EX-10
Exhibit 10.10.2 Saturn Supplemental Agmt
EXHIBIT 10.10.2
SUPPLEMENTAL AGREEMENT
TO SATURN RETAILER AGREEMENT
This Supplemental Agreement to the Saturn Retailer Agreement is entered
into among Saturn of Southwest Oregon, Inc., an Oregon corporation and
wholly-owned subsidiary of Lithia Motors, Inc. ("Retailer"); Lithia Motors
Inc., an Oregon corporation ("Retailer Investor"); Lithia Holding, LLC, an
Oregon limited liability company, ("Holding"); Sidney B. DeBoer, an individual
("DeBoer'), and Saturn Distribution Corporation, a Delaware corporate ("SDC').
WHEREAS, SDC has entered into a Saturn Retailer Agreement ("Retailer
Agreement") with Retailer, permitting Retailer to conduct retail operations
from approved locations identified in the Retailer Agreement; and
WHEREAS, the organization and ownership structure of Retailer and
Retailer Investor are such that the terms of the Retailer Agreement are not
wholly adequate to address the legitimate business needs and concerns of the
Retailer, Retailer Investor, Holding and SDC; and
WHEREAS, the parties desire to continue a positive and productive
business relationship and to accomplish our mutual goals and promote the sale
and service of Saturn products consistent with Saturn's brand strategy and to
focus on total customer enthusiasm:
NOW, THEREFORE, in consideration for the mutual agreements contained
here and in the Retailer Agreement, the parties agree:
1. Purpose of Agreement
1.1 Purpose of Agreement.
The parties acknowledge that Retailer Investor desires to
offer from thirty to fifty percent of its equity as Class A Common Stock
(with total voting control of not more than 6.25%) to the public. The
remaining shares of Retail Investor's common stock will be Class B stock
(with not less than 93.75% of total effective voting control). Holding will
be the only initial owner of Class B common stock. The parties further
acknowledge that the ownership arrangements for Retailer and the operating
processes and procedures of Retailer Investor and Holding require that the
parties supplement the standard terms and provisions of the Retailer
Agreement to assure that the legitimate business needs of Saturn in regard to
the representation of its products are satisfied. The parties have agreed to
enter into this Supplemental Agreement for that purpose.
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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 the Saturn Retailer Agreement.
1.2.2 "Retailer Agreement" means a Saturn Retailer
Agreement, a copy of which is attached hereto as Exhibit A and is
incorporated herein by reference. It also includes any superseding Saturn
Retailer Agreements.
1.2.3 "Saturn" means Saturn Corporation.
1.2.4 "SDC" means Saturn Distribution Corporation.
1.2.5 "Voting stock" means any stock of Retailer or
Retailer Investor that has voting rights as well as any debt or equity
security of Retailer or Retailer Investor that is convertible into stock of
Retailer that has voting rights.
2. Retailer Ownership
2.1 Ownership Structure
Retailer, Retailer Investor, Retailer Operator and Holding
hereby each warrant that the representations and assurances contained in this
Supplemental Agreement are within its respective authority to make and do not
contravene any directive, policy or procedure of each.
Retailer Investor is the 100% shareholder of Retailer;
Holding is and shall continue to be the controlling (as defined below)
shareholder of Retailer Investor, and DeBoer is and shall continue to be the
managing and controlling member of Holding. (For purposes of this
Supplemental Agreement, the terms "control", "controlling" and "controlled"
have the meanings given to them in Rule 405 under the Rules and Regulations
of the Securities Act of 1933, as amended.) DeBoer will serve as Chief
Executive Officer ("CEO"), Trustee and Controlling Manager of Holding, and
will continue to serve as President and CEO of Retailer Investor.
The ownership of the stock of Retailer Investor is:
=============================================================================
| Share of Total | Type of | Votes | Share of Total
| Stock | Stock | Per Share | Voting Control
---------|-------------------|----------------|-----------|------------------
Holding | Not less than 55% | Common Class B | 10 | Not less than
| | | | 93.75%
---------|-------------------|----------------|-----------|------------------
Others | Not more than 45% | Common Class A | 1 | Not more than
| | | | 6.25%
=============================================================================
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The members of the Holding, an Oregon Limited Liability Company, and
their respective interests in Holding are:
Share of Units
Sidney B. DeBoer 58.125%
Manfred L. Heimann 34.875%
R. Bradford Gray 7.000%
2.2 Retailer Operator
The parties agree that DeBoer shall continue to serve as Retailer
Operator under Article 8 of the Retailer Agreement. AH parties to this
Agreement acknowledge and agree that, in addition to meeting the
qualifications for Retailer Operator set forth in the Retailer Agreement and
the Saturn Retailer Selection Process, DeBoer, as Retailer Operator, must
also meet the following q@cations at all times:
(i.) he must serve as CEO of Retailer Investor.
(ii.) he must maintain both effective voting control and a direct or
indirect beneficial ownership in Retailer of at least 20% at all times (the
beneficial interest with Holding must be equal to or greater than 34.4% in
order to constitute an effective 20% ownership interest in Retailer).
3. Changes in Ownership
All parties agree that the Retailer Agreement and this Supplemental
Agreement have been executed in reliance upon the ownership and management
structure described by this Agreement and any material change in such
structure (other than changes in ownership, which are discussed in Section
3.2 below), shall be the basis for a review of the Agreements among the
parties and a determination whether changes and modifications are required
and whether the business relationship among the parties should continue or
terminate.
Retailer will be maintained as a separate legal entity, distinct from
Retailer Investor and Holding, in the form of either a corporation,
partnership or other business enterprise form acceptable to SDC. Retailer
must capitalize in accordance with Part 5, Article 19 of the Saturn Retailer
Agreement. Retailer will not engage in any business other than the operation
of its Saturn franchises. Retailer will not be merged with or into, or be
consolidated with, or acquire substantially all the assets of, any other
entity without prior written consent of SDC.
Any change in ownership of Retailer or any material change in Retail
Investor or Holding (as described in Section 3.1) shall be considered a
change in ownership of the Retailer under the terms of the Retailer
Agreement, and all applicable terms of the Retailer Agreement as supplemented
by this Agreement will apply to any such change.
3.1 Material Changes in Ownership
Given the ultimate control Retailer Investor and Holding could
have over the Retailer and SDC's strong interest in assuring that those who
own and control the Retailer have interests consistent with those of Saturn
and SDC, all parties agree that:
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3.1.1 Retailer Investor will deliver to SDC copies of all
Schedules 13D and 13G, and all amendments thereto and terminations thereof,
received by Retailer Investor, within five (5) days of receipt of such
Schedules. If Retailer Investor is or becomes 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 maimer, it will promptly give SDC written notice of such
ownership, with any information about the owner that Retailer Investor
possesses.
3.1.2 Any change of ownership that was reported or should have
been reported through filings to the Securities and Exchange Commission by
third parties that are required to disclose significant holdings or
substantial acquisitions of, or changes in the ownership of the stock of
Retailer Investor, including but not @ted to Schedule 13D, that indicates
that any person, entity or group as a result of such change of ownership now
has or is about to acquire aggregate ownership of equal to or greater than
twenty percent (20%) of equity and/or voting interest in Retailer Investor,
shall be deemed a material change of ownership under this section.
Additionally, if Retailer Investor proposes, through its
Board of Directors or through shareholder action, or if any person, entity or
group notifies Retailer Investor by Schedule 13D or otherwise, of (a) a
proposal to acquire more than 20% of the voting and/or equity interests of
Retailer Investor, (b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation involving Retailer Investor which would
result in an issuance of more than 20% of the voting and/or equity interest
to another party; (c) a sale or transfer of a material amount of the assets
of Retailer Investor and/or its subsidiaries; or (d) any change which, either
by itself or together with any changes made to the Board of Directors within
the preceding year, would result in a change of control of the thencurrent
Board of Directors of Retailer Investor, such proposal, transaction, sale or
offer of change shall be treated by SDC as a proposal for a material change
of ownership or a material change of ownership, and shall require the prior
written approval of SDC or remedial action as set forth in Paragraph 3.2.
A material change in the ownership of Holding is deemed to
have occurred in the event that DeBoer no longer serves as Chief Executive
Officer and sole manager of Holding.
3.2 Remedial Actions.
SDC will consider any proposed change in ownership of
Retailer or Holding, or any proposed material change in ownership (as defined
in 3. 1) of Retailer Investor under Article 20(B) of the Retailer Agreement.
The right of first refusal and/or option to purchase under Article 20(C)
shall apply. Alternatively,. SDC may, at its sole discretion, require
Retailer, Retailer Investor and/or Holding to take one of the rededial
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actions set forth in Section 3.2.1 within 90 days of the time SDC learns of
such proposal. Upon notification of a material change of ownership that has
already occurred in Retailer Investor, SDC at its sole discretion, may
require Retailer, Retailer Investor and/or Holding to take one of the
remedial actions set forth in Section 3.2.1 within 90 days of the date SDC
learns of the material change of ownership.
3.2.1 If Retailer, Retailer Investor and/or Holding is
required by SDC to take remedial action, it/they will: (i) transfer to SDC or
its designee, and SDC or its designee will acquire, all the assets,
properties and/or businesses associated with Retailer at fair market value,
as determined in accordance with Section 6, below; or, (ii) provide evidence
reasonably acceptable to SDC that such person, entity or interest no longer
has such threshold level of ownership interest or effective voting interest
described in Section 3.1.2.
3.2.2 Retailer Investor 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 and/or regulations.
3.3 Officers and Key Management
Retailer Investor agrees to provide to SDC a list of the
key management of Retailer Investor and of their responsibilities in regard
to the control and management of Retailer Investor and Retailer. Retailer
shall agree to propose to SDC any material changes in the key management of
the Retailer or their responsibilities. Such proposal should be provided to
SDC in writing prior to such change and shall include sufficient information
to permit SDC to evaluate the proposed change consistent with normal policies
and procedures. Retailer Investor will notify SDC in writing of any material
change in the key management of Retailer Investor or their responsibilities.
For purposes of this Agreement, the term "key management" shall mean CEO,
President and Vice Presidents with respect to Retailer, all executive
officers and Board of Directors with respect to Retailer Investor, and all
members with respect to Holding.
4. Changes in Retailer Operator or Retailer Operator's Qualifications
For purposes of these Agreements, Sid DeBoer is, has been and
will continue to be the Retailer Operator as set forth in Article 7 of the
Retailer Agreement. SDC has relied on and will continue to rely on DeBoer's
personal qualifications, management skills and commitment to Saturn's
Mission, Philosophy and Values. AH parties hereby represent and agree that
Retailer Operator wig have complete managerial authority to make all
decisions, and to enter into any and all necessary business commitments
required in the normal course of conducting Retailer Operations on behalf of
Retailer, and to take any and all actions required of a Retailer Operator
pursuant to the Agreements. Retailer, Retailer Investor, and/or Holding will
not revoke, modify, amend or abrogate Retailer Operator's authority without
the prior written approval of SDC.
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4.1 Removal, Withdrawal or Replacement of Retailer Operator
The removal, withdrawal and/or replacement of Retailer
Operator or the restriction of his managerial authority, without SDC's prior
written approval, shall constitute grounds for termination of the Retailer
Agreement. In the event Retailer proposes a change in Retailer Operator for
SDC's consideration, Retailer will pay SDC a fee (currently $5,000.00) to
defray the costs of review of the proposal and completion of the Retailer
Selection Process. SDC has no obligation to consider the proposal until it
has received this non-refundable payment. SDC's right of first refusal or
option to purchase described in Article 20(C) of the Retailer Agreement shall
apply to any proposal to change Retailer Operator. In the event that SDC
elects to exercise its right of first refusal or its option to purchase, the
price to be paid by SDC or its designee shall be the fair market value as
determined in accordance with Section 6 below.
4.2 Change in Qualifications of Retailer Operator
In the event that the Retailer operator fails to continue
to meet the Retailer Selection Criteria or the additional qualifications set
forth under Paragraph 2.2 of this Agreement, Article 2 1 (A) of the Retailer
Agreement shall apply.
5. Retailer Investor Operating Policies and Procedures
5.1 Saturn Brand Strategy
Retailer, Retailer Investor and Holding acknowledge that
Saturn and SDC have a Brand Strategy and have invested and are continuing to
invest significant capital in the development of the Saturn brand. Relevant
information regarding this strategy has been shared with Retailer, Retailer
Investor and Holding.
5.1.1 Retailer and Retailer Investor agree to
accommodate Saturn's Brand Strategy in their Retailer Operations, and will
incorporate in each Sat= retail facility as a minimum in support of the
Saturn Brand Strategy, all Saturn Retail and Service operating standards,
including Saturn Brand Critical Standards.
5.1.2 Neither Retailer nor Retailer Investor will jointly
advertise or market any non-Saturn operations in conjunction with any Saturn
Retailer Operations. Retailer, Retailer Investor and Holding agree that they
will not compete with Saturn or SDC within Retailer's Marketing Area in any
areas in which Saturn proposes to extend its brand.
6. Right to Purchase or Lease
In the event of any termination of the Retailer Agreement or any
transaction or event that would, in effect, discontinue Retail Operations
from that Saturn Retail facility, or require a transfer of assets, properties
or business to SDC or an SDC designee pursuant to Section 3, and business for
fair market value with fair market value being determined by the process set
forth in Exhibit B; (ii) the right to lease the properties for up to 24
(twenty-four) months at a monthly rent equivalent to 1% of the appraisal
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value as determined by the process set forth in Exhibit B; and (iii) the
right to 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; provided, however, that the parties shall assure SDC
or its designee of quiet possession of the retail facilities for a period of
not less than five years if this right is exercised with respect to such
facilities within ten years of the execution of this Agreement. If, however,
the parties enter into a financing arrangement with respect to such
facilities then such assurance of quiet possession would be subordinated to
the interests of any lender in connection with any default by the parties
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 SDC may exercise any of its rights under this Section with respect
to some or all of the retail facilities to which it may apply at any given
time, and that exercise or failure to exercise any such rights as to one
facility shall in no way affect SDC's other rights or its rights as to other
facilities.
7. Dispute Resolution
All parties stipulate and agree that the dispute resolution
process described in Article 6 of the Retailer Agreement, including binding
arbitration, shall be the exclusive mechanism for resolving any dispute with
SDC arising out of or relating to the Saturn Retailer Agreement and this
Supplemental Agreement including, but not @ted to, involuntary termination of
the Agreement(s), and/or approval of Retailer Investor for additional
investment in or ownership of Saturn franchises.
8. Supplement to Retailer Agreement
The parties agree that this Agreement shall supplement the terms
of the Retailer Agreement in accordance with 24.J of the Retailer Agreement.
9. No Third Party Rights
Nothing in this Agreement or the Retailer Agreement shall be
construed to confer any rights upon any person not a party hereto, nor shall
it create in any party an interest as a third party beneficiary of this
Agreement or the Retailer Agreement. Retailer, Retailer Investor and Holding
hereby agree to indemnity and hold Sat= Corporation, Saturn Distribution
Corporation, its directors, officers, employees, subsidiaries, agents and
representatives harmless from and against all claims, actions, damages,
expenses, costs and liability arising from or in connection with any action
by a third party in its capacity as a stockholder of Retailer, Retailer
Investor or Holding.
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10. Modification of Retailer Agreement
This Agreement is intended to modify and adapt certain provisions
of the Retailer Agreement to the limited extent provided herein and is
intended to be incorporated as part of the Retailer Agreement AH provisions
of the Retailer Agreement not in conflict with this Agreement shall continue
to have fun force and effect. la the event that any provisions of this
Agreement are found to be in conflict with other provisions of the Retailer
Agreement, the provisions contained in this Supplemental Agreement shall
govern.
11. 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, unless authorized by the other party, required by law, pertinent to
judicial or administrative proceedings or to proceedings under the Dispute
Resolution Process.
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IN WITNESS WHEREOF, the parties have executed this Agreement this 26
day of August 1997.
"RETAILER" "SDC"
Saturn of Southwest Oregon, Inc. Saturn Distribution Corporation
/s/ Sidney B. DeBoer /s/ Joe Kennedy 8-22-97
- --------------------------------- -----------------------------------
By: Sidney B. DeBoer By: Joe Kennedy
Retailer Operator President
"HOLDING"
Lithia Holding, LLC
/s/ Sidney B. DeBoer
- ---------------------------------
By: Sidney B. DeBoer, Member
Manfred L. Heimann
- ---------------------------------
By: Manfred L. Heimann, Member
/s/ R. Bradford Gray
- ---------------------------------
By: R. Bradford Gray, Member
"RETAILER INVESTOR"
Lithia Motors, Inc.
/s/ Sidney B. DeBoer
- ---------------------------------
By: Sidney B. DeBoer
President
"DeBoer"
Sidney B. DeBoer
/s/ Sidney B. DeBoer
- ---------------------------------
By: Sidney B. DeBoer
Chief Executive Officer
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EXHIBIT B
PROCEDURE FOR DETERMINATION OF
FAIR MARKET VALUE
For purposes of the Agreement to which this is an attachment, the term
"Fair Market Value" shall mean the fair market value of the businesses,
properties and assets of the Saturn Retailer. Fair Market Value shall be
calculated: (a) as the value of a Saturn automobile sales and service
facility that is not part of any other system or entity and not necessarily
the value of the Retailer, (b) based on comparable sales of automobile sales
and services facilities similar to the Saturn retail facility in the market
area in which Saturn retail @ty is located, and (c) based on the facility in
"AS IS, WHERE IS" condition. Fair Market Value shall be determined in the
following manner.
1. The parties shall attempt, in good faith, to agree on Fair
Market Value of the Saturn Retailer.
If the parties fail refuse, or are unable for any reason to
agree on Fair Market Value within (30) days following notice by SDC of an
event giving rise to a determination of Fair Market Value, Saturn of
Southwest Oregon, Inc. ("Retailer"), shall within ten (10) days thereafter
select both a nationally recognized investment banker and an appraiser and
notify SDC in writing of the names, addresses and qualifications. Wid2in
(10) days following its receipt of such notice, SDC shall also select a
nationally recognized inves=ent banker and an appraiser and notify Retailer
of their names, addresses and qualifications. The investment bankers and a
selected by Retailer and SDC are sometimes referred to herein as the
"Advisers."
2. The Advisors shall advise Retailer and SDC of their
respective derminitions of Fair Market Value within 30 days of SDC's
selection of its investment banker and appraiser. If the greatest of the
four determinitions of Fair Market Value is less dm or equal to one hundred
five percent (105%) of the average of the four determinations of Fair Market
Value, the Fair Market Value shall equal the average of such determinations
of Fair Market Value, and that determination shall be binding and conclusive
upon all parties. If the greatest of the four determinations is greater than
105% of the average of the four determinations, the two investznent bankers
shall select a diird nationally recognized investment banker and the two
appraisers shall select a third appraiser to each make an additional
determinition of Fair Market Value. If the average of the third set of
appraisals is higher than the highest of the original appraisals, then the
highest original appraisal will be used. If the average of the third set of
appraisals is lower than the lowest of the original appraisals, then the
lowest original appraisal will be used. If the average of the third set of
appraisals falls between the highest and lowest of the original appraisals,
then the average of the third set of appraisals will be used and shall be
binding and conclusive upon all parties.
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3. If the investment bankers selected by SDC and Retailer
respectively are unable to agree upon the designation of a third investment
banker withen ten (10) days after the expiration of the thirty (30) day
period referred to above, or if such third investment banker has not advised
the investment bankers selected by Retailer and SDC of his/her determination
of Fair Market Value within (30) days after his/her selection, either party
may request the United States District Court for the District in which the
premises are located to appoint a nationally recognized investment banker.
If the appraisers selected by SDC and Retailer respectively
are unable to agree upon the designation of a third appraiser within
ten (10) days after the expiration of the thirty (30) day period referred to
above, or if the third appraiser has not advised the appraiser selected by
SDC and Retailer of his/her determination of Fair Market Value within (30)
days after his/her selection, either party may request the United States
District Court for the District in which the Premises are located to appoint
an appraiser. The determination of Fair Market Value made by the third
investment banker and by the third appraiser appointed pursuant hereto shall
be made within (30) days after such appointment. If the average of the third
set of appraisals is higher than the highest of the original appraisals, then
the highest original appraisal will be used. If the average of the third set
of appraisals is lower than the lowest of the original appraisal then the
lowest original appraisal will be used. If the average of the set of
appraisals falls between the highest and lowest of the original appraisal
then the average of the third set of a will be used and shall be binding and
conclusive upon all parties.
4. All appraisers selected or appointed as provided above
shall (i) be independent and qualified MAI appraisers active in the market in
which the premises are located, with experience in appraising automobile
sales and service facilities, (ii) use the de@tion of Fair Market Value set
forth above, and (iii) be registered in the state in which the Premises are
located ("State') if the State provides for or required such registrations.
The costs and expenses of any investment banker and appraiser selected by a
party shall be borne solely by such party, and the costs and expenses of a
third investment banker and appraiser shall be shared equally between Retailr
and SDC.
If SDC elects to purchase the Saturn retail facility premises, then
within (30) days following initiation of the Fair Market Value process,
Retailer shall supply SDC with a commitment for title insurance and a title
report showing good and marketable title in Retailer. At closing, Retailer
shall cause a policy of title insurance to be issued to SDC insuring good and
marketable title.
The parties shall close the purchase and sale of the Saturn retail
facility, within (30) days after the determination of the Fair Muket Value.
The parties shall prepare, execute and deliver all appropriate and customary
documents and make such closing adjustments as may be normal for transactions
of this type in the State.
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MOTOR VEHICLE ADDENDUM
TO
SATURN RETAILER AGREEMENT
Saturn of Southwest Oregon, Inc.
------------------------------
Retailer Entity Name
Medford, Oregon
------------------------------
City, State
In accordance with the effective date of the Saturn Retailer Agreement
(see page 1), Retailer, as an authorized Saturn Retailer, has a non-exclusive
right to buy the following new Motor Vehicles marketed by Satum Distribution
Corporation:
SL, SL1, SL2, SC1, SC2, SW1, SW2
This Motor Vehicle Addendum shall remain in effect unless and until
superseded by a new Motor Vehicle Addendum fumished to Retailer by SDC. This
Motor Vehicle Addendum cancels and supersedes any previous Motor Vehicle
Addendum fumished to Retailer by Saturn.
SATURN DISTRIBUTION CORPORATION
By: Joe Kennedy 6-5-97
--------------------------
President
(This Motor Vehicle Addendum should be filed
with your Saturn Retailer Agreement)
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Execution of Agreement
We are pleased to offer you the new Saturn Retailer Agreement
(Agreement). The Franchise Operations Team (FOT), formerly the Franchise
Development Team (FDT), has reviewed this new Agreement and recommends it
pursuant to Article 22K of the existing Saturn Dealer Agreement.
"In the event the FDT recommends a superseding form
of Dealer Agreement, Franchisor and Dealer mutually
agree to terminate this Agreement and execute the new
Agreement."
Saturn Distribution Corporation as the Franchisor and Dealer mutually
agree to terminate the existing Saturn Dealer Agreement, including the
existing Marketing Area Plan (MAP), and execute the new Saturn Retailer
Agreement and new Marketing Area Plan effective the date signed by the
Retailer Operator or March 15, 1997 whichever is later.
The following agreements attached to this document are incorporated by
reference and survive the execution of the new Retailer Agreement:
None
Agreed to:
By: /s/ Sidney B. DeBoer Joe Kennedy 6-5-97
----------------------------------- ---------------------------------
Sidney B. DeBoer Joe Kennedy
Retailer Operator President
Saturn Distribution Corporation
Saturn of Southwest Oregon, Inc.
- ----------------------------------------
Retail Entity
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[Saturn of Southwest Oregon letterhead]
August 28, 1997
Mr. Larry C. Schmid
Manager Network Planning
Saturn Corporation
100 Saturn Parkway
P.O. Box 1500
Springhill, Tennessee 37174
Dear Larry,
Please find enclosed the signed supplemental agreement between Lithia
Motors, Inc. and Saturn Distribution Corporation. Unfortunately during our
final review we found some of the percentages in the agreement are
inaccurate. Our legal counsel did not take into account the impact of the
stock options issued to employees. The following table shows the ownership
and voting control breakdown:
Number of Votlng
Shares/Options Control
----------------------- -----------------------
Class A Shares - Public 2,875,000 37.484% 2,875,000 6.438%
Class A Employee Stock Options 685,000 8.931% 685,000 1.534%
Total Class A Shares 3,560,000 46.415% 3,560,000 7.971%
Class B Shares 4,110,000 53.585% 41,100,000 92.029%
Total Shares Outstanding 7,670,000 100.000% 44,660,000 100.000%
The corrections should therefore read as follows:
Paragraph 1. 1
6.25% should read 7.971%
93.75% should read 92.029%
Paragraph 2.1
55% should read 53.585%
93.75% should read 92.029%
45% should read 46.415%
6.25% should read 7.971%
We hope you agree these differences are minor. If so, we propose the
Supplemental Agreement not be changed, but rather this letter serve as an
amendment and attachment to it. If this is not acceptable, please so
advise. Thank you for all your help and cooperation in formulating this
agreement.
Sincerely,
/s/ Sidney B. DeBoer
Sidney B. DeBoer
President & CEO
SN/sm
enclosure: Supplemental Agreement
14
[Saturn of Southwest Oregon letterhead]
August 28, 1997
Mr. Sid DeBoer
Lithia Automotive Group
360 E. Jackson Street
Medford, OR 97501-5892
Dear Sid,
Enclosed are two copies of the supplemental agreement between Lithia
Motors, Inc. and Saturn Distribution Corporation. This agreement
incorporates the suggested changes in your letter to me dated June 16, 1997.
You had also indicated you would "continue to ask for the removal of the 20%
equity interest portion". As you will see in the supplemental agreement, our
requirement remains at a minimum "of at least 20% at all times".
This supplemental agreement supercedes the supplemental agreement you
executed on June 16, 1997. Please date and obtain the necessary signatures
on both copies. Keep one copy for your files and forward one copy to me at
the following address:
Saturn Corporation
PO Box 1500
Springhill, TN 37174-1500
Attention: Larry Schmid
Mail Drop S20
Sid, thank you for your assistance in this matter.
Sincerely,
/s/ Larry Schmid
Larry Schmid
Mgr.- Network Planning
Attach.
cc: Jill Lajdziak
Jim Craner
John Minarick