EX-10
Exhibit 10.8.1 GM Supplemental Agmt
Exhibit 10.8.1
SUPPLEMENTAL AGREEMENT TO
GENERAL MOTORS CORPORATION
DEALER SALES AND SERVICE AGREEMENT
This Supplemental Agreement to General Motors Corporation Dealer Sales
and Service Agreement is entered into between Lithia Motors, Inc. and General
Motors Corporation.
WHEREAS Lithia Motors, Inc. is interested in acquiring ownership of one
or more GM Dealerships in selected areas of the United States;
WHEREAS, the parties desire to enter into a positive and productive
business relationship which will accomplish our mutual goals and promote
sales of GM products consistent with GM's brand strategy for its products and
focus on total customer enthusiasm;
WHEREAS, the organization and ownership structure of Lithia Motors,
Inc. and its retail operating systems are such that the terms of the Dealer
Agreement are not wholly adequate to address the legitimate business needs
and concerns of Lithia Motors, Inc. and GM;
NOW, THEREFORE, the parties agree as follows:
1. Purpose of Agreement
1.1 Purpose of Agreement
The parties acknowledge that Lithia Motors, Inc. desires to
purchase the stock or assets of one or more current GM Dealerships and to be
appointed as the replacement Dealer by the appropriate Divisions. The
parties further acknowledge that the ownership arrangements of Lithia Motors,
Inc. and the operating processes and procedures of Lithia Motors, Inc.
require that the parties supplement the standard terms and provisions of the
Dealer Agreement to assure that the legitimate business needs of GM in regard
to the representation of its products are satisfied. The parties have agreed
to enter into this Agreement for that purpose. This agreement shall not
apply in any respect to Saturn Dealers or dealerships.
1.2 Definitions.
For purposes of this Agreement, the following terms shall
have the meaning indicated:
1.2.1 "Agreement" means this Supplemental Agreement to
General Motors Corporation Dealer Sales and Service Agreement.
1.2.2 "Lithia Motors, Inc. or "Lithia" means Lithia Motors,
Inc. and its subsidiary Dealer Companies.
1.2.3 "Dealer Agreement" means a General Motors Corporation
Dealer Sales and Service Agreement, a copy of which is attached hereto as
Exhibit A and is incorporated herein by reference. It also includes any
superseding Dealer Agreements.
1.2.4 "Dealer Company" or "Dealer" means the business
entity owned or controlled by Lithia Motors, Inc. that is a party to a Dealer
Agreement and is defined as the "Dealer" for purposes of the Dealer Agreement.
1.2.5 "Division" or "Divisions" means one or more of the
marketing divisions of GM; Chevrolet, Pontiac-GMC, Oldsmobile, Buick,
Cadillac.
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1.2.6 "GM" means General Motors Corporation.
1.2.7 "GM Dealerships" means a specific, physical location
from which Dealership Operations are conducted by a Dealer pursuant to the
terms of one or more Dealer Agreements. It does not include Saturn
Dealerships.
1.2.8 "Voting stock" means any stock of Lithia Motors,
Inc. that has voting rights as well as any debt or equity security of Lithia
Motors, Inc. that is convertible into stock of Lithia Motors, Inc. that has
voting rights.
2. Lithia Motors, Inc. Ownership
2.1 Ownership Structure.
Each Dealer will be a separate company, distinct from
Lithia Motors, Inc. in the form of either a corporation, partnership or other
business enterprise form acceptable to GM, which is capitalized in accordance
with the "GM Owned Working Capital Agreement". Each of the Dealer Companies
will be owned by Lithia Motors, Inc. or may have minority interests held by
employees of that Dealer Company subject to GM approval.
2.2 Lithia Motors, Inc. hereby warrants that the
representations and assurances contained in this Agreement are within its
authority to make and do not contravene any directive, policy or procedure of
Lithia Motors, Inc.
2.3 Change in Ownership. Any material change in ownership of
any Dealer company and any material change in Lithia Motors, Inc. or any
event described in section 2.4.2(b) shall be considered a change in ownership
of the Dealer Company under the terms of the dealer agreements and all
applicable terms of the Dealer Agreement as supplemented by this Agreement
will apply to any such change.
2.4 Acquisition of Ownership Interest by Third Party. Given the
ultimate control Lithia Motors, Inc. will have over the Dealer Companies, and
the Divisions' strong interest in assuring that those who own and control
their Dealers have interests consistent with those of the Divisions', Lithia
Motors, Inc. agrees to the following:
2.4.1 Lithia Motors, Inc. will deliver to GM copies of all
Schedules 13D and 13G, and all amendments thereto and terminations thereof,
received by Lithia Motors, Inc., within five (5) days of receipt of such
Schedules. If Lithia Motors, Inc. is aware of any ownership of its stock
that should have been reported to it on Schedule 13D but that is not reported
in a timely manner, it will promptly give GM written notice of such
ownership, with any relevant information about the owner that Lithia Motors,
Inc. possesses.
2.4.2 If Lithia Motors, Inc. through its Board of Directors
or through shareholder action proposes or if any person, entity or group
sends Lithia Motors, Inc. a schedule 13D, or any amendment thereto,
disclosing (a) a binding agreement to acquire or the acquisition of aggregate
ownership of more than twenty percent (20%) of the voting stock of Lithia
Motors, Inc. (b) Lithia Motors, Inc. through its Board of Directors or
through shareholder action proposes or if any plans or proposals which relate
to or would result in the following: (i) the acquisition by any person of
more than 20% of the voting stock of Lithia Motors, Inc. other than for the
purposes of ordinary passive investment (ii) an extraordinary corporate
transaction. such as a material merger, reorganization or liquidation,
involving Lithia Motors, Inc. or a sale or transfer of a material amount of
assets of Lithia Motors, Inc. and its subsidiaries; or (iii) any change which
together with any changes made to the Board of Directors within the preceding
year, would result in a change in control of the then current board of
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directors of Lithia Motors. Inc. or (iv) in the case of an entity that
produces or controls or is controlled by or is under common control with an
entity that either produces motor vehicles or is a motor vehicle franchisor,
the acquisition by any person entity or group of more than 20% of the voting
stock of Lithia Motors, Inc. and any proposal by any such person, entity or
group through the Lithia Motors, Inc. Board of Directors or shareholders
action to change the board of directors of Lithia Motors, Inc., then if such
actions in GM's business judgment could have a material or adverse effect on
its image or reputation in the GM dealerships or be materially incompatible
with GM's interests (and upon notice of GM's reasons for such judgment),
Lithia Motors, Inc. agree that it will take one of the remedial actions set
forth in Section 2.4.3 below within ninety (90) days of receiving such
Schedule 13D or such amendment.
2.4.3 If Lithia Motors, Inc. is obligated under Section
2.4.2 above to take remedial action, it will (a) transfer to GM or its
designee, and GM or its designee will acquire the assets, properties or
business associated with any Dealer Company at fair market value as
determined in accordance with Section 8 below, or (b) provide evidence to the
Divisions (reasonably acceptable to GM) that such person entity or group no
longer has such threshold level of ownership interest in Lithia Motors, Inc.
or that the actions described in Section 2.4.2(b) will not occur.
2.4.4 Should Lithia Motors, Inc. or Dealer Company enter
into an agreement to transfer the assets of a Dealer Company to a third
party, the right of first refusal described in Article 12.3 of the Dealer
Agreement shall apply to any such transfer.
2.4.5 Lithia Motors, Inc. will describe such provisions of
this Section in any prospectus it delivers in connection with the offer or
sale of its stock or any other securities filing as may be required by any
applicable laws or regulations.
2.5 Officers and Key Management. Lithia Motors, Inc. agrees to
provide to GM a list of the key management of Lithia Motors, Inc.
responsibilities in regard to the control and management of Lithia Motors,
Inc. and each Dealer Company. Each Dealer Company shall agree to propose to
GM any material changes in the key management of the Dealer Company or their
responsibilities. Such proposal should be provided to GM in writing prior to
such change to the extent practicable and shall include sufficient
information to permit GM to evaluate the proposed change consistent with
normal policies and procedures. Lithia Motors, Inc. will notify GM in
writing of any material change in the key management of Lithia Motors, Inc.
or their responsibilities. For purposes of this Agreement, the term "key
management" shall mean CEO, President and Vice Presidents with respect to
each dealer company and executive officers with respect to Lithia Motors. Inc.
3. Lithia Motors, Inc. Operating Policies and Procedures.
3.1 GM Brand Strategy. Lithia Motors, Inc. acknowledges that
GM has a Brand Strategy and has invested significant capital in the
development of corporate, divisional and brand image. Relevant information
regarding this strategy has been shared with Lithia Motors, Inc.. Lithia
Motors, Inc. agrees to accommodate GM's Brand Strategy in its Lithia Motors,
Inc. GM dealership Operations. Lithia Motors, Inc. will incorporate in each
of its GM Dealerships the following as a minimum in support of the GM Brand
Strategy:
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3.1.1 GM has developed retail and service operating
standards for each of its Divisions. At each of its GM Dealerships, Lithia
Motors, Inc. will implement and use those divisional standards, or higher
standards which it may develop, subject to GM's approval.
3.1.2 Dealer marketing associations for each of the
Divisions are an integral part of GM's Brand Strategy. Lithia Motors, Inc.
agrees that its advertising and marketing practices will support and enhance
GM and Divisional brand and marketing practices and goals. Lithia Motors,
Inc. agrees and each Dealer Company shall agree that the Dealer Company will
participate in the appropriate dealer marketing association or group as
provided in Section 11.
3.1.3 Lithia Motors, Inc. will not, and will not permit any
Dealer Company to jointly advertise or market any of their non-GM automotive
operations in conjunction with its approved GM Dealership Operations (it
being understood that the advertising example attached hereto as Exhibit C
will be permissible).
4. Acquisition of GM Dealerships.
4.1 In consideration for the representations, covenants and
commitments contained herein and assuming compliance with the normal
requirements of General Motors regarding transfer of assets and appointment
as a dealer, General Motors will permit the acquisition of up to five (5)
General Motors Dealerships during the period commencing from the date of this
Agreement and ending 24 months thereafter. Currently Lithia Motors is not in
compliance with General Motors standards for the Pontiac dealership in
Medford, Oregon for Customer Satisfaction and Sales performance. Lithia
represents intent to bring the performance into compliance, but believes it
will be able to do so if the location is in compliance with GM's channel
plan. Accordingly, General Motors will approve, upon receipt of an
acceptable proposal Lithia's acquisition of the Buick/Cadillac dealership or
the Oldsmobile/GMC dealership or the sale of Pontiac assets to either of
those dealers in Medford in order that the plan of a Pontiac-Buick-GMC
dealership and a Chevrolet Oldsmobile/Cadillac dealership may be
accomplished. If Lithia does not accomplish this purchase or sale within 12
months of the date of this agreement and the Pontiac Customer Satisfaction
and Sales performance does not meet the performance standards identified in
sections 4.2 and 4.3 of this agreement, Lithia will voluntarily terminate its
Pontiac dealer agreement in exchange for payment provided in section 5.2 of
this agreement. In the first 12 months following the date of this agreement,
GM will allow Lithia to acquire two additional GM dealers, subject to receipt
of acceptable proposals, while working on the purchase/sale/correction of the
Medford Pontiac dealership deficiencies. In the second 12 months, GM will
allow, subject to receipt of acceptable proposals the acquisition of two
additional GM dealerships if Lithia is meeting the performance standards for
its then owned GM dealerships. Total Lithia owned GM dealerships will not
exceed 5 at the conclusion of the 24 months following the date of this
agreement.
4.2 Following the 24 month period, each Dealer company in which
Lithia Motors, Inc. has an investment must be in compliance with the terms of
the General Motors Policies for Changes in GM Dealership Ownership/Management
bulletin of September 19, 1994 (a copy of which has already been provided)
including any revisions or replacements of that bulletin, in order to be
approved for additional acquisitions of General Motors Dealerships.
4.3 Multiple Dealer Policy. Lithia Motors, Inc. recognizes
that customers benefit from competition in the marketplace and agree that any
proposal to acquire additional GM dealerships shall be subject to the terms
of General Motors Multiple Dealer Investor/Multiple Dealer Operator policies
as set forth in NAO Bulletin 94-11, including any revisions of replacements
to the bulletin.
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4.4 GM and Lithia Motors, Inc. agree that Lithia Motors, Inc.
will not attempt to acquire more than 50% of the GM dealerships, by franchise
line in a GM defined Multiple Dealer Area. GM will provide upon Lithia
Motors, Inc. request the number of GM dealerships, by line, in the Multiple
Dealer Area and the maximum number of dealerships Lithia Motors, Inc. may
acquire in that Multiple Dealer Area.
4.5 Evaluation of Operation. GM will conduct semi annual
evaluation meetings with the management of Lithia Motors, Inc. and the Dealer
Operators of each GM Dealer Company to review the performance of each GM
Dealer Company. In the event GM advises Lithia Motors, Inc. for any two
consecutive evaluation periods that the performance of a GM dealership is not
meeting the sales volume, Customer Satisfaction and Branding requirements of
GM, in addition to other available remedies, GM will have the right to demand
a change in the management of the dealer company not meeting those
requirements. Lithia Motors, Inc. will make the management changes at any
deficient dealership within not more than six (6) months after notice of the
deficiencies.
5. Dealership Operations.
5.1 Dealership Operations. Each Dealer Company shall be a
distinct and complete business entity which shall include complete Dealership
Operations as that term is defined in the Dealer Agreement including, but not
limited to sales, service, parts and used car operations. This requirement
will not preclude certain centralized functions provided that they are
consistent with GM's Channel Strategy, and that such centralized functions
are reviewed with and approved by GM, which approval shall not be
unreasonably withheld. However, no sales, service or parts operations may be
combined with any non-GM representation and all GM Dealerships will have
reasonable used car operations.
5.2 GM Channel Strategy. Lithia Motors, Inc. further
stipulates and agrees that if Lithia Motors, Inc., GM, and the public are to
realize the potential benefits that Lithia Motors, Inc. represents to be the
result of the acquisitions proposed by Lithia Motors, Inc., then an integral
component of the participation by Lithia Motors, Inc. and Dealer Company is
their agreement that all GM Dealerships shall fully comply with General
Motors Channel Strategy including proper divisional representation alignment
and facilities that are properly located and that are in compliance with
appropriate divisional image programs. The Channel Strategy is set forth in
a memorandum dated October 5, 1995, from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to all GM
dealers. and in the written statement of the strategy as it relates to each
Dealer Company, copies of which will be provided to Lithia Motors, Inc. and
each Dealer Company. Lithia Motors, Inc. agrees and each Dealer Company
shall agree that within 12 months of the acquisition of any GM Dealership
that is not consistent with the Channel Strategy, Lithia Motors, Inc. and
Dealer Company will have complied with the Channel Strategy for that
location. Notwithstanding the above, GM will consider reasonable requests
from Lithia Motors, Inc. for an extension if Lithia Motors, Inc. is making
reasonable progress and is unable to comply with the Channel Strategy for
reasons beyond Lithia Motors, Inc. control. If Lithia Motors, Inc. and
Dealer Company fail to do so within the time provided, then Lithia Motors,
Inc. will cause Dealer Company and Dealer Company will agree to terminate the
representation of such products as reasonably required by GM to comply with
the Channel Strategy. If such termination is required, GM will compensate
Lithia Motors, Inc. the of sum $1,000 for each unit of GM retail planning
guide for each Dealer Agreement so terminated.
5.3 Exclusive Representation. Lithia Motors, Inc. agrees and
each Dealer Company shall agree that all GM Dealerships shall be used solely
for the exclusive representation of GM products and related services and in
no event shall be used for the display, sale or promotion or warranty service
of any new vehicle other than those of General Motors Corporation (provided
that if Lithia Motors, Inc. acquires a GM Dealership having a sales and
service agreement with a competitive automobile manufacturer or importer and
related sales and service operations at the same facility, at GM's request
Lithia Motors, Inc. shall cause the competitive sales and service operations
to be relocated within one year of acquisition). Lithia Motors, Inc. agrees
and each Dealer Company shall agree that should a Dealer Company cease to
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provide exclusive representation of GM products, based on the proper
franchise alignment as determined by the Charmer Strategy, then that shall
constitute good cause in and of itself for the termination of the Dealer
Agreement then in effect with such Dealer Company and Lithia Motors, Inc.
shall cause Dealer Company to and Dealer Company shall voluntarily terminate
the Dealer Agreements then in effect.
5.4 Image Compliance. Any Dealer Company acquired by Lithia
Motors, Inc. shall be brought into compliance with applicable Divisional
facility image requirements. Any new construction or significant interior or
exterior remodeling of any GM Dealerships shall incorporate the appropriate
divisional image program and shall be subject to approval by the appropriate
Division before such construction is undertaken.
5.5 Corporate Name and Tradenames. Both the corporate name and
any tradename or d/b/a of each Dealer Company must include the names of those
GM Divisions represented by such Dealer Company.
5.6 Dealer Company Advertising. Lithia Motors, Inc. agrees
that the advertising of each of the Dealer companies will maintain and
support the GM brand strategy. Newspaper, radio, television and any other
form of advertising will not combine GM brands or non GM brands, unless GM
has approved combined operations and will clearly identify each GM dealership
as a separate entity at its approved location (it being understood that the
advertising example attached hereto as Exhibit C will be permissible).
6. Dealer Operator
6.1 Appointment of Dealer Operator. For purposes of the Dealer
Agreement, including Paragraph Third and Article 2 and for each GM
Dealership, Lithia Motors, Inc. shall appoint an individual who shall act as
Executive Manager of that GM Dealership only and who shall be considered as
Dealer Operator for purposes of the Dealer Agreement. The Divisions will
rely upon the personal qualifications and management skills GM of Dealer
Operator. Lithia Motors. Inc. hereby represents that Dealer operator will
have complete managerial authority to make all decisions, and enter into any
and all necessary business commitments required in the normal course of
conducting Dealership Operations on behalf of Dealer Company and may take all
actions normally required of a Dealer Operator pursuant to Paragraph Third
and Article 2 of the Dealer Agreement. Lithia Motors, Inc. will not revoke,
modify or amend such authority without the prior written approval of the
applicable Division (except as provided in Section 6.3 below). Because of
the unique structure of Lithia Motors, Inc., the 15% ownership requirement
contained in Article 2 shall not apply to Dealer Operator.
6.2 Removal of Dealer Operator. Except as provided in Section
6.3 below, the removal or withdrawal of Dealer Operator without Divisions'
prior written consent shall constitute grounds for termination of the Dealer
Agreements. However, the Divisions recognize that employment
responsibilities of the Dealer Operator with Dealer Company may change,
making it impractical for the Dealer Operator to continue to fulfill his/her
responsibilities as Dealer Operator. In that case, or in the event Dealer
Operator leaves the employ of the Dealer Company, Dealer Company shall have
the opportunity to propose a replacement Dealer Operator. The Divisions will
not unreasonably withhold approval of any such proposal, provided the
proposed replacement has the skills and qualifications to act as Dealer
Operator pursuant to the standard policies and procedures of GM.
6.3 Replacement Dealer Operator. Dealer Company shall make
every effort to obtain the consent of the Divisions to a proposed replacement
Dealer Operator prior to the removal or withdrawal of the approved Dealer
Operator. If that is not practical, Dealer Company shall notify, Division in
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writing within 10 days following the removal or withdrawal of the approved
Dealer Operator. Within 10 days of that removal or withdrawal, Dealer
Company will submit to Division a plan and appropriate applications to
replace Dealer Operator with a qualified replacement acceptable to Division.
The replacement Dealer Operator must assume his/her responsibilities no later
than 90 days following the withdrawal of the approved Dealer Operator.
Lithia Motors, Inc. shall be permitted to appoint a temporary general manager
to manage the GM Dealership during the interim period while the Dealer
Operator is being replaced.
7. Dispute Resolution. Lithia Motors, Inc. agrees not to join any
legal or administrative action a seller of a General Motors dealership may
take against General Motors in the event General Motors declines to approve a
proposed transfer to Lithia Motors, Inc.. Lithia Motors, Inc. and GM
stipulate and agree and each Dealer Company shall stipulate and agree that
the dispute resolution process attached hereto as Exhibit D, or any
replacement process offered to all GM Dealers. shall be the exclusive source
of resolution of any dispute regarding the Dealer Agreements and this
Agreement including, but not limited to, involuntary termination of the
Dealer Agreements and/or approval of Lithia Motors, Inc. for additional
investment in or ownership of GM Dealerships. The parties further agree that
the Chevrolet dealer dispute resolution process will be used for the
resolution of the matter, regardless of the GM Division involved.
8. Right to Purchase or Lease. In the event of any termination of
the Dealer Agreement or any transaction or event that would, in effect,
discontinue Dealership Operations from that GM Dealership, or a transfer of
assets, properties or business to GM or a GM designee pursuant to Section
2.4.3, Lithia Motors, Inc. agrees and each Dealer Company shall agree to
provide GM with: (a) the right to purchase the dealership assets, properties
or business for fair market value based on automotive use, and (b) an
assignment of any existing lease or lease options that are available, subject
in each case to any legal or contractual obligations existing at such time
through the process attached hereto as Exhibit B, that Lithia Motors, Inc.
shall assure GM or its delegate of quiet possession of the dealership
facilities for a period of not less than five years if the right to have any
existing lease or lease option assigned as set forth above is exercised with
respect to such facilities within ten years of the execution of this
Agreement. If, however, Lithia Motors, Inc. enters into a financing
arrangement with respect to GM's option as described in this Section 8 would
be subordinated to the interests of any lender in connection with any default
by Lithia Motors, Inc. under the terms of the financing arrangement other
than a default due to the discontinuance of dealership operations from such
facilities. The Parties agree that GM may exercise its rights under this
Section 8 with respect to some or all of the dealership facilities to which
it may apply at any given time. and that failure to exercise such rights as
to one facility shall not affect GM's rights as to other facilities.
9. Electronic Funds Transfer. Lithia Motors, Inc. agrees that each
Dealer Company will use Electronic Funds Transfer (EFT) for settlement of the
dealership obligations to GM and that GM will have a right of offset for any
unpaid debit balances for any Dealer Company at the time the indebtedness is
due and will have the right to collect those amounts from the account of the
Dealer Company that owes the debt or the account of any other Dealer Company.
10. Compliance with Policies and Procedures. Each Dealer Company
must comply with all terms of the Dealer Agreement and all GM policies
applicable to Dealer company's Dealership Operations. Those procedures
include policies precluding joint advertising and prohibiting sales of GM
auction vehicles from other than the purchasing GM Dealership. Except as
specifically provided herein, all Dealership Operations shall be conducted
consistent with requirements for other GM dealerships.
11. Membership in Dealer Marketing Group. Each Dealer Company will
join its respective dealer marketing group and area marketing group including
membership financial support and will participate as a regular member in
meetings and marketing activities.
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12. Capital Standards. Lithia Motors, Inc. agrees and Dealer Company
shall agree that Dealer Company shall maintain, at all times, sufficient
working capital to meet or exceed the minimum net working capital standards
for the Dealer Company as determined from time to time by GM consistent with
its normal practices and procedures. Lithia Motors, Inc. and Dealer Company
shall provide such documentation as reasonably requested by GM to assure
compliance with that requirement. Lithia Motors, Inc. shall submit an annual
consolidated balance sheet for the combined GM Dealership operations of
Lithia Motors, Inc.
13. Discontinuance of Representations. In the event that Lithia
Motors, Inc. determines, voluntarily or otherwise to discontinue
representation in any given Multiple Dealer Area, Lithia Motors, Inc. shall
grant the right to GM to acquire at fair market value as determined in
accordance with Exhibit B the right to representation of the Divisions
previously represented by any Dealer Company in that Multiple Dealer Area.
GM shall also have the option to acquire the fixed assets and/or the
Dealership Facilities in that Multiple Dealer Area in accordance with section
8. The terms and conditions for the exercise of such rights shall be set
forth in appropriate and customary documents. Lithia Motors, Inc. has
received GM's standard option agreements modified for this Agreement.
14. Supplement to Dealer Agreement. The parties agree that each
Dealer Company shall be required to execute an addendum to the Dealer
Agreements binding the Dealer Company to the applicable portions of this
Agreement. For each Dealer Company, this Agreement shall supplement the
terms of the Dealer Agreements in accordance with Article 17.1.1 of the
Dealer Agreements.
15. Further Modifications. In the event that the policies of GM with
regard to Dealerships owned or controlled in whole or in part by public
shareholders should be modified. the parties agree to review such
modifications to determine whether modification to this Agreement is
appropriate.
16. Rights. Nothing in this Agreement or the Dealer Agreement shall
be construed to confer any rights upon any person not a party hereto or
thereto, nor shall it create in any party an interest as a third party
beneficiary of this Agreement or the Dealer Agreement. Lithia Motors, Inc.
and Dealer Company hereby agree to indemnity and hold harmless GM, its
directors, officers, employees, subsidiaries, agents and representatives from
and against all claims, actions, damages, expenses, costs and liability,
including attorneys fees, arising from or in connection with any action by a
third-party in its capacity as a stockholder of Lithia Motors, Inc. relating
to this Agreement other than through a derivative stockholder suit authorized
by the Board of Lithia Motors, Inc., provided that Lithia Motors, Inc. shall
have the right to assume the defense and control any such actions or suits
and that GM shall not settle any such actions or suits without Lithia Motors,
Inc. consent (such consent not to be unreasonably withheld). Notwithstanding
the above, GM may choose, at its own expense, to manage and control its own
defense in any such action.
17. Modification of Dealer Agreement. This Agreement is intended to
modify and adapt certain provisions of the Dealer Agreement and is intended
to be incorporated as part of the Dealer Agreement for each Dealer Company.
In the event that any provisions of this Agreement are in conflict with other
provisions of the standard Dealer Agreement, the provisions contained in this
Agreement shall govern. Except as expressly provided in this Agreement the
terms of the Dealer Agreements remain unchanged and apply herein.
18. Confidentiality. Each party agrees not to disclose the content
of this Agreement to non-affiliated entities and to treat the Agreement with
the same degree of confidentiality as it treats its own confidential
documents of the same nature, except as expressly provided by Article 2.3.5
of this Agreement or unless authorized by the other party, required by law,
pertinent to judicial or administrative proceedings or to proceedings under
the Dispute Resolution Process.
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19. This Agreement remains in effect so long as Lithia Motors, Inc.
or any successor thereto, directly or indirectly holds or has an agreement to
hold an ownership interest in any GM Dealer Company.
IN WITNESS WHEREOF, the parties have executed this Agreement this 16th
day of January 1998.
GENERAL MOTORS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇▇ III
-------------------------------- -----------------------------------
▇.▇. ▇▇▇▇▇▇▇▇▇▇, III
General Manager
North American Operations
Dealer Network Investment and
Development
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