EX-10
Exhibit 10.15.1 Nissan Dealer Sales & Serv Agmt
EXHIBIT 10.15.1
NISSAN
DEALER TERM SALES AND SERVICE AGREEMENT
THIS AGREEMENT is entered into effective the day last set forth
below by and between the Nissan Division of NISSAN MOTOR CORPORATION IN
U.S.A., a California corporation, hereinafter called "Seller," and the
entities and natural persons identified in the Final Article of this
Agreement.
INTRODUCTION
The purpose of this Agreement is to establish Dealer as an authorized
dealer of Nissan Products and to provide for the sale and servicing of Nissan
Products in a manner that will best serve owners, potential owners and
purchasers of Nissan Products as well as the interests of Seller, Dealer and
other Authorized Nissan Dealers. This Agreement sets forth: the rights which
Dealer will enjoy as an Authorized Nissan Dealer; the responsibilities which
Dealer assumes in consideration of its receipt of these rights; and the
respective conditions, rights and obligations of Seller and Dealer that apply
to Seller's grant to Dealer of such rights and Dealer's assumption of such
responsibilities. It is understood that each term and undertaking
hereinafter described is material, and relied upon, as the quid pro quo and
consideration for this Agreement.
This is a personal services Agreement. In entering into this Agreement
and appointing Dealer as provided below, Seller is relying, among other
things, upon the personal qualifications, expertise, reputation, integrity,
experience, ability and representations of the individual named in the Final
Article of this Agreement as Dealer Principal (the "Dealer Principal"), the
individual named in the Final Article of this Agreement as Executive Manager,
and the representations of Lithia Motors, Inc. ("Lithia") and Dealer. In
addition to Dealer, Seller intends to look to Lithia, the Dealer Principal,
and the Executive Manager for the performance of Dealer's obligations
hereunder.
Nissan Products are intended for discriminate owners with the
expectation that such owners will be loyal and proud, but also demanding
toward Seller and Dealer with respect to Nissan Products and the manner in
which they are sold and serviced. Owners, potential owners and purchasers of
Nissan Products are expected to want, and are entitled to do business with,
dealers who enjoy the highest reputation in their communities and have well
located, attractive and efficient places of business, courteous personnel and
outstanding service and parts facilities. Nissan Products must be sold by
enthusiastic dealers who are not interested in short term results only but
are willing to look toward long term goals and who are devoted to creating
and maintaining a positive total ownership experience for owners of Nissan
Products. Seller's standard of excellence for Nissan Products must be
matched by the dealers who sell them to the public and who service them
during their operative lives.
Achievement of the purposes of this Agreement is premised upon mutual
understanding and cooperation between Seller and Dealer. Dealer has entered
into this Agreement in reliance upon Seller's integrity and expressed
intention to deal fairly with Dealer and the consuming public. Seller has
entered into this Agreement in reliance upon the integrity and ability of the
Dealer Principal and Executive Manager and their expressed intention to deal
fairly with the consuming public and Seller.
It is the responsibility of Seller to market Nissan Products throughout
the Territory. It is the responsibility of Dealer to actively promote the
retail sale of Nissan Products and to provide courteous and efficient service
of Nissan Products. The success of both Seller and Dealer will depend on how
well they each fulfill their respective responsibilities under this
Agreement. It is recognized that: Seller will endeavor to provide motor
vehicles of excellent quality and workmanship and to establish a network of
Authorized Nissan Dealers that can provide an outstanding sales and service
effort at the retail level; and Dealer will endeavor to fulfill its
responsibilities through aggressive, sound, ethical selling practices and
through conscientious regard for customer service in all aspects of its
Nissan Dealership Operations.
Seller and Dealer shall refrain from engaging in conduct or activities
which might be detrimental to or reflect adversely upon the reputation of
Seller, Dealer or Nissan Products and shall engage in no discourteous,
deceptive, misleading or unethical practices or activities.
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For consistency and clarity, terms which are used frequently in this
Agreement have been defined in Section I of the Standard Provisions. All
terms used herein which are defined in the Standard Provisions shall have the
meaning stated in said Standard Provisions. These definitions should be read
carefully for a proper understanding of the provisions in which they appear.
To achieve the purposes referred to above, Seller, Lithia, Dealer, the
Dealer Principal and the Executive Manger agree as follows:
ARTICLE FIRST: Appointment of Dealer
Subject to the conditions and provisions of this Agreement, Seller:
(a) appoints Dealer as an Authorized Nissan Dealer and grants Dealer
the non-exclusive right to buy from Seller those Nissan Products specified in
Dealer's current Product Addendum hereto, for resale, rental or lease at or
from the Dealership Locations established and described in accordance with
Section 2 of the Standard Provisions; and
(b) grants Dealer a non-exclusive right, subject to and in accordance
with Section 6.K of the Standard Provisions, to identify itself as an
Authorized Nissan Dealer, to display the Nissan Marks in the conduct of its
Dealership Operations and to use the Nissan Marks in the advertising,
promotion and sale of Nissan Products in the manner provided in this
Agreement.
ARTICLE SECOND: Assumption of Responsibilities by Dealer
Dealer hereby accepts from Seller its appointment as an Authorized
Nissan Dealer and, in consideration of its appointment and subject to the
other conditions and provisions of this Agreement, hereby assumes the
responsibility for:
(a) establishing and maintaining at the Dealership Location the
Dealership Facilities in accordance with Section 2 of the Standard Provisions;
(b) actively and effectively promoting the sale at retail (and, if
Dealer elects, the leasing and rental) of Nissan Vehicles within Dealer's
Primary Market Area in accordance with Section 3 of the Standard Provisions;
(c) servicing Nissan Vehicles and for selling and servicing Nissan
Parts and Accessories in accordance with Section 5 of the Standard Provisions;
(d) building and maintaining consumer confidence in Dealer and in
Nissan Products in accordance with Section 5 of the Standard Provisions; and
(e) performance of the additional responsibilities set forth in this
Agreement, including those specified in Section 6 of the Standard Provisions.
ARTICLE THIRD: Ownership
(a) Owners. This Agreement has been entered into by Seller in
reliance upon, and in consideration of, among other things, the personal
qualifications, expertise, reputation, integrity, experience, ability and
representations with respect thereto of the Dealer Principal and Executive
Manager named in the Final Article of this Agreement and in reliance upon the
representations and agreements of Lithia and Dealer as follows:
(i) Lithia will at all times own I 00% of the capital stock of
Dealer and Dealer will at all times be maintained as a separate entity.
(ii) Lithia Motors, Inc., ("Lithia") owns 100% of the
outstanding stock of Lithia Inc. dba Nissan of Bakersfield ("Bakersfield" or
"Dealer"). (See Attachment "A" attached.)
(b) Changes in Ownership. In view of the fact that this is a
personal services agreement with the Dealer Principal and Executive Manager
and in view of its objectives and purposes, this Agreement and the rights and
privileges conferred on -Dealer hereunder are not assignable, transferable or
salable by Lithia and Dealer, and no property right or interest is or shall
be deemed to be sold, conveyed or transferred to Lithia and Dealer under this
Agreement. Lithia, Dealer, the Dealer Principal and the Executive Manager
agree that any change in the ownership of Dealer or in Lithia, other than
specified herein, requires the prior written consent of Seller IF DEALER
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DESIRES TO REMAIN AN AUTHORIZED NISSAN DEALER and that without the prior
written consent of Seller:
(i) no sale, pledge, hypothecation or other transfer of any of
the currently outstanding capital stock or partnership interest of Dealer
will be made and no additional shares of capital stock, partnership interest
or securities convertible into shares of capital stock of Dealer will be
issued or sold.
(ii) no sale, pledge, hypothecation or other transfer of any of
the currently outstanding capital stock of Dealer will be made and no
additional shares of capital stock, partnership interest or securities
convertible into shares of capital stock f Dealer will be issued or sold.
(iii) Dealer will not be merged with or into, or consolidate
with, any other entity and none of the principal assets necessary for the
performance of Dealer's obligations under this Agreement will be sold,
transferred or assigned.
(iv) Lithia will not enter into any transaction, including,
without limitation, any sale, pledge, hypothecation or other transfer of any
of the currently outstanding capital stock of Dealer, the issuance or sale of
additional shares of capital stock, partnership interest or securities
convertible into shares of capital stock, of Dealer, or the merger of and
Dealer with or into, or the consolidation of and Dealer with any other
entity, if as a result of such transaction, Lithia will cease to own at least
100% of the capital stock or interest of Dealer.
(v) If any person or entity acquires more than 20% of Lithia's
common stock issued and outstanding at any time and Nissan determines that
such person or entity does not have interests compatible with those of
Nissan, or is otherwise not qualified to have an ownership interest in a
Nissan dealership (an "Adverse Person"), Lithia must terminate its dealer
agreements with Nissan or transfer the Nissan dealerships to a third party
acceptable to Nissan unless, within 90 days after Nissan's determination, the
adverse Person's ownership interest is reduced to less than 20%.
Any transaction involving the capital stock of and Dealer which does
not violate subparagraph (iv) above may be effected without obtaining the
prior written consent of Seller and > without triggering a termination event
under Section 12.A.(2) of the Standard Provisions.
Dealer shall give Seller prior notice of any proposed change in said
ownership requiring the consent of Seller and immediate notice of the death
or incapacity of any Dealer Principal or Executive Manager. No such change,
and no assignment of this Agreement or of any right or interest herein, shall
be effective against Seller unless and until embodied in an appropriate
amendment to or assignment of this Agreement, as the case may be, duly
executed and delivered by Seller and by Dealer. Seller shall not, however,
unreasonably withhold its consent to any such change, subject to Seller's
Rights of First Refusal set forth in Article Tenth of this Agreement. Seller
shall have no obligation to transact business with any person who is not
named either as a Dealer Principal or Executive Manager of Dealer hereunder
or otherwise to give effect to any proposed sale or transfer of the
ownership, partnership interest or management of Dealer and (other than
changes in the ownership of and Dealer which are expressly permitted by this
Article Third) prior to having concluded the evaluation of such a proposal as
provided in Section 15 of the Standard Provisions. Dealer acknowledges
Seller's right to require consent to any change in the ownership of Dealer,
and agrees that any change or transfer without such consent from Seller is
void, and of no force and effect, and grounds for termination. Lithia and
Dealer further agree that they will not challenge, contest, dispute, or
litigate, except in accordance with Article Fifteenth(c) hereunder:
(i) any action taken by Seller (including, without limitation,
termination of this
Agreement) in response to an attempt to transfer ownership of Dealer
(except as provided by this Agreement) without Seller's consent; or
(ii) any decisions by Seller to withhold consent to a proposed
change in ownership of Dealer.
ARTICLE FOURTH: Management
(a) This Agreement has been entered into by Seller in reliance upon,
and in consideration of, among other things, the personal qualifications,
expertise, reputation, integrity, experience, ability and representations
with respect thereto of the person named as Dealer Principal in the Final
Article of this Agreement and in reliance on the following representations
and agreements of and Dealer that:
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(i) Dealer shall retain a qualified Executive Manager meeting
Seller's approval to be named under the Final Article of this Agreement.
The qualifications and performance of the individual proposed to be
named as the Executive Manager of Dealer shall be evaluated by Seller during
the first six (6) months of the term of this Agreement pursuant to Seller's
executive management evaluation program. If at the end of such six (6) month
period, the candidate -Y s and Dealer's performance in all departments of the
dealership (including sales, service, parts, and customer satisfaction) is
not satisfactory to Seller under the evaluation program guidelines, Dealer
shall be obligated to retain another individual who is a qualified Executive
Manager to be named under the Final Article of this Agreement within sixty
(60) days of the date that Seller notifies Dealer that the proposed
individual has not met the executive management requirements of Seller as
described above.
(ii) The Executive Manager of Dealer ("Executive Manager") will,
subject to any other obligations set forth in this Agreement, devote 100% of
his time to the day to day business operations of Dealer, and the Dealer
Principal will devote his time to the business and day-today operations of
the entity for which he is responsible.
(iii) Executive Manager will devote 100% of his time to the
affairs of Dealer.
(b) Dealer. Seller and Dealer agree that the retention by Dealer of
qualified management is of critical importance to the successful operation of
Dealer and to the achievement of the purposes and objectives of this
Agreement. This Agreement has been entered into by Seller in reliance upon,
and in consideration of, among other things, the personal qualifications,
expertise, reputation, integrity, experience, ability and representations
with respect thereto of the persons named as Dealer Principal and Executive
Manager in the Final Article of this Agreement and in reliance on the
following representations and agreements of Lithia and Dealer, that:
(i) There must be an approved Executive Manager, acceptable to
Nissan, employed by Dealer. As long as the Executive Manager is employed by
Dealer, he will have full and complete control over the Dealership
Operations, subject only to the powers of the Board of Directors of Dealer to
manage the business and affairs of Dealer, and he will at all times be a
member of the Board of Directors of Dealer. In addition, any replacements
for Dealer Principal and Executive Manager will, so long as such replacements
are employed by Lithia and Dealer, have full and complete control over the
Dealership Operations, subject only to the powers of the Board of Directors
of Dealer to manage the business and airs of Dealer, and such replacements
will at all times be members of the Board of Directors of Dealer.
(ii) the Board of Directors of Dealer shall delegate the
management of the Dealership Operations to the Executive Manager, and Lithia
will not amend its Certificate of Incorporation or By-laws to provide that
its Board of Directors is entitled to exercise any extraordinary powers or
interfere unduly in the Dealership Operations.
(iii) Executive Manager, subject to any other obligations set
forth in this Agreement, shall continually provide his personal services in
operating the dealership and will be physically present at the Dealership
Facilities on a full-time basis.
(c) Changes in Management. In view of the fact that this is a
personal services Agreement with the Dealer Principal and Executive Manager
and in view of its objectives and purposes, Dealer and agree that any change
in the Dealer Principal or Executive Manager from that specified in the Final
Article of this Agreement requires the prior written consent of Seller. In
addition, Lithia and Dealer agree that no chief executive officer, or person
performing services and having responsibilities similar to a chief executive
officer, of Dealer will be appointed, directly or indirectly, without the
prior written consent of Seller. Dealer shall give Seller prior notice of
any proposed change in Dealer Principal or Executive Manager or the
appointment of any chief executive or similar officer of and immediate notice
of the death or incapacity of any Dealer Principal or Executive Manager. No
change in Dealer Principal or Executive Manager and no appointment of a chief
executive or similar officer of shall be effective unless and until embodied
in an appropriate amendment to this Agreement duly executed and delivered by
all of the parties hereto. Subject to the foregoing, Dealer and Dealer
Principal shall make their own, independent decisions concerning the hiring
and firing of its employees, including, without limitation, the Dealer
Principal and Executive Manager.
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Dealer shall give Seller prior written notice of any proposed change in
Dealer Principal or Executive Manager and immediate notice of the death or
incapacity of Dealer Principal or Executive Manager. No change in Dealer
Principal or Executive Manager shall be effective unless and until embodied
in an appropriate amendment to this Agreement duly executed and delivered by
all of the parties hereto. Dealer acknowledges Seller's right (as set forth
herein and in the Standard Provisions) to require consent to any change in
the management of Dealer and agrees that a change without such consent from
Seller is void, of no force and effect, and grounds for termination. Lithia
and Dealer further agree that they will not challenge, contest, dispute, or
litigate, except in accordance with the dispute resolution procedures
contained in Article Fifteenth (c):
(i) any action taken by Seller (including, without limitation,
termination of this Agreement) in response to an attempt to change the
management of Dealer without Seller's consent;or
(ii) any decision by Seller to withhold consent to a proposed
change in management of Dealer; or
(iii) any decision by Seller to withhold approval of a proposed
management candidate.
To enable Seller to evaluate and respond to Dealer concerning any
proposed change in Dealer Principal or Executive Manager or the appointment
of any chief executive or similar officer of Lithia, Dealer agrees to
provide, in the form requested by Seller and in a timely manner, all
applications and information customarily requested by Seller to evaluate the
proposed change. While Seller shall not unreasonably withhold its consent to
any such change, it is agreed that any successor Dealer Principal, Executive
Manager or chief executive or similar officer of must possess personal
qualifications, expertise, reputation, integrity, experience and ability
which are, in the opinion of Seller, satisfactory. Seller will determine
whether, in its opinion, the proposed change or appointment is likely to
result in a successful dealership operation with capable management that will
satisfactorily perform Dealer's obligations under this Agreement. Seller
shall have no obligation to transact business with any person who is not
named as a Dealer Principal or Executive Manager of Dealer hereunder prior to
having concluded its evaluation of such person.
Any successor Dealer Principal or Executive Manager and any chief
executive or similar officer of must meet the following minimum requirements
in order to be submitted to Seller for approval:
(i) At least three years of experience as a general manager of
an automobile dealer in a major metropolitan area or similar position
involving all aspects of the day-today operations of such an automobile
dealership (including, without limitation, new and used vehicle sales,
service, parts and administration); and
(ii) A demonstrated track record of success in his/her prior
automobile dealership activities as measured by the dealerships' performance
under his/her management. The dealership(s) shall have consistently
demonstrated at least the following:
1. An above average level of sales performance when
measured against regional or zone averages and as measured against sales
performance objectives established by the manufacturer; and
2. An above average level of customer satisfaction when
measured against regional or zone averages for the make; and
3. A history of cooperation and good relations
with manufacturer(s) and/or distributor(s).
(d) Evaluation of Management. Dealer and Seller understand and
acknowledge that the personal qualifications, expertise, reputation,
integrity, experience and ability of the Dealer Principal and Executive
Manager and their ability to effectively manage Dealer's day-today Dealership
Operations is critical to the success of Dealer in performing its obligations
under this Agreement. Seller may from time to time develop standards and/or
procedures for evaluating the performance of the Dealer Principal and
Executive Manager and of Dealer's personnel generally.
Seller may, from time to time, evaluate the performance of the Dealer
Principal and Executive Manager and will advise Dealer, the Dealer Principal
and the Executive Manager of the results of such evaluations and the way in
which any deficiencies affect Dealer's performance of its obligations under
this Agreement.
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(e) Compensation of Executive Manager. Executive Manager will have a
substantial portion of his compensation tied to Dealer's overall performance
with respect to objectives for sales, market penetration and customer service
which will be established at quarterly intervals.
ARTICLE FIFTH: Additional Provisions
The additional provisions set forth in the attached "Nissan Dealer
Sales and Service Agreement Standard Provisions," bearing form number
NDA-4S/9-88, as amended in Article Thirteenth of this Agreement, and
excepting only the provisions contained in Sections 4, 14 and 16, are hereby
incorporated in and made a part of this Agreement. The Notice of Primary
Market Area, Dealership Facilities Addendum, Product Addendum, Dealership
Identification Addendum, Holding Company Addendum, if applicable, and all
Guides and Standards referred to in this Agreement (including references
contained in the Standard Provisions referred to above) are hereby
incorporated in and made a part of this Agreement. Dealer further agrees to
be bound by and comply with: the Warranty Manual; Seller's Manuals or
Instructions heretofore or hereafter issued by Seller to Dealer; any
amendment, revision or supplement to any of the foregoing; and any other
manuals heretofore or hereafter issued by Seller to Dealer.
ARTICLE SIXTH: Termination of Prior Agreements
This Agreement cancels, supersedes and annuls all prior contracts,
agreements and understandings except as stated herein, all negotiations,
representations and understandings being merged herein. No waiver,
modification or change of any of the terms of this Agreement or change or
erasure of any printed part of this Agreement or addition to it (except
filling of blank spaces and lines) will be valid or binding on Seller unless
approved in writing by the President or an authorized Vice President of
Seller.
ARTICLE SEVENTH: Term
This Agreement shall have a term commencing on the effective date
hereof and, subject to its earlier termination in accordance with the
provisions of this Agreement, expiring on the expiration date indicated in
the Final Article of this Agreement. Subject to other applicable provisions
hereof, this Agreement shall automatically terminate at the end of such
stipulated term without any action by Dealer, Seller or any of the other
parties hereto.
ARTICLE EIGHTH: License of Dealer
If Dealer is required to secure or maintain a license for the conduct
of its business as contemplated by this Agreement in any state or
jurisdiction where any of its Dealership Operations are to be conducted or
any of its Dealership Facilities are located, this Agreement shall not be
valid until and unless Dealer shall have furnished Seller with written notice
specifying the date and number, if any, of such license or licenses issued to
Dealer, Dealer shall notify Seller immediately in writing if Dealer shall
fail to secure or maintain any and all such licenses or renewal thereof or,
if such license or licenses are suspended or revoked, specifying the
effective date of any such suspension or revocation.
ARTICLE NINTH: Additional Representations and Warranties
(a) All of the representations and covenants made to Seller by the
other parties to this Agreement have been made jointly and severally by each
of the parties hereto which has made any such representation or covenant.
(b) In addition to the representations set forth elsewhere in this
Agreement, Lithia and Dealer jointly and severally, represent to Seller that:
(i) All of the documents and correspondence provided to Seller
by Lithia and Dealer, or any of their agents in connection with the
solicitation of Seller's consent to this Agreement, are true and correct
copies of such documents.
(c) In addition to the covenants set forth elsewhere in this
Agreement, Lithia and Dealer, jointly and severally, agree with Seller that:
(i) Dealer will at all times be involved in the operation of
the Nissan dealership currently operated by it and Dealer will not conduct
any other type of business.
(ii) No distributions will be made to the stockholders or
partners of Dealer and if such distributions would cause Dealer to fail to
meet any of the Guides and Standards relating to the capitalization of
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Dealer. In particular, will not be permitted to voluntarily redeem any of
its preferred stock, if prior to and after giving effect to such redemption
Dealer fails to meet any of the Guides and Standards relating to
capitalization of Dealer.
(iii) Lithia and Dealer hereby, jointly and severally, indemnity
and hold harmless, Seller, its officers, directors, affiliates and agents,
and each person who controls Seller within the meaning of the Securities Act
of 1933, as amended (the "Act"), from and against any and all losses, claims,
damages or liabilities, to which they or any of them may become subject under
the Act, the Securities Exchange Act of 1934, as amended, or any other
federal or state securities law, rule or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities arise out
of the sale by Lithia or Dealer of any securities. The indemnification
provided for in this paragraph shall be exclusive of, and in addition to, any
indemnification pursuant to Section 10 of the Standard Provisions.
(iv) One of the conditions to the effectiveness of this
Agreement by Seller is the delivery of an opinion of counsel to all of the
parties hereto (other than Seller) to the effect that this Agreement has been
duly executed and delivered by each of the parties thereto (other than
Seller) and is the legal, valid and binding obligation of each of such
parties enforceable in accordance with its terms.
ARTICLE TENTH: Right of First Refusal, Exclusivity
A. Seller's Right of First Refusal
In addition to its rights under this Agreement, in the event that
Lithia or Dealer should desire to enter into a transaction, which if not
approved by Seller, would result in a breach of the covenants set forth in
Article Third, Sections (a)(i), (a)(ii), (a)(iii), (a)(iv) or (b) of this
Agreement or in the event that any of the covenants set forth in the fourth
full paragraph of Article Third, Section (b), Article Fourth, Section
(a)(vii) or Article Ninth, Section (c)(ii) of this Agreement are breached,
Seller shall have the additional right and option to purchase the dealership
assets or ownership interests pursuant to this Article Tenth.
(a) If Seller chooses to exercise its right of first refusal, it must
do so in its written refusal to consent to the proposed sale or transfer
pursuant to Section 15 of the Standard Provisions or, if Section 15 of the
Standard Provisions does not apply, within sixty (60) days of receipt of
notification that a event triggering Seller's right of first refusal
hereunder has occurred. Dealer agrees not to complete any proposed change or
sale prior to the expiration of the period for exercise of Seller's right of
first refusal and without Seller's prior written consent. Such exercise
shall be null and void if Dealer withdraws its proposal within thirty (30)
days following Dealer's receipt of Seller's notice exercising its rights of
first refusal.
(b) After being exercised, Seller's right to purchase may be assigned
to any party, and Seller hereby agrees to guarantee the full payment of the
purchase price by such assignee. Seller's rights under this Article Tenth
shall be binding on and enforceable against any assignee or successor in
interest of Dealer or purchaser of Dealer's assets. Seller shall have no
obligation to exercise its rights hereunder.
(c) If Dealer has entered into a bona fide written buy/sell agreement
respecting its Nissan dealership, Seller's right under this Article Tenth
shall be a right of first refusal, enabling Seller to assume the prospective
purchaser's purchase rights and obligations under such buy/sell agreement.
The purchase price and other terms of sale shall be those set forth in such
agreement and any related documents. Seller may request and Dealer agrees to
provide all other documents relating to Dealer and the proposed transfer,
including, but not limited to, those reflecting any other agreements or
understandings between the parties to the buy/sell agreement. If Dealer
refuses either to provide such documentation or to state in writing that no
such document exists, it shall be presumed that the agreement is not bona
fide.
(d) If Seller determines pursuant to paragraph (c) above that the
buy/sell agreement is not bona fide, Seller will so notify Dealer. Dealer
shall have ten (10) days from its receipt of such notice within which to
withdraw its proposal. Seller's exercise of its rights hereunder shall be
null and void if Dealer withdraws its proposal within such time period. If
the proposal is not withdrawn, Seller shall have the option, but no
obligation, under this Article Tenth to purchase the principal assets of
Dealer utilized in the Dealership Operations, including real estate and
leasehold interest or to purchase the ownership interests of Dealer, and to
terminate this Agreement and all rights granted Dealer hereunder. If the
Dealership Facilities are leased by Dealer from an affiliated company, the
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right to purchase the principal assets, or the ownership interests, of
Dealer, shall include the right to lease the Dealership Facilities. The
purchase price shall be at the then fair market value as determined by an
independent appraiser selected by Seller and reasonably acceptable to Dealer,
and the other terms of sale shall be those agreed by Seller, Dealer, and
Lithia.
(e) Dealer shall transfer the affected property free and clear of
liens, claims, mortgages, and encumbrances.
(f) In addition to any other rights Seller may have at law, in equity
or hereunder, any conveyance of the dealership in violation of this right of
first refusal shall be voidable by Seller.
(g) In the event that Seller elects not to exercise its right to
purchase the dealership assets or the ownership interests of the Dealer and
Lithia, Dealer and Lithia agree that it will offer to sell such assets or
interests to the Dealer's then current management team or to some other
entity or persons acceptable to Seller. If such individuals are not
interested in such a transaction and no other entity or individuals
acceptable to Seller can be found then this Agreement will be terminable at
Seller's option, by deliver of written notice to Dealer.
B. Right of First Re@ on Sale or Lease of Property to a Third Party.
(a) In addition to its rights under Articles Third and Fourth and
Section 15 of the Standard Provisions, Dealer agrees that should Dealer seek
to sell or lease all or substantially all of the Approved Site to a third
party for use as a Nissan New Motor Vehicle Dealership, Seller shall have the
additional right and option, but not the obligation, to purchase or lease the
Approved Site pursuant to this Article Thirteenth. A sale or lease for use
other than a Nissan New Motor Vehicle Dealership is void.
(b) If Seller chooses to exercise its right of first refusal, it must
do so by written notice delivered to Dealer within 60 days of Seller's
receipt of notice of the proposed sale or lease by Dealer. Dealer agrees not
to complete any proposed sale or lease prior to the expiration of the period
for exercise of Seller's right of first refusal and without Seller's prior
written consent, and agrees to allow Seller to perform an environmental study
of the property. Such exercise shall be null and void if Dealer withdraws
its sale or lease proposal within thirty (30) days following Dealer's receipt
of Seller's notice exercising its right of first refusal.
(c) After being exercised, Seller's right to purchase or lease may be
assigned to any party, and Seller hereby agrees to guarantee the full payment
of the purchase price or the rental payment by such assignee. Seller's
rights under this Article Thirteenth shall be binding on and enforceable
against any assignee or successor in interest of Dealer or purchaser of
Dealer's assets. Seller shall have no obligation to exercise its rights
hereunder, and Seller may rescind its offer if the property is determined to
be contaminated pursuant to an environmental study. Such contamination shall
be deemed a breach of this agreement by dealer.
(d) Should Seller actually purchase or lease the facility, Dealer
shall also furnish to Seller copies of any easements, licenses, environmental
studies or other documents affecting the property.
(e) Dealer shall transfer the affected property by deed conveying
marketable title free and clear of liens, claims, mortgages, encumbrances,
tenancies and occupancies, or, if applicable, by an assignment of any
existing lease. The Warranty Deed shall be in proper form for recording.
Dealer shall deliver complete possession of the property at the time of
delivery of the Deed or lease assignment. Dealer shall also furnish to
Seller copies of any easements, licenses, or other documents affecting the
property and shall assign any permits or licenses which are necessary for the
conduct of the Dealership Operations.
(f) In addition to any other rights Seller may have at law, in equity
or hereunder, any sale or lease of the Approved Site in violation of this
right of first refusal shall be voidable by Seller
C. Exclusivity Provisions.
In order for Dealer to maintain competitive Dealership Facilities to
effectively market Nissan Products, Dealer hereby agrees to abide by and
never challenge the following provisions (hereinafter "Exclusivity
Provisions"). These Exclusivity Provisions shall be effective on or before
the execution of the Agreement, and continue in effect thereafter so long as
Dealer (or its principals) are authorized Nissan dealers and these provisions
shall be binding on any successors-in-interest, assigns or purchasers of
Dealer:
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(a) The only line-make of new, unused motor vehicles which Dealer
shall display and sell at the Dealership Facilities shall be the Nissan line
and make of motor vehicles. Dealer shall not conduct any dealership
operations for any other make or line of new, unused vehicles from the
Dealership Facilities throughout the term of this Agreement.
(b) Dealer shall sell and maintain a full line of Genuine Nissan
Parts and Accessories at the Dealership Facilities and shall provide a full
range of automotive servicing for Nissan vehicles at the Dealership
Facilities pursuant to Section 5 of the Standard Provisions to the
Agreement. Nothing contained herein, however, shall preclude Dealer from
offering parts, accessories or servicing for vehicles of other lines or makes
so long as such products or services are incidental to Dealer's Nissan
Dealership Operations;
(c) Dealer shall not advertise or promote any make or line of new,
unused vehicles from the Dealership Facilities other than the Nissan line; and
(d) Dealer shall not install or maintain any sign at or near the
Dealership Facilities which would tend to lead the public into believing that
any line or make of vehicles other than the Nissan line is sold at the
Dealership Facilities.
ARTICLE ELEVENTH: Breach By Dealer
In the event (i) that any of the representations and warranties of
Dealer, Lithia, Dealer Principle or Executive Manager, contained in this
Agreement shall prove not to have been true and correct when made or (ii) of
any breach or violation of any of the covenants made by Dealer and Lithia,
Dealer Principal or Executive Manager, in Articles Third, Fourth and Ninth of
this Agreement or (iii) of the occurrence of any of the events warranting
termination of this Agreement as set forth in Section 12.A of the Standard
Provisions, Seller may terminate this Agreement, prior to the expiration date
hereof, by giving Dealer written notice thereof, such termination to be
effective upon the date specified in such notice, or such latter date as may
be required by any applicable statute with the effect set forth in Section 13
of the Standard Provisions.
ARTICLE TWELFTH: Execution of Agreement
This Agreement, and any Addendum or amendment or notice with respect
thereto, shall be valid and binding on Seller only when it bears the
signature of either the President or an authorized Vice President of Seller
and, when such signature is a facsimile, the manual countersignature of an
authorized employee of Seller at the Director level and a duplicate original
thereof is delivered personally or by mail to the Dealership Location. This
Agreement shall bind Dealer and the other parties hereto only when it is
signed by: a duly authorized officer or executive of Dealer or such party if
a corporation; one of the general partners of Dealer or such party if a
partnership; or Dealer or such party if an individual.
ARTICLE THIRTEENTH: Amendments to Standard Provisions
(a) Section 1.0 of the Standard Provisions is hereby amended to read
as follows:
"O. 'Principal Owners(s)' shall mean the persons named as Dealer
Principal in the Final Article of this Agreement upon whose personal
qualifications, expertise, integrity, experience, ability and
representations Seller has relied in entering into this Agreement."
(b) Section 6.I of the Standard Provisions is hereby amended to read
as follows:
"Seller shall have the right, at all reasonable times during
regular business hours, to inspect the Dealership Facilities and to
examine, audit and make and take copies of all records, accounts and
supporting data relating to the sale, sales reporting, service and
repair of Nissan Products by Dealer. Whenever possible, Seller shall
attempt to provide Dealer with advance notice of an audit or
examination of Dealers operations. Seller shall also have the right,
at all reasonable times during regular business hours and upon advance
notice, to examine, audit and make and take copies of all records,
accounts and supporting data of and Dealer relating to the business,
ownership or operations of Dealer."
(c) Section 12.A.(I) of the Standard Provisions is hereby amended to
read as follows:
"(1) Any actual or attempted sale, transfer, assignment or
delegation, whether by operation of law or otherwise, by Dealer or
Inc., of any interest in or right, privilege or obligation under this
Agreement, or of the principal assets necessary for the performance of
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Dealer's responsibilities under this Agreement, without, in either
case, the prior written consent of Seller having been obtained, which
consent shall not be unreasonably withheld;"
(d) Section 12.A.(3) of the Standard Provisions is hereby amended to
read as follows:
"(3) Removal, resignation, withdrawal or elimination from Dealer
for any reason of the Executive Manager, or removal, resignation,
withdrawal or elimination of Dealer Principal from operational control
of Dealer, or removal, resignation, withdrawal or elimination from
Dealer of Executive Manager; provided, however, in each case, Seller
shall give Dealer a reasonable period of time within which to replace
such person with a individual satisfactory to Dealer as the case may
be, and Seller in accordance with Article Fourth of this Agreement; or
the failure of Dealer to retain an Executive Manager who, in accordance
with Article Fourth of this Agreement, in Seller's reasonable opinion,
is competent, possesses the requisite qualifications for the position,
and who will act in a manner consistent with the continued interests of
both Seller and Dealer."
(e) Section 12.B.(2)(i) of the Standard Provisions is hereby amended to
read as follows:
"(i) any dispute, disagreement or controversy between or among
Dealer or Lithia and any third party or between the owners and
management personnel of Dealer relating to the management or ownership
of Dealer and Lithia develops or exists which, in the reasonable
judgment of Seller, tends to adversely affect the conduct of the
Dealership Operations or the interests of Dealer or Seller; or"
(f) Section 12.B.(2)(ii) of the Standard Provisions is hereby amended
to read as follows:
"(ii) any other act or activity of Dealer, and/or Lithia, or any
of their owners or management occurs, which substantially impairs the
reputation or financial standing of Dealer or any of its management
subsequent to the execution of this Agreement:"
(g) Exhibits A and B are hereby incorporated by reference.
ARTICLE FOURTEENTH: Branding / Business Name
The parties acknowledge and agree that Dealer shall do business as
Lithia Nissan of Bakersfield. Dealer agrees to include in its promotional,
marketing and advertising efforts the approved name of the Dealership or
another name approved by Nissan that includes the Nissan name. In all
television, radio, print and other advertising and marketing conducted by
dealer, Dealer shall refer to itself as "Lithia Nissan of Bakersfield" or
such other approved name. Dealer shall actively and effectively promote
primarily the "Nissan" name. Under no circumstances shall the name "Nissan"
be subordinated to or promoted less aggressively than any other name (e.g.,
"Lithia") by Dealer.
ARTICLE FIFTEENTH: Special Conditions
(a) Adequate Representation of Entire Line of Nissan Vehicles
Dealer shall actively and effectively promote the sale of Nissan's
entire line of vehicles and products to customers located throughout the
Primary Market Area. In evaluating Dealer's sales performance, in addition
to those factors established in the Standard Provisions, Nissan will evaluate
Dealer's performance by vehicle segment. Dealer is obligated to adequately
represent Nissan in each and every model line. Adequate representation is
the higher of national, regional, state or DMA average, adjusted for segment
popularity, as set forth in the Business plan.
(b) Nissan Products
The definition of "Nissan Products" in the Standard Provisions is
amended to mean Nissan Vehicles (defined as new Nissan Cars and new Nissan
Trucks, as well as "near-new" Nissan Vehicles of the current and three prior
model years), Genuine Parts and Accessories, Nissan Security+Plus and such
other products and services offered by Nissan to Dealer and designated by
Nissan as a Nissan Product. Dealer shall actively and effectively promote
the sale of Nissan Products. Effectiveness with respect to Nissan
Security+Plus sales is measured by the ratio of Security+Plus sales to new
vehicles sales, compared to the higher of national, regional, state or DMA
average as set forth in the Business plan.
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(c) Dispute Resolution Process
The parties acknowledge that, at the state and federal level, various
courts and agencies would, in the absence of this Article Fifteenth (c), be
available to them to resolve claims or controversies which might arise
between them. The parties agree that it is inconsistent with their
relationship for either to use courts or governmental agencies to resolve
such claims or controversies.
THEREFORE, CONSISTENT WITH THE PROVISIONS OF THE UNITED STATES
ARBITRATION ACT (9 U.S.C. SEC. 1 ET SEQ.), THE PARTIES TO THIS AGREEMENT
AGREE THAT THE DISPUTE RESOLUTION PROCESS OUTLINED IN THIS SECTION, WHICH
INCLUDES BINDING ARBITRATION, SHALL BE THE EXCLUSIVE MECHANISM FOR RESOLVING
ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING IN ANY WAY TO
THIS AGREEMENT OR TO THE RELATIONSHIP BETWEEN THE PARTIES, INCLUDING BUT NOT
LIMITED TO CLAIMS UNDER ANY STATE OR FEDERAL STATUTES (HEREINAFTER
"DISPUTES"). Section 16 of the Standard Provisions is deleted in its
entirety.
There are two steps in the Dispute Resolution Process: Mediation and
Binding Arbitration. All Disputes must first be submitted to Mediation,
unless that step is waived by written agreement of the parties. Mediation is
conducted by a panel consisting of an equal number of representatives of the
parties designated by Nissan and selected by Dealer. The Mediation Panel
will evaluate each position and recommend a solution. This recommended
solution is not binding.
If a dispute has not been resolved after Mediation, or if Dealer and
Nissan have agreed in writing to waive Mediation, the Dispute will be settled
by Binding Arbitration. SPECIFICALLY, THE PARTIES AGREE TO RESOLVE ALL SUCH
DISPUTES BY BINDING ARBITRATION CONDUCTED IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION PROCEDURES OF THE AMERICAN ARBITRATION ASSOCIATION, WITH THE
PREVAILING PARTY TO RECOVER ITS COSTS AND ATTORNEY'S FEES FROM THE OTHER
PARTY. ALL ARBITRATION AWARDS ARE BINDING AND NONAPPEALABLE, EXCEPT AS
OTHERWISE PROVIDED IN THE UNITED STATES ARBITRATION ACT. JUDGMENT UPON ANY
SUCH AWARD MAY BE ENTERED AND ENFORCED IN ANY COURT HAVING JURISDICTION.
(d) Business Plan
Dealer and Nissan shall execute a Business Plan in the form specified
in the Business Planning Process Workbook that describes how Dealer will
fulfill it sales, service, customer relations and other commitments
hereunder, including heightened performance standards that Dealer commits to
meet;
(e) Option to Purchase
If the Dealer Agreement is to expire or be terminated: i) Voluntarily
by Dealer; ii) By Nissan upon the occurrence of any of the events specified
in Section 12A. of the Standard Provisions to the Agreement (as modified
herein); or iii) As a result of the death or physical or mental incapacity of
Principal Owners, Nissan has the option to Purchase the principal assets of
Dealer utilized in the dealership business, including such real property as
Nissan may elect to purchase, and cancel the Agreement and all rights granted
Dealer thereunder. The purchase price of the dealership assets and real
property and other terms will be determined by agreement between the parties
or, if the parties are unable to reach agreement in a reasonable time, by
arbitration pursuant to the Dispute Resolution Process established in
Paragraph 12 hereof. Nissan must advise Dealer of its intent to exercise
this option within 30 days after one party notifies the other of its intent
to terminate the Agreement. Nissan may assign its right to exercise its
option to purchase under this paragraph to any third party.
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FINAL ARTICLE
The Dealer is LITHIA NB, INC. dba LITHIA NISSAN OF BAKERSFIELD a
corporation formed under the laws of the CALIFORNIA. Dealer is located in
Bakersfield, California.
The other parties to this Agreement are LITHIA MOTORS, INC. a
corporation incorporated under the laws of the state of Oregon, and Xxxxxx X.
XxXxxx.
The Dealer Principal is Xxxxxx X. XxXxxx
The Executive Manager is: See Article Fourth (a)(i) contained herein.
Expiration Date: October 2, 2002
Working Capital Guide Requirement: $ 1,050,000
Net Worth Guide Requirement: $ 1,840,000
Flooring Line: $ 4,943,200
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
triplicate effective as of the second day of October, 1997 at Carson,
California.
SELLER:
NISSAN DIVISION
NISSAN MOTOR DIVISION CORPORATION IN USA
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Vice President
By: /s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
Regional Vice President
LITHIA MOTORS, INC.
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
President
LITHIA NB, INC. dba LITHIA NISSAN OF BAKERSFIELD
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
Dealer Principal
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NISSAN
HOLDING COMPANY ADDENDUM TO
NISSAN DEALER SALES AND SERVICE AGREEMENT
Pursuant to Article Third (b) of the Nissan Dealer Sales & Service
Agreement (the "Agreement") in effect between the authorized Nissan Dealer
named below and Nissan Motor Corporation in U.S.A. ("Seller"), Dealer
represents and agrees the following Principal Owner(s) of Dealer named in the
Final Article of the Agreement which is (are) a corporation, partnership, or
other entity and not a natural person, is (are) owned as follows:
Name of Owner: Lithia NB, Inc., a corporation, incorporated or formed under
the laws of the State of ___________.
PRINCIPAL OWNERS(S)/SETTLOR(S)
PERCENTAGE
NAME RESIDENCE INTEREST
Lithia Motors, Inc. 000 X. Xxxxxxx Xxxxxx 100%
Xxxxxxx, Xxxxxx 00000
OTHER OWNER(S)/SETTLOR(S)
PERCENTAGE
NAME RESIDENCE INTEREST
TRUSTEE(S)
PERCENTAGE
NAME RESIDENCE INTEREST
OTHER RELEVANT INFORMATION:
This Holding Company Addendum cancels and supersedes any previous
Holding Company addendum between Dealer and Seller.
This Holding company Addendum is effective as of October 2, 1997.
DEALER:
Lithia NB of Bakersfield, Inc. dba Lithia Nissan of Bakersfield
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx, President
Bakersfield, California
Dealer Code: 3475
SELLER:
Nissan Division, Nissan Motor Corporation in U.S.A.
By: /s/ Vice President
Vice President, Nissan Division
By: /s/ Xxxx Xxxxxxxx
Regional Vice President
(File this Addendum with Current Sales & Service Agreement)
13
NISSAN
HOLDING COMPANY ADDENDUM TO
NISSAN DEALER SALES AND SERVICE AGREEMENT
Pursuant to Article Third (b) of the Nissan Dealer Sales & Service
Agreement (the "Agreement") in effect between the authorized Nissan Dealer
named below and Nissan Motor Corporation in U.S.A. ("Seller"), Dealer
represents and agrees the following Principal Owner(s) of Dealer named in the
Final Article of the Agreement which is (are) a corporation, partnership, or
other entity and not a natural person, is (are) owned as follows:
Name of Owner: Lithia Motors, Inc., a corporation, incorporated or formed
under the laws of the State of ___________.
PRINCIPAL OWNERS(S)/SETTLOR(S)
PERCENTAGE
NAME RESIDENCE INTEREST
Lithia Holding Company, L.L.C. 000 X. Xxxxxxx Xxxxxx
53.5%
Xxxxxxx, Xxxxxx 00000
OTHER OWNER(S)/SETTLOR(S)
PERCENTAGE
NAME RESIDENCE INTEREST
Public Ownership 46.5%
TRUSTEE(S)
PERCENTAGE
NAME RESIDENCE INTEREST
OTHER RELEVANT INFORMATION:
This Holding Company Addendum cancels and supersedes any previous
Holding Company addendum between Dealer and Seller.
This Holding company Addendum is effective as of October 2, 1997.
DEALER:
Lithia NB of Bakersfield, Inc. dba Lithia Nissan of Bakersfield
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx, President
Bakersfield, California
Dealer Code: 3475
SELLER:
Nissan Division, Nissan Motor Corporation in U.S.A.
By: /s/ Vice President
Vice President, Nissan Division
By: /s/ Xxxx Xxxxxxxx
Regional Vice President
(File this Addendum with Current Sales & Service Agreement)
14
NISSAN
HOLDING COMPANY ADDENDUM TO
NISSAN DEALER SALES AND SERVICE AGREEMENT
Pursuant to Article Third (b) of the Nissan Dealer Sales & Service
Agreement (the "Agreement") in effect between the authorized Nissan Dealer
named below and Nissan Motor Corporation in U.S.A. ("Seller"), Dealer
represents and agrees the following Principal Owner(s) of Dealer named in the
Final Article of the Agreement which is (are) a corporation, partnership, or
other entity and not a natural person, is (are) owned as follows:
Name of Owner: Lithia Holding Company, L.L.C., a limited liability company
formed under the laws of the State of ___________.
PRINCIPAL OWNERS(S)/SETTLOR(S)
PERCENTAGE
NAME RESIDENCE INTEREST
Xxxxxx X. XxXxxx 234 Vista 58.125%
Xxxxxxx, XX 00000
OTHER OWNER(S)/SETTLOR(S)
PERCENTAGE
NAME RESIDENCE INTEREST
M.L. Xxxx Xxxxxxx 000 Xxxxxxxxx Xxxxxx 34.875%
Xxxxxxx, XX 00000
R. Xxxxxxxx Xxxx 0000 Xxxxxx Xxxxx Xxxxx 7.000%
Xxxxxxx, XX 00000
TRUSTEE(S)
NAME RESIDENCE
OTHER RELEVANT INFORMATION:
This Holding Company Addendum cancels and supersedes any previous
Holding Company addendum between Dealer and Seller.
This Holding company Addendum is effective as of October 2, 1997.
DEALER:
Lithia NB of Bakersfield, Inc. dba Lithia Nissan of Bakersfield
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx, President
Bakersfield, California
Dealer Code: 3475
SELLER:
Nissan Division, Nissan Motor Corporation in U.S.A.
By: /s/ Vice President
Vice President, Nissan Division
By: /s/ Xxxx Xxxxxxxx
Regional Vice President
(File this Addendum with Current Sales & Service Agreement)
15
