EXHIBIT 10.34.1
AGREEMENT FOR PURCHASE AND SALE OF BUSINESS ASSETS
THIS AGREEMENT is entered into by and between ▇▇▇▇▇▇▇ AUTO GROUP, an
Oregon corporation, dba "▇▇▇▇▇▇▇ Toyota" (hereinafter referred to as "Seller"),
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (hereinafter "Owner"), and LITHIA MOTORS, INC. or its nominee
(hereinafter referred to as the "Buyer" or as "Lithia").
R E C I T A L S :
Seller is an Oregon business corporation engaged in the business of
selling and servicing Toyota motor vehicles and related parts and accessories
from premises located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the "Business
Real Property"), under franchises issued by Toyota Motor Sales U.S.A., Inc.
Owner owns [all] [a majority] of the outstanding shares of Seller.
Buyer wishes to purchase from Seller, and Seller is willing to sell to
Buyer, all assets relating to Seller's Toyota franchise at the Business Real
Property, conditioned upon the granting to Buyer of an exclusive franchise for
the sale of new Toyota motor vehicles in the same geographical area as Seller's
current franchise.
Buyer (or a related entity) also wishes to purchase all of the real
property and improvements which constitute the Business Real Property, and the
purchase of Seller's business assets shall be conditioned upon the simultaneous
closing of the purchase of that real property by Buyer. ▇▇▇▇▇▇▇ Properties, LLC,
also owned by Owner, is the owner of the Business Real Property.
NOW, THEREFORE, IN CONSIDERATION OF the mutual promises set forth herein,
the parties agree as follows:
1. Definitions. In this Agreement, the following words shall have
the indicated meanings:
(a) "Closing" shall refer to the consummation of the transaction
contemplated under this Agreement in accordance with the terms hereof, and
"Closing Date" shall refer to the actual date of Closing. "Target Closing Date"
shall refer to June 15, 1998 "Final Closing Date" shall refer to July 15, 1998.
(b) "Seller's Business" shall refer to any and all activities
conducted by Seller in Redding, California, relating to the marketing and sale
of new Toyota vehicles and associated parts and accessories, and the repair and
servicing of new or used Toyota vehicles.
(c) "Purchased Assets" shall refer to those assets which are
identified in Paragraph 2 as being purchased and sold by the parties hereunder.
(d) Seller's "Equipment" shall refer to all non-inventory items of
tangible personal property presently owned or used by Seller in connection with
Seller's Business, including all of Seller's machinery, tools, generic or
marquee signs, office equipment, computer equipment, computer programs,
microfiches, parts lists, repair manuals, sales or service brochures, furniture
and fixtures, and all of Seller's leasehold improvements to the Business Real
Property, and further including all assets listed on Seller's financial
statements as of December 31, 1997 previously provided to Buyer, but shall not
include Seller's loaner vehicles .
(e) Seller's "Intangible Assets" shall refer to Seller's business
name ("▇▇▇▇▇▇▇ Toyota"), telephone and fax numbers, service customer lists,
sales customer lists, vehicle sales records, vehicle service records, all rights
of Seller under contracts assigned to and assumed by Buyer pursuant to this
Agreement, all goodwill associated with Seller's Business (in the Redding area),
and all other intangible rights and interests of any value relating to Seller's
Business.
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(f) "Business Real Property" shall refer to all of the real property
used in connection with Seller's business, including but not limited to the
premises at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
(g) "Franchisor" shall refer to Toyota Motor Sales U.S.A., Inc..
(h) "New Vehicle" shall refer to a Toyota motor vehicle which: (i)
is unregistered and unused, (ii) is from the 1997 or 1998 model year, (iii) has
been driven for less than 200 odometer miles, and (iv) may be represented or
warranted to consumers as "new" under California law. "Rollback Vehicle" shall
mean an unregistered vehicle from the 1997 or 1998 model year which has been
sold to a customer by Seller but returned because of the customer's inability to
obtain financing for the purchase. "Demonstrator Vehicle" shall mean an
unregistered vehicle from the 1997 or 1998 model year which has been used and
operated by Seller on dealer plates for sales demonstration purposes. "Used
Vehicle" shall mean any vehicle which is not a "New Vehicle," a "Demonstrator
Vehicle" or a "Rollback Vehicle" as defined in the three preceding sentences,
and includes Seller's loaner vehicles.
(i) "Date of this Agreement" shall refer to the first date upon
which this Agreement has been signed by all of the parties.
(j) All amounts payable by Buyer to Seller at Closing shall be paid
by certified check drawn against a bank of Buyer's choice having offices located
in ▇▇▇▇▇▇▇ County, Oregon, or by whatever other means shall be acceptable to
Seller.
2. Purchased Assets. Seller agrees to sell to Buyer, and Buyer agrees to
purchase from Seller, the assets identified in Paragraphs 3 through 9 of this
Agreement, plus any Pre-paid accounts assumed by Buyer (the "Purchased Assets").
Excluded from this transaction are Seller's cash, accounts receivable, notes
receivable, banking accounts and deposits, and all other assets not identified
in Paragraphs 3 through 9 of this Agreement.
3. Inventory Of New Vehicles, Demonstrator Vehicles and Rollback Vehicles.
Buyer shall purchase Seller's entire inventory of new Toyota vehicles, as that
inventory exists on the Closing Date. Buyer also shall purchase Seller's entire
inventory of Demonstrator Vehicles and Rollback Vehicles (up to a maximum of
five Rollback Vehicles unless such maximum is waived by Buyer), as that
inventory exists on the Closing Date.
(a) Price of New Vehicles. The purchase price for each of Seller's
New Vehicles shall be equal to Seller's factory invoice cost, reduced by any
factory hold-backs, factory rebates, factory incentives, carry-over model
allowances, floor plan allowances, finance cost allowances, advertising
allowances, and any other items which should reasonably be deducted in order to
establish Seller's actual net cost for each vehicle, and further reduced by the
actual net cost for any and all accessories, equipment and parts which are
missing from a vehicle. Seller's actual net cost for New Vehicles shall include
Seller's actual net cost for any and all parts and accessories reasonably
installed by Seller to New Vehicles in the ordinary course of business, but
shall not include any other vehicle preparation charges, labor charges or other
dealer charges of any kind.
(b) Deduction for Damage to New Vehicles. Immediately prior to
Closing, Buyer and Seller shall jointly inspect Seller's inventory of New
Vehicles. If any vehicle in Seller's inventory of New Vehicles is damaged, and
if the cost of repairing that damage would be more than $1,000.00, then
notwithstanding anything herein to the contrary, that vehicle shall be treated
as a Used Vehicle for purposes of Paragraph 4 and this Paragraph 3, rather than
as a New Vehicle. If any vehicle in Seller's inventory of New Vehicles is
damaged, and if the cost of repairing that damage is less than $1,000.00, then
Buyer shall be obligated to purchase that vehicle as a New Vehicle, but the
price for that vehicle, as determined under subparagraph 3(a), shall be reduced
by the actual net cost to Buyer of repairing such damage. If Buyer and Seller
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are unable to agree upon the actual net cost to Buyer of repairing the damage to
a vehicle, then Buyer and Seller shall select an independent third party to
determine that repair cost, which determination shall be binding upon both Buyer
and Seller.
(c) Payment for New Vehicles. The aggregate purchase price for all
New Vehicles purchased by Buyer from Seller shall be paid in full at Closing.
(d) Purchase Orders For New Vehicles. Immediately prior to Closing,
Buyer and Seller shall jointly review Seller's outstanding purchase orders for
New Vehicles ordered from Seller by customers but not delivered prior to
Closing. At Closing, Seller shall assign and transfer to Buyer, and Buyer shall
assume from Seller, all of Seller's rights (including customer deposits) and
obligations (including sales commissions) under such purchase orders; provided,
however, that Buyer shall not be obligated to assume Seller's rights or
obligations with respect to any New Vehicle purchase order which is at a price
less than factory invoice, or which provides for a trade-in at a price or under
terms unacceptable to Buyer.
(e) Price for Demonstrator Vehicles and Rollback Vehicles. The price
for each Demonstrator Vehicle shall be determined as provided in subparagraphs
3(a) and 3(b) and then reduced by $250 per vehicle and further reduced by
30(cent) per mile for each odometer mile on that vehicle in excess of 200 miles.
The price for each Rollback Vehicle shall be determined as provided in
subparagraphs 3(a) and 3(b) and then reduced by 30(cent) per mile for each
odometer mile on that vehicle in excess of 200 miles. The purchase price for
Demonstrator Vehicles and Rollback Vehicles shall be paid at Closing.
4. Inventory Of Used Vehicles. Buyer intends to purchase Seller's entire
inventory of Used Vehicles, as that inventory exists at Closing. However, Buyer
shall not be obligated to purchase any Used Vehicle for which Buyer and Seller
are unable to agree upon a purchase price.
(a) Disclosures. Seller shall be obligated, prior to Closing, to:
(i) disclose to Buyer any and all facts concerning each Used Vehicle which
Seller would be legally obligated to disclose to a consumer (including but not
limited to known damage and usage history), and (ii) provide to Buyer legal
odometer statements and free and clear title for each of the Used Vehicles.
(b) Price for Used Vehicles. Used Vehicles shall be purchased on an
individual basis. It is Buyer's intention to purchase all of Seller's Used
Vehicles. However, if Buyer and Seller cannot agree on the value of one or more
Used Vehicles, then those vehicles whose value is not agreed upon shall remain
the property of the Seller, and Buyer shall not be obligated to purchase those
vehicles. Buyer and Seller agree to establish the proposed purchase price for
all of Seller's Used Vehicles at least three business days prior to the
anticipated Closing Date.
(c) Payment for Used Vehicles. The aggregate purchase price for
Seller's inventory of Used Vehicles shall be paid in full at Closing.
(d) Storage of Used Vehicles Which Are Not Purchased by Buyer.
Seller shall have 10 days after Closing within which to remove from the Business
Real Property any of Seller's Used Vehicles which are not purchased by Buyer.
Buyer shall store those vehicles in accordance with Buyer's normal business
practices. Seller shall have sole and exclusive risk and liability for any
damage or loss to Seller's Used Vehicles while so stored on the Business Real
Property after Closing, and Buyer shall have no liability or obligation of any
kind by reason of any such damage or loss.
5. Inventory Of New Parts and Accessories. Buyer shall purchase Seller's
entire inventory of new, current (non-obsolete), undamaged Toyota vehicle parts
and accessories manufactured by Franchisor and/or third party suppliers, as that
inventory exists on the Closing Date. Buyer shall have no obligation to purchase
from Seller any parts or accessories which are used, damaged or obsolete. For
purposes of this Paragraph 5, a part or accessory shall be "obsolete" on the
Closing Date if not then returnable to the supplier from which that part was
originally purchased, or if not then listed in the supplier's then-current price
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and parts books. Prior to Closing, Seller shall maintain Seller's inventory of
parts and accessories at a level consistent with good business practices and
Seller's normal and regular course of business.
(a) Price for Parts and Accessories. The purchase price for each
item in Seller's inventory of new, current and undamaged parts and accessories
for Toyota vehicles (whether manufactured by Franchisor or third party
suppliers) shall be the net cost for that item as set forth in the then most
recent price book published by the supplier of that item, reduced by any
discounts (including quantity purchase or stock order discounts), rebates,
incentives or allowances received by Seller which should reasonably be taken
into account in order to establish what Buyer's net cost for that item would be
if that item was purchased by Buyer directly from that supplier at the time of
Closing.
(b) Determination of Inventory of Parts and Accessories. Seller's
inventory of new, current and undamaged Toyota parts and accessories shall be
determined immediately prior to Closing (or on whatever earlier date shall be
selected by mutual agreement of the parties) by a third party inventory service
selected by mutual agreement of the parties. Buyer and Seller each shall be
responsible for 50 percent of the fees charged by the inventory service for
conducting the inventory.
(c) Payment for Inventory of New Parts and Accessories. The purchase
price for Seller's inventory of parts and accessories shall be paid in full at
Closing.
6. Equipment. Seller agrees to sell all of the Equipment to Buyer, and
Buyer agrees to purchase the Equipment from Seller.
(a) Identification of Equipment. Within 10 days after the date of
this Agreement, Seller shall provide to Buyer a list of the Equipment, which
list shall be attached hereto as Exhibit "A." Seller is retaining, and is not
selling to Buyer, those personal items of Seller's Equipment which are listed on
Exhibit "B" attached hereto. Seller warrants to Buyer that the items listed on
Exhibit "A" constitute all of the items of tangible personal property (other
than inventory, consumable supplies or those items listed on Exhibit "B") which,
during the six months preceding Closing, shall have been owned or used by Seller
in connection with Seller's Business. Buyer shall have the right to fully
inspect the Equipment. If Buyer is dissatisfied with the kind, quality and/or
value of the items listed on Exhibit "A," Buyer shall have 10 days after receipt
of Exhibit "A" from Seller within which to notify Seller, in writing, of Buyer's
determination to rescind the transaction contemplated hereunder based on that
dissatisfaction.
(b) Price and Payment for Equipment. The aggregate purchase price
for all items of Seller's Equipment (including leasehold improvements) which are
being purchased hereunder shall be the book value of the Equipment being
purchased on the current financial statements of Seller. Notwithstanding the
preceding sentence, if one or more items listed on Seller's current financial
statements are not delivered to Buyer at Closing, then the aggregate purchase
price for the Equipment shall be reduced by the fair market value of those
missing items. Seller agrees that (with Sellers approval), Buyer shall have the
right to allocate the aggregate purchase price for the Equipment among the
various items of Equipment in whatever manner Buyer, in the exercise of its
discretion, believes will best reflect the relative fair market values of those
items. The purchase price for the Equipment shall be paid in full at Closing.
7. Supplies. Buyer shall purchase all of the gas, oil, nuts, bolts, and
other automotive supplies which are held for use in Seller's Business; provided,
however, that Buyer shall not be obligated to purchase used, damaged or obsolete
items or supplies. For purposes of this Paragraph 7, an item shall be "obsolete"
on the Closing Date if not then returnable to the supplier from which that item
was originally purchased, or if not then listed in the supplier's then-current
price books. Prior to Closing, Seller shall maintain Seller's inventory of
supplies at a level consistent with good business practices and Seller's normal
and regular course of business. The price for each item of the purchased
supplies shall be Seller's actual net cost, as determined by mutual agreement of
the parties, reduced by any discounts (including quantity purchase or stock
order discounts), rebates, incentives or allowances received by Seller which
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should reasonably be taken into account in order to establish what Buyer's net
cost for that item would be if that item was purchased by Buyer directly from
that supplier at the time of Closing. The purchase price for Seller's supplies
shall be paid to Seller at Closing.
8. Contractual Rights and Obligations. At Closing, Buyer shall assume all
rights and obligations of Seller under those certain equipment leases and other
contracts identified on Exhibit "C" attached hereto, provided, however, that
Buyer shall have the right at any time up to Closing to refuse to assume any one
or more of Seller's leases or other contracts to be included in Exhibit "C," and
Seller shall remain solely responsible for any such obligations rejected by
Buyer. Exhibit "C" shall be prepared and attached hereto within 10 days after
the date of this Agreement with full copies of all such leases and other
contracts delivered to Buyer at the time Exhibit "C" is provided. Seller
warrants that all of Seller's obligations under the contracts listed on Exhibit
"C" shall be current at the time of Closing. Seller agrees to indemnify Buyer
against all obligations under the contracts identified on Exhibit "C" which
relate to periods prior to Closing. Buyer agrees to indemnify Seller against all
obligations under the contracts assumed by Buyer which relate to periods after
Closing.
9. Intangible Assets. Buyer shall purchase all of Seller's Intangible
Assets.
(a) The aggregate purchase price for Seller's Intangible Assets
shall be One Million Eight Hundred Fifty Thousand and 00/100 Dollars
($1,850,000.00). The purchase price shall be allocated among the items which
constitute the Intangible Assets as determined by Buyer in the reasonable
exercise of Buyer's discretion; provided, however, that no value shall be
allocated to the non-transferable Toyota franchise issued by the Franchisor. The
purchase price for the Intangible Assets shall be paid in full at Closing.
(b) In order for Buyer to receive the full benefit of the
intangible good will being purchased by Buyer, it will be necessary for Buyer to
perform no-charge repair work and vehicle warranty work with respect to vehicles
repaired or sold by Seller prior to Closing. In partial consideration of the
$1,850,000.00 amount being paid by Buyer for the Intangible Assets, Seller
agrees to reimburse Buyer for the net cost to Buyer of repair and warranty
services which are not covered by factory warranty and which are performed by
Buyer within six months after Closing in order to satisfy: (i) customers who are
dissatisfied with repair services provided by Seller prior to Closing, and (ii)
warranty claims with respect to new or Used Vehicles purchased from Seller prior
to Closing. All repairs shall be authorized by Seller or his representative.
Seller agrees to reimburse Buyer pursuant to the preceding sentence on a monthly
basis, with payment to be made within 10 days after Buyer submits a billing for
the cost of repair and warranty services performed during the preceding calendar
month.
10. Bulk Transfers. It is the intention of the parties that this
transaction comply with Division Six of the California Uniform Commercial Code,
more commonly known as Uniform Commercial Code - Bulk Transfers, and Seller
shall take all actions necessary to comply therewith.
11. Limitation On Liabilities Assumed. Except as provided in subparagraph
3(d) and Paragraph 8, Buyer shall not, by reason of this Agreement or Buyer's
purchase of the Purchased Assets, take responsibility for any liabilities, debts
or obligations of Seller (including Seller's trade payables, account payables,
obligations to employees, or tax liabilities).
12. Warranties Of Seller. Owner and Seller make the following warranties
to Buyer, with the intent that Buyer rely thereon:
(a) Corporate Organization. Seller is a corporation organized,
validly existing, and in good standing under the laws of the State of
California. Seller has full power and authority to own, use, and sell its
assets.
(b) Corporate Authority. Seller's board of directors and
shareholders have authorized the execution and delivery of this Agreement to
Buyer and the carrying out of its provisions. This Agreement will not violate
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any judicial, governmental or administrative decree, order, writ, injunction, or
judgment, and will not conflict with or constitute a default under Seller's
bylaws, or any contract, agreement, or other instrument to which Seller is a
party or by which it may be bound.
(c) Employee Issues. No employees of Seller are members of any
union. Within 10 days after the date of this Agreement, Seller shall provide to
Buyer the following: (i) a census of Seller's employees, (ii) a written
disclosure of all benefits made available to Seller's employees (including
qualified and non-qualified retirement plans), and (iii) access to all personnel
files for Seller's employees. All employee benefit plans maintained by Seller
for its employees shall be fully funded prior to Closing. Seller shall pay all
wages, commissions, accrued vacation pay and other accrued compensation earned
by Seller's employees prior to Closing (together with all accrued FICA and
withholding taxes). Seller shall terminate the employment of all of Seller's
employees effective as of the close of business on the Closing Date. At Buyer's
sole discretion, Buyer may (but shall not be obligated to) hire any of Seller's
employees. Seller and Buyer will not, for a period of two years following
Closing, offer employment to any person who was an employee of Seller's Business
at any time within the 180 day period immediately preceding Closing unless
either: (1) Buyer consents in writing to Seller's employment of that employee,
or (2) a period of at least six months shall have elapsed since the later of:
(i) the date of Closing, or (ii) the last date when that employee is employed by
Buyer.
(d) Financial and Business Disclosures. Seller shall promptly
furnish to Buyer such financial and operating data and other information,
including but not limited to computer, phone, inventory and accounting systems,
relating to Seller's Business and the Business Real Property as Buyer shall
request. The review of such materials will be at Buyer's expense. Seller
warrants that all financial statements and related materials provided to Buyer
fairly present the financial position of Seller's Business and the results of
operation of Seller's Business for the periods covered thereby. Buyer (at
Buyer's expense) shall have the right, at any time prior to Closing, to conduct
a certified audit (by a certified public accounting firm selected by Buyer) of
Seller's balance sheets and income and cash flow statements for one or more
fiscal years or interim periods, and Seller agrees to cooperate and assist in
the prompt and efficient completion of all such audit activities, recognizing
that the audit process may result in inconveniences or inefficiencies to
Seller's Business, and would require the delivery of a representation letter to
such accounting firm.
(e) Undisclosed Liabilities and Contractual Commitments. Except as
otherwise disclosed in this Agreement (or in an attached Exhibit), the following
statements are true as of the date of this Agreement and shall be true at
Closing: (i) Seller does not have any liabilities which might have a material
impact on Buyer's use of the Purchased Assets; (ii) Seller is not a party to any
contracts or commitments which might have a material impact on Buyer's use of
the Purchased Assets; (iii) no lawsuit or action, administrative proceeding,
arbitration proceeding, governmental investigation, or other legal or equitable
proceeding of any kind is pending or threatened against Seller or the Business
Real Property which might adversely affect the value of the Purchased Assets,
the operation of the Business or the Business Real Property, (iv) Seller has all
licenses, permits and authorizations required by any federal, state or local
governmental or regulatory agency in order to operate Seller's Business, and
knows of no reason why any such license or permit might be subject to
revocation; and (v) the construction, occupancy and operation of the Business
Real Property materially conform to and comply with all applicable city, county,
state and federal laws, statutes, ordinances and regulations. If any claim is
asserted against Buyer after Closing with respect to any obligation of Seller
which Seller has failed to disclose to Buyer in writing, or which Seller has
disclosed but failed to pay, then Buyer shall give prompt written notice of that
claim to Seller. Seller shall indemnify Buyer with respect to all such
obligations.
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(f) Condition of Equipment and Business Real Property. Each item of
Equipment and Business Real Property (including the roof, the electrical,
plumbing, heating, ventilation, air conditioning and other utility systems)
shall be in good operating condition at Closing and needing no repairs. Seller
will continue to perform routine maintenance and repairs with respect to the
Equipment and the Business Real Property prior to Closing. Buyer shall have 30
days after Closing within which to advise Seller in writing if any item of
Equipment is not in good operating condition at Closing, and Seller shall
thereupon be obligated to repair or replace that item (or reimburse Buyer for
doing so). There are no material structural defects in the building, nor are
there any major repairs required to operate the building in a lawful, safe and
efficient manner. The Seller has not received any notices from any insurance
company of any defects or inadequacies in the Business Real Property. Any
licenses and permits obtained by the Seller have been fully paid for and are not
subject to any liens, encumbrances, or claims of any kind.
(g) Good Title. Seller has, and shall transfer to Buyer at Closing,
good and marketable title to all of the Purchased Assets, free and clear of all
security interests, liens, equitable interests, leases, assessments,
restrictions, reservations, or other burdens of any kind. All current and
accrued taxes which may become a lien against any of the Purchased Assets shall
have been paid by Seller prior to Closing (including property taxes, sales taxes
and excise taxes).
(h) No Hazardous Materials Discharged. Except as disclosed by Seller
on Exhibit "D" attached hereto, (i) at all times prior to Closing, Seller and
all of Seller's predecessors in title, and all lessees, tenants, employees,
agents, sublessees, franchisees, licensees, permitees, contractors, vendees and
customers of Seller and/or Seller's predecessors in title, and all other persons
permitted by Seller and/or Seller's predecessors in title to have access to the
Business Real Property, shall have used, stored, transported, disposed of and
treated Hazardous Materials in strict accordance with all applicable federal,
state and local laws and regulations (collectively referred to for the remainder
of this Paragraph 12(h) as the "Laws"), and (ii) there are no in-ground hoists,
underground gas tanks, underground fuel tanks, or underground waste oil tanks
located on the Business Real Property, and (iii) at Closing the Business Real
Property shall not be contaminated by the presence on, under or about the
Business Real Property of any Hazardous Material, and (iii) at Closing no other
parcel of real property (including but not limited to properties adjacent to or
in the immediate vicinity of the Business Real Property) is or at any time in
the future will be contaminated by the presence on, under or about that parcel
of any Hazardous Material which was released to, on, under, about or from the
Business Real Property prior to Closing. For purposes or this subparagraph (h),
the phrase "Hazardous Material" shall refer to and include any hazardous or
toxic substance, material or waste which is or becomes regulated by any federal,
state or local governmental authority or political subdivision. The term
"Hazardous Materials" includes, without limitation, any material or substance
that is (i) defined as a "hazardous substance" under applicable federal, state
or local law, (ii) petroleum, (iii) asbestos, (iv) polychlorinated biphenyl
("PCB"), (v) designated as a "hazardous substance" pursuant to Section 311 of
the Federal Water Pollution Control Act (33 U.S.C. ss. 1321), (vi) defined as a
"hazardous waste" pursuant to Section 1004 of the Solid Waste Disposal Act (42
U.S.C. ss. 6903), (vii) defined as a "hazardous substance" pursuant to Section
101 of the Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C. ss. 9601), (viii) defined as a "regulated substance" pursuant to
Section 9001 of the Solid Waste Disposal Act (Regulation of Underground Storage
Tanks), 42 U.S.C. ss. 6991, (ix) considered a "hazardous chemical substance and
mixture" pursuant to Section 6 of the Toxic Substance Control Act (15 U.S.C. ss.
2605), or (x) defined as a "pesticide" pursuant to Section 2 of the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss. 136), and (xi) any and
all substances which now or in the future are deemed to be pollutants, toxic
materials or hazardous materials under any other state or federal law. Seller
has furnished to Buyer, prior to the date of this Agreement, copies of all
environmental reports and certificates of compliance relating to Seller's
Business and the Business Real Property. Upon the execution of this Agreement,
Seller shall, engage an appropriate environmental firm which is acceptable to
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Buyer to conduct an investigation and produce a Phase One Environmental Report
regarding the Business Real Property, fees for said report shall be divided
equally between Buyer and Seller. If the Phase One Environmental Report
discloses that the Business Real Property is, or is likely to be, contaminated
by the presence of Hazardous Materials, and if Buyer provides Seller with a
written demand to remediate, cleanup, detoxify and decontaminate any and all
such contamination as a condition of Closing, then Seller shall be obligated (at
Seller's sole expense) either to: (i) complete such remediation, cleanup,
detoxification and/or decontamination prior to, and as a condition of, Closing,
or (ii) place sufficient funds into escrow at Closing to cover the expense of
the required remediation or (iii) rescind the entire transaction.
(i) Franchisors' Consent. Seller shall take all actions which are
commercially necessary on Seller's part to obtain the consent of the Franchisor
to the issuance to Buyer of an exclusive franchise for the sale of new Toyota
vehicles in the same geographical area as Seller's current franchise in Redding,
California.
(j) Indemnification for Breach of Warranties. Seller and Owner
shall jointly and severally indemnify and hold harmless Buyer against all
losses, damages and costs (including attorney fees and court costs) relating to
any warranty, (for a period of two years) made by Seller in this Agreement which
is false, misleading, incomplete or inaccurate (either on the date of this
Agreement or at the time of Closing). If at any time prior to Closing Buyer
determines that any warranty made by Seller in this Agreement is incorrect,
incomplete or misleading, then Buyer shall advise Seller of that fact and Seller
shall provide to Buyer in writing whatever other information shall be necessary
to cause that warranty to be correct, complete and not misleading or to cure or
remedy the breach. If any claim, action or proceeding is filed or brought
against Buyer which is or may be subject to Seller's obligation to indemnify
Buyer as set forth in this subparagraph, then Buyer shall promptly give Seller
written notice of that claim and Seller thereafter shall have the option to
defend that claim at Seller's expense using attorneys selected by Seller. Seller
and Owners agree to indemnify Buyer on demand for any claim made hereunder.
13. Conduct Of Business Pending Closing. Seller warrants that during the
period beginning on the date of this Agreement and ending at Closing: (i) Seller
shall continue to operate Seller's Business in the usual and ordinary course and
in substantial conformity with all applicable laws, ordinances, regulations,
rules or orders and will not institute any new, novel or unusual business
practices; (ii) Seller shall not allow any liens to be placed against any of the
Purchased Assets unless those liens are discharged prior to Closing; (iii)
Seller shall not take any action which may cause a material adverse change in
the operations of Seller's Business; (iv) Seller shall not conduct any sale
which shall use the words or phrases "Going Out of Business Sale" or "Change of
Ownership Sale" or other words or phrases having similar meanings; (v) Seller
shall use its best efforts to preserve the value of the Toyota franchise in
Redding, California; (vi) Seller shall not hire any new employees except in the
ordinary course of business; (vii) Seller shall not transfer any existing
employee(s) of Seller's Business to any other business location operated by
Seller or any affiliate of Seller; and (viii) Seller shall preserve the good
will and business relationships of the Business.
15. Representations And Warranties Of Buyer. Buyer hereby makes the
following representations and warranties to Seller, with the intent that Seller
rely thereon:
(a) Organization. Lithia Motors, Inc. is a corporation
organized and validly existing under the laws of the State of Oregon, and
is entitled to own property and to carry on its business.
(b) Authority. This Agreement shall be binding upon Lithia only if
authorized by the board of directors of Lithia within 10 days after the date of
this Agreement. This Agreement will not violate the provision of any judicial,
governmental or administrative decree, order, writ, injunction, or judgment, or
conflict with or constitute a default under, the Articles or bylaws of Lithia or
any contract, agreement, or other instrument to which Lithia is a party.
Page 8 of 18
16. Additional Conditions Precedent To Buyer's Obligations. The obligation
of Buyer to close this transaction is subject to each of the following
conditions being true or satisfied as of the date of Closing (each of which is
for the benefit of Buyer and may be waived by Buyer), and Buyer shall have the
right to rescind this Agreement if any of the following conditions is not
satisfied in accordance with its terms:
(a) Buyer shall have obtained from Franchisor, prior to the Final
Closing Date, a commitment for the issuance of an exclusive franchise to sell
new Toyota vehicles in the same geographical area as Seller's current franchise
in Redding, California (as evidenced by the issuance to Buyer by Franchisor of
an appropriate Dealership Sales and Service Agreement, and the approval of Buyer
as the publicly owned Dealer-Operator of the franchise) on terms reasonably
acceptable to Buyer, and Buyer agrees to use reasonable efforts to obtain that
franchise.
(b) Buyer shall be reasonably satisfied with any facility
improvement requirements which are imposed by Franchisor.
(c) Buyer shall have been permitted to fully inspect the Business
Real Property promptly after the execution of this Agreement (but in no event
longer than 10 days), and Buyer shall be reasonably satisfied with the physical
condition of the Business Real Property and with all other aspects of the
Business Real Property. If Buyer is not so satisfied, it will give written
notice within 10 days of the inspection to Seller who shall either agree to
remedy the deficiencies (if practicable) prior to and as a condition of Closing,
or the Agreement may be terminated by either party. The purchase by Buyer of the
Business Real Property shall be closed concurrently with this transaction under
terms and conditions which are reasonably acceptable to Buyer.
(d) All of Seller's agreements and warranties set forth in this
Agreement shall be true, correct, complete and not misleading at Closing;
provided that Buyer's decision to close this transaction shall not release
Seller from liability to Buyer for any warranty which is subsequently determined
to be incorrect, incomplete or misleading.
(e) Buyer shall be reasonably satisfied with the kind, quality
and/or value of the items listed on Exhibit "A," and does not notify Seller to
the contrary pursuant to Paragraph 6.
(f) This Agreement shall have been authorized by the board of
directors of Lithia within 10 days after the date of this Agreement.
(g) The aggregate Purchase Price for all of the Purchased Assets and
the Business Real Property shall be less than Fifteen Million and No/100 Dollars
($15,000,000.00).
(h) If the transaction contemplated by this Agreement requires a
filing under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, the parties agree to cooperate in providing the information required
for the filing, to share the cost of the filing fee, and all applicable waiting
periods for such filing shall have expired or been terminated with no injunction
having been filed or threatened by any governmental agency.
16. Closing. The parties shall make all reasonable effort to close the
purchase and sale under this Agreement at or before 5:00 p.m., Pacific Standard
Time, on or before the Final Closing Date, at the offices of Capital City
Escrow, Inc. in Sacramento, California, or at such other location as shall be
selected by mutual agreement of the parties.
(a) The parties agree to establish a closing escrow account at
Capital City Escrow, Inc. in Sacramento, California, (the "Closing Escrow
Agent"). Buyer and Seller each shall pay one-half (1/2) of the closing escrow
fees. Buyer and Seller agree to execute whatever reasonable escrow instructions
may be required by Closing Escrow Agent in connection with this transaction. In
the event of any conflict between those escrow instructions and this Agreement,
the terms of this Agreement shall prevail. Upon the execution of this Agreement,
Page 9 of 18
Buyer shall deliver to Closing Escrow Agent the sum of $100,000, which amount
shall immediately be placed into an interest bearing account. The deposit plus
interest (collectively the "Deposit") shall be credited to Buyer and shall be
applied against the purchase price for the Equipment at Closing, or if the
Closing fails to occur, then the Deposit shall be disbursed as set forth
hereinafter.
(b) In all events, the Closing of the transaction contemplated under
this Agreement shall occur (if at all) on or before the Final Closing Date.
(c) If this transaction closes as provided herein, then actual
possession and all risk of loss, damage or destruction with respect to the
Purchased Assets, shall be deemed to have been delivered to Buyer at Closing.
(d) At Closing (and from time to time thereafter as may be
reasonably requested by Buyer to vest in Buyer the Purchased Assets), and
coincidentally with the performance of the obligations to be performed by Buyer
at Closing, Seller shall deliver to Buyer: (i) all bills of sale, assignments
and other instruments of transfer, in form and substance reasonably satisfactory
to Buyer, which shall be necessary to convey the Purchased Assets to Buyer and
(ii) all other documents required under this Agreement.
(e) At Closing, and coincidentally with the performance of all
obligations required of Seller at Closing, Buyer shall deliver to Seller: (i)
payment for the Purchased Assets and (ii) all other payments and documents
required under this Agreement. Buyer shall be responsible for all sales taxes
payable in connection with the transaction.
(f) If Closing does not take place on or before the Final Closing
Date because there has been a failure of any condition precedent set forth in
Paragraph 15 without the fault or breach of either party, then: (i) all rights
and obligations of both parties under this Agreement shall terminate, (ii) Buyer
shall be entitled to a refund of the Deposit, and (iii) this Agreement shall
thereafter be void and of no effect.
(g) If Closing does not take place on or before the Final Closing
Date because of Buyer's material breach of this Agreement, then the Deposit
shall be paid to Seller as Seller's sole and exclusive remedy for Buyer's
breach, and Seller shall have no other rights or remedies against Buyer by
reason of that breach. IT WOULD BE EXTREMELY DIFFICULT TO ASCERTAIN SELLER'S
PRECISE MONETARY DAMAGES IN THE EVENT OF A BREACH BY BUYER, AND THE PARTIES
STIPULATE THAT THE DEPOSIT REPRESENTS A REASONABLE ESTIMATE BY BUYER AND SELLER
OF SELLER'S DAMAGES IN THE EVENT OF A BREACH BY BUYER. If Closing does not take
place on or before the Final Closing Date because of Seller's material breach of
this Agreement, then Buyer shall be entitled to: (i) a refund of the Deposit and
(ii) any and all other rights and remedies for that breach which are specified
in this Agreement or which may be provided by law or in equity, including
specific performance. A breach may not be declared if the action or inaction of
a party is capable of cure and the party intending to declare the breach has not
given the other party at least 10 days prior written notice within which such
impending breach may be cured.
(h) Both parties agree to make a good faith effort to execute and
deliver all documents and complete all actions necessary to consummate this
transaction.
(i) At or following Closing, Seller agrees to execute an Asset
Acquisition Statement (IRS Form 8594) prepared by Buyer, and approved by Seller
which reflects the allocation of the total purchase price among the Purchased
Assets in the manner determined in accordance with this Agreement.
17. Seller's Accounts Receivable. For a period of six months after
Closing, Buyer shall, on Seller's behalf, and at no charge to Seller, accept any
payment with respect to Seller's customer receivables and other receivables
arising out of the operation of Seller's Business prior to Closing. All
collected receivables from vehicle sales shall be delivered to Seller within 10
days after collection, and all other collected receivables shall be delivered to
Page 10 of 18
Seller on a monthly basis. Buyer shall have no obligation to undertake
collection efforts with respect to Seller's receivables, and Buyer's only
obligation shall be to account for and pay over Seller's receivables which are
actually received by Buyer.
18. Survival Of Representations. All representations, warranties,
indemnification obligations and covenants made in this Agreement shall survive
Closing, and shall remain in effect until the expiration of the latest period
allowable under any applicable statute of limitations.
19. Assignment By Buyer. Lithia shall have the right to assign all rights
and obligations of Lithia as "Buyer" under this Agreement. In the event of any
such assignment, the assignee shall assume all rights and obligations of the
Buyer under this Agreement; however, Lithia shall remain jointly liable for all
obligations of the Buyer.
20. Purchase of Business Real Property. As a condition to the Closing of
the transaction contemplated under this Agreement, Buyer (or a related entity)
is purchasing the Business Real Property, and Buyer's obligation to close the
transaction contemplated under this Agreement shall be subject to the condition
that Buyer is simultaneously able to enter into an agreement with the owner of
the Business Real Property which allows Buyer to purchase the Business Real
Property for a price of One Million Five Hundred Fifty Thousand Dollars
($1,550,000) and under such additional terms as are reasonably satisfactory to
Buyer: The full purchase price for property shall be payable at closing of
purchase. Seller must convey the Business Real Property free of all liens and
encumbrances.
21. Books And Records. For a period of three years after Closing, Seller
shall maintain Seller's financial records, and Buyer and its agents shall have
full reasonable access to Seller's financial statements and general ledger and
may make copies thereof.
22. Dispute Resolution.
(a) Mediation. The parties hope there will be no disputes arising
out of this transaction. To that end, each commits to cooperate in good faith
and to deal fairly in performing its duties under this Agreement in order to
accomplish their mutual objectives and avoid disputes. But if a dispute arises,
the parties agree to resolve all disputes by the following alternate dispute
resolution process. The parties will seek a fair and prompt negotiated
resolution, but if this is not successful, all disputes shall be resolved by
binding arbitration; provided, however, that during this process, at the request
of either party made not later than twenty-five (25) days after the initial
arbitration demand, the parties will attempt to resolve any dispute by
nonbinding mediation (but without delaying the arbitration hearing date). The
parties recognize that negotiation or mediation may not be appropriate to
resolve some disputes and agree that either party may proceed with arbitration
without negotiating or mediating. The parties confirm that by agreeing to this
alternate dispute resolution process, they intend to give up their right to have
any dispute decided in court by a judge or jury.
(b) Binding Arbitration. Any claim between the parties, including
but not limited to those arising out of or relating to this Agreement and any
claim based on or arising from an alleged tort, shall be determined by
arbitration in Medford, Oregon (or some other place as the parties may agree).
If either party demands a total award greater than $250,000, including interest,
attorneys' fees and costs, then either party may require that there be three (3)
neutral arbitrators. If the parties cannot agree on the identity of the
arbitrator(s) within ten (10) days of the arbitration demand, the arbitrator(s)
shall be selected by the administrator of the American Arbitration Association
(AAA) office in having jurisdiction over Medford, Oregon, from its Large,
Complex Case Panel (or have similar professional credentials). Each arbitrator
shall be an attorney with at least fifteen (15) years' experience in commercial
law and shall reside in Oregon. Whether a claim is covered by this Agreement
shall be determined by the arbitrator(s). All statutes of limitations which
would otherwise be applicable shall apply to any arbitration proceeding
hereunder.
Page 11 of 18
(c) Procedures. The arbitration shall be conducted in accordance
with the AAA Commercial Arbitration Rules with Expedited Procedures, as modified
by this Agreement. There shall be no dispositive motion practice. As may be
shown to be necessary to ensure a fair hearing, the arbitrator(s) may authorize
limited discovery, and may enter pre-hearing orders regarding (without
limitation) scheduling, document exchange, witness disclosure and issues to be
heard. The arbitrator(s) shall not be bound by the rules of evidence or of civil
procedure, but may consider such writings and oral presentations as reasonable
business people would use in the conduct of their day-to-day affairs, and may
require the parties to submit some or all of their case by written declaration
or such other manner of presentation as the arbitrator(s) may determine to be
appropriate. The parties intend to limit live testimony and cross-examination to
the extent necessary to ensure a fair hearing on material issues.
(d) Hearing and Award. The arbitrator(s) shall take such steps as
may be necessary to hold a private hearing within ninety (90) days of the
initial demand for arbitration and to conclude the hearing within three (3)
days; and the arbitrator(s)'s written decision shall be made not later than
fourteen (14) calendar days after the hearing. The parties have included these
time limits in order to expedite the proceeding, but they are not
jurisdictional, and the arbitrator(s) may for good cause afford or permit
reasonable extensions or delays, which shall not affect the validity of the
award. The written decision shall contain a brief statement of the claim(s)
determined and the award made on each claim. In making the decision and award,
the arbitrator(s) shall apply applicable substantive law. Absent fraud,
collusion or willful misconduct by an arbitrator, the award shall be final, and
judgment may be entered in any court having jurisdiction thereof. The
arbitrator(s) may award injunctive relief or any other remedy available from a
judge, including the joinder of parties or consolidation of this arbitration
with any other involving common issues of law or fact or which may promote
judicial economy, and may award attorneys' fees and costs to the prevailing
party but shall not have the power to award punitive or exemplary damages. The
decision and award of the arbitrators need not be unanimous; rather, the
decision and award of two arbitrators shall be final.
25. Miscellaneous.
(a) There are no oral agreements or representations between the
parties which affect this transaction, and this Agreement supersedes all
previous negotiations, warranties, representations and understandings between
the parties. True copies of all documents referenced in this Agreement are
attached hereto. If any provision of this Agreement shall be determined to be
void by any court of competent jurisdiction, then that determination shall not
affect any other provision of this Agreement, and all other provisions shall
remain in full force and effect. If any provision of this Agreement is capable
of two constructions only one of which would render the provision valid, then
the provision shall have the meaning which renders it valid. The paragraph
headings in this Agreement are for convenience purposes only, and do not in any
way define or construe the contents of this Agreement.
(b) This Agreement shall be governed and performed in accordance
with the laws of the state of Oregon. Each of the parties hereby irrevocably
submits to the jurisdiction of the courts of ▇▇▇▇▇▇▇ County, Oregon, and agrees
that any legal proceedings with respect to this Agreement shall be filed and
heard in the appropriate court in ▇▇▇▇▇▇▇ County, Oregon.
(c) This Agreement may be executed in multiple counterparts, each of
which shall be an original, and all of which shall constitute a single
instrument, when signed by both of the parties. This Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of the
respective parties.
(d) Waiver by either party of strict performance of any provision of
this Agreement shall not be a waiver of, and shall not prejudice the party's
right to subsequently require strict performance of, the same provision or any
other provision. The consent or approval of either party to any act by the other
party of a nature requiring consent or approval shall not render unnecessary the
consent to or approval of any subsequent similar act.
Page 12 of 18
(e) Time is of the essence to this Agreement.
(f) Should any party hereto institute any action or proceedings to
enforce or interpret any provision hereof, or for damages by reason of any
alleged breach of any provision of this Agreement, the prevailing party shall be
entitled to recover from the losing party or parties such amount as the court
may adjudge to be reasonable attorney's fees for services rendered to the
prevailing party in such action or proceeding, including any proceeding in
bankruptcy. The term "prevailing party" as used in this section shall include,
without limitation, any party who is made a defendant in litigation in which
damages and/or other relief may be sought against such party and a final
judgment or dismissal or decree is entered in such litigation in favor of such
party defendant.
(g) All notices, requests and demands shall be in writing and shall
be addressed or sent as follows:
Seller and Owners: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ TOYOTA
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ____________________
Buyer ▇▇▇▇▇▇ ▇▇▇▇▇▇
LITHIA MOTORS, INC.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇)▇▇▇-▇▇▇▇
Any party may change its address or facsimile number for notice by
written notice as provided herein. Notices shall be deemed duly given only (i)
when actually received by personal service, facsimile, overnight mail or courier
service, or (ii) 72 hours after being sent by registered or certified mail,
postage prepaid, return receipt requested. The giving of notice may be waived in
writing by the person or persons entitled to receive such notice, either before
or after the time established for the giving of such notice.
(h) Attorney Fees. If any arbitration, any action or proceeding
("Proceeding") is brought to enforce or interpret the provisions of this
Agreement, the prevailing party shall be entitled to recover all costs and
expenses incurred in such Proceeding, or on appeal, including reasonable
attorney fees as fixed by the arbitrator or court, and including a reasonable
amount for costs and attorney fees to be incurred in collection any money
judgment or award or otherwise enforcing each order, judgment, or decree entered
in the claim for relief, action, or other proceeding. If either party becomes
the subject of any bankruptcy or other insolvency proceedings, the party which
becomes the subject of such proceedings shall pay all legal costs and expenses
incurred by the other party in connection with such proceedings, whether such
amounts are incurred in connection with issues of state law, federal law,
bankruptcy law or otherwise.
Page 13 of 18
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
indicated below.
SELLER: ▇▇▇▇▇▇▇ TOYOTA
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
OWNER:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
BUYER: LITHIA MOTORS, INC. (OR NOMINEE)
By: /s/ ▇▇▇▇ ▇▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇▇, Vice President
Date:
----------------------------------
Page 14 of 18
EXHIBIT "A"
TO
AGREEMENT FOR PURCHASE AND SALE OF BUSINESS ASSETS
Between NAME OF CORPORATION, INC., as "Seller," and
LITHIA MOTORS, INC. (OR NOMINEE), as Buyer
LIST OF EQUIPMENT, FURNITURE AND FIXTURES BEING SOLD BY SELLER
[See ___ pages attached hereto.]
Page 15 of 18
EXHIBIT "B"
TO
AGREEMENT FOR PURCHASE AND SALE OF BUSINESS ASSETS
Between NAME OF CORPORATION, INC., as "Seller," and
LITHIA MOTORS, INC. (OR NOMINEE), as Buyer
LIST OF EQUIPMENT, FURNITURE AND FIXTURES BEING RETAINED BY SELLER
[See ___ pages attached hereto.]
Page 16 of 18
EXHIBIT "C"
TO
AGREEMENT FOR PURCHASE AND SALE OF BUSINESS ASSETS
Between NAME OF CORPORATION, INC., as "Seller," and
LITHIA MOTORS, INC. (OR NOMINEE), as Buyer
LISTING OF LEASES AND AGREEMENTS BEING ASSUMED
[See ____ pages attached hereto.]
Page 17 of 18
EXHIBIT "D"
TO
AGREEMENT FOR PURCHASE AND SALE OF BUSINESS ASSETS
Between NAME OF CORPORATION, INC., as "Seller," and
LITHIA MOTORS, INC. (OR NOMINEE), as Buyer
DISCLOSURE OF TOXIC MATERIALS
[See ____ page(s) attached hereto.]
Page 18 of 18