EX-10
Exhibit 10.5.2 Acura Dealer Sales & Service Agmt
EXHIBIT 10.5.2
ACURA
AUTOMOBILE DEALER
SALES AND SERVICE AGREEMENT
PARAGRAPH A
This is an agreement between the Acura Division, American Honda Motor
Co., Inc. (American Honda) and Lithia BB, Inc. (Dealer) a(n) California
Corporation doing business as Lithia Acura of Bakersfield. By this
agreement, which is made and entered into at Torrance, California, effective
the 2nd day of October, 1997. American Honda gives to Dealer the
nonexclusive right to sell and service Acura Products at the Dealership
Location. It is the purpose of this Agreement, including the Acura
Automobile Dealer Sales and Service Agreement Standard Provisions (Standard
Provisions), which are incorporated herein by reference, to set forth the
rights and obligations which Dealer will have as a retail seller of Acura
Products. Achievement of the purposes of this Agreement is premised upon the
mutual and continuing understanding and cooperation between American Honda
and Dealer and the expressed intention of each to deal fairly with the
consuming public.
For consistency and clarity, terms which are used frequently in this
Agreement have been defined in Article 12 of the Standard Provisions.
PARAGRAPH B
American Honda grants to Dealer the nonexclusive right to buy Acura
Products and to identify itself as an Acura dealer at the Dealership
Location. Dealer assumes the obligations specified in this Agreement and
agrees to sell and service effectively Acura Products within Dealer's Primary
Market Area and to maintain premises satisfactory to American Honda.
PARAGRAPH C
Dealer covenants and agrees that this Agreement is personal to Dealer,
to the Dealer Owner, and to the Dealer Manager, and American Honda has
entered into this Agreement based upon their particular qualifications and
attributes and their continued ownership or participation in Dealership
Operations. The parties therefore recognize that the ability of Dealer to
perform this Agreement satisfactorily and the Agreement itself are both
conditioned upon the continued active involvement in or ownership of Dealer
by either:
(1.) the following person(s) in the percentage(s) shown:
PERCENT OF
NAME ADDRESS TITLE OWNERSHIP
Lithia Motors, Inc. Holding Company 100%
Xxxxxx X. XxXxxx 000 Xxxxx Xxxxxxxxx/Xxxxxxxxx/Xxxxxxxxx
Xxxxxxx, XX 00000
M.L. Xxxx Xxxxxxx 000 Xxxxxxxxx Xxxxxx Vice President
Xxxxxxx, XX 00000
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(2.) ______________________________________________________, an
individual personally owning an interest in Dealer of at least 25% and who
has presented to American Honda a firm and binding contract giving to him the
right and obligation of acquiring an ownership interest in Dealer in excess
of 50% within five years of the commencement of Dealership Operations and
being designated in that contract as Dealer operator.
PARAGRAPH D
Dealer represents, and American Honda enters into this Agreement in
reliance upon the representation, that Xxxxxx X. XxXxxx exercises the
functions of Dealer Manager and is in complete charge of Dealership
Operations with authority to make all decisions on behalf of Dealer with
respect to Dealership Operations. Dealer agrees that there will be no change
in Dealer Manager without the prior written approval of American Honda.
PARAGRAPH E
American Honda has approved the following premise as the location(s)
for the display of Acura Trademarks and for dealership Operations.
New Car Showroom 0000 Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000
Used Car Showroom 0000 Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000
Sales and General Offices 0000 Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000
Parts and Service Facilities 0000 Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000
PARAGRAPH F
There shall be no voluntary change or involuntary change, direct or
indirect, in the legal or beneficial ownership or executive power or
responsibility of Dealer for the Dealership Operations, specified in
Paragraphs C and D hereof, without the prior written approval of American
Honda.
PARAGRAPH G
Dealer agrees to maintain, solely with respect to the Dealership
Operations, minimum net working capital of $228,242, minimum owner's equity
of $270,482, and a line or lines of credit in the aggregate amount of
$566.400 with banks or financial institutions approved by American Honda for
use in connection with Dealer's purchases of and carrying of inventory of
Acura Products, all or which American Honda and Dealer agree are required to
enable Dealer to perform its obligations pursuant to this Agreement. If
Dealer also carries on another business or sells other products, Dealer's
total net working capital, owner's equity and lines of credit shall be
increased by an appropriate amount.
PARAGRAPH H
This Agreement is made for the period beginning October 2, 1997 and
ending November 30, 1997 unless sooner terminated. Continued dealings
between American Honda and Dealer after the expiration of this Agreement
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shall not constitute a renewal of this Agreement for a term, but rather shall
be on a day-to-day basis, unless a new agreement or a renewal of this
Agreement is fully executed by both parties.
PARAGRAPH I
This Agreement may not be varied, modified or amended except by an
instrument in writing, signed by duly authorized officers of the parties,
referring specifically to this Agreement and the provision being modified,
varied or amended.
PARAGRAPH J
Neither this Agreement, nor any part thereof or interest therein, may
be transferred or assigned by Dealer, directly or indirectly, voluntarily or
by operation of law, without the prior written consent of American Honda.
Lithia BB, Inc.
dba LITHIA ACURA OF BAKERSFIELD By /s/Xxxxxx X. XxXxxx
----------------------------------------- ------------------------------
(Corporate or Firm Name) (Dealer)
ACURA DIVISION
AMERICAN HONDA MOTOR CO., INC. (Corporate Seal)
By /s/Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx, Executive Vice President
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ADDENDUM TO ACURA AUTOMOBILE DEALER
SALES AND SERVICE AGREEMENT
This Addendum (the "Addendum") dated October 2, 1997, is entered
between Lithia BB, Inc. ("Dealer), a California corporation, with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxx
00000, and American Honda Motor Co., Inc. ("American Honda"), a California
corporation, with its principal place of business at 0000 Xxxxxxxx Xxxxxxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000.
WHEREAS, Dealer and American Honda are entering into the Acura
Automobile Dealer Sales and Service Agreement including the Standard
Provisions (the "Dealer Agreement"), a copy of which is attached hereto, as
of the date hereof; and
WHEREAS, Dealer and American Honda have entered into the "Agreement
between American Honda Motor Co., Inc. and Lithia Motors, Inc. et al." dated
December 17, 1996 as amended by that certain "Amendment to Agreement between
American Honda Motor Co., Inc. and Lithia Motors, Inc. et al.0 dated October
2, 1997 (collectively, the "Lithia Agreement); and
WHEREAS, Dealer and American Honda desire that this Addendum and the
Lithia Agreement be incorporated into and become part of the Dealer Agreement;
NOW THEREFORE, in consideration of the mutual convenience set forth
herein and in the Dealer Agreement and other good and valuable consideration
the sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Status of the Addendum. This Addendum is hereby incorporated
into and is made part of the Dealer Agreement. The Dealer Agreement and this
Addendum shall, when possible, be read as an integrated document; however, if
there is any conflict between the terms of this Addendum and the Dealer
Agreement, this Addendum shall govern.
2. Incorporation of the Applicable Terms of the Lithia Agreement.
Attached hereto as Schedule A is the Lithia Agreement. Dealer represents and
warrants that it has read the Lithia Agreement and acknowledges that the
Lithia Agreement includes provisions that pertain to Lithia's management,
ownership, and right to acquire and transfer Acura dealerships and other
matters. Dealer has executed the Lithia Agreement and agrees to be bound by
all provisions of the Lithia- Agreement that are applicable to or affect it
and/or the actions of a Honda and Acura dealership. Dealer and American
Honda agree that the terms and conditions of the Lithia Agreement are hereby
incorporated into and made part of the Dealer Agreement.
3. Additional Terms. Dealer shall satisfy the following terms on a
continuing basis during the term of the Dealer Agreement, as well as during
any periods following any renewal or extension of the Dealer Agreement:
a. Separate Legal Entity. Dealer shall be a separate legal
entity, shall maintain and be subject to a separate motor vehicle license and
shall maintain separate financial statements from any and all other
dealerships, whether or not commonly owned. Consistent with American Honda
policy, the name "Honda" or "Acura", as applicable, shall appear in the d/b/a
of Dealer but not in the corporate name. Dealer agrees to provide a separate
legal entity by October 1, 1998 and to bring the d/b/a name into compliance
within 60 days from October 1, 1997.
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b. Public Ownership Policy. Dealer hereby agrees to be bound
by the terms of the American Honda Motor Co., Inc. Policy on the Public
Ownership of Honda and Acura Dealerships (the "Policy"), a copy of which is
appended to the Lithia Agreement as Schedule C.
c. Transfers of Ownership Interests. Dealer hereby agrees
that all transfers of ownership interests in Dealer, all limitations on who
may own Dealer, any obligation to identify the ownership interests in Dealer,
and any issues pertaining to future acquisitions of dealers by Dealer's owner
shall be governed by the applicable provisions of the Lithia Agreement,
including, without limitation, Article 2 and Schedule D, and Articles 1 and 8
and Schedule E, as amended, and that Dealer shall not object to American
Honda's enforcement of any of the provisions thereof.
d. Exclusive Facilities. As provided in Paragraph 3.1 of the
Lithia Agreement, as amended, Dealer shall maintain separate, exclusive,
freestanding Acura Dealership Operations that are in full and timely
compliance with American Honda standards and guidelines relating to Acura
Dealership Operations, facility design, functionality and capacity, and
enhancements to American Honda's brand image, which standards and guidelines
American Honda may reasonably modify from time to time, shall exclusively
offer a full range of Acura Products and services and shall not offer
competing products or services from its Dealership Premises. Dealer agrees
to bring the currently non-exclusive Acura Dealership Operations in
Bakersfield, California into compliance on or before October 1, 1998.
e. Acura Exclusive Minimum Facility Requirements. The
Dealership Premises shall provide the following Acura exclusive minimum
square footage requirements, arranged in a manner conducive to the reasonable
sales and service of Acura Automobiles, Acura Parts and accessories:
Building Facility Guide
Acura New Vehicle Sales Showroom and Sales Office 1,738 Sq. Ft.
General Office 1,067 Sq. Ft.
Acura Service Department 6,255 Sq. Ft.
Stall/Lifts 10/2
Acura Parts and Accessories Department 3,375 Sq. Ft.
Total Building 12,435 Sq. Ft.
Land
New Vehicle Display and Storage 11,756 Sq. Ft.
Used Car Display and Storage 6,520 Sq. Ft.
Customer, Employee and Service Parking 9,328 Sq. Ft.
Circulation and Landscaping 12,002 Sq. Ft.
Total Land 39,606 Sq. Ft.
Total Land and Building 52,041 Sq. Ft.
Dealer agrees to bring Dealership Premises into compliance with these
facility requirements on or before October 1, 1998.
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f. Dealer Manager. Dealer agrees to be bound by the
provisions of Articles 4, 5, and 6 of the Lithia Agreement governing, by way
of example, American Honda's right of approval of the Dealer Manager, the
authority of the Dealer Manager, Dealer's representation in dealer
organizations, and dealership personnel training, and to not object to
enforcement of any of the provisions thereof or take actions contrary to the
letter or spirit of these provisions.
g. Enforcement of Rights. Dealer agrees that, in addition to
the rights and remedies available to American Honda under the Dealer
Agreement and this Addendum, American Honda may enforce its rights under the
Lithia Agreement, as amended, against Dealer as if Dealer were a signatory
thereto.
h. American Honda Policies. American Honda has adopted
certain policies which are attached to the Lithia Agreement as Schedule G.
Dealer hereby agrees t o abide by these policies as attached thereto and as
reasonably amended by American Honda from time to time, and other policies
promulgated in the future by American Honda. In addition, American Honda has
expressed a commitment to diversity in management and among employees.
Dealer hereby agrees to adhere to that commitment by seeking to achieve
diversity among its management personnel and employees.
i. Minimum Capital Requirements. Dealer agrees that the Acura
Dealership Operations shall meet American Honda's minimum capital
requirements at all times. The minimum capital requirements shall be
determined by American Honda from time to time and, as of the date hereof,
shall be the amounts specified below:
o American Honda's current minimum working capital
requirement is $228,242 for the Acura dealership at the Dealership Premises.
The Acura dealership entity will be capitalized with not less than $270,482
in effective net worth.
o A wholesale line of credit is to be established and
maintained by Dealer with a financial institution approved by American Honda
for the exclusive purpose of purchasing and maintaining a representative
inventory of new Acura Automobiles. The current minimum amount of such line
is $566,400.
j. Financial Statement Submission. Dealer agrees to continue
to comply with American Honda's dealer financial requirements as specified in
the Dealer Agreement. These specifically provide that Dealer will furnish a
complete, timely and accurate financial statement on a monthly basis,
electronically, on the form required by American Honda.
k. Personnel Minimum Requirements. Dealer agrees to employ
Acura service and parts staff which meets at all times the minimum service
and parts training standards specified by American Honda for its authorized
dealers and whose members are properly licensed.
l. Communications Equipment. Dealer agrees to provide
appropriate data communications equipment, compatible with American Honda's
specifications, which currently must accommodate AcuraLink 2000.
4. No Guarantee of Financial Success. Dealer recognizes and
acknowledges that American Honda's approval of Dealer's application and
Dealership Premises does not in any way constitute a representation,
assurance, or guarantee by American Honda that Dealer w@ill achieve any
particular level of sales, operate at a profit, or realize any return on
Dealer's investment.
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5. Automobile Availability. Dealer recognizes and acknowledges that
American Honda cannot and does not guarantee a specific number of new Acura
Automobiles to be made available for resale by the Dealer. American Honda
assumes no liability in the event of losses incurred during periods of
unavailability, nor does unavailability excuse Dealer's performance.
6. Compliance with and Impact of Applicable Laws. Dealer shall
comply at Dealer's own expense with all applicable state and federal laws
including those pertaining to vehicle dealerships. Dealer shall secure all
licenses and permissions in accordance with such laws and bear all the cost
related thereto.
7. Assumption of Costs. Dealer will complete the above actions
solely at Dealers own expense and without responsibility on the part of
American Honda.
8. Severability. If any provision of this Addendum should be held
invalid or unenforceable for any reason whatsoever, or conflicts with any
applicable law, this Addendum will be considered divisible as to such
provision(s), and such provision(s) will be deemed amended to comply with
such law, or if it (they) cannot be so amended without materially affecting
the tenor of the Dealer Agreement, then it (they) will be deemed deleted from
the Dealer Agreement in such jurisdiction, and in either case, the remainder
of the Dealer Agreement will be valid and binding. Notwithstanding the
foregoing, if, as a result of any provision of the Dealer Agreement
(including this Addendum) being held invalid or unenforceable, American
Honda's ability to control the selection of the Dealer Owner, Executive
Manager, or the Dealer Manager or to otherwise maintain its ability to
exercise reasonable discretion over the selection of the actual individual
who is managing Dealer is materially restricted beyond the terms of the
Dealer Agreement or the Lithia Agreement, American Honda shall be permitted
to invoke the repurchase provisions of Section 9.3 of the Lithia Agreement.
IN WITNESS WHEREOF, the parties have executed this Addendum as of the
date first above written.
LITHIA BB, INC.
BY /s/Xxxxxx X. XxXxxx
AMERICAN HONDA MOTOR CO., INC.
BY /s/Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx, Executive
Vice President
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SCHEDULE A
"Agreement between
American Honda Motor Co., Inc.
and
Lithia Motors, Inc. et al."
dated December 17, 1996
and
"Amendment to Agreement between
American Honda Motor Co., Inc.
and
Lithia Motors, Inc. et al."
dated October 2, 1997
