FACTORY RESERVE ACCOUNT. The parties acknowledge and agree that Seller shall deposit the amount of TWO HUNDRED THOUSAND DOLLARS ($200,000) in a reserve account (the "Reserve Account") which shall be held in an interest bearing account to pay any finance, warranty or factory receivables chargebacks from and after the Closing Date related to contracts or receivables outstanding as of the Closing Date. Such Reserve Account shall be held 2 in an account which will be subject to mutual signatory authority of Purchaser and Seller. The Reserve Account, including all interest accrued, shall be disbursed to the Corporation on a monthly basis to cover any such finance, warranty or factory sums due and owing. At the end of Twenty-four (24) months, any amount remaining in the Reserve Account, after a further reserve for any balance of anticipated liability, shall be the property of Seller. Except as provided for in Section 13.4 herein below, the parties acknowledge and agree that the Reserve Account shall limit Seller's liability for any and all finance, warranty and factory chargebacks obligations. 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and -------------------------------------------- warrants to Seller as follows: 4.1 POWER AND AUTHORITY. Purchaser has the requisite power and authority to enter into and perform this Agreement. This Agreement has been (and each other agreement, document or instrument contemplated hereby, will at or prior to the Closing will be) duly executed and delivered by the Purchaser. No approvals or consents of any person or entity other than the Purchaser are necessary in connection with the Purchaser's power and authority to perform its obligations pursuant to this Agreement. This Agreement constitutes (and at the Closing, each other agreement, document or instrument contemplated hereby will constitute) the legal, valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms. 4.2 NO MISREPRESENTATION. None of the representations and/or warranties made by the Purchaser hereunder contains or will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they are made, not misleading. 4.3 EFFECT OF AGREEMENT. The execution, delivery and performance by Purchaser of this Agreement, and the consummation of the transactions herein contemplated, will not result in a violation of any law or regulation of any governmental authority, and the execution, delivery and performance by Purchaser of this Agreement, and the consummation by it of the transactions herein contemplated, will not result in a breach of the terms of, or constitute a default under or violation of, any provision of the Articles of Incorporation or Bylaws of Purchaser or any statute or regulation, order, judgment or court decree or any agreement or instrument to which Purchaser is a party or by which it is bound or to which it is subject. 5. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE CORPORATION. The parties ------------------------------------------------------------ acknowledge and agree that all representations and warranties of Seller shall constitute representations of L. Vaughn Graybehl, the trustor and trustee of Seller. The Seller and the Corporation jointly and severally represent and warrant to the Purchaser as follows: 5.1 POWER AND AUTHORITY. The Seller and the Corporation have the requisite power and authority to enter into and perform this Agreement and to convey and transfer the capital Shares of the Corporation as provided in this Agreement. This Agreement has been (and each other agreement, document or instrument contemplated hereby, will at or prior to the Closing will be) duly executed and delivered by the Seller and the Corporation. No approvals or consents of any person or entity is necessary in connection with Seller's and the Corporation's power and authority to perform their respective obligations pursuant to this Agreement. This Agreement constitutes (and at the Closing, 3 each other agreement, document or instrument contemplated hereby will constitute) the legal, valid and binding obligation of the Seller and the Corporation enforceable against Seller and the Corporation in accordance with its terms. 5.2 CORPORATE ORGANIZATION AND GOOD STANDING. The Corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of California, and is duly authorized, qualified, and licensed under all applicable laws, regulations, ordinances and orders of public authorities to carry on its business in the places and in the manner as now conducted. 5.3 ARTICLES OF INCORPORATION, BY-LAWS AND MINUTE BOOKS. True, complete and correct copies of the Articles of Incorporation and By-Laws of the Corporation, each as amended to date, will be furnished to Purchaser within ten (10) business days of execution of this Agreement. The stock records and minute books of the Corporation contain true and complete minutes and records of all meetings, proceedings and other actions of the stockholders and directors of the Corporation from the date of organization. 5.4 AUTHORIZED CAPITALIZATION. The number of issued and outstanding shares of stock of the Corporation acquired by Purchaser represents all of the outstanding shares of capital stock of the Corporation. All issued and outstanding shares of the Corporation are owned by the Seller and are validly issued and outstanding, fully paid and non-assessable, free and clear of all liens, security interests, pledges, charges, voting trusts, equities, restrictions, encumbrances and claims of every kind. All of the outstanding shares of the Corporation were offered, issued, sold and delivered by the Corporation in compliance with all applicable state and federal laws concerning the issuance of securities. The Corporation does not have any outstanding options, warrants, rights or other securities, plans, contracts or agreements which give the holder thereof or any other person the right to purchase any shares of the Corporation's capital stock or which are convertible into or exercisable for any shares of such capital stock or under which any such option, warrant, or right or security may be issued in the future. The Corporation does not have any obligation, whether contingent or otherwise, to purchase, redeem, or otherwise acquire any of its equity securities or interests therein or pay a dividend or make any distribution with respect thereto. 5.5 UNIONS. Except as set forth on Schedule 5.5 attached hereto and incorporated herein by this reference, the Corporation is not a party to any arrangement with any union, and no employees of the Corporation are represented by any labor union or covered by any collective bargaining agreement, nor, to the actual knowledge of the Seller, is any effort to establish such representation in progress. There is no pending or, to the actual knowledge of the Seller, threatened labor dispute involving the Corporation or any of its employees. 5.6 INSURANCE. Set forth on Schedule 5.6 attached hereto and incorporated herein by this reference is an accurate list, as of the date of this Agreement, of all insurance policies of the Corporation, including an accurate list of all insurance losses, including workers' compensation claims, of the Corporation for the past three policy years. 5.7 EMPLOYEE PLANS. Set forth on Schedule 5.7 attached hereto and incorporated herein by this reference is a complete and accurate list of all employee benefit plans, including without 4 limitation, all pension, profit sharing, deferred compensation, bonus, and multi-employer plans and other plans currently maintained or sponsored by the Corporation, or to which the Corporation contributes or has an obligation to contribute in the future. To the actual knowledge of the Seller, each of the plans referenced on Schedule 5.7 attached is in substantial compliance with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). To the actual knowledge of Seller no plan has incurred an accumulated funding deficiency, as defined for purposes of the Internal Revenue Code and ERISA, and the Corporation does not have any direct or indirect obligation or liability to the Pension Benefit Guaranty Corporation or to the Internal Revenue Service for any excise tax or penalty. To the actual knowledge of Seller neither the Corporation nor any ERISA Affiliate (i.e., each business which is treated together with the Corporation as a single employer under Section 4001(a)(14) of ERISA or Internal Revenue Code Section 414(b), (c), (m), (n) or (o)) has incurred or expects to insure any withdrawal liability to any multi-employer plan. 5.8 LITIGATION; CONFORMITY WITH THE LAW. Except as set forth on Schedule 5.8 attached hereto and incorporated herein by this reference, there are no claims, actions, suits or proceedings, pending or, to the actual knowledge of the Seller, threatened against or affecting the Corporation or any of its properties at law or in equity, or before or by any federal, state, municipal, or any other governmental department, commission, board, bureau, agency, or instrumentality, having jurisdiction with respect to the Corporation, and no notice of any claim, action, suit, or proceeding, whether pending or threatened, has been received. The Corporation has conducted its business in substantial compliance with all federal, state and local statutes, ordinances, permits, licenses, orders, variances, rules and regulations. Except as set forth on Schedule 5.8, the Corporation is not subject to any order or judgment issued by any Court or federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality. 5.9 ENVIRONMENTAL COMPLIANCE NOTICES. Seller and Corporation have received no written notice advising them of any defects, defaults or non- compliance in connection with the Corporation's assets pursuant to the laws, rules and regulations from any governmental agency dealing with environmental laws, except notices which have been previously complied with or waived by the government agency. 5.10 REPRESENTATIONS AND WARRANTIES ON CLOSING DATE. The representations and warranties of the Seller contained in this Agreement shall be true and correct in all material respects to the best of Seller's actual knowledge on and as of the Closing Date with the same force and effect as though such representations and warranties had been made on and as of the Closing Date. 5.11 TITLE TO STOCK OF SELLER. The Seller has good title to all of the Shares held by the Seller. All of the Shares are free and clear of restrictions on or conditions to transfer or assignment, other than any restrictions imposed by any governmental agency, and are free and clear of all mortgages, liens, options, pledges, charges, encumbrances, equities, claims, easements or restrictions. 5.12 TITLE TO ASSETS, LIENS AND ENCUMBRANCES. The assets of the Corporation are free and clear of all security interests, liens, claims, restrictions, equities and encumbrances whatsoever other than as set forth in Schedule 5.12 attached hereto. All the furniture, fixtures and equipment 5 owned by the Corporation shall be in substantially the same condition as the furniture, fixtures and equipment are at the expiration of the Due Diligence period provided for in Section 7.6 herein below. 5.13 REAL PROPERTY LEASES. The Corporation has the right to occupy the premises at 1090 Concord Avenue, Concord, Concord, California pursuant to a lease attached hereto as Schedule 5.13. Neither the Corporation or the Landlord is in default under the terms of such lease. 5.14 FINANCIAL REPORTS. Seller has delivered to Purchaser dealer financial statements for the Corporation for the calendar years 1996, 1997 and April 1998 (collectively, "Dealer Financial Statements"). The Dealer Financial Statements have been prepared in accordance with past practices of the Corporation, and are true and correct in all material respects as of the date specified therein. 6. CONDUCT PRIOR TO CLOSING DATE. 6.1 ONGOING OPERATIONS. From the date hereof to the Closing, Seller will use its best effort to preserve intact the assets of the Corporation and to continue to operate the Dealership as a going concern, including, but not limited to, maintaining commercially reasonable inventories. Seller will not cause the Corporation to dispose of any of its assets except in the ordinary course of business consistent with past practices, and will not, without limiting the foregoing, hold a "going-out-of-business" or "liquidation" sale. 6.1.1 APPROVALS. Each of Purchaser and Seller will use its best efforts to obtain all permits, approvals, authorizations and consents of third parties necessary or desirable for the consummation of the transactions contemplated by this Agreement. Purchaser and Seller shall proceed as promptly as practicable after the date hereof to prepare all materials necessary to obtain the consent of the Franchisor as is necessary for Purchaser to consummate the transaction contemplated hereby. 6.1.2 COVENANT TO COMPLY. Each of Seller, the Corporation, and Purchaser shall not take any action or fail to take any action which will make any of their representations and warranties not true and correct in all material respects on the Closing Date. Each of Seller, Corporation, and Purchaser shall use their best efforts to satisfy or cause to be satisfied all of the conditions precedent to the other parties' obligations hereunder. Each party shall give prompt written notice of any material change in any of the information contained in the representations and warranties made in Sections 4 and 5 hereof or the schedules referred to herein which occur prior to the Closing Date; provided, however, except as otherwise provided in Sections 4 and 5, that any change in the information contained in the representations and warranties or schedules will not relieve the other party of any obligations hereunder if such changes result in a breach of the representations and warranties contained herein. 7. CONDITIONS TO PURCHASER'S OBLIGATIONS TO CLOSE. The obligations of ---------------------------------------------- Purchaser under this Agreement are subject to fulfillment of the conditions set forth below. Purchaser shall have the right to waive in writing all or part of any one or more of the following conditions without releasing Seller or the Corporation from any liability for any loss or damage sustained by Purchaser by reason of the breach by Seller or the Corporation of any covenant, obligation or agreement contained herein, or 6 by reason of any misrepresentation made by Seller or the Corporation and upon such waiver may proceed with the transactions contemplated by this Agreement. 7.1 AGREEMENTS AND CONDITIONS. On or before the Closing Date, Seller and the Corporation shall have complied with and duly performed in all material respects all agreements and conditions on their part to be complied with and performed pursuant to or in connection with this Agreement, including the delivery of all items set forth in Section 9.1 hereof. 7.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties of Seller and the Corporation contained in this Agreement, or otherwise made in writing in connection with the transactions contemplated hereby, shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as though such representations and warranties had been made on and as of the Closing Date. 7.3 NO LEGAL PROCEEDINGS. No action or proceeding shall have been instituted or threatened to restrain or prohibit the acquisition by Purchaser or the conveyance by Seller of the Shares or which might result in any material adverse change in the business, prospects or financial or other condition of the Corporation. 7.4 LOSS, DAMAGE OR DESTRUCTION. Between the date hereof and the Closing Date, there shall not have been any material loss, damage or destruction of the assets of the Corporation, and there shall have been no development which would have a material adverse effect on the Corporation. 7.5 CONSENTS. Purchaser shall have received the written approval of Toyota Motor Corporation U.S.A. ("Franchiser") designating the Corporation with Purchaser as owner as the duly authorized dealer for the sales and service of such Franchiser's automobiles at 1090 Concord Avenue, Concord, California, free of any material condition which is adverse to Purchaser, and Purchaser and Franchiser shall have entered into a customary dealer sales and service agreement. All permits and licenses necessary to enable Purchaser to conduct the Franchise and service facilities shall have been obtained. All other requisite consents and approvals shall have been obtained. 7.6 DUE DILIGENCE. Purchaser shall have the right to and including August 14, 1998 to review the books and records of the Corporation, the physical condition of the Corporation property and any other items reasonably necessary or appropriate to evaluate the Corporation. Such review shall be done at times and locations as mutually agreed between Purchaser and Seller provided that Purchaser shall use all reasonable efforts to have such review of books and records at locations away from the Corporation. Seller shall cooperate and provide such information reasonably necessary for Purchaser to conduct such due diligence review to and including August 14, 1998. Purchaser will use its best efforts to have no more than three (3) representatives on the Premises of the Corporation at any one time. In the event Purchaser does not approve of the physical condition of the Corporation and the review of the books and records by written notice to Seller on or before August 14, 1998, this Agreement shall terminate with all deposits (if any shall have been made) returned to Purchaser and no further rights or obligations to either party. 7 7.7 ENVIRONMENTAL ASSESSMENT. From the date of execution of this Agreement to and including August 14, 1998 (the "Testing Period"), Purchaser may conduct an environmental assessment (the "Environmental Assessment") of the real property at the Corporation (the "Real Property"). Expenses of any environmental consultant engaged by Purchaser and Seller to conduct the Environmental Assessment shall be paid one half by Purchaser and one half by Seller provided that Seller shall only be obligated to pay its share of the expenses to a maximum of FIVE THOUSAND DOLLARS ($5,000). Purchaser may terminate all of its obligations under this Agreement by written notice to Seller on or before the expiration of the Testing Period, if Purchaser determines that a release or threatened release of a hazardous substance has occurred on the Real Property. Failure to timely notify Seller under this Section 7.7 is deemed to constitute a waiver of Purchaser's right to terminate this Agreement under this Section 7.7. 7.8 DELIVERY OF SCHEDULES. Seller shall prepare and deliver to Purchaser the schedules specified in Sections 5.5, 5.6, 5.7, 5.8, and 5.12 of this Agreement not later than 5:00 p.m. Pacific Time on the date fifteen (15) business days following execution of this Agreement. All other schedules specified in this Agreement shall be attached at the Closing. 8. CONDITIONS OF SELLER'S OBLIGATIONS TO CLOSE. The obligations of Seller under this Agreement are subject to fulfillment of the conditions set forth below. Seller shall have the right to waive in writing all or part of any one or more of the following conditions without, however, releasing Purchaser from any liability for any loss or damage sustained by Seller by reason of the breach by Purchaser of any covenant, obligation or agreement contained herein, or by reason of any misrepresentation made by Purchaser and upon such waiver may proceed with the transactions contemplated by this Agreement. 8.1 AGREEMENTS AND CONDITIONS. On or before the Closing Date, Purchaser shall have complied with and duly performed in all material respects all of the agreements and conditions on its part required to be complied with or performed pursuant to this Agreement, including the delivery of all items set forth in Section 9.2 below. 8.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. The representations and warranties of Purchaser contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as though such representations and warranties had been made on and as of the Closing Date. 9. DELIVERIES AND PROCEEDINGS AT CLOSING. 9.1 DELIVERIES BY SELLER. Seller shall deliver or cause to be delivered to Buyer at the Closing: 9.1.1 Stock certificates (or lost stock certificate affidavits with indemnification provisions in form and substance acceptable to Buyer covering any lost or destroyed certificates) representing all of the Shares, free and clear of all Encumbrances, duly endorsed in blank by the record holders thereof. 8 9.1.2 A Certificate of the Secretary of State for the State of California to the effect that the Corporation is a validly existing corporation in good standing in the State of California as of a date not more than twenty (20) days prior to the Closing Date. 9.1.3 True and correct copies of (a) the Governing Documents (other than the bylaws) of the Corporation as of a date not more than twenty (20) days prior to the Closing Date, certified by the Secretary of the Corporation; and (b) the bylaws of the Corporation as of the Closing Date, certified by the Secretary of the Corporation. 9.1.4 General releases of all officers and directors of the Corporation and Seller releasing all liability of the Corporation of any claim that they or any of them may have against the Corporation. 9.1.5 The minute books, stock ledgers and corporate seal of the Corporation. 9.1.6 Resignations of the officers and directors of the Corporation effective at the Closing. 9.1.7 Such other agreements and documents as Purchaser may reasonably request. 9.2 DELIVERIES BY PURCHASER. Purchaser shall deliver or cause to be delivered to the Corporation and Seller at the Closing: 9.2.1 Cash in the amount of the Purchase Price. 9.2.2 Incumbency and specimen signature certificates signed by the officers of the Purchaser and certified by the Secretary of Purchaser. 9.2.3 The payment in full of the Floor Plan Financing of the Corporation and the release of Seller as a guarantor of the Floor Plan Financing in favor of Bank of America, N.T.S.A. 9.2.4 Such other agreements and documents as Sellers may reasonably request. 100 NO OTHER REPRESENTATIONS. Except as specifically set forth herein, no ------------------------- party to this Agreement makes any representations or warranties. 110 CLOSING. Provided that the conditions set forth in Sections 6 and 7 above -------- are satisfied or waived, the closing of this transaction (the "Closing" or the "Closing Date") shall take place on September 30, 1998. 120 COVENANTS AFTER CLOSING DATE. ----------------------------- 12.1 TRANSFER OF ACQUIRED ASSETS. Seller agrees, at any time and from time to time after the Closing Date, upon the request of Purchaser, to do, execute, acknowledge and deliver, or to cause to be done, executed, acknowledged and delivered, all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and assurances as may be required for the better assigning, transferring, conveying, and confirming to the Corporation, or to its successors and 9 assigns, or for the aiding, assisting, collecting and reducing to possession of, any or all of the assets of the Corporation as provided herein. 12.2 COOPERATION. Seller will cooperate and use its best efforts to cooperate with Purchaser at Purchaser's request, on and after the Closing Date, in furnishing information, evidence, testimony and other assistance in connection with any actions, proceedings, arrangements or disputes involving Purchaser and based upon contracts, arrangements, commitments or acts of the Corporation which were in effect or occurred on or prior to the Closing Date. From and after the Closing Date, Seller will permit Purchaser and its representatives to have access to the Corporation's books and records relating to the Dealership for periods prior to the Closing Date. Seller shall assist Purchaser after the Closing with audits required in connection with any public filings of the Purchaser provided Seller shall not be required to expend funds or institute litigation. 130 INDEMNIFICATION. ---------------- 13.1 INDEMNIFICATION BY SELLER. Seller agrees to indemnify and hold harmless Purchaser and the Corporation from and against any and all losses, costs, damages, claims and expenses (including reasonable attorney's fees) which Purchaser or the Corporation may sustain at any time by reason of (a) any debt, liability, or obligation of the Corporation not reflected on the Closing Balance Sheet prepared in accordance with Section 3.3 hereinabove except other obligation assumed by Purchaser; (b) any liability to any federal, state or local taxing authorities for any taxes for the period prior to the date of Closing due or owing by the Corporation including interest or penalties which obligations are not reflected on the Closing Balance Sheet prepared in accordance with Section 3.3 hereinabove except other obligation assumed by Purchaser; (c) any lawsuit pending as of the date of Closing and/or filed thereafter if related to any act or omission of the Corporation or Seller prior to the date of Closing; (d) any presence of hazardous materials or toxic substances located as of the Closing Date in or around the Premises including without limitation any such materials related to the underground storage tanks except related to underground hoists; or (e) the breach or inaccuracy of or failure to comply with, or the existence of any facts resulting in the inaccuracy of, any of the warranties, representations, covenants or agreements of Seller contained in this Agreement or in any agreement or document delivered pursuant hereto or in connection herewith or with the closing of the transactions contemplated hereby, provided that Purchaser makes a written claim for indemnification against Seller pursuant to Section 17 within the Survival Period. 13.2 INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify and hold harmless Seller from and against any and all losses, cost, damages, claims and expenses (including reasonable attorneys' fees) which Seller may sustain at any time by reason of (a) any debt, liability or obligation of Purchaser, (b) any liability or obligation of any kind relating to the operations of the Corporation or the Dealership on or after the Closing Date, or (c) the breach or inaccuracy of or failure to comply with, or the existence of any facts resulting in the inaccuracy of, any of the warranties, representations, covenants or agreements of Purchaser contained in this Agreement or in any agreement or document delivered pursuant hereto or in connection herewith or with the closing of the transactions contemplated hereby. 13.3 DEFENSE. Any party who receives notice of a claim for which it will seek indemnification shall promptly notify the indemnifying party in writing of such claim. The 10 indemnifying party shall have the right to assume the defense of such action at its cost with counsel reasonably satisfactory to the indemnified party. Any settlement shall require the approval of the indemnified party at no cost to said party. The indemnified party shall have the right to participate in such defense with its own counsel at its cost. 13.4 LIMITATIONS. The parties acknowledge and agree that Purchaser shall have the right to repair automobiles sold and/or serviced by Corporation to correct miscellaneous customer complaints that Purchaser determines in Purchaser's reasonable judgment are an obligation of Corporation provided that the total of all such repairs without Seller's prior approval shall not exceed the sum of TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500). Notwithstanding any other provision of this Agreement, Seller shall not be liable to Purchaser for breach of, or failure to perform any, warranty, representation, or covenant made by Seller or Corporation in this Agreement, or under any of their indemnities in this Agreement, until the Purchaser has suffered Adverse Consequences by reason of all such breaches in excess of a TEN THOUSAND DOLLARS ($10,000) aggregate deductible (after which point the Seller will be obligated only to indemnify the Purchaser from and against further such Adverse Consequences to the extent the Adverse Consequences the Purchaser has suffered by reason of all such breaches do not exceed a TWO HUNDRED THOUSAND DOLLARS ($200,000) aggregate ceiling, which aggregate ceiling is over and above the TWO HUNDRED THOUSAND DOLLARS ($200,000) held in the Reserve Account pursuant to Section 3.6 herein above, after which point the Seller will have no obligation to indemnify the Purchaser from and against further such Adverse Consequences). "Adverse Consequences" means all actions, suits, proceedings, hearings, investigations, finance, warranty or factory receivables chargebacks, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, liabilities, obligations, taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys' fees and expenses. 140 CONSULTING. In consideration of consulting services to provided by Seller to Purchaser which consulting services shall be set forth on Schedule 14 attached hereto, Purchaser shall reimburse Seller for the cost of two (2) automobiles including maintenance for the period of three (3) years up to the total monthly cost of ONE THOUSAND TWO HUNDRED DOLLARS ($1,200). In addition thereto, Purchaser shall cause the Corporation to reimburse Seller the costs of medical, dental and vision insurance for such three (3) year period. 150 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties hereto agree that ------------------------------------------- the representations and warranties contained herein and the obligations set forth in Sections 6 and 7 hereof shall survive the execution and delivery hereof and the Closing hereunder for a period of two (2) years subsequent to the Closing. 160 FURTHER ASSURANCES. The parties hereto each agree to execute such other ------------------- documents or agreements as may be necessary or desirable for the implementation of this Agreement and the consummation of the transactions contemplated hereby. 170 NOTICES. Any notice or other communication required or permitted to be -------- given under this Agreement ("Notices") shall be in writing and shall be (a) personally delivered; (b) delivered by a reputable overnight courier; or (c) delivered by certified mail, return receipt required and deposited in the U.S. Mail, postage prepaid. Notices shall be deemed received at the earlier of actual receipt 11 or (a) one (1) business day after deposit with an overnight courier as evidenced by a receipt of deposit; or (b) three (3) business days following deposit in the U.S. Mail, as evidenced by a return receipt. Notices shall be directed to the parties at their respective addresses shown below and to the Escrow Holder at the address shown below or such other address as either party may, from time to time, specify in writing to the other in the manner described above: THE PURCHASER: FirstAmerica Automotive, Inc. 601 Brannan Street San Francisco, CA 94107 Attn: Thomas A. Price Fax No.: (415) 808-4838 WITH COPY TO: W. Bruce Bercovich, Esq. Kay & Merkle 100 The Embarcadero, Penthouse San Francisco, California 94105 Fax No.: (415) 512-9277 THE SELLER: L. Vaughn Graybehl, Trustee Graybehl Family Trust 3405 Deer Ridge Drive Danville, CA 94506 Fax No.: (925) 648-3437 TO CORPORATION: Concord Toyota Sales, Inc. 1090 Concord Avenue Concord, CA 94520 Attn: L. Vaughn Graybehl Fax No.: (925) 609-7613 WITH COPY TO: Nickolas P. Tooliatos, II Hallgrimson McNichols McCann LLP 5000 Hopyard Road, Suite 400 Pleasanton, CA 94588 Fax No.: (925) 460-0969 180 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between ----------------- the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations and understandings of the parties. 190 INUREMENT. This Agreement shall be binding on and shall inure to the --------- benefit of the parties hereto, their respective heirs, legal representatives, successors and assigns. 12 200 CALIFORNIA LAW. This Agreement shall be governed by and be construed -------------- according to the laws of the State of California. 210 ATTORNEYS' FEES. In the event of any litigation or arbitration between the ---------------- parties, the prevailing party shall be entitled to recover reasonable attorneys' fees and all other costs and expenses incurred in connection with such litigation or arbitration. 220 SEVERABILITY. If any provision of this Agreement or the application of any ------------- provision hereof to any person or circumstance is held invalid, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected unless the provision held invalid shall substantially impair the benefits of the remaining portions of this Agreement. 230 TERMINATION. If the Closing Date shall not have occurred on or prior to ----------- September 30, 1998 or if Purchaser shall receive disapproval from the Franchiser prior thereto, any party that is not in default in the performance of its obligations under this Agreement may, thereafter, terminate this Agreement by giving written notice to the other party. 240 CONFIDENTIALITY. Unless and until the transactions contemplated by this --------------- Agreement are consummated, Purchaser agrees to maintain in confidence and not to disclose, give, sell, license, use or otherwise dispose of any information of Seller and Corporation which Seller and Corporation furnish to Purchaser or which Purchaser obtains as a result of the exercise of its rights herein. Purchaser shall disclose such confidential information only to Purchaser's employees, legal counsel, financial advisors or accountants on a "need to know" basis and such information shall be used only for the purpose of ascertaining whether the representations and warranties of Seller and Corporation contained in this Agreement are true and correct. In the event this Agreement is not consummated, Purchaser agrees to maintain such confidentiality and not to disclose or use the information it has obtained from Seller or Corporation for a period of three (3) years from the date of the disclosure of this information. The confidentiality obligations set forth in this Section shall not apply to any information Purchaser receives from Seller or Corporation that is in the public domain at the time of its disclosure. Purchaser shall take reasonable measures to assure that its employees, legal counsel and financial advisors maintain the confidentiality of the information provided by Seller or Corporation or obtained by Purchaser pursuant to Section 7.6. 250 NO BROKER. Purchaser on the one hand, and Seller on the other, represent --------- to the other that no broker or finder has been connected with the transactions contemplated by this Agreement. In the event of a claim by any broker or finder based upon his representing or being retained by Seller on the one hand, or by Purchaser on the other, Seller or Purchaser, as the case may be, agrees to indemnify and save harmless the other in respect of such claim. 260 COUNTERPARTS. This Agreement may be executed in counterparts, each of ------------- which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto. 270 LIQUIDATED DAMAGES. If Purchaser breaches this Agreement, and the transaction contemplated by this Agreement fails to close by reason thereof, Seller shall be entitled to terminate 13 this Agreement and retain the amount of the Deposit plus any accrued interest thereon (the "Specified Sum") as liquidated damages. SELLER AND PURCHASER ACKNOWLEDGE THAT SELLER'S DAMAGES WOULD BE DIFFICULT TO DETERMINE, AND THAT THE SPECIFIED SUM IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES. SELLER AND PURCHASER FURTHER AGREE THAT THIS SECTION IS INTENDED TO AND DOES LIQUIDATE THE AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE SELLER'S EXCLUSIVE REMEDY AGAINST PURCHASER, BOTH AT LAW AND IN EQUITY ARISING FROM OR RELATED TO A BREACH BY PURCHASER OF ITS OBLIGATIONS TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. ______________________ _____________________ Seller's Initials Purchaser's Initials IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. PURCHASER: SELLER: FirstAmerica Automotive, Inc. Graybehl Family Trust u/t/d March 22, 1978 a Delaware corporation By: ___________________________ By: _______________________________ L. Vaughn Graybehl, Trustee THE CORPORATION: Concord Toyota Sales, Inc., a California corporation By: _______________________________ L. Vaughn Graybehl, President 14 SCHEDULES Schedule 3.3-A Form of Closing Balance Sheet Schedule 3.3-B Valuation of Acquired Assets Schedule 5.5 Schedule of Unions Schedule 5.6 Schedule of Insurance Schedule 5.7 Schedule of Employee Plans Schedule 5.8 Schedule of Litigation; Conformity with the Law Schedule 5.12 Schedule of Liens and Encumbrances Schedule 5.13 Schedule of Real Property Leases Schedule 14 Form of Consulting Agreement 15 Schedule 3.3-A Form of Closing Balance Sheet Attached 16 SCHEDULE 3.3 B VALUATION OF ACQUIRED ASSETS. The assets of the Corporation shall be determined as set forth below: (a) The price for current model new unregistered and undamaged vehicles with not more than three hundred (300) miles purchased hereunder shall be the sum of the following: (i) The wholesale cost of each new vehicle determined in accordance with the factory invoice, including advertising charges; plus (ii) The wholesale cost of all optional parts and accessories installed in the new vehicles plus the cost of labor (determined at the internal rate pursuant to the standard factory formula) for installation of the same, provided, however, the Corporation shall not install any optional parts or accessories on new vehicles from and after the day of execution of this Agreement; LESS (iii) The sum of all distributor's allowances as of the Closing Date including, but not limited to, inventory carry-over allowances, discounts, holdbacks, rebates, contests, floor plan assistance, model changes and similar distributor's allowances related to specific automobiles transferred on the Closing Date. (b) The price for current model new unregistered and undamaged demonstrator model vehicles with not more than Seven Thousand Five Hundred (7,500) miles purchased hereunder shall be valued in accordance with subsections (a)(i), (a)(ii) and (a)(iii) above LESS the sum of TWENTY CENTS ($0.20) per mile. (c) All vehicles not described in subsections (a) and (b) above which have been in Seller's Inventory sixty (60) days prior to the Closing Date, which are to be purchased hereunder shall be valued at the actual cash value of such vehicle as reasonably determined by Seller and Purchaser, provided that Seller and the Corporation shall deliver to Purchaser as of the Closing Date, a complete list of each vehicle together with the actual cash value. Vehicles acquired by Seller in the ordinary course of business on a date less than sixty (60) days prior to the Closing Date, shall be purchased at Seller's cost. Purchaser shall have a period of five (5) days to review such cash value set by Seller and the Corporation. In the event Purchaser disagrees, Seller and the Corporation on the one hand and Purchaser on the other, shall attempt to resolve such dispute, provided, however, in the event Seller and the Corporation and Purchaser are unable to resolve such dispute within fifteen (15) days, any such automobile shall be sent to wholesale auction and the auction price shall be determined as the value of such vehicle. (d) All new, undamaged, and returnable genuine factory parts, accessories and jobber parts which are in the possession of the Corporation as of the Closing Date and which are listed in the manufacturer's most current wholesale parts and accessories price book shall be valued at dealer cost in accordance with the manufacturer's most current wholesale parts and accessories price book as of the Closing Date; provided, however, that Obsolete Parts shall be valued at ZERO ($0.00). "Obsolete Parts" means factory parts which are not listed in the most current manufacturer's wholesale price book or, if listed therein, are valued at ZERO ($0.00), parts which are not returnable to the manufacturer (as defined by the Franchiser), or parts indicated as discontinued, and broken or damaged parts, regardless of whether listed in the most current manufacturer's wholesale price book. 17 (e) All new undamaged nonfactory parts and accessories which are in possession of the Corporation as of the Closing Date shall be valued at dealer cost, provided, however, such nonfactory parts and accessories shall not be in excess of TEN THOUSAND DOLLARS ($10,000). (f) All sublet repairs, miscellaneous inventory and work-in-progress shall be valued at cost. (g) All furniture, fixtures, equipment, supplies, forms and special tools shall be valued at the Corporation's book value, provided, however, that in the event that any item of furniture, fixtures, supplies, equipment, or special tools is materially damaged, destroyed or removed from the Dealership between the date of determination of book value and the Closing Date, the value of said item damaged, destroyed or removed from the Dealership shall be credited against the Purchase Price. (h) All factory and customer receivables on the books of the Corporation, which receivables are in the ordinary course of business shall be valued at their book value, provided, however, that any contracts in transit and/or vehicle receivables not collected within fifteen (15) days shall be valued at ZERO ($0.00) and any and all customer or factory receivables not collected within ninety (90) days shall be valued at ZERO ($0.00). (i) All finance and insurance receivables on the books of the Corporation shall be valued at their book value, provided, however, any and all finance and insurance receivables not collected within ninety (90) days shall be valued at ZERO ($0.00). (j) There shall be no additional value for franchise value, goodwill or other intangible rights. (k) All cash on hand, contracts in transit shall be value at actual book value, provided, however, any and all contracts in transit not collected within sixty (60) days shall be valued at ZERO ($0.00). (l) Prepaid expenses shall be valued at book value, provided, however, that such prepaid expenses are reasonable prepaid expenses and determined in accordance with U.S. GAAP. (m) An amount shall be deducted from the values of the inventories set forth herein above, for any deferred tax due on any LIFO Reserve carried on the books of the Corporation. 18 SCHEDULE 5.5 SCHEDULE OF UNIONS [Pursuant to Section 7.8 herein above, to be attached 15 business days following execution of this Agreement] 19 SCHEDULE 5.6 SCHEDULE OF INSURANCE [Pursuant to Section 7.8 herein above, to be attached 15 business days following execution of this Agreement] 20 SCHEDULE 5.7 SCHEDULE OF EMPLOYEE PLANS [Pursuant to Section 7.8 herein above, to be attached 15 business days following execution of this Agreement] 21 SCHEDULE 5.8 SCHEDULE OF LITIGATION; CONFORMITY WITH THE LAW [Pursuant to Section 7.8 herein above, to be attached 15 business days following execution of this Agreement] 22 SCHEDULE 5.12 SCHEDULE OF LIENS AND ENCUMBRANCES [Pursuant to Section 7.8 herein above, to be attached 15 business days following execution of this Agreement] 23 SCHEDULE 5.13 SCHEDULE OF REAL PROPERTY LEASES [Pursuant to Section 7.8 herein above, to be attached at the Closing] 24 SCHEDULE 14 FORM OF CONSULTING AGREEMENT [Pursuant to Section 7.8 herein above, to be attached at the Closing] 25 EX-2.2 3 FIRST AMENDMENT TO STOCK PURCHASE - 10/01/98 EXHIBIT 2.2 FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT This First Amendment to Stock Purchase Agreement ("Amendment") is entered into as of October 1, 1998 by and between FirstAmerica Automotive, Inc., a Delaware corporation ("Purchaser"), Vacation Motors, a California corporation (the "Corporation") and The Graybehl Family Trust, dated March 22, 1978 ("Seller"), and is made with respect to the following facts and circumstances: A. Purchaser and Seller are parties to that certain Stock Purchase Agreement dated July 17, 1998 (the "Agreement") whereby Seller has agreed to sell, and Purchaser has agreed to buy, all of the outstanding stock of Concord Toyota Sales, Inc., a California corporation. The reference to Concord Toyota Sales, Inc. as the corporation which Purchaser has agreed to buy from Seller is erroneous; the true and correct name of the corporation which Purchaser has agreed to buy, and wishes to buy, from Seller is Vacation Motors, Inc., a California corporation, said entity having changed its name from Concord Toyota Sales, Inc. in May of 1997. B. The parties now desire to amend the Agreement to correct the aforementioned error, and to provide for such additional terms and conditions as set forth herein. All capitalized terms used herein shall have the meaning ascribed to them in the Agreement, unless otherwise noted. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Purchaser, Seller and the Corporation agree as follows: 1. Each and every reference in the Agreement to Concord Toyota Sales, Inc., a California corporation as the "Corporation" which is the subject of the Agreement, or otherwise, is hereby deleted, and Vacation Motors, a California corporation is hereby inserted in its place and stead. It is the parties' intention that the Agreement be among Purchaser, Seller and Vacation Motors, a California corporation in the first instance, and as if all references to Concord Toyota Sales, Inc., a California corporation had never existed in the Agreement. 2. Seller shall prepare and deliver to Purchaser all documentation necessary to cause the name of the Corporation to be changed from Vacation Motors, a California corporation to FAA Concord T, Inc., a California corporation on or before the Closing Date (as defined in the Agreement). 3. Section 3.1 of the Agreement is hereby deleted and the following language is inserted in lieu thereof: 3.1 AMOUNT. Subject to adjustments as set forth in Section 3.3 herein below, Purchaser shall pay to Seller as consideration for the acquisition of the Shares hereunder, the sum of TWELVE MILLION SEVEN HUNDRED EIGHTY-EIGHT THOUSAND SIX HUNDRED SIXTY-SIX DOLLARS ($12,788,666). 4. Section 3.2.1 of the Agreement is hereby modified to provide that the Deposit, less any accrued interest thereon, shall be paid to Seller on the Closing Date. All interest on the Deposit shall be returned to Purchaser. 5. Section 3.2 of the Agreement is hereby deleted in its entirety, and the following language is inserted in lieu thereof: 3.2.2 The balance of the purchase price shall be paid pursuant to the terms of a promissory note made by Purchaser in favor of Seller on the terms and conditions set forth in the form of promissory note -1- (the "Note") attached hereto as Exhibit 3.2.2(a). The Note shall be secured by granting Seller a security interest in the Shares pursuant to a written security pledge agreement (the "Pledge Agreement") in the form attached hereto as Exhibit 3.2.2(b). 6. Section 3.3 is hereby modified to replace all references therein to the sum of "TWO MILLION TWO HUNDRED THOUSAND DOLLARS ($2,200,000)" with the sum of "THREE MILLION THREE HUNDRED FOUR THOUSAND TWO HUNDRED THIRTEEN DOLLARS ($3,304,213)". 7. Section 3.6 is hereby deleted and the following language is inserted in lieu thereof: 3.6 FINANCE, WARRANTY AND FACTORY CHARGEBACKS. Purchaser shall be responsible for payment of all finance, warranty and factory chargeback obligations related to the operation of the Dealership prior to the Closing Date (the "Chargebacks") up to the sum of TWO HUNDRED THOUSAND DOLLARS ($200,000). In the event the Chargebacks exceed said amount, Seller shall then be responsible pursuant to the terms and conditions of Section 13.1, as limited by Section 13.4. Purchaser shall thereafter be responsible for all subsequent Chargebacks. Purchaser shall provide Seller with written quarterly reports containing information reasonably sufficient to inform Seller of the running Chargeback balance for purposes of determining when Seller's Chargeback obligations accrue, if any. At such time as the quarterly reports submitted to Seller indicate the Chargebacks are at a level which are Seller's responsibility, Seller shall promptly reimburse Purchaser for all appropriate sums within fifteen (15) days of receipt of the quarterly report indicating such obligation. 8. Section 11 of the Agreement is hereby modified to provide that the Closing Date shall be October 1, 1998. 9. The parenthetical contained in the second sentence of section 13.4 is hereby deleted, and the following language is inserted in lieu thereof: (after which point Seller will be obligated only to indemnify Purchaser from and against further such Adverse Consequences to the extent the Adverse Consequences Purchaser suffers by reason of all such breaches do not exceed a TWO HUNDRED THOUSAND DOLLAR ($200,000) aggregate ceiling). 10. The following language is hereby inserted as a new Section 27: 27. SECTION 338(h)(10) ELECTION. At Purchaser's option, an election under --------------------------- Section 338(h)(10) of the Code and equivalent elections under applicable state Law (the "338(H)(10) ELECTION") may be made in connection with the transactions contemplated by this Agreement. If Purchaser chooses to make the 338(h)(10) election, then Purchaser, Sellers, and the Corporation shall cooperate in the completion and timely filing (and amendment or correction, if any) of an IRS Form 8023-A for the 338(h)(10) election, and all other documents and instruments which may be necessary or appropriate in accomplishing the 338(h)(10) Election. Allocation of the Purchase Price among the assets purchased hereunder for the purposes of the 338(h)(10) Election shall be in accordance with the principles of Treasury Regulation Section 1.338(h)(10)-1(f)(1)(ii) in the case of Seller, and Treasury Regulation Section 1.338(h)(10)-1(e)(5) in the case of Purchaser. Purchaser hereby agrees to reimburse Seller for any reasonable accounting expenses incurred by Seller as a result of a federal or state tax audit specifically related to the 338(h)(10) Election up to a maximum of $25,000. -2- 11. The following language is hereby inserted as a new Section 28: 28. Notwithstanding any other provision of the Agreement, Seller shall retain all rights to the slogan "The Dealer with a Heart"; provided, however, that Purchaser shall have the right to use such slogan for a reasonable time period after the Closing Date not to exceed one (1) year. 12. Except as set forth specifically herein, all remaining terms and conditions of the Agreement shall remain in full force and effect, binding upon Seller, Purchaser and Vacation Motors, Inc., a California corporation. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. PURCHASER: SELLER: FirstAmerica Automotive, Inc. Graybehl Family Trust u/t/d March 22, 1978 a Delaware corporation By: By: --------------------------- ------------------------------- L. Vaughn Graybehl, Trustee THE CORPORATION: Vacation Motors, a California corporation By: ------------------------------- L. Vaughn Graybehl, President -3- EX-2.3 4 SECOND AMENDMENT TO STOCK PURCHASE - 10/13/98 EXHIBIT 2.3 SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT This Second Amendment to Stock Purchase Agreement ("Amendment") is entered into as of October 13, 1998 by and between FirstAmerica Automotive, Inc., a Delaware corporation ("Purchaser") and The Graybehl Family Trust, dated March 22, 1978 ("Seller"), and is made with respect to the following facts and circumstances: A. Purchaser and Seller are parties to that certain Stock Purchase Agreement dated July 17, 1998 (the "Agreement"), as amended pursuant to that certain First Amendment to Stock Purchase Agreement dated as of October 1, 1998 (the "First Amendment"), whereby Seller has agreed to sell, and Purchaser has agreed to buy, all of the outstanding stock of FAA Concord T, Inc., a California corporation, formerly known as Vacation Motors, a California corporation, formerly known as Concord Toyota Sales, Inc., a California corporation (the "Corporation"). B. The parties now desire to further amend the Agreement to provide for such additional terms and conditions as set forth herein. All capitalized terms used herein shall have the meaning ascribed to them in the Agreement or the First Amendment, unless otherwise noted. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Purchaser, Seller and the Corporation agree as follows: 1. Section 3.1 of the Agreement, and the First Amendment, is hereby deleted and the following language is inserted in lieu thereof: 3.1 AMOUNT. Subject to adjustments as set forth in Section 3.3 herein below, Purchaser shall pay to Seller as consideration for the acquisition of the Shares hereunder, the sum of TWELVE MILLION SEVEN HUNDRED SIXTY THOUSAND NINTY- ONE DOLLARS ($12,760,091). 2. The parties acknowledge that the Closing Value of the Corporation at Closing was ONE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED THIRTY DOLLARS ($132,630) less than as required pursuant to Section 3.3 of the Agreement, as modified by the First Amendment. The parties therefore agree that Purchaser shall receive a credit against the purchase price, as calculated pursuant to Section 3, equal to this same amount. 3. The parties further agree that, taking into account (i) the adjustment to the purchase price set forth in section one above, (ii) the credit due Purchaser set forth in section two above, and (iii) the delivery of the Deposit to Seller at Closing (which Seller acknowledges having received), the total amount due Seller, and to pay off the Note in full, is and shall be the sum of TWELVE MILLION FIVE HUNDRED TWENTY-SEVEN THOUSAND FOUR HUNDRED SIXTY-ONE DOLLARS ($12,527,461). Upon payment in full of such amount by Purchaser to Seller, Seller shall deliver the original and all copies of the Note to Purchaser for cancellation. 4. Except as set forth specifically herein, all remaining terms and conditions of the Agreement shall remain in full force and effect, binding upon Seller, Purchaser and Vacation Motors, Inc., a California corporation. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. -1- PURCHASER: SELLER: FirstAmerica Automotive, Inc. Graybehl Family Trust u/t/d March 22, 1978 a Delaware corporation By: By: ------------------------------- -------------------------------- W. Bruce Bercovich, Secretary L. Vaughn Graybehl, Trustee -2- -----END PRIVACY-ENHANCED MESSAGE-----