Exhibit 1.1
[ ], 2002
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxx Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Lithia Motors, Inc., an Oregon corporation (the "Company"), proposes to
issue and sell to the several Underwriters named in Schedule II hereto (the
"Underwriters"), and certain stockholders of the Company (the "Selling
Stockholders") named in Schedule I hereto severally propose to sell to the
several Underwriters, an aggregate of 5,000,000 shares of the Class A Common
Stock, no par value per share, of the Company (the "Firm Shares"), of which
4,000,000 shares are to be issued and sold by the Company and 1,000,000 shares
are to be sold by a Selling Stockholder selling the amount set forth opposite
such Selling Stockholder's name in Schedule I hereto.
The Company also proposes to issue and sell to the several Underwriters
not more than an additional 750,000 shares of its Class A Common Stock, no par
value per share, (the "Additional Shares") if and to the extent that you, as
Managers of the offering, shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares." The shares of Class A
Common Stock, no par value per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "Common Stock." The Company and the Selling Stockholders are hereinafter
sometimes collectively referred to as the "Sellers."
The Company and certain other selling stockholders as set forth on
Schedule I have filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "Securities Act") is hereinafter
referred to as the "Registration Statement"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "Prospectus"
(including, in the case of all references to the Registration Statement and the
Prospectus, documents incorporated
therein by reference). If the Company has filed an abbreviated registration
statement to register additional shares of Common Stock pursuant to Rule 462(b)
under the Securities Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed to include
such Rule 462 Registration Statement.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
incorporated by reference in the Prospectus complied or will comply when
so filed in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder, (ii) the
Registration Statement, when it became effective, did not contain and,
as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (iii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iv) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or
the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The Company has been duly incorporated, is validly existing
as a corporation under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
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(d) Each subsidiary of the Company has been duly incorporated or
organized, is validly existing as a corporation, limited liability
company or limited partnership in good standing under the laws of the
jurisdiction of its incorporation, has the full power and authority
(corporate and other) to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified
or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; all of the issued
interests or shares of capital stock of each subsidiary of the Company
have been duly and validly authorized and issued, with respect to shares
of capital stock, are fully paid and non-assessable; all of the issued
interests or shares of capital stock of each subsidiary of the Company,
except for Lithia VS, L.L.C. and Lithia SH, L.L.C. for which, in each
case, 80% of the issued interests of such entity, are owned directly by
the Company, free and clear of all liens, encumbrances, equities or
claims, except for pledges to Ford Motor Credit Company in connection
with the Ford Credit Facilities. For purposes of this Agreement, "Ford
Credit Facilities" means, collectively, (i) the Credit Agreement dated
November 23, 1998 between Ford Motor Credit Company and Lithia Motors,
Inc. (the "Acquisition Revolving Line of Credit"), (ii) the Amendment to
Acquisition Revolving Line of Credit, effective December 1, 1999, (iii)
the Second Amendment to Acquisition Revolving Line of Credit, effective
December 1, 2000, (iv) the Credit Agreement dated November 23, 1998
between Ford Motor Credit Company and Lithia Motors, Inc. (the "Used
Vehicle Revolving Line of Credit"), (v) the Amendment to Used Vehicle
Revolving Line of Credit, effective December 1, 1999 and (vi) the Second
Amendment to Used Vehicle Revolving Line of Credit, effective December
1, 2000.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock (including the Shares to be sold
by the Selling Stockholders) outstanding prior to the issuance of the
Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable.
(h) The Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms
of this Agreement, will be validly issued, fully paid and
non-assessable, and the
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issuance of such Shares will not be subject to any preemptive or similar
rights.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene (1) any provision of applicable law or (2) the articles
of incorporation or by-laws of the Company or (3) any agreement or other
instrument binding upon the Company or any of its subsidiaries the
breach of which agreement or instrument would have a material adverse
effect on the Company and its subsidiaries, taken as a whole, or (4) any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or
to which any of the properties of the Company or any of its subsidiaries
is subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement that are not described or
filed as required.
(l) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(m) The Company is not, and after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus will not be, required to register as an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
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(n) The Company and its subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(o) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(p) There are no contracts, agreements or understandings between
the Company and any person granting such person the right, not
effectively satisfied or waived, to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement.
(q) The Company or a wholly-owned direct or indirect subsidiary
has entered into a dealer agreement with each of the manufacturers
listed on Schedule III hereto (collectively, the "Dealer Agreements",
and each a Dealer Agreement"), each of which has been duly authorized,
executed and delivered by the Company or such subsidiary, is in full
force and effect and constitutes the valid and binding agreement between
the parties thereto, enforceable in accordance with its terms, subject
to applicable Federal and state franchise laws; the Dealer Agreements
permit the Company or a subsidiary or subsidiaries to operate a vehicle
sales franchise at the locations indicated on Schedule III; the Company
and its subsidiaries are in compliance with all material terms and
conditions of the Dealer Agreements, and, to the best knowledge of the
Company, there has not occurred any material default under any of the
Dealer Agreements or any event that with the giving of notice or the
lapse of time would constitute a default thereunder, except as described
in the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement).
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(r) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from
the Company or from transferring any of such subsidiary's property or
assets to the Company or any other subsidiary of the Company, except as
described in or contemplated by the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement).
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each of
the Selling Stockholders represents and warrants to and agrees with each of the
Underwriters that:
(a) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder.
(b) The execution and delivery by such Selling Stockholder of,
and the performance by such Selling Stockholder of its obligations
under, this Agreement, the Irrevocable Power of Attorney and Custody
Agreement signed by such Selling Stockholder and Computershare Trust
Company, as Custodian, relating to the deposit of the Shares to be sold
by such Selling Stockholder and appointing certain individuals as such
Selling Stockholder's attorneys-in-fact to the extent set forth therein,
relating to the transactions contemplated hereby and by the Registration
Statement (the "Power of Attorney and Custody Agreement") will not
contravene any provision of applicable law, or the certificate of
incorporation or by-laws of such Selling Stockholder (if such Selling
Stockholder is a corporation), or any agreement or other instrument
binding upon such Selling Stockholder or any judgment, order or decree
of any governmental body, agency or court having jurisdiction over such
Selling Stockholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required
for the performance by such Selling Stockholder of its obligations under
this Agreement or the Power of Attorney and Custody Agreement of such
Selling Stockholder, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and
sale of the Shares.
(c) Such Selling Stockholder has, and on the Closing Date will
have, valid title to the Shares to be sold by such Selling Stockholder
and the legal right and power, and all authorization and approval
required by law, to enter into this Agreement and Power of Attorney and
Custody Agreement and to sell, transfer and deliver the Shares to be
sold by such Selling Stockholder.
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(d) The Shares to be sold by such Selling Stockholder pursuant
to this Agreement have been duly authorized and are validly issued,
fully paid and non-assessable.
(e) The Power of Attorney and Custody Agreement has been duly
authorized, executed and delivered by such Selling Stockholder and is a
valid and binding agreement of such Selling Stockholder.
(f) Delivery of the Shares to be sold by such Selling
Stockholder pursuant to this Agreement will pass title to such Shares
free and clear of any security interests, claims, liens, equities and
other encumbrances.
(g) All information furnished by or on behalf of such Selling
Stockholder for use in the Registration Statement and Prospectus is, and
on the Closing Date will be, true, correct and complete, and does not,
and on the Closing Date will not, contain any untrue statement of a
material fact or omit to state any material fact necessary to make such
information not misleading.
3. AGREEMENTS TO SELL AND PURCHASE. Each Seller, severally and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller at $[ ] a share (the "Purchase
Price") the number of Firm Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
number of Firm Shares to be sold by such Seller as the number of Firm Shares set
forth in Schedule II hereto opposite the name of such Underwriter bears to the
total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company and certain
selling stockholders identified in Schedule I agree to sell to the Underwriters
the Additional Shares, and the Underwriters shall have a one-time right to
purchase, severally and not jointly, up to 750,000 Additional Shares at the
Purchase Price. If you, on behalf of the Underwriters, elect to exercise such
option, you shall so notify the Company in writing not later than 30 days after
the date of this Agreement, which notice shall specify the number of Additional
Shares to be purchased by the Underwriters and the date on which such shares are
to be purchased. Such date may be the same as the Closing Date (as defined
below) but not earlier than the Closing Date nor later than ten business days
after the date of such notice. Additional Shares may be purchased as provided in
Section 5 hereof solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Shares. If any Additional Shares are to
be purchased, each Underwriter agrees, severally and not jointly, to purchase
the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
total number of Additional Shares to be purchased as the
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number of Firm Shares set forth in Schedule II hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 180 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Shares to be sold hereunder, (B) the issuance by the Company of
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing or (C) transactions by any person
other than the Company relating to shares of Common Stock or other securities
acquired in open market transactions after the completion of the offering of the
Shares. In addition, each Selling Stockholder, agrees that, without the prior
written consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the
Underwriters, it will not, during the period ending 180 days after the date of
the Prospectus, make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
4. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at $[ ]
a share (the "Public Offering Price") and to certain dealers selected by you at
a price that represents a concession not in excess of $[ ] a share under the
Public Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of $[ ] a share, to any Underwriter or to
certain other dealers.
5. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by each
Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on [ ], 2002, or at such other time on the same or such other
date, not later than [ ], 2002, as shall be designated in writing by you.
The time and date of such payment are hereinafter referred to as the "Closing
Date."
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Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 A.M., New York City time, on the date specified in the
notice described in Section 3 or on such other date, in any event not later than
[ ], 2002, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Sellers to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 5 p.m. (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating
accorded any of the Company's securities by any "nationally
recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act;
and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse and
that makes it, in your
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judgment, impracticable to market the Shares on the terms and in
the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in clause 6(a)(i) above and to
the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date
and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxx Xxxxxx & Xxxxxxxxx LLP, outside counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a
whole;
(ii) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(iii) the shares of Common Stock (including the Shares
to be sold by the Selling Stockholders) outstanding prior to the
issuance of the Shares to be sold by the Company have been duly
authorized and are validly issued, fully paid and
non-assessable;
(iv) all of the issued interests or shares of capital
stock of each subsidiary of the Company (1) have been duly and
validly authorized and issued, (2) with respect to shares of
capital stock, are fully paid and non-assessable, (3), except
for Lithia VS, L.L.C. and Lithia SH, L.L.C. for which, in each
case, 80% of the issued interests of such entity, are owned
directly by the Company, free and clear of
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all liens, encumbrances, equities or claims, except for pledges
to Ford Motor Credit Company in connection with the Ford Credit
Facilities;
(v) the Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be
subject to any preemptive or similar rights;
(vi) this Agreement has been duly authorized, executed
and delivered by the Company;
(vii) the execution and delivery by the Company of, and
the performance by the Company of its obligations under, this
Agreement will not contravene (1) any provision of applicable
law or (2) the articles of incorporation or by-laws of the
Company or, (3) to the best of such counsel's knowledge, any
agreement or other instrument binding upon the Company or any of
its subsidiaries the breach of which agreement or instrument
would have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or, (4) to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
the Company of its obligations under this Agreement, except such
as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the
Shares;
(viii) the statements (A) in the Prospectus under the
captions "Business -- Regulation," "Description of Capital
Stock" and "Underwriters" and (B) in the Registration Statement
in Item 15, in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings
referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings
and fairly summarize the matters referred to therein;
(ix) after due inquiry, such counsel does not know of
any legal or governmental proceedings pending or threatened to
which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so
described or of any statutes, regulations, contracts or other
documents that are required to be described in the
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Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or
filed as required;
(x) the Company is not, and after giving effect to the
offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus will not be,
required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xi) to the best of such counsel's knowledge, the
Company and its subsidiaries (A) are in compliance with any and
all applicable Environmental Laws, (B) have received all
permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective
businesses and (C) are in compliance with all terms and
conditions of any such permit, license or approval, except where
such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses
or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries,
taken as a whole; provided that for purposes of this Section
6(a)(xi), such counsel shall state that "to the best of such
counsel's knowledge" shall include such counsel's knowledge
after review of any applicable Phase I or Phase II environmental
report obtained in the ordinary course of the Company's
acquisitions; and
(xii) such counsel (A) is of the opinion that each
document filed pursuant to the Exchange Act and incorporated by
reference in the Registration Statement and the Prospectus
(except for financial statements and schedules and other
financial and statistical data as to which such counsel need not
express any belief) complied when so filed as to form in all
material respects with the Exchange Act and the applicable rules
and regulations of the Commission thereunder, (B) is of the
opinion that the Registration Statement and Prospectus (except
for financial statements and schedules and other financial and
statistical data included therein as to which such counsel need
not express any opinion) comply as to form in all material
respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder, (C) has no reason to
believe that (except for financial statements and schedules and
other financial and statistical data as to which such counsel
need not express any belief) the Registration Statement and the
prospectus included therein at the time the Registration
Statement became effective contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
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misleading and (D) has no reason to believe that (except for
financial statements and schedules and other financial and
statistical data as to which such counsel need not express any
belief) the Prospectus contains any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxx Pepper & Xxxxxxxxx LLP, counsel for each of Xxxxxx X.
XxXxxx, X. Xxxxxxxx Xxxx, and Lithia Holding Company, LLC, as Selling
Stockholders (the "Company Selling Stockholders"), dated the Closing
Date, to the effect that:
(i) this Agreement has been duly authorized, executed
and delivered by or on behalf of each of the Company Selling
Stockholders;
(ii) the execution and delivery by each Company Selling
Stockholder of, and the performance by such Company Selling
Stockholder of its obligations under, this Agreement and the
Power of Attorney and Custody Agreement of such Company Selling
Stockholder will not contravene any provision of applicable law,
or the limited liability company agreement or by-laws of such
Company Selling Stockholder (if such Company Selling Stockholder
is a limited liability company), or, to the best of such
counsel's knowledge, any agreement or other instrument binding
upon such Company Selling Stockholder or, to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such
Company Selling Stockholder, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
such Company Selling Stockholder of its obligations under this
Agreement or the Power of Attorney and Custody Agreement of such
Company Selling Stockholder, except such as may be required by
the securities or Blue Sky laws of the various states in
connection with offer and sale of the Shares;
(iii) each of the Company Selling Stockholders has valid
title to the Shares to be sold by such Company Selling
Stockholder and the legal right and power, and all authorization
and approval required by law, to enter into this Agreement and
Power of Attorney and Custody Agreement of such Company Selling
Stockholder and
13
to sell, transfer and deliver the Shares to be sold by such
Company Selling Stockholder;
(iv) the Power of Attorney and Custody Agreement of each
Company Selling Stockholder has been duly authorized, executed
and delivered by such Company Selling Stockholder and is a valid
and binding agreement of such Company Selling Stockholder;
(v) delivery of the Shares to be sold by each Company
Selling Stockholder pursuant to this Agreement will pass title
to such Shares free and clear of any security interests, claims,
liens, equities and other encumbrances; and
(e) The Underwriters shall have received on the Closing Date an
opinion of [ ], counsel for the [Xxxxxxxx Entities as Selling
Stockholders] (the "Xxxxxxxx Selling Stockholders"), dated the Closing
Date, to the effect that:
(i) this Agreement has been duly authorized, executed
and delivered by or on behalf of each of the Xxxxxxxx Selling
Stockholders;
(ii) the execution and delivery by each Xxxxxxxx Selling
Stockholder of, and the performance by such Xxxxxxxx Selling
Stockholder of its obligations under, this Agreement and the
Power of Attorney and Custody Agreement of such Xxxxxxxx Selling
Stockholder will not contravene any provision of applicable law,
or the limited liability company agreement or by-laws of such
Xxxxxxxx Selling Stockholder (if such Xxxxxxxx Selling
Stockholder is a limited liability company), or, to the best of
such counsel's knowledge, any agreement or other instrument
binding upon such Xxxxxxxx Selling Stockholder or, to the best
of such counsel's knowledge, any judgment, order or decree of
any governmental body, agency or court having jurisdiction over
such Xxxxxxxx Selling Stockholder, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
such Xxxxxxxx Selling Stockholder of its obligations under this
Agreement or the Power of Attorney and Custody Agreement of such
Xxxxxxxx Selling Stockholder, except such as may be required by
the securities or Blue Sky laws of the various states in
connection with offer and sale of the Shares;
(iii) each of the Xxxxxxxx Selling Stockholders has
valid title to the Shares to be sold by such Xxxxxxxx Selling
Stockholder
14
and the legal right and power, and all authorization and
approval required by law, to enter into this Agreement and Power
of Attorney and Custody Agreement of such Xxxxxxxx Selling
Stockholder and to sell, transfer and deliver the Shares to be
sold by such Xxxxxxxx Selling Stockholder;
(iv) the Power of Attorney and Custody Agreement of each
Xxxxxxxx Selling Stockholder has been duly authorized, executed
and delivered by such Xxxxxxxx Selling Stockholder and is a
valid and binding agreement of such Xxxxxxxx Selling
Stockholder;
(v) delivery of the Shares to be sold by each Xxxxxxxx
Selling Stockholder pursuant to this Agreement will pass title
to such Shares free and clear of any security interests, claims,
liens, equities and other encumbrances; and
(f) The Underwriters shall have received on the Closing Date an
opinion of Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters, dated
the Closing Date, covering the matters referred to in Sections 6(c)(v),
6(c)(vi), 6(c)(viii) (but only as to the statements in the Prospectus
under "Description of Capital Stock" and "Underwriters") and clauses
(B), (C) and (D) of 6(c)(xii) above.
With respect to Section 6(c)(xii) above, Xxxxxx Pepper & Shefelman LLP
may state that their opinion and belief are based upon their participation in
the preparation of the Registration Statement and Prospectus and any amendments
or supplements thereto and documents incorporated therein by reference and
review and discussion of the contents thereof, but is without independent check
or verification except as specified. With respect to clauses (B), (C) and (D) of
Section 6(c)(xii) above, Xxxxx Xxxx & Xxxxxxxx may state that their belief is
based upon their participation in the preparation of the Registration Statement
and Prospectus and any amendments or supplements thereto (other than the
documents incorporated by reference) and review and discussion of the contents
thereof (including documents incorporated by reference), but is without
independent check or verification except as specified, with respect to Section
6(d) above, Xxxxxx Pepper & Shefelman LLP, and [ ], with respect to
Section 6(e) above, may rely with respect to factual matters and to the extent
such counsel deems appropriate, upon the representations of each Selling
Stockholder contained herein and in the Power of Attorney and Custody Agreement
of such Selling Stockholder and in other documents and instruments; provided
that copies of such Power of Attorney and Custody Agreement and of any such
other documents and instruments shall be delivered to you and shall be in form
and substance satisfactory to your counsel.
The opinions of Xxxxxx Pepper & Xxxxxxxxx LLP described in Sections 6(c)
and 6(d) above and of [ ] described in Section 6(e) above
15
shall be rendered to the Underwriters at the request of the Company or one or
more of the Selling Stockholders, as the case may be, and shall so state
therein.
(g) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from KPMG LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement and the
Prospectus; provided that the letter delivered on the Closing Date shall
use a "cut-off date" not earlier than the date hereof.
(h) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain stockholders, officers and
directors of the Company relating to sales and certain other
dispositions of shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force
and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the Additional Shares.
7. COVENANTS OF THE COMPANY. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish you, without charge, five signed copies of the
Registration Statement (including exhibits thereto and documents
incorporated by reference) and for delivery to each other Underwriter a
copy of the Registration Statement (without exhibits thereto but
including documents incorporated by reference) and, during the period
mentioned in paragraph (c) below, as many copies of the Prospectus, any
documents incorporated therein by reference and any supplements and
amendments thereto as you may reasonably request. The terms "supplement"
and "amendment" or "amend" as used in this Agreement shall include all
documents subsequently filed by the Company with the Commission pursuant
to the Exchange Act that are deemed to be incorporated by reference in
the Prospectus.
(b) Before amending or supplementing the Registration Statement
or the Prospectus, to furnish to you a copy of each such proposed
amendment or supplement and not to file any such proposed amendment or
supplement
16
to which you reasonably object, and to file with the Commission within
the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with
sales by an Underwriter or dealer, any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Prospectus to comply with
applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers
(whose names and addresses you will furnish to the Company) to which
Shares may have been sold by you on behalf of the Underwriters and to
any other dealers upon request, either amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering
the twelve-month period ending March 31, 2003 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
8. EXPENSES. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Sellers agree to
pay or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel, the Company's accountants and counsel for the
Selling Stockholders in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or
17
producing any Blue Sky or Legal Investment memorandum in connection with the
offer and sale of the Shares under state securities laws and all expenses in
connection with the qualification of the Shares for offer and sale under state
securities laws as provided in Section 7(d) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky or Legal
Investment memorandum, (iv) all filing fees and the reasonable fees and
disbursements of counsel to the Underwriters incurred in connection with the
review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., (v) all fees and expenses in connection
with the preparation and filing of the registration statement on Form 8-A
relating to the Common Stock and all costs and expenses incident to listing the
Shares on the NYSE, (vi) the cost of printing certificates representing the
Shares, (vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) one-half of the aggregate total amount of the costs and
expenses of the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Shares,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show, and (ix) all other costs and expenses incident to
the performance of the obligations of the Company hereunder for which provision
is not otherwise made in this Section. It is understood, however, that except as
provided in this Section, Section 9 entitled "Indemnity and Contribution", and
the last paragraph of Section 11 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel, stock
transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make.
The provisions of this Section shall not supersede or otherwise affect
any agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
9. INDEMNITY AND CONTRIBUTION. (a) The Sellers, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except
18
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(b) Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Selling Stockholder
furnished in writing by or on behalf of such Selling Stockholder expressly for
use in the Registration Statement, any preliminary prospectus, the Prospectus or
any amendments or supplements thereto.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Selling Stockholders, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Stockholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a), 9(b) or 9(c), such person (the "indemnified
party") shall promptly notify the person against whom such indemnity may be
sought (the "indemnifying party") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the
19
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, (ii) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section and
(iii) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Selling Stockholders and all persons, if any, who control
any Selling Stockholder within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing by Xxxxxx Xxxxxxx & Co.
Incorporated. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Stockholders and such control persons of any Selling Stockholders,
such firm shall be designated in writing by the persons named as
attorneys-in-fact for the Selling Stockholders under the Powers of Attorney. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any
20
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in Section 9(a), 9(b)
or 9(c) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 9(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by each Seller and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Sellers on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Sellers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 9(e). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9, no Underwriter shall be
21
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 9 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section
9 and the representations, warranties and other statements of the Company and
the Selling Stockholders contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, any Selling Stockholder or any person controlling
any Selling Stockholder, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
10. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 10(a)(i) through 10(a)(iv), such event, singly
or together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
11. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of
22
the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling Stockholders for the purchase of such Firm Shares are not made
within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Stockholders. In any such case either you or the relevant Sellers shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on the Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase Additional Shares or (ii) purchase not less
than the number of Additional Shares that such non-defaulting Underwriters would
have been obligated to purchase in the absence of such default. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of any Seller to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
23
13. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
24
14. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
LITHIA MOTORS, INC.
By:
----------------------------
Name:
Title:
The Selling Stockholders
named in Schedule I hereto,
acting severally
By:
----------------------------
Attorney-in-Fact
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxx Inc.
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co.
Incorporated
By:
-------------------------
Name:
Title:
25
SCHEDULE I
Number of Firm
Shares To Be Sold
-------------------------------------
Selling Stockholder Primary Over-allotment
------------------- ----------------- --------------
[X. Xxxxxxx Xxxxxxxx entities] 1,000,000
Xxxxxx X. XxXxxx 108,962
X. Xxxxxxxx Xxxx 20,550
Lithia Holding Company, LLC 120,488
--------- -------
Total............ 1,000,000 250,000
========= =======
26
SCHEDULE II
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxx Inc.
[NAMES OF OTHER UNDERWRITERS]
---------
Total .............. 4,000,000
=========
SCHEDULE III
MANUFACTURER FRANCHISE LOCATION
------------ ------------------
DAIMLERCHRYSLER
Lithia Chrysler Jeep of Anchorage, Inc. 0000 Xxx Xxxxxx Xxxxxxx
Xxxxxxxxx, XX
Lithia of Anchorage, Inc. 0000 Xxx Xxxxxx Xxxxxxx
Xxxxxxxxx, XX
Lithia DC, Inc. 0000 Xxxxx Xxxxx
Xxxxxxx, XX
Lithia Centennial Chrysler Plymouth 0000 X. Xxxxxxxx Xxxx
Jeep, Inc. Centennial, CO
Lithia Cherry Creek Dodge, Inc. 0000 X. Xxxxxx
Xxxxxx, XX
Lithia Colorado Chrysler Plymouth, Inc. 000 X. Xxxxxx
Xxxxxx, XX
Lithia Colorado Jeep, Inc. 000 X. Xxxxxx
Xxxxxx, XX
Lithia Colorado Springs Jeep Chrysler 1250 S. Nevada
Plymouth, Inc. Colorado Springs, CO
Lithia Foothills Chrysler, Inc. 0000 X. Xxxxxxx
Xxxx Xxxxxxx, XX
Lithia Chrysler Plymouth of Boise, Inc. 0000 Xxxx Xxxxxx
Xxxxx, XX
Lithia of Pocatello, Inc. 0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX
LGPAC, Inc. 0000 XX 0xx
Xxxxxx Xxxx, XX
Lithia DE, Inc. 0000 Xxxxxxxxxx Xxxx.
Eugene, OR
Lithia DM, Inc. 000 X. 0xx Xxxxxx
Xxxxxxx, XX
Lithia Klamath, Inc. 0000 Xxxxxxxx Xxx
Xxxxxxx Xxxxx, XX
Lithia of Roseburg, Inc. 1590 NE Xxxxxxxx
Roseburg, OR
Lithia of Sioux Falls, Inc. 0000 X. Xxxxxxxxx
Xxxxx Xxxxx, XX
Lithia CJDBS, L.P. 502 East FM 700
Big Spring, TX
Lithia CJDSA, L.P. 0000 Xxxxxxxx Xxx
Xxx Xxxxxx, XX
2
Lithia DC of Renton, Inc. 000 Xxxxxx Xxxxxx XX
Xxxxxx, XX
Lithia Dodge of Tri-Cities, Inc. 0000 Xxxx Xxxxx Xxxxx
Xxxxxxxxx, XX
FORD MOTOR COMPANY
Lithia FMF, Inc. 000 X. Xxxx Xxxxxx Xxxxx
Xxxxxx, XX
Lithia FN, Inc. 000 Xxxxxx Xxx.
Napa, CA
Lithia FVHC, Inc. 0000 Xxxxxxx Xxxx.
Concord, CA
Lithia Ford of Boise, Inc. 0000 Xxxx Xxxxxx
Xxxxx, XX
Lithia LMB, Inc. 0000 X. Xxxxxxxx
Xxxxx, XX
Lithia LM, Inc. 000 X. Xxxxxxx Xxxxxx
Xxxxxxx, XX
Lithia Rose-FT, Inc. 0000 XX Xxxxxxxx Xxxxxx
Xxxxxxxx, XX
Lithia FTC, Inc. 0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX
GENERAL MOTORS CORPORATION
Lithia CIMR, Inc. 000 X. Xxxxxxx Xxx.
Redding, CA
Lithia CB, Inc. 0000 X. Xxxxxxxx
Xxxxx, XX
Lithia of Xxxxxxxx, Inc. 0000 X. Xxxxxxxxx Xxxx
Xxxxxxxx, XX
Lithia Automotive, Inc. 0000 X. 00xx Xxxxxx
Xxxxx Xxxxx, XX
Lithia CSA, L.P. 000 X. Xxxxxx Xxxx.
San Angelo, TX
Camp Automotive, Inc. 000 X. Xxxxxxxxxx
Xxxxxxx, XX
Lithia BC, Inc. 000 000xx XX
Xxxxxxxx, XX
Lithia IC, Inc. 0000 00xx Xxxxxx, XX
Xxxxxxxx, XX
TOYOTA MOTOR SALES, U.S.A., INC.
Lithia TKV, Inc. 000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX
Lithia TR, Inc. 000 X. Xxxxxxx Xxxxxx
Xxxxxxx, XX
3
Xxxxxxxx Imported Motors, Inc. 000 Xxxx Xxxxxx
Xxxxxxxxxxx, XX
Lithia Klamath, Inc. 0000 Xxxxxxxx Xxx
Xxxxxxx Xxxxx, XX
Lithia MTLM, Inc. 0000 X. Xxxxxxxxx
Xxxxxxx, XX
VOLKSWAGEN OF AMERICA, INC.
Lithia VWC, Inc. 0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX
Xxxxxx XXXXXX, Inc. 0000 X. Xxxxxxxx
Xxxx, XX
Lithia HPI, Inc. 000 X. Xxxxxxxxx
Xxxxxxx, XX
AUDI OF AMERICA, INC.
Xxxxxx XXXXXX, Inc. 0000 X. Xxxxxxxx
Xxxx, XX
NISSAN NORTH AMERICA, INC.
Lithia NF, Inc. 0000 X. Xxxxxxxxxx Xxxxx
Xxxxxx, XX
Xxxxxxxx Xxxxxx Nissan, Inc. 0000 Xxxxxxxxxx Xxxx
Xxxxxx, XX
Lithia Nissan of Roseburg, Inc. 000 XX Xxxxxxx Xxxxxxx
Xxxxxxxx, XX
Lithia BNM, Inc. 000 X. Xxxxxxx
Xxxxxxx, XX
Lithia NSA, L.P. 0000 Xxxxxxxx Xxx
Xxx Xxxxxx, XX
SUBARU OF AMERICA, INC.
Xxxxxx Xxxx Sub-Hyun, Inc. 0000 Xxxxxxx Xx
Xxxx, XX
Lithia of Sioux Falls, Inc. 0000 X. Xxxxxxxxx
Xxxxx Xxxxx, XX
Camp Automotive, Inc. 000 X. Xxxxxxxxxx
Xxxxxxx, XX
AMERICAN HONDA MOTOR CO, INC.
Lithia Poca-Hon, Inc. 0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX
Lithia Medford Hon, Inc. 000 X. Xxxxxxx
Xxxxxxx, XX
TC Hon, Inc. 0000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX
4
AMERICAN ISUZU MOTORS, INC.
Lithia VWC, Inc. 0000 Xxxxxxx Xxxx.
Concord, CA
Lithia IB, Inc. 0000 X. Xxxxxxxx
Xxxxx, XX
Xxxxxx XXXXXX, Inc. 0000 X. Xxxxxxxx
Xxxx, XX
Lithia HPI, Inc. 000 X. Xxxxxxxxx
Xxxxxxx, XX
BMW OF NORTH AMERICA, LLC
Lithia BNM, Inc. 000 X. Xxxxxxx
Xxxxxxx, XX
Lithia of Seattle, Inc. 000 Xxxx Xxxxxx
Xxxxxxx, XX
Camp Automotive, Inc. 000 X. Xxxxxxxxxx
Xxxxxxx, XX
HYUNDAI MOTOR AMERICA
Lithia JEF, Inc. 0000 X. Xxxxxxxxxx Xxxxx
Xxxxxx, XX
Lithia Foothills Chrysler, Inc. 0000 X. Xxxxxxx
Xxxx Xxxxxxx, XX
Lithia of Pocatello, Inc. 0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX
Lithia of SALMIR, Inc. 0000 Xxxxxxx Xxxx
Xxxx, XX
MAZDA MOTOR OF AMERICA, INC.
Lithia MMF, Inc. 000 X. Xxxx Xxxxxx Xxxxx
Xxxxxx, XX
Lithia Xxxxxxx XX, Inc. 000 X. Xxxxxxx Xxxxxx
Xxxxxxx, XX
AMERICAN SUZUKI MOTOR CORPORATION
Lithia MMF, Inc. 000 X. Xxxx Xxxxxx Xxxxx
Xxxxxx, XX
Xxxxxx XXXXXX, Inc. 00 Xxxxxxxxx Xxxxxx
Xxxxxx, XX
Lithia Xxxxxxx XX, Inc. 000 X. Xxxxxxx Xxxxxx
Xxxxxxx, XX
SATURN DISTRIBUTION CORPORATION
SOE, LLC 0000 Xxxxxxxxxx Xxxx
Xxxxxx, XX
Saturn of Southwest Oregon, Inc. 000 X. Xxxxxxxxx
Xxxxxxx, XX
5
DAEWOO MOTOR AMERICA, INC.
Lithia DB, Inc. 0000 X. Xxxxxxxx
Xxxxxxxx, XX
Lithia DSA, L.P. 000 X. Xxxxxx Xxxx.
San Angelo, TX
VOLVO CARS OF NORTH AMERICA, INC.
Lithia VS, LLC 000 X. Xxxxxxxxxx
Xxxxxxx, XX
KIA MOTORS AMERICA, INC.
Lithia Cherry Creek Dodge, Inc. 0000 X. Xxxxxx
Xxxxxx, XX
Lithia Colorado Chrysler Plymouth, 350 S. Havana
Inc. Aurora, CO
6
EXHIBIT A
[FORM OF LOCK-UP LETTER]
[ ], 2002
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxx Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Lithia Motors, Inc., an Oregon corporation (the
"COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by the
several Underwriters, including Xxxxxx Xxxxxxx (the "UNDERWRITERS"), of
5,000,000 shares (the "SHARES") of the Class A Common Stock, no par value per
share, of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 180 days after the date of the final prospectus
relating to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (a) the sale of any
Shares to the Underwriters pursuant to the Underwriting Agreement or (b)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the Public Offering. In
addition, the undersigned agrees that, without the prior written consent of
Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not,
7
during the period commencing on the date hereof and ending 180 days after the
date of the Prospectus, make any demand for or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock. The undersigned also
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of the undersigned's
shares of Common Stock except in compliance with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up Agreement
is irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
----------------------------
(Name)
----------------------------
(Address)
2
