EXHIBIT 10.13.1
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 2nd day of August, 1996, by
and between XXXXXXX DODGE, INC., an Oregon corporation (hereinafter referred to
as "Seller" or the "Company"), and LITHIA MOTORS, INC. an Oregon corporation
(hereinafter referred to as "Purchaser").
WITNESSETH:
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to buy
from Seller substantially all of the assets of the Company which Assets are used
in and related to the business of the Company of selling, leasing and repairing
used vehicles and new Dodge vehicles (the "Business").
NOW, THEREFORE, upon the terms and considerations herein set forth, it is
agreed as follows:
1. PURCHASE AND SALE. Purchaser agrees to buy and Seller agrees to sell
the following assets of Company (hereinafter referred to as the "Assets") on the
following terms and at the prices indicated with payment to be made at
Preliminary and Final Closing (as hereinafter defined):
a. FIXED ASSETS. Purchaser agrees to purchase all of Seller's fixed
assets, subject to Purchaser's review and approval of same, including, but not
limited to machinery and shop equipment, special tools, signs, office equipment,
furniture and fixtures presently located
at Seller's place of business or in Seller's possession as of the date of this
offer. The purchase price for said assets is the sum of $450,000 and shall
include all of the fixed assets, as mentioned above, excluding the ADP computer
on lease and furniture in dealer's office, and also excluding any items,
mutually agreed to, and listed in Schedule "A" to become attached here. The
$450,000 shall be paid in full at the Final Closing.
b. GOODWILL, COVENANT NOT-TO-COMPETE AND OTHER ASSETS. Purchaser
shall purchase Seller's goodwill, name, service and sales customer lists,
vehicles sales and service records, telephone, fax number, and covenant not-to-
compete from BOB AND XXXXX XXXXXXX. The covenant not-to-compete shall be for a
period of five (5) years and shall include Lane County, Oregon. The purchase
price for said assets, including the covenant not-to-compete, is the sum of
$1,800,000. The terms of payment is as follows: $1,300,00 to be paid at the
Final Closing and the remaining $500,000 shall be in the form of a promissory
note from Purchaser which shall be fully amortized, including all principal and
interest at a rate of 8.5% per annum over a five (5) year period. In the event
Purchaser elects to use a Corporate Nominee, Lithia Motors, Inc., shall be a co-
maker of said promissory note, at anytime, without penalty. Purchaser shall be
obligated to pay off the promissory note if Purchaser becomes a public company.
Seller shall not hire any existing personnel without the written permission from
purchaser. Permission is granted for list provided 8/13/96.
c. NEW VEHICLES. Purchaser shall purchase from Seller all of
Seller's new unregistered, and unused 1996 and 1997 model Dodge vehicles ("New
Vehicles") at a price equal to factory invoice, less any factory holdbacks,
rebates or incentives, carryover model
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allowances, floorplan allowances, finance cost allowances, advertising charges,
and any other similar items which should reasonably be deducted to establish
Seller's net cost for such vehicles, plus dealer installed parts and accessories
at dealer's actual cost, and less the Seller's actual cost of any missing
accessories, equipment or parts. If there is any damage to any new vehicles,
there shall be a deduction of such damages as agreed upon between a
representative of Purchaser and a representative of Seller. If Purchaser and
Seller cannot agree on this amount, they shall choose an independent third party
to determine the amount and such party's determination shall be binding. All
new vehicles shall be paid in full at the Final Closing.
d. USED VEHICLES, COMPANY VEHICLES, AND DEMONSTRATORS. Purchaser
shall purchase, on an all-or-nothing basis, Seller's used vehicles, company
vehicles and demonstrators in Seller's inventory, as of the closing date, at a
value mutually agreed to by both Purchaser and Seller. In the event Purchaser
and Seller cannot agree on a value, then Seller shall retain those vehicles, and
Purchaser shall not be obligated to purchase same. Any of the above vehicles
purchased shall be paid in full at the Final Closing. [SELLER MUST REMOVE
VEHICLES WITHIN 1 WEEK IF NOT PURCHASED.]
e. PARTS AND ACCESSORIES. Purchaser shall purchase from Seller all
of Seller's current returnable, unused, undamaged, non-obsolete, new factory
parts and accessories for Dodge vehicles on hand at Final Closing. Purchaser
shall also purchase all of Seller's non-obsolete parts and accessories on hand
at closing obtained from suppliers other than Seller's franchiser. All Dodge
pals shall be listed in the most recent factory price book, as inventoried and
valued by a mutually acceptable inventory service, at the net cost set forth in
the price
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books, less any dealer discounts available. Non-factory parts and accessories
shall be valued in accordance with the current prices in the price lists of
suppliers of such parts and accessories. Purchaser shall not be obligated to
purchase any used, damaged or obsolete parts or accessories (obsolete shall mean
parts which have no sales for 270 days). Seller agrees to maintain the parts
and accessories inventory at normal operating levels through the Final Closing.
The cost of the inventory service shall be divided equally between Purchaser and
Seller. The value of the parts and accessory inventories shall be paid in full
at the Final Closing.
f. WORK-IN-PROCESS. Purchaser shall purchase from Seller all of
Seller's work-in-process and sublet repairs work at a price equal to Seller's
actual net cost. The value of the work-in-process inventory shall be paid in
full at the Final Closing.
g. MISCELLANEOUS INVENTORY AND SUPPLIES. Purchaser shall purchase
from Seller all of Seller's miscellaneous inventory such as gas, oil, nuts,
bolts, and the like, the price of which is to be determined by a representative
of Purchaser and Seller, at Seller's actual cost of such items. The value of
the miscellaneous inventory and supplies shall be paid in full at the Final
Closing.
h. ASSUMPTIONS OF LEASES AND CONTRACTS. In addition to the purchase
of the fixed assets, as outlined in paragraph 1(a) above, Purchaser shall assume
Seller's obligations under those leases and contracts set forth in Schedule "B"
attached hereto.
i. PURCHASE ORDERS. Seller shall transfer to Purchaser all of
Seller's purchase orders for new vehicles as of the closing date, together with
all deposits on such purchase orders.
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j. REAL AND IMPROVED PROPERTY. Purchaser shall purchase from Seller
the real property and all improvements for the sum of $2,330,050, subject to a
loan approval satisfactory to Purchaser. The purchase price of the real
property and improvements shall be paid in full at the Final Closing. Unless
otherwise agreed to in writing, the Real Property and Dealership Asset Purchase
shall close simultaneously. Purchaser hereby acknowledges that it is the
intention of Seller to complete an IRC Section 1031 exchange which will not
delay the close of escrow or cause additional expense to Purchaser. Seller's
rights and obligations under this agreement may be assigned to REAL ESTATE
EXCHANGE, INC. for the purpose of completing such an exchange. Purchaser agrees
to cooperate with Seller and REAL ESTATE EXCHANGE, INC. in a manner necessary to
complete the exchange.
k. ASSETS NOT SOLD. Notwithstanding anything to the contrary
hereinabove, the following assets and properties shall be retained by Seller and
shall not be sold or transferred to Purchaser: Accounts and notes receivable,
prepaid insurance and other prepaid assets, antiques, personal effects, dealer
finance reserves, earned factory rebates, earned credits, manufacturer holdbacks
or other allowances or incentives relating to vehicles sold prior to Final
Closing, bank deposits and cash. Provided, however, Purchaser, with the
assistance of Seller, shall for a period of 180 days following Final Closing use
its best efforts to collect Seller's accounts receivable. Purchaser shall
collect such accounts receivable as are paid to Purchaser in the normal course
of business, without charge to Seller, [ON A MONTHLY BASIS] and shall promptly
pay the same over to Seller (whether the payments are received during or
subsequent to the 180 day period), but shall act solely as a conduit in doing so
and shall have no
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responsibility to undertake any collection efforts with regard thereto. All
payments from the customer shall be applied first to such accounts receivable
accruing prior to Final Closing, unless customer expressly directs otherwise.
l. OTHER OBLIGATIONS ASSUMED. Except as specifically set forth
herein, Purchaser is assuming no liabilities of Seller in connection with the
transaction set forth in this Agreement. However, Purchaser will assume all of
Seller's customer complaints, contracts in transit, "make goods", "comebacks"
and the like arising out of service performed by Seller prior to the
commencement date of the Final Closing, and which would normally be covered
under Seller's applicable warranties, good customer relations and adjustments.
Seller agrees to reimburse Purchaser for the mutually agreeable dealer costs of
these items for a period of up to sixty days from the effective date of the
Final Closing; and for finance and insurance charge backs paid by Purchaser on
Seller's behalf as provided in paragraph 8(b) below.
2. PRELIMINARY CLOSING AND FINAL CLOSING.
a. PRELIMINARY CLOSING. The Preliminary Closing shall be the
execution and delivery of this Agreement and a Real Estate Purchase Agreement
for the sale to Purchaser, or its designated nominee or assignee, of the
Company's dealership property. The Final Closing shall occur on or before
October 1, 1996. Purchaser shall pay to Seller at the Preliminary Closing as
partial payment for the Dealerships assets the sum of One Hundred Thousand
Dollars ($100,000).
i. The Final Closing of the purchase and sale shall be
contingent upon the approval of this transaction and the issuance of sales and
service agreements by Chrysler
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Corporation and Chrysler Financial Corporation or financial institution of
Purchaser's choice for credit line financing, and approval and license by the
Oregon Department of Motor Vehicles, if required, and shall occur at such place
and time as the parties mutually agree, within fourteen (14) days (or as
otherwise agreed in writing to coordinate Final Closing with the end of a
monthly accounting period) after the date upon which Purchaser, or its
designated nominee or assignee, shall have received written approval to become
an authorized dealer of Dodge vehicles at Seller's location in Eugene (the
"Approvals"). The parties agree to use best efforts to expedite the Approvals
of Purchaser or its nominee or assignee, as a new Dodge dealer and to meet the
minimum capital requirements imposed by Dodge.
ii. Purchaser shall notify Seller promptly of the receipt of the
Approvals.
b. FINAL CLOSING.
i. PAYMENTS.
1. At Final Closing, Purchaser shall either re-floor all
new vehicles or shall pay to Seller, in addition to the amounts set forth in
paragraph 2(b)(i)(2) an amount as calculated in paragraph 1(d) hereto as and for
the purchase price thereof.
2. At the Final Closing, Purchaser shall receive a credit
against the Purchase Price of the payment in paragraph 2(a) and shall pay the
following to Seller in cash: The balance of the Purchase Price, as calculated
pursuant to paragraph 1, cash, less any offsets under paragraph 2(b)(i)(3).
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3. Seller shall pay to Purchaser, by offset from the
amount to be paid by Purchaser the full amount of all manufacturer hold backs,
rebates, incentives and the like that are due or have been taken by Seller on
the new vehicles purchased by Purchaser, and Purchaser shall promptly pay Seller
any such amounts received by Purchaser with respect to vehicles sold prior to
Final Closing.
ii. DOCUMENTS. At the Final Closing, the parties shall exchange
the following:
1. Seller shall deliver the Assets and a xxxx of sale for
the Assets, certain of which assets described in Schedule "B" hereto are subject
to the lease obligations identified therein; but all of the other Assets shall
be free and clear of all claims, liens or encumbrances.
2. Purchaser's Approvals to become an authorized dealer of
Dodge vehicles at Seller's present location under respective dealer sales and
service agreements.
3. Seller shall deliver all of the dealerships' service
records, customer records, customer lists, deal jackets and the like, which
shall remain the property of Seller, but shall be retained and stored by
Purchaser; provided, however, that Purchaser shall be entitled to destroy these
records after six (6) years.
4. Each party shall deliver to the other evidence to the
reasonable satisfaction of the other or its counsel of proper corporate and
stockholder action authorizing ratifying the execution of this Agreement and the
consummation of the transactions contemplated hereby.
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5. The parties shall deliver such other documents as
Seller or Purchaser or their counsel shall reasonably request in order to carry
out the intent, purpose and terms of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller, with any exceptions
and subject to any disclosures which may be contained herein, in schedules
attached hereto or in other writings referred to herein, represents, warrants
and covenants to Purchaser that at the time of Preliminary Closing and Final
Closing:
a. Seller owns all the Assets to be sold hereunder and at the final
Closing they will be delivered free and clear of all restrictions and/or
conditions to transfer or assignment, claims or right of an other person or
entity, or defects in title, and free and clear of mortgages, liens, pledges,
encumbrances, equities, covenants, conditions or restrictions, except as
described herein and for possible minor matters that, in the aggregate, are not
substantial in amount, do not materially detract from or interfere with the
present or intended use of any of the assets, nor materially impair operations
of the Company as a Dodge dealership; and all new vehicles sold to Purchaser
shall be in the computer inventory of DODGE and not previously sold. Seller, to
the best of its knowledge, has full power to sell and transfer the Assets
without obtaining the consent or approval of any other person or entity, other
than factory approvals. The transfer of the Assets to Purchaser will not
violate, at Final Closing, any provision of the articles of incorporation or
bylaws of the Company, or the provisions of any material note, mortgage, lien,
lease, agreement, instrument of arbitration, award, judgment or
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decree to which the Company, or its principal shareholders, is subject or a
party, to the best of Sellers knowledge.
b. Seller has made or will make available to Purchaser for
examination all of the Company's book and records concerning the dealership and
the Assets at reasonable times following execution hereof.
c. No representations or statements made by Seller or on its behalf
contain or will contain any untrue statement of a material fact or omit to state
any material fact regarding the Assets, which fact would be necessary to make
such representations, warranties or statements not materially misleading to
Purchaser.
d. Upon the receipt of factory and respective manufacturer
approvals, the consummation of the transactions contemplated by this Agreement
will not, to the best of Seller's knowledge, result in or constitute any of the
following that would materially, adversely affect the transactions contemplated
herein:
i. A default or event that, with notice or lapse of time or
both, would be a default, breach or violation of the articles of incorporation
or bylaws of the Company or any license, promissory note, conditional sale
contract, commitment, indenture, mortgage, deed of trust, dealer agreement or
other agreement instrument or arrangement to which the Company is a party or by
which the Assets are bound.
ii. An event that would permit any party to terminate any
agreement or to accelerate the maturity of any indebtedness or other obligation
of the Company; or
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iii. The creation or imposition of a third party lien, charge or
encumbrance on any of the Assets.
e. Seller is validly existing, and in good standing under the laws
of Oregon, and has all regulatory authorizations and permits necessary to
operate its business, and is duly qualified to do business from and at the real
property described.
f. To the best of Seller's knowledge, Seller has good and marketable
title to the Assets and interests in the Assets purchased by Purchaser, whether
real, personal, mixed, tangible or intangible, which constitute all of the
Assets and interest in the Assets that are used in the Business.
g. The Company has no employment contracts or consulting agreements
with or for any officer or employee that cannot be terminated at will and does
not have, and is not bound by, any unfunded severance pay, and bonus which is
not accrued on the books of the Company to the best of Seller's knowledge.
[SELLER SHALL PAY PURCHASER FOR ALL ACCRUED LIABILITIES TO EMPLOYEES, ANY EXCESS
NOT PAID TO EMPLOYEES SHALL BE REFUNDED WITHIN 1 YEAR.]
h. Except as disclosed in writing and to the best of Seller's
knowledge, Seller is not a party to any written or oral (i) contract not made in
the ordinary course of business, (ii) contract with any labor union,
(iii) advertising contract or contract for public relations services,
(iv) continuing contract for the purchase of materials, supplies or equipment,
or (v) contract continuing for a period of more than thirty (30) days or which
is not terminable
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without cost or other liability to Seller, or its successors, which relates to
the operation of the dealerships or the Assets.
i. To the best of the Company's knowledge, it has complied with, and
is not in violation of, applicable Federal, State or local statutes, laws and
regulations affecting the Assets, the real estate at which it conducts business
or the operation of its Business.
j. Except for minor collection matters under $1,000, there is not
any claim, suit, action, counterclaim, cross claim, arbitration or legal,
administrative or other proceeding or governmental investigation pending or
threatened against or affecting the Assets, Seller or its principal
shareholders. The Company is not in default or in violation with respect to any
order, writ, injunction or decree issued by any federal, state, local or foreign
court or regulatory authority affecting the dealership, Seller or the Assets
except as reflected in Schedule "C".
k. The Company does not, to the best of its knowledge, have any
debt, liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, whether due or to become due that would have a
material, adverse effect on the transactions contemplated by this Agreement,
that is not reflected on Schedule "C", the Company's July 31, 1996 Financial
Statement. Seller represents Schedule "D" is the financial statement it
provides to Chrysler Financial and it has been prepared in accordance with
factory reporting requirements. [PURCHASER HAS RIGHT TO AUDIT BOOKS OF SELLER
FOR WHATEVER PERIODS REQUIRED BY SEC REQUIREMENTS FOR PUBLIC COMPANIES AT
PURCHASER'S EXPENSE. (SECURITY EXCHANGE COMMISSION)].
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l. The Company has filed or will file all Federal, State and local
Tax returns required by law and has paid all taxes, assessments and penalties
due and payable as of the date hereof and on the date of Final Closing, except
as the time for filing or payments has been properly extended and disclosed to
Purchaser, that would have a material, adverse effect on the transactions
contemplated in this Agreement. Except for federal and state income taxes, the
provision for taxes reflected in the financial statements (Schedule "D") is
adequate for any and all federal, state, and local taxes for the period ending
on the date of such financial statement and for all prior periods whether or not
disputed, and the amounts so provided on said financial statements have actually
been paid or will be paid when due (or as extended) to the appropriate federal,
state or local tax collecting agency as of the date hereof and as of the date of
Final Closing. There are no pending disputes as to taxes of any nature payable
by the Company.
m. From the date of this Agreement to the Final Closing, the Company
will not cause or make, except in the ordinary course of its business, or except
with Purchaser's written consent prior to the Final Closing, any:
i. change in the manner of conducting the business of the
Company;
ii. loan or commitments to make loans, or capital expenditures
by the Company;
iii. sale or transfer of the Assets of the Company;
iv. amendment, release or voluntary termination of any contract,
agreement, lease, insurance policy, bonding agreement, license or dealer
agreement to which the Company is a party;
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v. mortgage, pledge or other encumbrance of any Assets of the
Company; or
vi. enter into any other contract, commitment or transaction
affecting the Assets or Seller's obligations hereunder, prior to the Final
closing.
n. Except for transactions in the normal course of its business,
Seller shall also, from the date of this Agreement until the Final Closing, not
cause or make without Purchaser's written consent (which consent shall not be
unreasonably withheld) any:
i. material adverse change in the financial condition,
liabilities, Assets, business or prospects of the Company, including the
telephone number of the Business, which Seller agrees to release to Purchaser
upon Final Closing, subject to Purchaser paying all future accruing telephone
charges with regard thereto, but with no liability on Purchaser's part for
accrued advertising charges through the date of Final Closing;
ii. increase in the salary or other compensation payable or to
become payable by the Company to any of its agents, officers, employees or
consultants, or the declaration, payment or commitment or obligation of any kind
for the payment by it of a substantial bonus or other additional salary or
compensation to any such person, or any deferred compensation agreement for any
such person;
iii. issue or create any offerings, warrants, obligations,
subscriptions, options, convertible securities or other commitments under which
any interests of the Company might be directly or indirectly authorized, sold,
issued or transferred;
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iv. pay any obligation or liability of the Company, fixed or
contingent, other than current liabilities and monthly payments required on
installment liabilities and any payments on the obligations owed by the Company;
v. cause a material change in, perform any act or fail to
perform any act which would render any of the representations or warranties in
this paragraph untrue or inaccurate or incomplete as of the Final Closing Date
of the purchase contemplated by this Agreement.
o. From and after the date hereof and for a term of five (5) years,
Seller and Guarantors individually agree and covenant not to:
i. engage in any new car franchise ownership within Lane
County, Oregon;
ii. actively solicit by phone, mail or other direct
advertisement, customers of the Company; or
iii. use the name Xxxxxxx Dodge, Inc. for any purposes except to
finalize the termination of the dealership business, within the State of Oregon,
without using a DBA.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER. Purchaser,
with any exceptions and subject to any disclosures which may be contained
herein, in schedules hereto or in other writings referred to herein, represents,
warrants and covenants to Seller that at the time of Preliminary and Final
Closing:
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a. Purchaser has the right, power, legal capacity and authority to
enter into and perform its obligations under this Agreement.
b. This Agreement and the documents to be delivered or executed at
the Preliminary and Final Closing have been or will be, duly executed and
delivered and are, or will be, the lawful, valid and legally binding obligation
of Purchaser, its designated nominee or assignee, enforceable against it in
accordance with their respective terms. The execution, delivery and
consummation of this Agreement are not prohibited by and do not violate or
conflict with any provision of and will not result in a default under, a
termination of, an acceleration of, or a breach of: (i) any material contract,
agreement or other instrument to which Purchaser is a party; (ii) to the best
knowledge of Purchaser, any regulation, order, decree or judgment of any
arbitration panel, court or governmental agency; and (iii) to the best knowledge
of Purchaser, any other restriction of any kind to which it is subject.
c. Purchaser, or its designated nominee or assignee, will diligently
and in good faith pursue an application to become an authorized Dodge dealer.
d. Purchaser will arrange in good faith adequate financing to
consummate this Agreement and the Real Estate Purchase Agreement.
e. Cause a material change in, perform any act or fail to perform
any act which would render any of the representations or warranties in this
paragraph untrue or inaccurate or incomplete as of the Final Closing Date of the
purchase contemplated by this Agreement.
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f. Purchaser agrees to store on the Real Property without cost to
Seller, but at Seller's risk, including all risk or loss, any item to which
Seller retains title hereunder and does not sell to Purchaser for a maximum
period of one hundred twenty (120) days following Final Closing, [EXCEPT FOR
NONPURCHASED VEHICLES WHICH MUST BE REMOVED IN 1 WEEK.] during which xxxx Xxxxxx
may by any reasonable means, including mutually agreeable consignment
arrangements with Purchaser, hold the same out for sale for Seller's account;
provided such storage does not unreasonably hamper Purchaser's operation of the
dealership business or use of the Real Property.
g. Purchaser agrees that Seller shall have reasonable access to the
dealership and its records after Final Closing and Purchaser will assist Seller
as Seller may reasonably require to wind down Seller's business after Final
Closing, including without limitation, assisting Seller in the collection of
Seller's accounts receivable, including Seller's Dodge warranty claims. Seller
shall provide Purchaser with a list of those of Seller's accounts receivable as
to which Seller desires Purchaser's assistance, and all amounts received in
payment of such accounts receivable shall be recorded as such, immediately upon
receipt, and paid over to Seller in the form received on a [MONTHLY BASIS.] In
the case of Seller's Dodge warranty claims and incentive payments, to the extent
and if, as and when Dodge tenders any payment in respect of Seller's warranty
claims or incentive payments in the form of credit to Purchaser's Dodge parts
account or to Purchaser's incentive account, Purchaser shall refund to Seller on
or before the 10th day of each month the net amount of all such credits received
during the prior calendar month and there shall accompany each refund an
appropriate accounting of Seller's warranty
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claim or incentive credits represented by such refund. If payments are received
by Purchaser from a customer having account balances outstanding to both Seller
and Purchaser, any such payment which is specifically identified by the payor as
being for Seller's account shall be paid over by Purchaser to Seller and any
such payment not so identified as belonging to Seller shall be applied first to
the accounts receivable of Seller and the remainder shall be credited as a
payment on the accounts receivable of Purchaser. Purchaser will assist Seller
in the collection of Seller's accounts receivable, without costs or expense to
Seller, for a period of six (6) months following the Final Closing.
5. PURCHASER'S CONDITIONS TO CLOSING. Purchaser's conditions to closing
shall be the following:
a. FACTORY APPROVALS. This offer is subject to approval of
Purchaser, or Purchaser's nominee and the issuance of a Dodge Dealership Sales
and Service Agreement with Chrysler Corporation and approval of Buyer's nominee
as the Dealer-Operator of the franchise. It is expressly understood and agreed
that any facility requirements shall be approved by Purchaser and this agreement
is subject to Purchaser's sole and complete approval of such requirements, if
any.
b. ENVIRONMENTAL, TOXIC WASTE AND PERMITS. This offer is subject to
the dealership meeting the requirements established by all regulatory agencies
governing the operation of the dealership, including but not limited to, the
Department of Motor Vehicles, city and/or county permits and license
departments. Environmental Protection Agency, and other agencies as shall be
included in the final purchase agreement to be approved by both Purchaser,
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Seller and their respective attorneys. Purchaser represents that there are no
in-ground hoists, below-ground gas tanks, below-ground waste oil tanks, and the
real property is free and clear of any toxic waste or hazardous waste material.
Seller shall furnish Purchaser with a copy of all environmental reports and any
certificates of compliance regarding the above items and that the property is
environmentally free of any toxic or hazardous waste.
6. SELLER'S OBLIGATIONS BEFORE FINAL CLOSING. Seller agrees from the
date of this Agreement until Final Closing:
a. To perform, abide by and adhere to all representations and
warranties set forth in this Agreement.
b. To cause the Company to allow Purchaser, its counsel and
representatives, to have full access to all properties, books, accounts,
records, contracts and documents of, or relating to, its Dodge dealership and
the Assets. Seller shall furnish or cause to be furnished to Purchaser all data
and information concerning its dealership and the Assets that may reasonably be
requested. Purchaser agrees to treat this information as confidential, not to
deliver any of it to third parties, except as required by law, [AND SEC
REQUIREMENTS] or to carry the intent and purpose of this transaction, to use it
only for Purchaser's purposes, and, if the transactions contemplated herein are
not consummated, to return the information to Seller and Purchaser warrants to
Seller that Purchaser will not use any such information for any purpose.
[PURCHASER MAY DISCLOSE AUDIT RESULTS IN PROSPECTUS AS A PUBLIC COMPANY.]
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c. To certify that all representations and warranties of Seller set
forth in this Agreement will also be true on and as of the Final Closing, as if
made on that date, except for changes in the ordinary course of business.
d. To diligently and in good faith assist and cooperate with
Purchaser in its application to become an authorized Dodge dealer. At or prior
to Final Closing, Seller shall terminate its working agreements with Dodge by
delivering to them letters of resignation in a form satisfactory to each such
manufacturer.
e. Seller shall use its best efforts not to damage any Asset of the
Company (whether or not covered by insurance) that materially and adversely
affects its financial condition, business or prospects.
f. Seller shall use its best efforts to prevent any other event or
condition of any character that has or might reasonably have a material and
adverse effect on the financial condition, business, Assets or prospects of the
Company and shall keep the dealerships in full operation between Preliminary and
Final Closing.
7. TERMINATION. If either party files for bankruptcy, voluntarily or
involuntarily, on or before the date of Final Closing, the other party shall
have the option to terminate this Agreement for 30 days following receipt of
written notice of such filing. In the event of termination of this Agreement,
neither party shall have any further liability hereunder, except said
termination shall not excuse or eliminate any breaches of this Agreement which
have occurred prior to such termination.
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8. REMEDIES.
a. In the event the transactions contemplated by this Agreement
should not be completed for any reason other than Seller's unexcused failure to
tender the performance required pursuant to this Agreement, Purchaser, Seller
and Guarantors agree that Seller shall be entitled to retain, as its sole and
exclusive remedy, the payments made by Purchaser at Preliminary Closing, and
that such payments are not refundable to Purchaser under any circumstances
except as expressly provided in this Paragraph 7.
b. In the event of a failure to close resulting from Seller's
unexcused failure or refusal to tender the performance required by this
Agreement and the Land Sale Contract, Purchaser may either (i) obtain a refund
of any payments made by Purchaser under this Agreement or (ii) obtain specific
performance of this Agreement, which remedies shall be Purchaser's sole,
mutually exclusive remedies.
9. INDEMNIFICATION.
a. Seller shall indemnify and hold harmless Purchaser and its
agents, its designated nominee, transferee, successors and assigns from and
against all claims, damages, actions, losses and expenses, including reasonable
attorney's fees and expert witness fees, arising out of or that are caused in
whole or in part from any default or breach of any warranty, representation, or
covenant of Seller in this Agreement. In the event or a loss for which
Purchaser is entitled to indemnification under this Agreement that Seller does
not dispute, Purchaser may set off against Seller the amount of the loss
incurred by Purchaser.
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b. Seller agrees to reimburse Purchaser for all amounts mutually
agreed to be paid by Purchaser for a period of up to [NINETY (90)] days from the
effective date of the Final Closing on charge backs or expenses related to
customer complaints, "make goods", "comebacks" and the like arising from
services performed prior to the date of commencement of the Final Closing and
which would normally be covered under Seller's applicable warranties, good
customer relations and adjustments; and for finance and insurance charge backs
paid by Purchaser on Seller's behalf. Purchaser shall invoice Seller or this
designee monthly for these charges.
c. Purchaser shall indemnify and hold harmless Seller and its
agents, its designated nominee, transferee, successors and assigns from and
against all claims, damages, action, losses and expenses, including reasonable
attorney fees and expert witness fees, arising out of or that are caused in
whole or in part from any default or breach of any warranty, representation, or
covenant of Purchaser in this Agreement.
d. Any party or parties seeking indemnification under this
paragraph 8 (i.e. collectively, the "Indemnitee") shall, on each occasion that
indemnification is sought, give prompt written notice for such indemnification,
of any claim, suit or demand which the Indemnitee believes give rise to
indemnification to it hereunder (the person to whom such notice of claim is
given being referred to herein as the "Indemnitor"). Except as hereinafter
provided, the Indemnitor shall be obligated to defend and to direct the defense
against any such claim, suit or demand, in its name or in the name of the
Indemnitee at the Indemnitor's expense and with counsel of the Indemnitor's own
choosing and shall have the sole right to settle or compromise
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any such claim, suit or demand; provided, however, that the Indemnitor will not,
without the Indemnitee's written consent, settle or compromise any claim or
consent to any entry of judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnitee of a
release from all liability in respect of such claim, in form and substance
reasonably satisfactory to the Indemnitee. The Indemnitee shall at the
Indemnitor's expense, cooperate in the defense of any such claim, suit or
demand. If the Indemnitor, within a reasonable time after notice of a claim,
fails to defend the Indemnitee, the Indemnitee shall be entitled to undertake
the defense, compromise or settlement of such claim at the expense of and for
the account and risk of the Indemnitor, utilizing counsel of the Indemnitee's
own choosing.
e. If (i) losses are claimed by Seller Indemnitees and Purchaser
Indemnitees with respect to the same cause, condition, event, circumstance,
occurrence, happening or transaction; and (ii) such losses are caused by or
arise out of Seller's operation or ownership of the Assets prior to Final
Closing and Purchaser's conduct after Final Closing, or if Seller and Purchaser
are jointly and severally liable therefor, then Seller and Purchaser shall be
obligated INTER SE to each indemnify the other under this Paragraph only for
that portion of such losses as are legally caused by, or equitably attributable
to, Seller or Purchaser, respectively.
10. BROKERAGE FEES. Purchaser and Seller each agree to pay National
Business Brokers, Inc. a commission of [$100,000] (for a total of [$200,000)] on
the purchase price of the assets of the dealership and the price of the real
property. Said commissions shall be paid to Broker upon Final Closing.
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11. COSTS. Each of the parties shall pay all costs and expenses
(including attorney fees and accounting fees) incurred or to be incurred by them
in negotiating, closing and carrying out the transactions contemplated by this
Agreement.
12. ENTIRE AGREEMENT. This Agreement and the schedules or exhibits
attached hereto or thereto, constitute the entire agreement between the parties
pertaining to the subject matter contained herein and supersede any prior
agreements. No supplement, modification or amendment of this agreement shall be
binding unless executed in writing by the parties. No waiver of the provisions
of this Agreement shall be deemed, or shall constitute, a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
granting the waiver.
13. COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. ASSIGNMENT. This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective heirs, legal representatives,
successors and assigns. Purchaser may assign this Agreement, provided
Purchaser guarantees the performance of all obligations under this Agreement of
any nominee or assignee.
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except for the provisions
of paragraph 3(o), the several representations, warranties, indemnities,
covenants and agreements of the parties contained in or made pursuant to this
Agreement shall be deemed to
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survive the Final Closing for 24 months and shall be binding upon the parties
and their successors in interest.
16. COMMUNICATIONS. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall either be
delivered personally or sent by first-class mail, registered or certified,
postage prepaid and properly addressed as follows:
To Seller: Xxxxxxx Dodge, Inc.
x/x Xxxxxxx X. Xxxxxxx, Xx.
00000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
To Purchaser: Lithia Motors, Inc.
c/o Xxxxxx XxXxxx
000 Xxxx Xxxxxxx
Xxxxxxx, XX 00000
17. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the local laws of the State of Oregon.
18. ARBITRATION AND ATTORNEY FEES.
a. In the event of a dispute over the terms, conditions, performance
or interpretation of this Agreement, the parties agree to submit to mandatory
binding arbitration for resolution of their disputes in accordance with the
Oregon Revised Statutes Section 36.300 ET SEQ.
b. Notice of such dispute must be timely given by serving upon the
other party written notice of the complaint, a statement adequately describing
the complaint, the specific paragraphs or subparagraphs of this Agreement
allegedly violated and the remedies sought. The arbitration panel shall consist
of three arbitrators, one nominated by Purchaser, one
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nominated by Seller, with the third arbitrator to be selected by the other two.
The arbitrators shall adopt their own rules for the conduct of the arbitration
and shall be authorized to make an award of specific performance. The
arbitration shall take place in Eugene, Oregon.
c. If any claim, arbitration or legal action or other proceeding is
brought for the interpretation or enforcement of this Agreement, or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Agreement, the successful or prevailing party shall be
entitled to recover actual attorney fees, expert witness fees and other costs
and expenses incurred in the enforcement of this Agreement whether by filing
suit or not, but not the costs of their appointed arbitrator, in addition to any
other relief to which that party may be entitled.
d. Nothing herein set forth shall prevent the parties from settling
any dispute by mutual agreement at any time.
19. SEVERABILITY. Notwithstanding anything contained herein to the
contrary, if this Agreement is or may be deemed for any reason to violate
Seller's Dodge dealer sales and service agreement, in any manner whatsoever,
then and in that event this Agreement shall be deemed modified, by consent of
the parties, to the extent and in the manner necessary to reform this Agreement
to comply with and not violate all relevant provisions of the said Dodge dealer
sales and service agreements.
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IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on
the day and year first above written.
SELLER: PURCHASER:
XXXXXXX DODGE, INC. LITHIA MOTORS, INC.
By By
------------------------- -------------------------
XXXXXXX X. XXXXXXX, XX. XXXXXX X. XxXXXX
President President & CEO
By
-------------------------
XXXXXXX X. XXXXXXX, XX.
The undersigned, Xxxxxxx X. Xxxxxxx, unconditionally guarantee the
foregoing performance of Xxxxxxx Dodge, Inc.
-------------------------
XXXXXXX X. XXXXXXX, XX.
The undersigned, Xxxxxx X. XxXxxx unconditionally guarantees the foregoing
performance of Lithia Motors, Inc. [EXCEPT FOR NOTE]
-------------------------
XXXXXX X. XxXXXX
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LIST OF ATTACHED SCHEDULES
Schedule A Excluded Personal Property
Schedule B Leased Personal Property
Schedule C Legal Matters, Debts or Obligations
Schedule D Financial Statement dated July 31, 1996
