EXHIBIT 10.10.4
ADDENDUM TO SECTION X - ADDITIONAL PROVISIONS
These Additional Provisions to Toyota Dealer Agreement ("Additional
Provisions") are entered into as of DECEMBER 23, 1996 among DISTRIBUTOR,
DEALER, LITHIA MOTORS, INC., an Oregon corporation, (hereinafter "LITHIA"),
LITHIA HOLDING COMPANY, L.L.C., an Oregon limited liability company
("hereinafter "HOLDING") and XXXXXX X. XXXXXX (hereinafter "XxXxxx") and form
a part of and are incorporated into the Dealer Agreement.
RECITALS
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1. DISTRIBUTOR and DEALER have entered Into a Toyota Dealer Agreement
(the "Dealer Agreement") dated as of NOVEMBER 15, 1996.
2. LITHIA is the 100% shareholder of DEALER, HOLDING is the controlling
(defined below) shareholder of LITHIA, XxXxxx is the controlling
manager of HOLDING. For the purposes of these Additional Provisions,
the terms "control", "controlling" and "controlled" have meanings
given to them in Rule 405 under the Rules and Regulations of the
Securities Act of 1933, as amended.
3. The current ownership of the outstanding stock of LITHIA is as
follows:
Share of Total Type of Votes Per Share of
Outstanding Stock Stock Share Total
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HOLDING NOT LESS THAN COMMON 10 NOT LESS THAN
55% CLASS B 93.75%
OTHERS NOT MORE THAN COMMON 1 NOT MORE THAN
45% CLASS A 6.25%
4. The Members of HOLDING are as follows:
Share of Units
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Xxxxxx X. XxXxxx 58.125%
Xxxxxxx X. Xxxxxxx 34.875%
R. Xxxxxxxx Xxxx 7.000%
The controlling Manager of HOLDING Is:
Xxxxxx X. XxXxxx
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5. HOLDING, DEALER, XxXxxx and LITHIA are hereinafter collectively
referred to as the "LITHIA Parties". DISTRIBUTOR and the LITHIA
Parties are hereinafter referred to as the "Parties".
6. The Parties wish to enter into these Additional Provisions for the
purpose of agreeing to be bound by the terms of these Additional
Provisions, which are a part of and are incorporated into the Dealer
Agreement.
NOW THEREFORE, in consideration for the mutual agreements contained
herein and in the Dealer Agreement, the Parties agree as follows:
A. GENERAL
1. DISTRIBUTOR and LITHIA have entered into an Agreement dated SEPTEMBER
30, 1996 (the "Agreement") relating, among other matters, to the
number of Toyota and Lexus dealerships which may be acquired by LITHIA
and its affiliates and to certain aspects of the management of Toyota
and Lexus dealerships owned by LITHIA. The LITHIA Parties agree that
the Agreement is incorporated into and forms a part of the Dealer
Agreement and these Additional Provisions. To the extent that any
provision of the Agreement is inconsistent with the Dealer Agreement
or these Additional Provisions, the provisions of the Agreement shall
be controlling.
2. The LITHIA Parties acknowledge and agree that if any provision of
these Additional Provisions is violated in any material respect by any
of the LITHIA Parties, DISTRIBUTOR will have the right to terminate
the Dealer Agreement on sixty (60) days' written notice to DEALER, if
DEALER fails to cure such violation prior to the expiration of such
sixty (60) days.
3. The LITHIA Parties agree to comply with all Toyota policies, including
all Market Representation policies.
B. PROVISIONS RELATING TO THE STRUCTURE OF DEALER
1. SINGLE PURPOSE ENTITY. DEALER will be maintained as a separate legal
entity, and will not engage in any business other than the operation
of this Toyota Kia dealership and activities related hereto.
2. NO MERGER, CONSOLIDATION, ETC. DEALER will not be merged with or
into, or be consolidated with, or acquire substantially all of the
assets of, any other entity, without the prior written consent of
DISTRIBUTOR, in its sole discretion.
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C. PROVISIONS RELATING TO MANAGEMENT
1. ROLE OF XXXXXX. XxXxxx will remain actively involved in the
management of all aspects of the operations of DEALER. The LITHIA
Parties have identified XxXxxx as the LITHIA contact official set
forth in paragraph 8 of the Agreement.
a). XxXxxx will be an officer of DEALER. XxXxxx, in
consultation with management of LITHIA, will have complete
control over all management decisions of DEALER or relating
to DEALER.
b). The General Manager will report directly to and be
responsible to XxXxxx.
c). DISTRIBUTOR may rely on oral or written communications and
agreements from XxXxxx as being the binding agreements of
DEALER, without any duty of the DISTRIBUTOR to confirm that
such communication or agreement has been duly authorized by
the Board of Directors of DEALER, LITHIA, or any other
individual or entity.
2. SUCCESSORS TO XXXXXX. In the event that XxXxxx wishes to discontinue
his role in the management of DEALER as set forth in Section C.1.,
such action may be taken only with the prior written consent of
DISTRIBUTOR. Such consent of DISTRIBUTOR may be conditioned on
transfer of XxXxxx'x management responsibilities to an individual or
individuals approved by DISTRIBUTOR, taking into amount such factors
as DISTRIBUTOR reasonably deems to be relevant and are consistent with
all applicable laws.
3. ROLE OF THE GENERAL MANAGER.
a). XXXXXXX X. XXXXXXXX or any subsequent General Manager of DEALER
approved by DISTRIBUTOR, will serve exclusively as General
Manager of the Toyota operation and any other line-make that
DISTRIBUTOR has consented may be dueled with Toyota, on a full
time basis and will not have any management responsibilities with
inspect to any other dealership or business.
b). The General Manager will have responsibility for and authority
with respect to the day-to-day operations of DEALER in the
ordinary course of business, under the supervision of LITHIA, and
the General Manager will have the following authority, without
the need for obtaining the prior approval
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of any other person:
(i) the authority to hire or terminate and employee of DEALER.
(ii) the authority to order vehicles and other products.
(iii) the authority to place advertising.
(iv) the authority to communicate with DISTRIBUTOR with respect
to all aspects of the business of DEALER,
(v) the authority to approve expenditure by DEALER in the
ordinary course of business in amounts of less than
$50,000 per item.
D. PROVISIONS RELATING TO CAPITALIZATION AND ACCOUNTING
1. No distributions will be made by DEALER to LITHIA if such
distributions would cause DEALER to fail to meet any of DISTRIBUTOR's
capitalization requirements, including but not limited to net working
capital requirements.
2. The operations and financial results of DEALER will be reported to
DISTRIBUTOR separately from those of any other entity, business or
activity, including but not limited to any of the LITHIA Parties and
any other dealerships directly or Indirectly owned or controlled by
any of the LITHIA Parties.
3. DEALER is currently dueled with KIA. There should be no change in the
line makes operating in DEALER's facility without the prior written
consent of DISTRIBUTOR. DEALER will maintain a separate and permanent
personnel staff and separate retail operations from other dealerships
directly or Indirectly owned by any of the LITHIA Parties.
4. DEALER shall not combine Its used car operation with that of any other
entity, including any other dealerships direct or indirectly owned by
any of the LITHIA Parties.
E. PROVISIONS RELATING TO OWNERSHIP
1. CHANGES IN INDIRECT OWNERSHIP. In addition to the right of
DISTRIBUTOR to approve changes in ownership of DEALER, as Set forth in
the Dealer Agreement and the Agreement, DISTRIBUTOR shall also have
the right, in compliance with applicable laws, to approve transfers In
ownership in LITHIA by HOLDING, will have the
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right to approve any transfer in management or ownership of HOLDING
which results in XxXxxx no longer being the controlling manager of
HOLDING, and will have the right to approve any change in this
ownership or capital structure of LITHIA which results in XxXxxx'x no
longer having a majority of the voting power of LITHIA.
2. DIRECTORS. LITHIA shall provide a list of all current members of its
Board of Directors, and resumes for each Director, to DISTRIBUTOR, and
provide such Information for each now member.
3. SUCCESSORS AND ASSIGNS. In the event there is a request for transfer
of any interest of the LITHIA Parties in accordance with the
provisions of the Dealer Agreement, the Agreement and these Additional
Provisions, as a condition to such transfer, the transferee must
agree, in writing, to be bound by all of the terms and provisions of
the Dealer Agreement, the Agreement and these Additional Provisions,
such agreement to be in form and substance reasonably acceptable to
DISTRIBUTOR.
F. FACILITIES
1. DEALER acknowledges that its current facility, designated in Section
VII of this Agreement, is deficient in the following respects:
Service Dept. (3,375)
Service Stalls (5)
DEALER understands and agrees that, to the extent DISTRIBUTOR has
permitted or will permit DEALER to continue Toyota operations without
full compliance with Toyota facility national minimum standards or
DISTRIBUTOR directives, or both, such conduct by the DISTRIBUTOR shall
not constitute a waiver of such standards or directives.
Further, DISTRIBUTOR may, at any time, amend this Agreement to establish a
timetable for DEALER to fully comply with DISTRIBUTOR's minimum facility
requirements.
2. DEALER acknowledges that the facility designated In Section VII of this
Toyota Dealer Agreement is severely deficient in its appearance and does
not project Toyota's #1 image, nor does it most Image USA requirements.
DEALER agrees to rectify these deficiencies in accordance with the
following timetable:
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DATE OF
ACTION COMPLETION
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Complete an exterior/fascia upgrade 12/01/97
utilizing the Image USA theme.
Complete an interior modernization/ 12/01/97
upgrade utilizing the Image USA themes.
DEALER understands and agrees that any provision set forth above that
contemplate action to be taken by DEALER after the expiration of this
Agreement are advisory only and that DISTRIBUTOR shall have no obligation
to extend this Agreement or to offer DEALER a subsequent Toyota Dealer
Agreement. DISTRIBUTOR does intend, however, to grant a subsequent Toyota
Dealer Agreement to DEALER provided that DEALER is in full compliance with
all of the terms and conditions of this Agreement, as well as any
reasonable requirements imposed by DISTRIBUTOR from time to time.
IN WITNESS WHEREOF, the Parties have executed these Additional Provisions as of
the date first above written.
TOYOTA MOTOR SALES, USA., INC. LITHIA MOTORS, INC.
By:/s/XXX XXXXX By:/s/XXXXXX X. XXXXXX
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Xxx Xxxxx
Title:General Manager Title:President
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LITHIA HOLDING CO., L.L.C.
By:/s/XXXXXX X.XXXXXX /s/XXXXXX X. XXXXXX
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Title: Xxxxxx X. XxXxxx
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LITHIA TKV, INC.
By:/S/XXXXXX X. XXXXXX
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Title:President
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TOYOTA MOTOR SALES, USA., INC.
By:/s/XXXXXX XXXXXXXX
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Xx. Xxxxxx Xxxxxxxx
Title:President
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