Exhibit 10.1
AGREEMENT FOR PURCHASE AND SALE OF BUSINESS ASSETS
THIS AGREEMENT is entered into by and between MAGNUSSEN DODGE, a
California corporation, dba "MAGNUSSEN DODGE ISUZU" (hereinafter referred to as
"Seller"), and LITHIA MOTORS, INC., an Oregon corporation, (hereinafter referred
to as the "Buyer").
RECITALS
Seller is a California business corporation engaged in the business of
selling and servicing Dodge and Isuzu motor vehicles and related parts and
accessories from premises located at 4901 Marsh Drive, Concord, California 94520
(the Business Real Property), under franchises issued by Chrysler Corporation,
and American Isuzu Motors, Inc.
Buyer wishes to purchase from Seller, and Seller is willing to sell to
Buyer, all assets relating to Seller's Dodge and Isuzu franchises, conditioned
upon the granting to Buyer of exclusive franchises for the sale of new Dodge and
Isuzu motor vehicles in the same geographical area as Seller's current
franchises in Concord, California.
Buyer also wishes to sublease the Business Real Property, and the
purchase of Seller's business assets shall be conditioned upon the simultaneous
closing of the subleasing of that real property by Buyer.
NOW, THEREFORE, IN CONSIDERATION OF the mutual premises 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 April 1, 1997, "Final Closing Date" shall refer to
the earlier of (i) April 30, 1997, or (ii) the 10" business day after the
condition precedent set forth in subparagraph 17(a) (the issuance of
Franchisers" s) has been satisfied.
(b) "Seller's Business" shall refer to any and all activities
conducted by Seller in Contra Costa County, California relating to the marketing
and sale of new Dodge and Isuzu vehicles and associated parts and accessories,
and the repair and servicing of new or used Dodge and Isuzu 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
item of tangible personal property presently owned or used by Seller in
connection with Seller's business, including all of Seller's machinery, tools,
signs, office equipment, computer equipment, computer programs, microfiches,
parts lists, repair manuals, sales and service brochures, furniture and
fixtures, and further including all assets
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listed on Seller's financial statements as of December 31, 1996. Seller's
leasehold improvements to the Business Real Property also shall be included
within the definition of Seller's "Equipment".
(e) Seller's "Intangible Assets" shall refer to Seller's name
("Magnussen Dodge and Isuzu"), telephone and fax numbers, service customer
lists, sales customer lists, vehicle sales records, vehicle services records,
all rights of Seller under contracts assigned to and assumed by Buyer pursuant
to this Agreement, all goodwill associated with Seller's business, and all other
intangible rights and interest of any value relating to Seller's business.
(f) "Business Real Property" shall refer to the real property
located at 4901 Marsh Drive, Concord, California, which has been used in
connection with Seller's business.
(g) "Franchisors" shall refer to Chrysler Corporation
and American Isuzu Motors, Inc.
(h) "New Vehicle" shall refer to a Dodge and Isuzu motor
vehicle which: (i) is unregistered and unused, (ii) is from the 1996 or 1997
model year, and (iii) may be represented or warranted to consumers as "new"
under California law. "Rollback Vehicle" shall mean an unregistered vehicle
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 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 rollback vehicle.
(i) "Date of this Agreement" shall refer to the first date
upon which this Agreement has been signed by all of the parties.
2. Purchased Assets. Seller agrees to sell to Buyer, and the Buyer
agrees to purchase from Seller, the assets identified in Paragraph 3, 4, 5, 6,
7, 8, 9, 10 and 11 of this Agreement (the "Purchase Assets"). Excluded from this
transaction are Seller's cash, accounts receivable, notes receivable, banking
accounts and deposits, and all other assets not identified in Paragraph 3, 4, 5,
6, 7, 8, 9, 10, and 11 of this Agreement.
3. Inventory of New Vehicles. Buyer shall purchase Seller's entire
inventory of new Dodge and Isuzu vehicles, as that inventory exists on the
Closing Date. Buyer also shall purchase Seller's entire inventory of
demonstrator vehicles and (up to five) rollback vehicles, as that inventory
exists on the Closing Date.
(a) Price of New Vehicles. The purchase price for each of the new
vehicles shall be equal to Seller's factory invoice cost, reduced by any factory
holdbacks, factory rebates, factory invoices, carry-over model allowances, floor
plan allowances, finance cost allowances, advertising allowances, 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 the 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 or 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 new vehicle purchased by Buyer from Seller is damaged, the
price for that vehicle, as determined under subparagraph 3(a), shall be
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reduced by the actual net cost to Buyer of repairing that damage. If Buyer and
Seller 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 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 Buyer'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 not acceptable to Buyer. At Closing, Seller shall turn over to Buyer all
customer deposits on ordered but undelivered new vehicles.
(e) Price for Demonstrators and Rollbacks. Regarding 1996
demonstrators, the price for each vehicle shall be determined as above less $500
per vehicle and 30 cents per mile for miles in excess of 4,000 miles. Regarding
1997 demonstrators, the price for each vehicle will be determined as above less
30 cents per mile for all miles in excess of 4,000 miles. Regarding rollbacks,
the purchase price for each such vehicle shall be determined as above less 30
cents per mile for miles in excess of 200 miles. The purchase price so
determined for the demonstrators and rollbacks shall be paid at Closing.
4. Inventory 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 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 the used
vehicles, however, in the event Buyer and Seller cannot agree on a value as to
one or more 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
same. Buyer and Seller agree to establish the proposed purchase price for
seller's used vehicles at least three business days prior to the anticipated
Closing Date. Regarding any used vehicles not purchased by Buyer, Seller shall
have 14 days subsequent to Closing to remove same from the Business Real
Property. So long as Buyer stores Seller's used vehicles on the Business Real
Property in accordance with standard business practices, Seller shall have sole,
and exclusive risk and liability for any damage or loss to Seller's used
vehicles while so owed on the Business Real Property after Closing, and Buyer
shall have no liability or obligation of any kind by reason of such damage or
loss.
(c) Payment for Used Vehicles. The aggregate purchase
price for Seller's inventory of used vehicles shall be paid in full at Closing.
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5. Inventory of New parts and Accessories. Buyer shall purchase
Seller's entire inventory of new, current (non-obsolete), undamaged Dodge and
Isuzu vehicle parts and accessories manufactured by Franchisors 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 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 Dodge and Isuzu vehicles (whether manufactured by a 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, rebates, incentives or allowances 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 the supplier at the
time of Closing.
(b) Determination of Inventory of Parts and Accessories.
Seller's inventory of new, current and undamaged Dodge and Isuzu parts and
accessories 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% 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.
(d) In addition to the vehicle accessories being purchased by
Buyer, Buyer agrees to purchase a quantity of other non-factory accessories the
amount of which shall be determined by the price of same which shall not exceed
$4,000.
6. Equipment. Buyer shall purchase Seller's Equipment. Buyer
acknowledges that Seller is retaining, and is not selling to Buyer, those
personal items of Seller's Equipment, if any, which are listed on Exhibit "A"
attached hereto.
(a) Price for Equipment. The aggregate purchase price for
Seller's Equipment shall be determined by a mutually agreed upon appraiser
whose cost shall be equally shared by the parties. This purchase price for
the Equipment shall be paid at the 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. The price for all such supplies shall be Seller's actual net cost,
and 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 equipment leases and other
contracts identified on Exhibit "B" attached hereto. Seller warrants that all of
Seller's obligations under the contracts listed on Exhibit "B" shall be current
at the time of Closing. Seller agrees to in Buyer against all obligations under
the contracts identified on Exhibit "B" which relate to periods prior to
Closing. Buyer agrees to indemnity Seller all obligations under the contracts
identified on Exhibit "B" which relate to periods after Closing.
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9. Repair Work in Progress. Buyer shall purchase all of Seller's
vehicle repair work in progress (in-house and subcontracted), at a price equal
to Seller's actual net cost (before profit and overhead) for all work completed
prior to Closing. The purchase price for work in progress shall be paid at
Closing.
10. Prepaid Expenses which Accrue to Buyer's Benefit. The
purchase price shall be at Seller's cost and shall be paid at Closing.
11. Intangible Assets. Buyer shall purchase all of Seller's
Intangible Assets.
(a) The aggregate purchase price for Seller's Intangible
Assets shall be Two Million Two Hundred Fifty Thousand and 00/100 Dollars
($2,250,000), $l,750,000 of which shall be paid outside of Escrow at the
Closing. The $500,000 balance of the purchase price for the Intangible Assets
($2,250,000 minus $1,750,000) shall be amortized and paid by Buyer to Seller as
follows:
(1) During the period be on the Closing Date and ending when the entire
deferred balance of this purchase price has been paid in full, interest shall
accrue an the outstanding balance of this purchase price at eight percent (8%)
per annum. The interest accruing on the outstanding balance of this purchase
price shall be due and payable quarter annual installments, with the first
interest payment being due and payable on the date which is three calendar
months after the Closing Date, and with subsequent interest payments being due
and payable at regular three month intervals thereafter.
(2) The $500,000 deferred principal balance of this purchase price shall be
due and payable in five equal annual installments of One Hundred Thousand and
00/100 Dollars ($100,000) each, with the first installment being due and payable
on date which is one calendar year after the Closing Date, and with subsequent
installments being due and payable at regular one year intervals thereafter.
(A) Buyer shall have the right at any time to prepay all or any portion of
the unpaid balance of this purchase price, without penalty or premium. Any
prepayment shall be applied against the last maturing installment of principal
then due (with the principal balance being reduced accordingly), and shall not
excuse Buyer from making the regular installment payments subsequently due until
the principal balance has been paid in full.
(B) If Buyer fails to pay any amount of principal or interest upon the due
date or within ten (10) days thereof, and if thereafter Seller notifies Buyer in
writing of said default and Buyer fails to cure said default within ten (10)
days after receipt of that written notice from Seller, then Seller shall have
the right, at any time prior to the moment when Buyer cures that default, to
declare (and thereby cause) the entire unpaid balance of the purchase price to
be immediately due and payable.
(C) Buyer's deferred payment obligation as set forth in this paragraph 11
shall be evidenced by a negotiable promissory note (hereinafter the "Promissory
Note") to be executed by Buyer and delivered to Seller at Closing. The
Promissory Note shall be unsecured and shall contain an attorney's fee clause,
(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 with respect to vehicles repaired or sold by
Seller prior to Closing. In partial consideration of the $2,250,000 amount being
paid by Buyer for the Intangible Assets, Seller agrees to reimburse Buyer for
Fifty percent (50%)
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of the net cost to Buyer of repair service which are not covered by Factory
warranty and which are performed by Buyer within two (2) months after Closing
with said reimbursement not exceeding a maximum of $4,000 in order to satisfy
customers who are dissatisfied with repair services provided by Seller prior to
Closing. Seller agrees to reimburse Buyer pursuant to the preceding sentence on
a monthly basis, with payment to be made within ten (10) days after Buyer
submits a billing for the cost of repair services performed during the preceding
calendar month.
12. Bulk Transfers. It is intention of the parties that this transaction
comply with Division Six of the California Uniform Commercial Code, more
commonly know as Uniform Commercial Code - Bulk Transfers. As a result thereof,
upon the execution of this agreement the parties shall immediately open an
escrow at Capitol City Escrow, Inc., 2720 Gateway Oaks Drive, #140, Sacramento,
California, for this purpose. At this same time, Buyer shall deliver to said
escrow the sum of $250,000 (the deposit), which amount shall immediately be
placed into an interest bearing account. The deposit plus interest shall be
credited to Buyer and shall be applied against the purchase price for the
Purchase Assets, other than the Intangible Assets, at the closing or if the
closing fails to occur, then the deposit shall be disbursed as set forth
hereinafter.
13. Limitation on Liabilities Assumed. Except as provided in subparagraph
3(c), Paragraph 8 and Paragraph 9, Buyer shall not, by reasons 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).
14. Warranties of Seller. Seller makes 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
is qualified to do business in the State of California and 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 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. Seller has a union agreement with the Machinists
Automotive Trades District Lodge No. 190, Local Lodge 1173, International
Association of Machinists and Aerospace, which expires on September 1, 1998.
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 Seller's
employees effective as of the close of business on the Closing Date. Buyer will
consider any of Seller's employees who apply for employment on an equal basis
with all other applicants. Employment will be offered to Buyer's selected
applicants on terms and conditions to be established by Buyer. Seller agrees
that for a period of six months following Closing, Seller will not offer
employment to any of Seller's terminated employees, other than Joseph Mayeri,
unless Buyer shall fail to employ such employees or shall subsequently terminate
such employees.
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(d) Financial Disclosures. Seller shall furnish to Buyer such financial
operating data and other information as to the business and properties of
Seller's business as Buyer shall requests. The review of such materials will be
at Buyer's expense, including a certified audit, if Buyer deems it to be
necessary.
(e) Undisclosed Liabilities and Contractual Commitments. Except as
otherwise disclosed in this Agreement (or in an attached Exhibit): (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, and (iii) no law suit or action, administrative proceeding, arbitration
proceeding, governmental investigation, or other legal or equatable proceedings
of any kind is pending or threatened against Seller which might adversely affect
the value of the Purchased Assets. 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 will respect to all such obligations.
(f) Condition of Equipment. Each item of the equipment shall be in good
operating condition at Closing. Seller will continue to perform routine
maintenance and repairs with respect to the Equipment prior to Closing.
(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 interest, leases, assessments,
restrictions, restrictions, reservations or other burdens of any kind. All
current and accrued taxes which may become a lien against any of the Purchased
Assets prior to closing shall have been paid by Seller prior to Closing
(including property taxes, sales taxes and excise taxes).
(h) Toxic Materials. Upon the execution of this agreement, Seller at its
cost shall engage an appropriate environmental firm to conduct an investigation
and who will thereafter produce a Phase One Environmental Report regarding the
Business Real Property. In addition, Seller shall make available to Buyer copies
of all other environmental reports and certificates (of which Seller has
knowledge with respect to the Business Real Property. Regarding any deficiencies
set forth in the Phase One Environmental Report, Buyer can waive same or Seller
shall have until the Closing Date to remedy same. In the event it is apparent
that a remedy can not be completed by the Closing Date, then in such event,
Seller can either elect to rescind the transaction in its entirety or place
sufficient funds into the escrow at the Closing Date to cover the expense of the
required remedy.
(i) Franchisors' Consent. Seller shall take all actions which are
reasonably necessary on Seller's part to obtain the consent of the Franchisors
to the issuance to Buyer of exclusive franchises for the sale of new Dodge and
Isuzu vehicles in the same geographical area as Seller's current franchises in
Concord, California.
(j) Indemnification for Breach of Warranties. Seller shall indemnify Buyer
against all losses, damages and costs (including attorney fees and court costs)
relating to any warranty 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.
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15. Conduct of Business Pending Closing. Seller warrants that during the
prior beginning on the date of this Agreement and ending at Closing: (i) Seller
shall continue to operate Seller's Business in the usual ordinary course, and in
substantial conformity with all applicable laws, ordinances, regulations, rules
or orders, (ii) Seller shall not allow any liens to be placed against any of the
Purchase 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 and; (v)
Seller shall use its best efforts to preserve the value of the Dodge and Isuzu
franchises in Concord, California.
16. 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, validly
existing and in good standing under the laws of the State of Oregon and is
entitled to own property and to carry on its business.
(b) Authority. This Agreement has been authorized by the board of directors
of Lithia Motors, Inc. This agreement will not violate the provisions 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 Motors, Inc. or any contract, agreement, or other instrument to which
Lithia Motors, Inc. is a party.
17. Additional Conditions Precedent to Buyer's Obligations. The obligation
of Buyer to close this transaction is subject to each of the following
conditions (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 Franchisors, prior to the Final Closing
Date, exclusive franchises to sell new Dodge and Isuzu vehicles in the same
geographical area as Seller's current franchises in Concord, California (as
evidenced by the issuance to Buyer by Franchisors of appropriate Dealership
Sales and Service Agreement, and the approval of Buyer as the publicly owned
Dealer-Operator of the franchises), and Buyer agrees to use its best reasonable
efforts to obtain those franchises.
(b) Buyer shall be reasonably satisfied with any facility improvement
requirement which are imposed by Franchisors which have na aggregate cost of
more than $25,000.
(c) The Sublease by Buyer, or a related entity, of the Business Real
Property shall be closed concurrently with this transaction under terms and
conditions which are agreeable to Seller, Buyer, Solano Way Partnership and
Contra Costa County and which shall include those terms set forth in the Letter
of Intent between the parties dated January 9, 1997.
(d) All of Seller's agreements and warranties set forth in this Agreement
shall be 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) The Phase One Environmental Report must indicate that there are no
toxic materials present on, under, or about the Business Real Property or if
such toxic materials are so
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indicated Seller must have cured same either by completing the required remedy
by the Closing Date or by placing sufficient funds into Escrow at the Closing
Date to cover the expense of the required remedy.
18. Closing. The parties shall make all reasonable effort to close the
purchase and sale under this Agreement at or before 5:00 PM, Pacific Standard
Time, on or before the Final Closing Date, at the offices of Capitol City
Escrow, Inc. in Sacramento, California, or at some other location as shall be
selected by mutual agreement of the parties.
(a) The parties agree to establish a closing escrow account at Capitol City
Escrow, Inc. in Sacramento, California (the "Closing Escrow Agent"). Buyer and
Seller each shall pay one-half (1/2) of the 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.
(b) In all events, the Closing 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 11:59 PM, Pacific
Standard Time, on the Closing Date.
(d) At Closing, and coincidentally with the performance of the obligations
to be performed by Buyer at Closing, Seller shall deliver to Buyer the
following: (i) all bills of sale, assignments and other instruments of transfer,
in form and substances 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 oblations
required of Seller at Closing, Buyer shall deliver to Seller the following: (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. 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 Jackson County, Oregon, or by whatever
other means shall be acceptable to Seller.
(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 17 or because Seller has elected to rescind the agreement pursuant to
paragraph 14(h), then; (i) all rights and obligations of both parties under this
Agreement shall terminate, (ii) Buyer shall be entitled to a refund of the
entire $250,000 deposit (and interest earned thereon) which is referred to in
paragraph 12, and (iii) this Agreement and all predecessor agreements 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 $250,000 deposit
delivered by Buyer to the Closing Escrow Agreement together with all interest
earned thereon while held by the Closing Escrow Agent shall be forfeited 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.
THIS SUM REPRESENTS A REASONABLE ESTIMATE BY BUYER AND SELLER OF SELLER'S
DAMAGES IN THE EVENT OF SUCH DEFAULT, IT BEING EXTREMELY DIFFICULT TO ASCERTAIN
SELLER'S PRECISE DAMAGES. IF CLOSING DOES NOT OCCUR ON OR BEFORE THE CLOSING
DATE FOR ANY REASON OTHER THAN BUYER'S DEFAULT, SELLER AND BUYER IRREVOCABLY
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AUTHORIZE AND INSTRUCT THE CLOSING ESCROW AGENT TO IMMEDIATELY DELIVER TO BUYER,
ON DEMAND, BUYER'S DEPOSIT TOGETHER WITH THE INTEREST EARNED THEREON, LESS
ESCROW CANCELLATION COSTS.
(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.
19. Books and Records. Seller shall have the right at any time and from
time to time, for a period of five (5) years after the Closing Date, to examine
and make copies of all books and records acquired by Buyer hereunder. In
addition, Buyer agrees to store for a period of five (5) years all books and
records of Seller which Buyer is not acquiring hereunder. Lastly, Buyer agrees
to make its staff available to Seller for a period of five (5) days subsequent
to the Closing Date so that Seller can close out its books.
20. Seller's Accounts Receivable. For a period of six (6) 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 vehicles sales shall be delivered to 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 an pay over Seller's receivables which are actually received by
Buyer.
21. Survival of Representations. All representations, warranties,
indemnification obligations and covenants made in this Agreement shall survive
the Closing, and shall remain in effect until the expiration of the latest
period allowable in any applicable statute of limitations.
22. Assignment By Buyer. Lithia Motors, Inc. shall have the right to assign
all rights and obligations of Lithia Motors, Inc. as "Buyer" under this
agreement. In the event of any such assignment, the assignee shall assume all
rights and oblations of the Buyer under this agreement, and Lithia Motors, Inc.
shall remain jointly and severally liable for all obligations of the Buyer. In
addition and in this event, Lithia Motors, Inc. will unconditionally guarantee
the promissory note referred to in paragraph 11 above.
23. Miscellaneous.
(a) There are no oral agreement 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 and contents of this Agreement.
(b) This Agreement shall be governed and performed in accordance with the
laws of the State of California. Each of the parties hereby irrevocably submits
to the jurisdiction of the courts of Contra Costs County, California, and agrees
that any legal proceedings with respect to this Agreement shall be filed and
heard in the appropriate court in Contra Costa County, California.
10
(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 the nature requiring consent or approval; shall not render unnecessary the
consent or approval of any subsequent similar act.
(e) All notices provided for herein shall be in writing and shall be deemed
to be duly given when mailed by United States certified mail, postage prepaid,
to the last known address of the party entitled to receive the notice, or when
personally delivered to that party.
(f) Time is of the essence to this Agreement.
(g) 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. The term "prevailing party" as
used in this section shall include, without limitations, 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.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
indicated below:
SELLER: MAGNUSSEN DODGE
BY:/s/BERNARD L. MAGNUSSEN 1/21/97
Bernard L. Magnussen, President Dated
BUYER: LITHIA MOTORS, INC.
BY:/s/BRAD GRAY 1/21/97
Brad Gray, Vice President Dated
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EXHIBIT 'A'
List of Equipment Seller is Retaining pursuant to Paragraph 6 above.
NONE
EXHIBIT 'B'
List of Leases and Agreements being assumed by Buyer pursuant to Paragraph 8
above:
LIST OF LEASES
1) Imperial Capitol Parts Cleaning Machines $306.33 6-15-98
(Lessor)
Magnussen Dodge
(Lessee)
2) GE Capitol Mail Machine $150.87 1-13-00
(Lessor)
Magnussen Dodge
(Lessee)
3) GE Capitol MitaDC3055 Copier $145.52 6-12-97
(Lessor)
Magnussen Dodge
(Lessee)
4) Textron Financial Hunter Alignment Rack $341.00 2-15-99
(Lessor)
Magnussen Dodge
(Lessee)
5) 3M Financing Lot Lights Remodel $407.39 2-15-97
(Lessor)
Magnussen Dodge
(Lessee)
6) AT&T Credit Corp. Voice Mail $196.16 6-29-99
(Lessor)
Magnussen Dodge
(Lessee)
7) ADP Credit Corp. 8800 Computer System $1975.30 9-30-99
(Lessor) Parts Catalog $604.01 10-31-00
Magnussen Dodge
(Lessee)
EXHIBIT "C"
Activities in connection with Seller's business prior to Closing which produced
toxic material which violated governmental law, regulations or orders or would
require reporting to any governmental authority - pursuant to paragraph 14(h)
above.
NONE