Exhibit 10.18.1
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;
\VHEREAS, 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 arid 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.
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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 parry 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.
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.
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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 termination's
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. and (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 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
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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
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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 94-1l,
including any revisions of replacements to the bulletin.
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 Operations. 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
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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 Ronald L Zarrella
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 provide exclusive representation of GM
products, based on the proper franchise alignment as determined by
the Channel Strategy, then that shall constitute good cause in and
of itself for the termination
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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 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
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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 writing within 10 days following the removal or
withdrawal of the approved Dealer Operator. Within 30 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
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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.
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 Representation. 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
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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 17.11 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. No Third Party 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 indemnify 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.
19. Duration of Agreement. 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
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ownership interest in any GM Dealer Company.
IN WITNESS WHEREOF, the parties have executed this Agreement this 16th day of
January, 1998.
LITHIA MOTORS, INC. GENERAL MOTORS CORPORATION
By: /s/ By: /s/
Sidney B. DeBoer E.K. Roggenkamp, III
CEO General Manager
North American Operations
Dealer Network Investment and Development
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