EXHIBIT 10.23
AGREEMENT FOR PURCHASE AND SALE OF BUSINESS ASSETS
THIS AGREEMENT is entered into by and between XXXXXXXXX-XXXXXX FORD,
LINCOLN-MERCURY, INC., a California corporation, (hereinafter referred to as
"Seller"), and LITHIA MOTORS, INC., an Oregon corporation, (hereinafter
referred to as the "Buyer").
RECITALS:
Seller is a California business corporation engaged in the business of
selling and servicing Ford and Lincoln-Mercury motor vehicles and related
parts and accessories from premises located at 000 Xxxxxx Xxxxxx, Xxxx,
Xxxxxxxxxx 00000 (the Business Real Property), under franchises issued by the
Ford Motor Company.
Buyer wishes to purchase from Seller, and Seller is willing to sell to
Buyer, all assets relating to Seller's Ford and Lincoln-Mercury franchises,
conditioned upon the granting to Buyer of exclusive franchises for the sale
of new Ford and Lincoln-Mercury motor vehicles in the same geographical area
as Seller's current franchises in Napa, California.
Buyer also wishes to assume the Lease of the Business Real Property, and
the purchase of Seller's business assets shall be conditioned upon the
assignment to Buyer of the Lease of the Business Real Property.
NOW, THEREFORE, IN CONSIDERATION OF the mutual premises set forth herein,
the parties agree as follows:
1. DEFINITIONS. In this Agreement, the following words shall have the
indicated meanings:
(a) "CLOSING" shall refer to the consummation of the transaction
contemplated under this Agreement in accordance with the terms hereof, and
"CLOSING DATE" shall refer to the actual date of Closing. "TARGET CLOSING
DATE" shall refer to May 1, 1997 "FINAL CLOSING DATE" shall refer to the
earlier of (i) May 30, 1997, or (ii) the 10th business day after the
condition precedent set forth in subparagraph 17(a) (the issuance of
Franchisors' approvals) has been satisfied.
(b) "SELLER'S BUSINESS" shall refer to any and all activities
conducted by Seller in Napa County, California, relating to the marketing and
sale of new Ford and Lincoln-Mercury vehicles and associated parts and
accessories, and the repair and servicing of new or used Ford and
Lincoln-Mercury vehicles.
(c) "PURCHASED ASSETS" shall refer to those assets which are
identified in Paragraph 2 as being purchased and sold by the parties
hereunder.
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(d) Seller's "EQUIPMENT" shall refer to all non-inventory items of
tangible personal property presently owned or used by Seller in connection
with Seller's business, including all of Seller's machinery, tools, signs,
office equipment, computer equipment computer programs, microfiches, parts
lists, repair manuals, sales or service brochures, furniture and fixtures,
and further including all assets listed on Seller's financial statements as
of December 31, 1996. Seller's leasehold improvements to the Business Real
Property also shag be included with the definition of Seller's "Equipment".
(e) Seller's "INTANGIBLE ASSETS" shall refer to Seller's name
("Xxxxxxxxx-Xxxxxx Ford, Lincoln-Mercury, Inc."), telephone and fax numbers,
service customer lists, sales customer lists, vehicle sales records, vehicle
service records, all rights of Seller under contracts assigned to and assumed
by Buyer pursuant to this Agreement, all goodwill associated with Seller's
business, and all other intangible rights and interests of any value relating
to Seller's business.
(f) "BUSINESS REAL PROPERTY" shall refer to the real property located
at 000 Xxxxxx Xxxxxx, Xxxx, Xxxxxxxxxx, which has been used in connection
with Seller's business.
(g) "FRANCHISOR" or "FRANCHISORS" shall refer to the Ford Motor
Company.
(h) "NEW VEHICLE" shall refer to a Ford and Lincoln-Mercury motor
vehicle which: (i) is unregistered and unused, (ii) is from the 1996 or 1997
model year, and (iii) may be represented or warranted to consumers as "new"
under California law. "ROLLBACK VEHICLE" shall mean an unregistered vehicle
which has been sold to a customer by Seller but returned because of the
customer's inability to obtain financing for the purchase. "DEMONSTRATOR
VEHICLE" shall mean an unregistered vehicle used and operated by Seller on
dealer plates for sales demonstration purposes. "USED VEHICLE" shall mean
any vehicle which is not a new vehicle, a demonstrator vehicle or rollback
vehicle.
(i) "DATE OF THIS AGREEMENT" shall refer to the first date upon which
this Agreement has been signed by all of the parties.
2. PURCHASED ASSETS. Seller agrees to sell to Buyer, and the Buyer agrees
to purchase from Seller, the assets identified in Paragraphs 3, 4, 5, 6, 7,
8, 9, 10 and 11 of this Agreement (the "Purchased Assets"). Excluded from
this transaction are Seller's cash, accounts receivable, notes receivable,
banking accounts and deposits, and all other assets not identified in
Paragraphs 3, 4, 5, 6, 7, 8, 9, 10, and 11 of this Agreement.
3. INVENTORY OF NEW VEHICLES. Buyer shall purchase Seller's entire
inventory of new Ford and Lincoln-Mercury vehicles, as that inventory exists
on the Closing Date. Buyer also shall purchase Seller's entire inventory of
demonstrator vehicles and (up to five) rollback vehicles, as that inventory
exists on the Closing Date.
(a) PRICE OF NEW VEHICLES. The purchase price for each of the new
vehicles shall be equal to Seller's factory invoice cost, reduced by any
factory holdbacks, factory rebates, factory incentives, carry-over model
allowances, floor plan allowances, finance cost
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allowances, advertising allowances, and further reduced by the actual net
cost for any and all accessories, equipment and parts which are missing from
a vehicle. Seller's actual net cost for the new vehicles shall include
Seller's actual net cost for any and all parts and accessories reasonably
installed by Seller to new vehicles in the ordinary course of business, but
shall not include any other vehicle preparation charges, labor charges or
other dealer charges of any kind.
(b) DEDUCTION FOR DAMAGE TO NEW VEHICLES. Immediately prior to
Closing, Buyer and seller shall jointly inspect Seller's inventory of new
vehicles. If any new vehicle purchased by Buyer from Seller is damaged, the
price for that vehicle, as determined under subparagraph 3(a), shall be
reduced by the actual net cost to Buyer of repairing that damage. If Buyer
and Seller are unable to agree upon the actual net cost to Buyer of repairing
the damage to a vehicle, then Buyer and seller shall select an independent
third party to determine that repair cost, which determination shall be
binding upon both Buyer and Seller.
(c) PAYMENT FOR NEW VEHICLES. The aggregate purchase price for all
new vehicles purchased by Buyer from Seller shall be paid in full at Closing.
(d) PURCHASE ORDERS FOR NEW VEHICLES. Immediately prior to Closing,
Buyer and seller shall jointly review Seller's outstanding purchase orders
for new vehicles ordered from Seller by customers but not delivered prior to
Closing. At Closing, Seller shall assign to Buyer, and Buyer shall assume
from Seller, all of Seller's rights (including customer deposits) and
obligations (including sales commissions) under such purchase orders;
provided, however, that Buyer shall not be obligated to assume Buyer's rights
or obligations with respect to any new vehicle purchase order which is at a
price less than factory invoice, or which provides for a trade-in at a price
or under terms not acceptable to Buyer. At Closing, Seller shall turn over
to Buyer all customer deposits on ordered but undelivered new vehicles.
(e) PRICE FOR DEMONSTRATORS AND ROLLBACKS. Regarding 1996
demonstrators, the price for each vehicle shall be determined as above less
$500 per vehicle and 30 CENTS per mile for miles in excess of 4,000 miles.
Regarding 1997 demonstrators, the price for each vehicle will be determined
as above less 30 CENTS per mile for all miles in excess of 4,000. miles.
Regarding rollbacks, the purchase price for each such vehicle shall be
determined as above less 30 CENTS per mile for miles in excess of 200 miles.
The purchase price so determined for the demonstrators and rollbacks shall be
paid at Closing.
4. INVENTORY OF USED VEHICLES. Buyer intends to purchase Seller's entire
inventory of used vehicles, as that inventory exists at Closing. However,
Buyer shall not be obligated to purchase any used vehicle for which Buyer and
Seller are unable to agree upon a purchase price.
(a) Seller shall be obligated to: (i) disclose to Buyer any and all
facts concerning each used vehicle which Seller would be legally obligated to
disclose to a consumer (including but not limited to known damage and usage
history), and (ii) provide to Buyer legal odometer statements and free and
clear title for each of the used vehicles.
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(b) PRICE FOR USED VEHICLES. Used vehicles shall be purchased
on an individual basis. It is Buyer's intention to purchase all of the used
vehicles, however, in the event Buyer and Seller cannot agree on a value as
to one or more vehicles, then those vehicles whose value is not agreed upon,
shall remain the property of the Seller and Buyer shall not be obligated to
purchase same. Buyer and Seller agree to establish the proposed purchase
price for seller's used vehicles at least three business days prior to the
anticipated Closing Date. Regarding any used vehicles not purchased by
Buyer, Seller shall have 14 days subsequent to Closing to remove same from
the Business Real Property. So long as Buyer stores Seller's used vehicles
on the Business Real Property in accordance with standard business practices,
Seller shall have sole and exclusive risk and liability for any damage or
loss to Seller's used vehicles while so stored on the Business Real Property
after Closing, and Buyer shall have no liability or obligation of any kind by
reason of such damage or loss.
(c) PAYMENT FOR USED VEHICLES. The aggregate purchase price for
Seller's inventory of used vehicles shall be paid in full at Closing.
5. INVENTORY OF NEW PARTS AND ACCESSORIES. Buyer shall purchase Seller's
entire inventory of new, current (non-obsolete), undamaged Ford and
Lincoln-Mercury vehicle parts and accessories manufactured by Franchisors
and/or third party suppliers, as that inventory exists on the Closing Date.
Buyer shall have no obligation to purchase from Seller any parts or
accessories which are used, damaged or obsolete. For purposes of this
Paragraph 5, a part or accessory shall be "obsolete" on the Closing Date if
not then returnable to the supplier from which that part was originally
purchased, or if not then listed in the supplier's then current price and
pats books. Prior to Closing, Seller shall maintain Seller's inventory of
parts and accessories at a level consistent with good business practices and
Seller's normal and regular course of business.
(a) PRICE FOR PARTS AND ACCESSORIES. The purchase price for each
item in Seller's inventory of new, current and undamaged parts and
accessories for Ford and Lincoln-Mercury vehicles (whether manufactured by a
Franchisor or third party suppliers) shall be the net cost for that item as
set forth in the then most recent price book published by the supplier of
that item, reduced by any discounts, rebates, incentives or allowances which
should reasonably be taken into account in order to establish what Buyer's
net cost for that item would be if that item was purchased by Buyer directly
from that supplier at the time of Closing.
(b) DETERMINATION OF INVENTORY OF PARTS AND ACCESSORIES. Seller's
inventory of new, current and undamaged Ford and Lincoln-Mercury parts and
accessories shall be determined immediately prior to Closing (or on whatever
earlier date shall be selected by mutual agreement of the parties) by a third
party inventory service selected by mutual agreement of the parties. Buyer
and Seller each shall be responsible for 50% of the fees charged by the
inventory service for conducting the inventory.
(c) PAYMENT FOR INVENTORY OF NEW PARTS AND ACCESSORIES. The purchase
price for Seller's inventory of parts and accessories shall be paid in full
at Closing.
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(d) In addition to the vehicle accessories being purchased by Buyer,
Buyer agrees to purchase a quantity of other non-factory accessories the
amount of which shall be determined by the price of same which shall not
exceed $____________________.
6. EQUIPMENT. Buyer shall purchase Seller's Equipment. Buyer
acknowledges that Seller is retaining, and is not selling to Buyer, those
personal items of Seller's Equipment, if any, which are listed on Exhibit "A"
attached hereto.
(a) PRICE FOR EQUIPMENT. The aggregate purchase price for Seller's
Equipment shall be determined by a mutually agreed upon appraiser whose cost
shall be equally shared by the parties. This purchase price for the
Equipment shall be paid at the Closing.
7. SUPPLIES. Buyer shall purchase all of the gas, oil, nuts, bolts, and
other automotive supplies which are held for use in Seller's business. The
price for all such supplies shall be Seller's actual net cost, and shall be
paid to Seller at Closing.
8. CONTRACTUAL RIGHTS AND OBLIGATIONS. At Closing, Buyer shall assume all
rights and obligations of Seller under those certain equipment leases and
other contracts identified on Exhibit "B" attached hereto. Seller warrants
that all of Seller's obligations under the contracts listed on Exhibit "B"
shall be current at the time of Closing. Seller agrees to indemnify Buyer
against all obligations under the contracts identified on Exhibit "B" which
relate to periods prior to Closing. Buyer agrees to indemnify Seller against
all obligations under the contracts identified on Exhibit "B" which relate to
periods after Closing.
9. REPAIR WORK IN PROGRESS. Buyer shall purchase all of Seller's vehicle
repair work in progress (in-house and subcontracted), at a price equal to
Seller's actual net cost, (before profit and overhead) for all work completed
prior to Closing. The purchase price for work in progress shall be paid at
Closing.
10. PREPAID EXPENSES WHICH ACCRUE TO BUYER'S BENEFIT. Buyer agrees to
reimburse Seller for those prepaid expenses which accrue to Buyer's benefit
which shall be at Seller's cost and shall be paid at closing.
11. INTANGIBLE ASSETS. Buyer shall purchase all of Seller's Intangible
Assets.
(a) The aggregate purchase price for Seller's Intangible Assets shall
be Two Million Seven Hundred Thousand and 00/100 Dollars ($2,700,000),
$2,100,000 of which shall be paid outside of Escrow at the Closing. The
$600,000 balance of the purchase price for the Intangible Assets ($2,700,000
minus $2,100,000) shall be amortized and paid by Buyer to Seller as follows:
(1) During the period beginning on the Closing Date and ending
when the entire deferred balance of this purchase price has been paid in
full, interest shall accrue on the outstanding balance of this purchase price
at nine percent (9%) per annum. The interest accruing on the outstanding
balance of this purchase price shall be due and payable in
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quarter annual installments, with the first interest payment being due and
payable on the date which is three calendar months after the Closing Date,
and with subsequent interest payments being due and payable at regular three
month intervals thereafter.
(2) The $600,000 deferred principal balance of this purchase price
shall be due and payable in four equal annual installments of One Hundred
Fifty Thousand and 00/100 Dollars ($150,000) each, with the first installment
being due and payable on April 1, 1998, and with subsequent installments
being due and payable at regular one year intervals thereafter.
(A) Buyer shall have the right at any time to prepay all or any
portion of the unpaid balance of this purchase price, without penalty or
premium. Any prepayment shall be applied against the last maturing
installment of principal then due (with the principal balance being reduced
accordingly), and shall not excuse Buyer from making the regular installment
payments subsequently due until the principal balance has been paid in full.
(B) If Buyer fails to pay any amount of principal or interest
upon the due date or within ten (10) days thereof, and if thereafter Seller
notifies Buyer in writing of said default and Buyer fails to cure said
default within ten (10) days after receipt of that written notice from
Seller, then Seller shall have the right, at any time prior to the moment
when Buyer cures that default, to declare (and thereby cause) the entire
unpaid balance of the purchase price to be immediately due and payable.
(C) Buyer's deferred payment obligation as set forth in this
paragraph 11 shall be evidenced by a negotiable promissory note (hereinafter
the "Promissory Note") to be executed by Buyer and delivered to Seller at
Closing. The Promissory Note shall be unsecured and shall contain an
attorney's fee clause.
(b) In order for Buyer to receive the full benefit of the intangible
good will being purchased by Buyer, it will be necessary for Buyer to perform
no-charge repair work with respect to vehicles repaired or sold by Seller
prior to Closing. In partial consideration of the $2,700,000 amount being
paid by Buyer for the Intangible Assets, Seller agrees to reimburse Buyer for
Fifty percent (50%) of the net cost to Buyer of repair service which are not
covered by factory warranty and which are performed by Buyer within two (2)
months after Closing with said reimbursement not exceeding a maximum of
$4,000 in order to satisfy customers who are dissatisfied with repair
services provided by Seller prior to Closing. Seller agrees to reimburse
Buyer pursuant to the preceding sentence on a monthly basis, with payment to
be made within ten (10) days after Buyer submits a billing for the cost of
repair services performed during the preceding calendar month.
12. BULK TRANSFERS. It is the intention of the parties that this
transaction comply with Division Six of the California Uniform Commercial
Code, more commonly known as Uniform Commercial Code - Bulk Transfers. As a
result thereof, upon the execution of this agreement the parties shall
immediately open an escrow at Capitol City Escrow, Inc., 0000 Xxxxxxx Xxxx
Xxxxx, # 000, Xxxxxxxxxx, Xxxxxxxxxx, for this purpose. At this same time,
Buyer shall deliver to said escrow the sum of $250,000 (the deposit), which
amount shall
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immediately be placed into an interest bearing account. The deposit plus
interest shall be credited to Buyer and shall be applied against the purchase
price for the Purchased Assets, other than the Intangible Assets, at the
closing or if the closing fails to occur, then the deposit shall be disbursed
as set forth hereinafter.
13. LIMITATION ON LIABILITIES ASSUMED. Except as provided in
subparagraph 3(c), Paragraph 8 and Paragraph 9, Buyer shall not, by reason of
this Agreement or Buyer's purchase of the Purchased Assets, take
responsibility for any liabilities, debts or obligations, is of Seller
(including Seller's trade payables, account payables, obligations to
employees, or tax liabilities).
14. WARRANTIES OF SELLER. Seller makes the following warranties to
Buyer, with the intent that Buyer rely thereon:
(a) CORPORATE ORGANIZATION. Seller is a corporation organized,
validly existing, and in good standing under the laws of the State of
California. Seller is qualified to do business in the State of California
and has full power and authority to own, use, and sell its assets.
(b) CORPORATE AUTHORITY. Seller's board of directors and shareholders
have authorized the execution and delivery of this Agreement to Buyer and the
carrying out of its provisions. This agreement will not violate any
judicial, governmental or administrative decree, order, writ, injunction, or
judgment, and will not conflict with or constitute a default under Seller's
bylaws, or any contract, agreement, or other instrument to which Seller is a
party or by which it may be bound.
(c) EMPLOYEE ISSUES. Within 10 days after the date of this Agreement
Seller shall provide to Buyer the following: (i) a census of Seller's
employees, (ii) a written disclosure of all benefits made available to
Seller's employees (including qualified and non-qualified retirement plans),
and (iii) access to all personnel files for seller's employees. All employee
benefit plans maintained by seller for its employees shall be fully funded
prior to Closing. Seller shall pay all wages, commissions, accrued vacation
pay and other accrued compensation earned by Seller's employees prior to
Closing (together with all accrued FICA and withholding taxes). Seller shall
terminate the employment of all of Seller's employees effective as of the
close of business on the Closing Date. Buyer will consider any of Seller's
employees who apply for employment on an equal basis with all other
applicants. Employment will be offered to Buyer's selected applicants on
terms and conditions to be established by Buyer. Seller agre
(d) FINANCIAL. Seller shall furnish to Buyer such financial and
operating data and other information as to the business and properties of
Seller's business as Buyer shall request. The review of such materials will
be at Buyer's expense, including a certified audit, if Buyer deems it to be
necessary.
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(e) UNDISCLOSED LIABILITIES AND CONTRACTUAL COMMITMENTS. Except as
otherwise disclosed in this Agreement (or in an attached Exhibit): (i) Seller
does not have any liabilities which might have a material impact on Buyer's
use of the Purchased Assets, (ii) Seller is not a party to any contracts or
commitments which might have a material impact on Buyer's use of the
Purchased Assets, and (iii) no law suit or action, administrative proceeding,
arbitration proceeding, governmental investigation, or other legal or
equitable proceedings of any kind is pending or threatened against Seller
which might adversely affect the value of the Purchased Assets. If any claim
is asserted against Buyer after Closing with respect to any obligation of
seller which Seller has failed to disclose to Buyer in writing, or which
Seller has disclosed but failed to pay, then Buyer shall give prompt. written
notice of that claim to Seller. Seller shall indemnify Buyer with respect to
all such obligations.
(f) CONDITION OF EQUIPMENT. Each item of the equipment shall be in
good operating condition at Closing. Seller will continue to perform routine
maintenance and repairs with respect to the Equipment prior to Closing. In
addition, the roof, ventilation (including the air conditioning), heating,
plumbing, electrical systems and structural members, collectively referred to
as the "Structural Building Systems" of the buildings located on the Business
Real Property, are in good working order and condition and shall be so on the
Closing Date. Buyer shall have thirty (30) days from the Closing Date to
advise Seller in writing if any of the foregoing assets were not in good
working order on the Closing Date.
(g) GOOD TITLE. Seller has, and shall transfer to Buyer at Closing,
good and marketable title to all of the Purchased Assets, free and clear of
all security interests, liens, equitable interests, leases, assessments,
restrictions, restrictions, reservations, or other burdens of any kind. All
current and accrued taxes which may become a lien against any of the
Purchased Assets prior to closing shall have been paid by Seller prior to
Closing (including property taxes, sales taxes and excise taxes).
(h) TOXIC MATERIALS. Upon the execution of this agreement, Seller at
its cost shall engage an appropriate environmental firm to conduct an
investigation and who will thereafter produce a Phase One Environmental
Report regarding the Business Real Property. In addition, Seller shall make
available to Buyer copies of all other environmental reports and certificates
(of which Seller has knowledge) with respect to the Business Real Property.
Regarding any deficiencies set forth in the Phase One Environmental Report,
Buyer can waive same or Seller shall have until the Closing Date to remedy
same. In the event it is apparent that a remedy can not be completed by the
Closing Date, then in such event, Seller can either elect to rescind the
transaction in its entirety or place sufficient funds into the escrow at the
Closing Date to cover the expense of the required remedy.
Except as disclosed by Seller on Exhibit "C" attached hereto, (i) no
activity in connection with Seller's business prior to Closing shall have
produced any toxic materials, the presence or use of which upon the Business
Real Property would violate any federal, state, local or other governmental
law, regulation or order or would require reporting to any governmental
authority and (ii) the Business Real Property is otherwise free and clear of
any toxic materials. For purposes or this subparagraph (h), the phrase
"toxic materials" shall include but not be limited to any and all substances
deemed to be pollutants, toxic materials or hazardous materials under any
state or federal law.
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(i) FRANCHISERS' CONSENT. Seller shall take all actions which are
reasonably necessary on Seller's part to obtain the consent of the
Franchisors to the issuance to Buyer of exclusive franchises for the sale of
new Ford and Lincoln-Mercury vehicles in the same geographical area as
Seller's current franchises in Napa, California.
(j) INDEMNIFICATION FOR BREACH OF WARRANTIES. Seller shall indemnify
Buyer against all losses, damages and costs (including attorney fees and
court costs) relating to any warranty made by Seller in this Agreement which
is false, misleading, incomplete or inaccurate (either on the date of this
Agreement or at the time of Closing). If at any time prior to Closing Buyer
determines that any warranty made by Seller in this Agreement is incorrect,
incomplete or misleading, then Buyer shall advise Seller of that fact and
Seller shall provide to Buyer in writing whatever other information shall be
necessary to cause that warranty to be correct, complete and not misleading.
15. CONDUCT OF BUSINESS PENDING CLOSING. Seller warrants that during the
period beginning on the date of this Agreement and ending at Closing: (i)
Seller shall continue to operate Seller's Business in the usual ordinary
course, and in substantial conformity with all applicable laws, ordinances,
regulations, rules or orders, (ii) Seller shall not allow any liens to be
placed against any of the Purchased Assets unless those liens are discharged
prior to Closing; (iii) Seller shall not take any action which may cause a
material adverse change in the operations of Seller's Business; (iv) Seller
shall not conduct any sale which shall use the words or phrases "Going Out of
Business Sale" or "Change of Ownership Sale" or other words or phrases having
similar meanings and; (v) Seller shall use its best efforts to preserve the
value of the Ford and Lincoln-Mercury franchises in Napa, California.
16. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby makes the
following representations and warranties to Seller, with the intent that
Seller rely thereon:
(a) ORGANIZATION. Lithia Motors, Inc. is a corporation organized,
validly existing and in good standing under the laws of the State of Oregon,
and has been qualified by the appropriate California authorities to own
property and to carry on its business.
(b) AUTHORITY. This Agreement has been authorized by the board of
directors of Lithia Motors, Inc. This agreement will not violate the
provisions of any judicial, governmental or administrative decree, order,
writ, injunction, or judgment, or conflict with or constitute a default
under, the Article or bylaws of Lithia Motors, Inc. or any contract,
agreement, or other instrument to which Lithia Motors, Inc. is a party.
17. ADDITIONAL CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The
obligation of Buyer to close this transaction is subject to each of the
following conditions (each of which is for the benefit of Buyer and may be
waived by Buyer), and Buyer shall have the right to rescind this Agreement if
any of the following conditions is not satisfied in accordance with its terms:
(a) Buyer shall have obtained from Franchisors, prior to the Final
Closing Date, exclusive franchises to sell new Ford and Lincoln-Mercury
vehicles in the same
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geographical area as Seller's current franchises in Napa, California (as
evidenced by the issuance to Buyer by Franchisors of appropriate Dealership
Sales and Service Agreement, and the approval of Buyer as the publicly owned
Dealer-Operator of the franchises), and Buyer agrees to use its best
reasonable efforts to obtain those Franchises.
(b) Buyer shall be reasonably satisfied with any facility improvement
requirement which are imposed by Franchisors which have an aggregate cost of
more than $25,000.
(c) The lease assigned to Buyer, or a related entity, of the Business
Real Property shall occur prior to or concurrently with this transaction.
(d) All of Seller's agreements and warranties set forth in this
Agreement shall be correct, complete and not misleading at Closing; provided
that Buyer's decision to close this transaction shall not release Seller from
liability to Buyer for any warranty which is subsequently determined to be
incorrect, incomplete or misleading.
(e) The Phase One Environmental Report must indicate that there are
no toxic materials present on, under, or about the Business Real Property or
if such toxic materials are so indicated Seller must have cured same either
by completing the required remedy by the Closing Date or by placing
sufficient funds into Escrow at the Closing Date to cover the expense of the
required remedy.
18. CLOSING. The parties shall make all reasonable effort to close the
purchase and sale under this Agreement at or before 5:00 PM, Pacific Standard
Time, on or before the Final Closing Date, at the offices of Capitol City
Escrow, Inc. in Sacramento, California, or at some other location as shall be
selected by mutual agreement of the parties.
(a) The parties agree to establish a closing escrow account at
Capitol City Escrow, Inc. in Sacramento, California, (the "Closing Escrow
Agent"). Buyer and Seller each shall pay one-half (1/2) of the escrow fees.
Buyer and Seller agree to execute whatever reasonable escrow instructions may
be required by Closing Escrow Agent in connection with this transaction. In
the event of any conflict between those escrow instructions and this
Agreement, the terms of this Agreement shall prevail.
(b) In all events, the Closing of the transaction contemplated under
this Agreement shall occur (if at all) on or before the Final Closing Date.
(c) If this transaction closes as provided herein, then actual
possession and all risk of loss, damage or destruction with respect to the
Purchased Assets, shall be deemed to have been delivered to Buyer at 11:59
PM, Pacific Standard Time, on the Closing Date.
(d) At Closing, and coincidentally with the performance of the
obligations to be performed by Buyer at Closing, Seller shall deliver to
Buyer the following: (i) all bills of sale, assignments and other instruments
of transfer, in form and substance reasonably satisfactory to Buyer, which
shall be necessary to convey the Purchased Assets to Buyer, and (ii) all
other documents required under this Agreement.
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(e) At Closing, and coincidentally with the performance of all
obligations required of Seller at Closing, Buyer shall deliver to Seller the
following: (i) payment for the Purchased Assets; and (ii) all other payments
and documents required under this Agreement. Buyer shall be responsible for
all sales taxes payable in connection with the transaction. All amounts
payable by Buyer to Seller at closing shall be paid by certified check drawn
against a bank of Buyer's choice having offices located in Xxxxxxx County,
Oregon, or by whatever other means shall be acceptable to Seller.
(f) If Closing does not take place on or before the Final Closing
Date because there has been a failure of any condition precedent set forth in
Paragraph 17 or because Seller has elected to rescind the agreement pursuant
to paragraph 14(h), then: (i) all rights and obligations of both parties
under this Agreement shall terminate, (ii) Buyer shall be entitled to a
refired of the entire $250,000 deposit (and interest earned thereon) which is
referred to in paragraph 12, and (iii) this Agreement and all predecessor
agreements shall thereafter be void and of no effect.
(g) If Closing does not take place on or before the Final Closing
Date because of Buyer's material breach of this Agreement, then the $250,000
deposit delivered by Buyer to the Closing Escrow Agent together with all
interest earned thereon while held by the Closing Escrow Agent shall be
forfeited to Seller as Seller's sole and exclusive remedy for Buyer's breach,
and seller shall have no other rights or remedies against Buyer by reason of
that breach. THIS SUM REPRESENTS A REASONABLE ESTATE BY BUYER AND SELLER OF
SELLER'S DAMAGES IN THE EVENT OF SUCH A DEFAULT, IT BEING EXTREMELY DIFFICULT
TO ASCERTAIN SELLER'S PRECISE DAMAGES. IF CLOSING DOES NOT OCCUR ON OR
BEFORE THE CLOSING DATE FOR ANY REASON OTHER THAN BUYER'S DEFAULT, SELLER AND
BUYER IRREVOCABLY AUTHORIZE AND INSTRUCT THE CLOSING ESCROW AGENT TO
IMMEDIATELY DELIVER TO BUYER, ON DEMAND, BUYER'S DEPOSIT TOGETHER WITH THE
INTEREST EARNED THEREON, LESS ESCROW CANCELLATION COSTS.
(h) Both parties agree to make a good faith effort to execute and
deliver all documents and complete all actions necessary to consummate this
transaction.
19. BOOKS AND RECORDS. Seller shall have the right at any time and from
time to time, for a period of five (5) years after the Closing Date, to
examine and make copies of all books and records acquired by Buyer hereunder.
In addition, Buyer agrees to store for a period of five (5) years all books
and records of Seller which Buyer is not acquiring hereunder. Lastly, Buyer
agrees to make its staff available to Seller for a period of five (5) days
subsequent to the Closing Date so that Seller can close out its books.
20. SELLER'S ACCOUNTS RECEIVABLE. For a period of six (6) months after
Closing, Buyer shall, on Seller's behalf, and at no charge to Seller, accept
any payment with respect to Seller's customer receivables and other
receivables arising out of the operation of Seller's Business prior to
Closing. All collected receivables from vehicles sales shall be delivered to
Seller within ten (10) days after collection, and all other collected
receivables shall be
11
delivered to Seller on a monthly basis. Buyer shall have no obligation to
undertake collection efforts with respect to Seller's receivables, and
Buyer's only obligation shall be to account for and pay over Seller's
receivables which are actually received by Buyer.
21. SURVIVAL OF REPRESENTATIONS. All representations, warranties,
indemnification obligations and covenants made in this Agreement shall
survive the Closing, and shall remain in effect until the expiration of the
latest period allowable in any applicable statute of limitations.
22. ASSIGNMENT BY BUYER. Lithia Motors, Inc. shall have the right to
assign all rights and obligations of Lithia Motors, Inc. as "Buyer" under
this agreement. In the event of any such assignment, the assignee shall
assume all rights and obligations of the Buyer under this agreement, and
Lithia Motors, Inc. shall remain jointly and severally liable for all
obligations of the Buyer. In addition and in this event, Lithia Motors, Inc.
will unconditionally guarantee the promissory note referred to in paragraph
11 above.
23. MISCELLANEOUS,
(a) There are no oral agreements or representations between the
parties which affect this transaction, and this Agreement supersedes all
previous negotiations, warranties, representations and understandings between
the parties. True copies of all documents referenced in this Agreement are
attached hereto. If any provision of this Agreement shall be determined to
be void by any court of competent jurisdiction, then that determination shall
not affect any other provision of this Agreement, and all other provisions
shall remain in full force and effect. If any provision of this Agreement is
capable of two constructions, only one of which would render the provision
valid, then the provision shall have the meaning which renders it valid. The
paragraph headings in this Agreement are for convenience purposes only, and
do not in any way define or construe and contents of this Agreement.
(b) This Agreement shall be governed and performed in accordance with
the laws of the State of California. Each of the parties hereby irrevocably
submits to the jurisdiction of the courts of Napa County, California, and
agrees that any legal proceedings with respect to this Agreement shall be
filed and heard in the appropriate court in Napa County, California.
(c) This Agreement may be executed in multiple counterparts, each of
which shall be an original, and all of which shall constitute a single
instrument when signed by both of the parties. This Agreement shall-inure to
the benefit of and shall be binding upon the successors and assigns of the
respective parties.
(d) Waiver by either party of strict performance of any provision of
this Agreement shall not be a waiver of, and shall not prejudice the party's
right to subsequently require strict performance of the same provision or any
other provision. The consent or approval of either party to any act by the
other party of a nature requiring consent or approval; shall not render
unnecessary the consent to or approval of any subsequent similar act.
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(e) All notices provided for herein shall be in writing and shall be
deemed to be duly given when mailed by United States certified mail, postage
prepaid, to the last known address of the party entitled to receive the
notice, or when personally delivered to that party.
(f) Time is of the essence to this Agreement.
(g) Should any party hereto institute any action or proceedings to
enforce or interpret any provision hereof, or for damages by reason of any
alleged breach of any provision of this Agreement, the prevailing party shall
be entitled to recover from the losing party or parties such amount as the
court may adjudge to be reasonable attorney's fees for services rendered to
the prevailing party in such action or proceeding. The term "prevailing
party" as used in this section shall include, without limitation, any party
who is made a defendant in litigation in which damages and/or other relief
may be sought against such party and a final judgment or dismissal or decree
is entered in such litigation in favor of such party defendant.
13
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
indicated below:
SELLER: XXXXXXXXX-XXXXXX FORD, LINCOLN-MERCURY, INC.
BY: /s/ Xxxxxxx X. Xxxxxxxxx 2/18/97
------------------------------------------------- ----------------
Xxxxxxx X. Xxxxxxxxx, President Dated
BUYER: LITHIA MOTORS, INC.
BY: /s/ Xxxxxx X. XxXxxx 2/21/97
------------------------------------------------- ----------------
Xxxxxx X. Xxxxxx, President Dated
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EXHIBIT "A"
List of Equipment Seller is Retaining pursuant to Paragraph 6 above.
NONE
15
EXHIBIT "B"
List of Leases and Agreements being assumed by Buyer pursuant to Paragraph 8
above.
16
EXHIBIT "C"
Activities in connection with Seller's business prior to Closing which
produced toxic material which violated governmental law, regulations or
orders or would require reporting to any governmental authority - pursuant to
paragraph 14h) above.
NONE
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