EXHIBIT 10.1
[HONDA LOGO]
AUTOMOBILE DEALER
SALES AND SERVICE
AGREEMENT
AMERICAN HONDA MOTOR CO., INC.
A
This is an agreement between the Honda Automobile Division, American
Honda Motor Co., Inc. (American Honda) and ____________________________________
_____________________________ (Dealer), a(n) _______________ doing business as
________________________________________ ______________________________. By this
agreement, which is made and entered into at _____________________, California,
effective the _____ day of ______________________, 19____, American Honda gives
to Dealer the nonexclusive right to sell and service Honda Products at the
Dealership Location. It is the purpose of this Agreement, including the Honda
Automobile Dealer Sales and Service Agreement Standard Provisions (Standard
Provisions), which are incorporated herein by reference, to set forth the
rights and obligations which Dealer will have as a retail seller of Honda
Products. Achievement of the purposes of this Agreement is premised upon the
mutual understanding and cooperation between American Honda and Dealer.
American Honda and Dealer have each entered into this Agreement in reliance
on the integrity and ability and expressed intention of each to deal fairly
with the consuming public and with each other.
For consistency and clarity, terms which are used frequently in this
Agreement have been defined in Article 12 of the Standard Provisions.
B
American Honda grants to Dealer the nonexclusive right to buy Honda
Products and to identify itself as a Honda dealer at the Dealership Location.
Dealer assumes the obligations specified in this Agreement and agrees to sell
and service effectively Honda Products within Dealer's Primary Market Area and
to maintain premises satisfactory to American Honda.
C
Dealer covenants and agrees that this Agreement is personal to Dealer,
to the Dealer Owner, and to the Dealer Manager, and American Honda has entered
into this Agreement based upon their particular qualifications and attributes
and their continued ownership or participation in Dealership Operations. The
parties therefore recognize that the ability of Dealer to perform this Agreement
satisfactorily and the Agreement itself are both conditioned upon the continued
active involvement in or ownership of Dealer by either:
(1.) the following person(s) in the percentage(s) shown:
PERCENT OF
NAME ADDRESS TITLE OWNERSHIP
(2.) __________________________________________________________________
an individual personally owning an interest in Dealer of at least
25% and who has presented to American Honda a firm and binding
contract giving to him the right and obligation of acquiring an
ownership interest in Dealer in excess of 50% within five years of
the commencement of Dealership Operations and being designated in
that contract as Dealer operator.
D
Dealer represents, and American Honda enters into this Agreement in
reliance upon the representation, that _________________________________________
______________ exercises the functions of Dealer Manager and is in complete
charge of Dealership Operations with authority to make all decisions on behalf
of Dealer with respect to Dealership Operations. Dealer agrees that there will
be no change in Dealer Manager without the prior written approval of American
Honda.
E
American Honda has approved the following premise as the location(s)
for the display of Honda Trademarks and for Dealership Operations.
HONDA NEW VEHICLE
SALES SHOWROOM PARTS AND SERVICE FACILITY
USED VEHICLE DISPLAY
SALES AND GENERAL OFFICES AND SALES FACILITIES
F
There shall be no voluntary or involuntary change, direct or indirect,
in the legal or beneficial ownership or executive power or responsibility of
Dealer for the Dealership Operations, specified in Paragraphs C and D hereof,
without the prior written approval of American Honda.
G
Dealer agrees to maintain, solely with respect to the Dealership
Operations, minimum net working capital of $ , minimum owner's
equity of $ * , and flooring and a line or lines of
credit in the aggregate amount of $ with banks or financial
institutions approved by American Honda for use in connection with Dealer's
purchases of and carrying of inventory of Honda Products, all of which
American Honda and Dealer agree are required to enable Dealer to perform its
obligations pursuant to this Agreement. If Dealer also carries on another
business or sells other products, Dealer's total net working capital, owner's
equity and lines of credit shall be increased by an appropriate amount.
* Long Term Debt, less Real Estate Mortgages, shall not exceed a ratio of 1:1
when compared to Effective Net Worth which is defined as Total Net Worth less
Total Other Assets.
H
This Agreement is made for the period beginning
and ending ,
unless sooner terminated. Continued dealings between American Honda and Dealer
after the expiration of this Agreement shall not constitute a renewal of this
Agreement for a term, but rather shall be on a day-to-day basis, unless a new
agreement or a renewal of this Agreement is fully executed by both parties.
I
This Agreement may not be varied, modified or amended except by an
instrument in writing, signed by duly authorized officers of the parties,
referring specifically to this Agreement and the provision being modified,
varied or amended.
J
Neither this Agreement, nor any part thereof or interest therein, may be
transferred or assigned by Dealer, directly or indirectly, voluntarily or by
operation of law, without the prior written consent of American Honda.
__________________________________________________ By ________________________________________________
(Corporate or Firm Name) (Dealer)
AMERICAN HONDA MOTOR CO., INC.
HONDA AUTOMOBILE DIVISION (Corporate Seal)
By ________________________________
[HONDA LOGO]
AUTOMOBILE DEALER
SALES AND SERVICE
AGREEMENT
STANDARD PROVISIONS
HONDA AUTOMOBILE DEALER SALES AND SERVICE AGREEMENT
STANDARD PROVISIONS
TABLE OF CONTENTS
PAGE
1. THE OBLIGATIONS OF AMERICAN HONDA ......................................................................... 1
2. SALE OF HONDA PRODUCTS TO DEALER .......................................................................... 3
3. THE OBLIGATIONS OF DEALER ................................................................................. 4
4. WARRANTY .................................................................................................. 6
5. ADVERTISING AND PROMOTIONAL PROGRAMS ...................................................................... 6
6. TRADEMARKS AND SERVICE MARKS .............................................................................. 7
7. GENERAL BUSINESS REQUIREMENTS ............................................................................. 7
8. APPOINTMENT OF SUCCESSOR AND REPLACEMENT DEALERS .......................................................... 8
9. TERMINATION OF AGREEMENT .................................................................................. 9
10. RIGHTS, OBLIGATIONS AND DEALINGS UPON TERMINATION ......................................................... 12
11. GENERAL PROVISIONS ........................................................................................ 15
12. DEFINITIONS ............................................................................................... 17
HONDA AUTOMOBILE DEALER SALES AND SERVICE AGREEMENT
STANDARD PROVISIONS
The following Standard Provisions are, by reference, incorporated in and made a
part of the Honda Automobile Dealer's Sales and Service Agreement. These
Standard Provisions accompany the Honda Dealer's Sales and Service Agreement
which has been executed on behalf of both American Honda and Dealer.
1. THE OBLIGATIONS OF AMERICAN HONDA
1.1. It is the obligation of American Honda to supply to Dealer,
and to all authorized dealers, Honda Products in a fair and
reasonable manner in order that Dealer may conduct Dealership
Operations in a businesslike manner. In fulfilling this
obligation, Honda Products may be supplied either on the basis
of dealer order or on the basis of allocation, depending on
market conditions and availability. There are numerous factors
which affect the availability of Honda Products. Among those
factors are component availability and production capacity,
consumer demand, strikes and other labor troubles, weather and
transportation conditions, and government regulations. Because
such factors affect individual dealer supply, Amercian Honda
necessarily reserves discretion in accepting orders and
allocating and distributing Honda Products, and its judgment
and decision in such matters will be final.
1.2. To assist Dealer in the fulfillment of its obligations under
the Agreement, which it has as a retail seller of Honda
Products, American Honda agrees to provide Dealer sales,
service and parts support.
1.2.A. To assist Dealer in fulfilling its sales
responsibility, American Honda agrees to offer
general and specialized product information and to
provide field sales personnel to advise and counsel
Dealer's sales organization on sales-related subjects
such as merchandising, training and sales management.
1.2.B. To assist Dealer in fulfilling its service and parts
responsibilities, American Honda agrees to offer, or
cause to be offered, general and specialized service
and parts training courses. Based on the service
training needs of Dealer's service personnel, to be
determined by American Honda with the assistance of
Dealer, Dealer agrees to have members of Dealer's
service organization attend such courses. Further,
American Honda agrees to make available to Dealer
field service personnel capable of advising and
counseling Dealer's service personnel on
service-related subjects, including product quality,
technical adjustments, repairs and replacement of
product components, recall, product improvement or
product update campaigns which American Honda may
conduct, owner complaints, warranty administration,
service and parts merchandising, and training and
service management.
1.3. To assist Dealer in planning, establishing and maintaining the
Dealership Premises, American Honda will, at its sole option,
make available to Dealer, upon request, sample copies of
building layout plans or facility planning recommendations,
including sales, service and parts space and the placement,
installation and maintenance of recommended signs. In
addition, representatives of American Honda will be available
to Dealer from time to time to counsel and advise Dealer and
its personnel in connection with Dealer's planning and
equipping the Dealership Premises.
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1.4. American Honda agrees to make available to Dealer, at
reasonable cost, such sales, service and parts manuals,
brochures, special service tools and equipment and other data
for Honda Products as American Honda deems necessary for
Dealership Operations.
1.5. American Honda agrees to maintain a nationwide system of
authorized dealers of Honda Products. In order that those
authorized dealers may be assured of the benefits of
comprehensive advertising of Honda Products, American Honda
agrees to establish and maintain general advertising programs
in such manner and amount as it may deem appropriate and will
make sales promotion and campaign materials available to
Dealer.
1.6. American Honda agrees to compensate Dealer for the labor and
parts used by Dealer in performing its obligations under any
American Honda warranty and in connection with any recall,
product improvement or product update campaign which American
Honda may undertake and require Dealer to perform. Such
compensation will be in such reasonable amounts, and pursuant
to such requirements and instructions, as American Honda shall
establish from time to time, and such compensation shall
constitute full and complete payment by Amercian Honda to
Dealer for such work.
1.7. American Honda agrees to assume the defense of Dealer and to
indemnify Dealer against any money judgment, less any offset
recovered by Dealer, in any lawsuit naming Dealer as a
defendant, where such lawsuit relates to: (a) an alleged
breach of any Honda warranty relating to Honda Products; (b)
bodily injury or property damage claimed to have been caused
by a defect in the design, manufacture or assembly of a Honda
Product prior to delivery thereof to Dealer (other than a
defect which could have been detected by Dealer in a
reasonable inspection); or (c) a misrepresentation or
misleading statement of American Honda; provided, however,
that if any information discloses the possibility of Dealer
error or omission in servicing or otherwise (including but not
limited to Dealer not having performed all recalls of which
Dealer has notice on the Honda Product involved in the lawsuit
if the defect subject to the recall is alleged or contended to
be a contributing cause of the breach of warranty, injury or
damage which is the subject matter of the lawsuit), or should
it appear that the Honda Product involved in such lawsuit had
been altered by or for Dealer, or if Dealer has violated any
of the provisions of this Paragraph 1.7, then Dealer will
immediately obtain its own counsel and defend itself, and
American Honda will not be obligated to defend or indemnify
Dealer further. Dealer will promptly notify American Honda of
any claim which Dealer will assert American Honda might be
obligated to defend under this Paragraph 1.7. American Honda
will have not less than thirty (30) days to conduct a
reasonable investigation to initially determine whether or not
American Honda is obligated to defend under this Paragraph
1.7. Dealer will take the steps necessary to protect its own
interests involved in the lawsuit until American Honda assumes
the active defense of Dealer. American Honda will, upon
assuming the defense of Dealer, reimburse Dealer for all
attorneys' fees or court costs incurred by Dealer from the
date of the tender. American Honda, upon assuming Dealer's
defense, will have the right to retain and direct counsel of
its own choosing, and Dealer will cooperate in all matters
during the course of defending the lawsuit. If, upon final
judgment in a lawsuit, it is determined that American Honda
wrongfully failed or refused to defend Dealer, American Honda
will reimburse Dealer for all costs and attorneys' fees
incurred by Dealer from the date of the tender of defense.
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2. SALE OF HONDA PRODUCTS TO DEALER.
2.1. To the extent that Honda Products are the subject of dealer
order, such orders will be submitted and processed in
accordance with procedures established by American Honda. No
order will be binding on American Honda, as evidenced by
either the issuance of an invoice or shipment of the ordered
Honda Products, and any such order may be accepted in whole or
in part. All orders by Dealer will be deemed firm orders and
binding upon the Dealer, except that at any time prior to
acceptance, an order may be canceled by Dealer by giving
actual notice to American Honda in writing of the desire by
Dealer to cancel such order.
2.2. While it is the intent of American Honda to provide Honda
Automobiles to Dealer in such quantities and types as are
ordered by Dealer, American Honda and Dealer recognize that
Honda Automobiles may not always be available in desired
quantities. It is therefore understood and agreed that
American Honda, at its sole election, will have the right to
allocate Honda Automobiles among authorized dealers of Honda
Products in a fair and reasonable manner. American Honda will
provide to Dealer an explanation, in writing, of any
allocation system it may adopt.
2.3. American Honda will have the right at any time and from time
to time to establish and revise prices and other terms,
including payment by Dealer, for its sales of Honda Products
to Dealer. Revised prices, terms or provisions will apply to
the sale of any Honda Products as of the effective date of the
revised prices, terms or provisions, even though a different
price or different terms may have been in effect at the time
such Honda Products were allocated to or ordered by Dealer.
2.4. American Honda will have the right to select the distribution
points and the mode of transportation and may pay carriers for
all charges in effecting delivery of Honda Products to Dealer.
Dealer agrees to pay to American Honda such charges for
delivery as American Honda may assess. Subject to the terms of
sale which may be established from time to time by American
Honda, risk of loss to Honda Products will pass to Dealer upon
tender of the Honda Products to Dealer or its authorized
agent, and title will pass to Dealer upon receipt by American
Honda of payment.
2.5. If Dealer should fail or refuse or for any reason be unable to
accept delivery of any Honda Products ordered by Dealer, or if
Dealer should request diversion of a shipment from American
Honda, Dealer will be responsible for and pay to American
Honda, promptly on demand, all costs and expenses incurred by
American Honda in filling and shipping Dealer's order and by
reason of such diversion, including costs of demurrage and
storage, plus restocking charges as determined by American
Honda. American Honda may direct that such returned Honda
Products be delivered to another destination, but the amount
charged Dealer for return to such other destination will not
be greater than the costs and expenses of returning such Honda
Products to their original place of shipment plus any
demurrage, storage and restocking charges.
2.6. As between American Honda and Dealer, American Honda assumes
responsibility for damage to Honda Products caused prior to
delivery to Dealer or its authorized agent.
2.7. American Honda will not be liable in any manner for delay or
failure in supplying any Honda Products where such delay or
failure is the result of any event beyond the control of
American Honda. Such event may include, but is not limited to,
any law or regulation or any acts of God, foreign or civil
wars, riots, interruptions of navigation, shipwrecks, fires,
strikes, lockouts, or other labor
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troubles, embargoes, blockades, demand for, or delay or
failure of any supplier to deliver or in making delivery, of
Honda Products.
2.8. American Honda reserves the right at any time to change or
modify, without notice, any specification, design or model of
Honda Products. In the event of any change or modification
with respect to any Honda Products, Dealer will not be
entitled to have such or similar change or modification made
with respect to any other Honda Products, except as may be
required by applicable law. American Honda may, however, in
its sole discretion, make such changes or modifications to all
Honda Products in its inventory or control, whether or not
invoiced to Dealer. No such change will be considered a model
year change unless specified by American Honda.
2.9. American Honda may at any time discontinue, without obligation
to Dealer or Dealer's customers, the sale of any Honda
Products, or models or lines thereof or any other items, goods
or services. Further, American Honda will have no obligation,
under any circumstances, to accept orders for any Honda
Products which are not in current inventory.
3. THE OBLIGATIONS OF DEALER.
3.1. It is the obligation of Dealer to promote and sell, at retail,
Honda Products, and to promote and render service, whether or
not under warranty, for those products within the Dealer's
Primary Market Area.
3.2. Dealer's performance of its sales obligations for Honda
Products will be evaluated by American Honda on the basis of
such reasonable criteria as American Honda may develop from
time to time, including, but not limited to, such reasonable
sales objectives as American Honda may establish and a
comparison of Dealer's sales performance with other authorized
dealers of Honda Products.
3.3. To enable Dealer to fulfill its obligations satisfactorily,
Dealer agrees to establish and maintain an adequate and
trained sales and customer relations organization. Dealer
further agrees to establish and maintain a complete service
and parts organization, including a qualified service manager
and a qualified parts manager and a number of competent
service and parts personnel adequate to care for the service
obligations to be performed by Dealer under the Agreement.
3.4. Dealer agrees to acknowledge, investigate and resolve
satisfactorily all complaints received from owners of Honda
Products in a businesslike manner in order to secure and
maintain the goodwill of the public. Any complaint received by
Dealer which, in the opinion of Dealer, cannot be readily
remedied, shall be promptly reported to American Honda by
Dealer.
3.5. Dealer agrees that it will not make any misrepresentations or
misleading statements regarding the items making up the total
selling price of Honda Products or as to the prices or charges
relating to such items. With the understanding that Dealer is
the sole judge of the price at which it sells Honda Products,
dealer recognizes that a retail customer has the right to
purchase Honda Automobiles without being required to purchase
any optional equipment or accessories which the purchaser does
not want or order unless such equipment or accessories are
required under applicable laws or regulations.
3.6. Dealer agrees to make certain that all Honda Products sold by
it have received predelivery services and inspection in
accordance with applicable procedures
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and directives issued by American Honda. Dealer further agrees
that all Honda Products sold by it will be in proper operating
condition prior to delivery to any customer. To enable Dealer
to fulfill its obligations in this regard, Dealer agrees that
an appropriate number of its service personnel will be fully
qualified to perform all necessary predelivery service and
inspection.
3.7. Dealer agrees to comply with, and operate consistent with, all
applicable provisions of the National Traffic and Motor
Vehicle Safety Act of 1966 and the Federal Clean Air Act, as
amended, including such applicable rules and regulations as
may be issued thereunder, and all other applicable federal,
state and local motor vehicle safety and emission control
requirements. In the interests of motor vehicle safety and
emission control, American Honda agrees to provide to Dealer,
and Dealer to American Honda, such information and assistance
as may reasonably be requested by the other in connection with
the performance of obligations imposed on either party by the
National Traffic and Motor Vehicle Safety Act of 1966 and the
Federal Clean Air Act, as amended, and the rules and
regulations issued thereunder, and all other applicable
federal, state and local motor vehicle safety and emission
control requirements.
3.8. Dealer agrees to conduct a used vehicle operation at or in
connection with the Dealership Premises, to the extent
reasonably required to enhance the opportunity for sales of
Honda Automobiles.
3.9. American Honda and Dealer recognize that it may be necessary
for American Honda to formulate new or different policies or
directives to meet new or changing technology, laws or
circumstances. In the operation of Dealer's business and in
the sale and promotion of Honda Products, in rendering service
and in all other activities of the Dealership Operations,
Dealer will follow all reasonable directives, suggestions and
policies of American Honda. All written directives,
suggestions and policies of American Honda contained in any of
its bulletins or manuals, which are in effect as of the date
of the Agreement or are issued thereafter, will be deemed a
part of the Agreement.
3.10. Dealer agrees that it will, at all times, maintain in effect
all licenses required for Dealership Operations and for the
Dealership Premises.
3.11. Dealer agrees that it will comply with all laws, rules,
regulations and guides relating to the conduct of its
business.
3.12. Dealer agrees that it will perform any and all warranty,
recall, product improvement or product update service in
compliance with instructions and directives issued by American
Honda, regardless of where the Honda Product involved was
purchased. To protect and maintain the goodwill and reputation
of Honda Products and the Honda Trademarks, Dealer agrees that
it will not charge any customer for warranty service or any
work done in connection with such warranty, recall, product
improvement or update or any other service as to which Dealer
is reimbursed by American Honda.
3.13. Dealer fully understands that the success of its Dealership
Operations depends to a great extend upon the amount of net
working capital, owner's equity, flooring and lines of credit
which Dealer maintains. Accordingly, for the benefit of both
American Honda and Dealer, Dealer agrees that it will, at all
times, pay for Honda Products promptly and, to do so, maintain
its minimum net working capital, owner's equity, flooring and
lines of credit in the amounts specified in Paragraph G of the
Agreement. American Honda will have the right, reasonably, to
specify an increased amount of minimum net working capital,
owner's equity, flooring, or lines of credit to be used in
Dealership Operations and Dealer agrees promptly to establish
and maintain the increased amount. Dealer and
5
American Honda agree to execute such new documents as American
Honda may reasonably require to evidence revised capital
requirements.
3.14. Dealer agrees to assume the defense of American Honda and to
indemnify American Honda against any money judgment, less any
offset recovered by American Honda, in any lawsuit naming
American Honda as a defendant where such lawsuit relates to:
(a) an alleged failure by Dealer to comply, in whole or in
part, with any obligation assumed by Dealer pursuant to the
Agreement, (b) Dealer's alleged negligent or improper
repairing or servicing of Honda Products, or such other motor
vehicles or equipment as may be sold or serviced by Dealer,
(c) Dealer's alleged breach of any contract between Dealer and
Dealer's customer or (d) Dealers alleged misrepresentation or
misleading statement, either direct or indirect, to any
customer of Dealer. American Honda may, at its sole option and
at its expense, participate in defending any such lawsuit.
4. WARRANTY.
4.1. Dealer understands and agrees that the only warranties that
will be applicable to Honda Products will be such written
warranty or warranties as may be furnished by American Honda.
Except for its express liability under such written
warranties, American Honda neither assumes nor authorizes any
other person or party to assume for it any other obligation or
liability in connection with any Honda Product or component
thereof.
4.2. Dealer agrees that it will expressly incorporate any warranty
furnished by American Honda with a Honda Automobile as a part
of each order form or other contract for the sale of such
Honda Automobile by Dealer to any buyer. Dealer further agrees
that it will deliver to the buyer of all Honda Products, at
the time of delivery of such Honda Products, copies of such
applicable warranties as may be furnished by American Honda.
Dealer agrees to abide by and implement in all other respects
American Honda's warranty procedures in effect at the time of
Dealer's sale.
5. ADVERTISING AND PROMOTIONAL PROGRAMS.
5.1. Dealer agrees to develop and actively utilize programs for the
advertisement and promotion of Honda Products and its
servicing of such products. Such programs will include the
prominent display and use or demonstration of Honda
Automobiles. Dealer further agrees to cooperate with all
reasonable promotional programs developed by American Honda.
5.2. Dealer agrees that it will not advertise, promote or trade in
Honda Products or the servicing thereof in such a manner as to
injure or be detrimental to the goodwill and reputation of
American Honda and the Honda Trademarks. Dealer further agrees
that it will not publish or otherwise disseminate any
advertisement or announcement or use any form or media of
advertising which is objectionable to American Honda. Dealer
agrees to discontinue immediately any advertisement or form of
advertising deemed objectionable upon request of American
Honda.
5.3. Subject to applicable federal, state or local ordinances,
regulations and statutes, Dealer agrees to erect and maintain,
at the Dealership Location, at Dealer's expense, authorized
product and service signs of types required by American Honda,
as well as such other authorized signs as are necessary to
advertise the Dealership Operations effectively and as are
required by American Honda.
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6. TRADEMARKS AND SERVICE MARKS.
6.1. Dealer agrees that American Honda has the exclusive right to
use and to control the use of the Honda Trademarks and but for
the right and license granted by Paragraph 6.2 hereof to use
and display the Honda Trademarks, Dealer would have no right
to use the same.
6.2. Dealer is hereby granted the nonexclusive right and license to
use and display the Honda Trademarks at the Dealership
Premises. Such use or display is limited to that which is
necessary in connection with the sale, offering for sale and
servicing of Honda Products at retail at the Dealership
Location. Dealer agrees that it will promptly discontinue the
use of any of the Honda Trademarks or change the manner in
which any of the Honda Trademarks is used when requested to do
so by American Honda.
6.3. American Honda and Dealer recognize that Dealer is free to
sell Honda Products to customers wherever they may be located.
However, in order that American Honda may establish and
maintain an effective network of authorized dealers for the
sale and service of Honda Products, Dealer specifically agrees
that it will not display Honda Trademarks, or, either directly
or indirectly, establish any place or places of business for
the conduct of any of its Dealership Operations except at the
locations and for the purpose described in Paragraph E of the
Agreement without the prior written approval of American
Honda. Dealer further agrees that the rights and license
granted by Paragraph 6.2 hereof will be automatically canceled
upon a change in the location of the Dealership Location
unless such change in location was previously approved in
writing by American Honda. Dealer further agrees that such
right and license terminates with the termination of the
Agreement.
6.4. If Dealer refuses or neglects to keep and perform its
obligations assumed under this Article 6 or under paragraph
10.3 hereof, Dealer will reimburse American Honda for all
costs, attorneys' fees and other expenses incurred by American
Honda in connection with any action to require Dealer to
comply therewith.
GENERAL BUSINESS REQUIREMENTS.
7.1. It is to the mutual benefit of Dealer and American Honda that
uniform accounting systems and practices be maintained by
authorized dealers. Accordingly, Dealer agrees to maintain
such systems and practices as are required by American Honda.
In the event Dealer engages in the sale of any other product,
Dealer agrees to maintain and keep separate records and books
relating to the sale and servicing of Honda Products.
7.2. Dealer agrees to furnish monthly to American Honda, on or
before the times designated by American Honda, on forms
prescribed by American Honda, a complete and accurate
financial and operating statement covering the preceding
month and calender-year-to-date operations and showing the
true and accurate condition of Dealership Operations.
Financial statements and other business information furnished
to American Honda will not be submitted to any third party
unless authorized by Dealer or required by law, or the
information is pertinent to a proceeding in which American
Honda and Dealer are parties.
7.3. Dealer agrees to keep complete and current records regarding
the sale and servicing of Honda Products and to prepare for
American Honda such reports, based on those records, as
American Honda may reasonably request. In order that policies
and procedures relating to the applications for reimbursement
for
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warranty and other applicable work and for other credits or
reimbursements may be applied uniformly to all authorized
dealers, Dealer agrees to prepare, keep current and retain
records in support of requests for reimbursement or credit in
accordance with policies and procedures designated by American
Honda.
7.4. Dealer agrees to permit, during reasonable business hours,
American Honda, or its designee, to examine, audit, reproduce
and take copies of all reports, accounts and records
pertaining to the sale, servicing and inventorying of Honda
Products, including, but not limited to, records in support of
claims for reimbursement or credit from American Honda, and
with the prior approval of Dealer, which approval will not be
unreasonably withheld, to interview Dealer employees with
respect thereto.
7.5. Dealer agrees that Dealership Operations will be conducted in
the normal course of business during and for not less than the
days of the week and hours of the day customary for automobile
dealerships in the Primary Market Area.
7.6. Dealer agrees and understands that any retail price which may
be suggested by American Honda is merely a suggested price,
and Dealer has no obligation to sell any Honda Products at
such price. Dealer further understands and agrees that it is
the sole judge of the price at which it sells Honda Products
and the price it charges others for service, subject only to
applicable local, state and federal laws, rules and
regulations.
7.7. Dealer understands and agrees that it will be responsible for
and will pay any and all taxes, whether sales, use or excise,
and all other governmental or municipal charges imposed upon
the sale of Honda Products by American Honda to Dealer and
will maintain accurate records of the same, which records will
be available to American Honda, or its designee, during
regular business hours for inspection.
7.8. Dealer understands and agrees that, while it has
responsibility for the promotion and retail sale and servicing
of Honda Products within the Primary Market Area, it has no
territorial exclusivity. Further, American Honda reserves the
right, based upon reasonable criteria, to appoint other
authorized dealers of Honda Products in the Primary Market
Area.
8. APPOINTMENT OF SUCCESSOR AND REPLACEMENT DEALERS.
8.1. The parties recognize that Honda Products are marketed through
a system of authorized dealers developed by American Honda and
that customers and American Honda have a vital interest in the
preservation and efficient operation of the system. American
Honda has the responsibility of continuing to administer the
system and of selecting the most suitable dealer candidate in
each circumstance. Accordingly, Dealer agrees that American
Honda has the right to select each successor and replacement
dealer and to approve its owners and principal management and
the location of dealership facilities. Further, Dealer agrees
to provide written notice to American Honda of any potential
change in the involvement, ownership or management specified
in Paragraphs C and D of the Agreement. No change affecting
such involvement, ownership or management will be made without
the prior written approval of American Honda, which approval
will not be unreasonably withheld.
8.2. Upon Dealer's request, American Honda will execute with Dealer
a Successor Addendum designating proposed Dealer operators or
owners of a successor
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dealer to be established if the Agreement expires or is
terminated because of death or incapacity. The request must be
executed by all persons identified in Paragraph C of the
Agreement and all proposed dealer operators or owners and be
submitted to American Honda prior to such death or incapacity;
provided that such proposed dealer operators or owners must be
acceptable to American Honda.
8.3. Dealer, but not American Honda, may cancel any executed
Successor Addendum. If American Honda notifies Dealer that it
does not plan to permit Dealership Operations to continue at
the Dealership Location, American Honda shall have no
obligation to execute a new Successor Addendum.
8.4. If the Agreement expires or is terminated because of death or
incapacity and Dealer and American Honda have not executed a
Successor Addendum, the remaining owners, successors or heirs
may propose a successor dealer entity to continue Dealership
Operations at the Dealership Location. Such proposal must be
made within thirty days of the event causing expiration or
termination by submitting a written proposal to American
Honda. Such proposal will be accepted by American Honda if it
does not introduce new owners or if the proposed new owners
are acceptable to American Honda.
8.5. Any successor dealer entity approved by American Honda
pursuant to this Article 8 must establish that it can conduct
Dealership Operations in an efficient and businesslike manner.
Such successor dealer entity will have one year to meet
reasonable performance criteria established from time to time
by American Honda. In the event such successor dealer entity
fails to meet those criteria, such failure will be separate
grounds for termination of the Agreement.
9. TERMINATION OF AGREEMENT.
9.1. The Agreement may be terminated, at any time, by mutual
agreement of American Honda and Dealer.
9.2. Dealer may terminate the Agreement, at any time, by giving
American Honda notice of such termination. Such termination
shall be effective upon the date specified by Dealer, or if no
date is specified, then upon receipt by American Honda of such
notice.
9.3. American Honda may terminate the Agreement, at any time, by
serving on Dealer a written notice of such termination by
certified or registered mail to Dealer at the Dealership
Premises. Subject to other provisions of the Agreement,
termination will be effective ninety (90) days after mailing
of such notice to dealer or such longer period as American
Honda may specify; provided, however, that termination will be
effective ten (10) days after mailing if for an occurrence of
any circumstance referred to in Paragraphs 9.4.A, 9.4.B,
9.4.J or 9.4.M hereof.
9.4. It is recognized that each of the following grounds is within
control of Dealer or originates from action taken by Dealer or
its employee(s) and is contrary to the spirit and objectives
of the Agreement. Therefore, American Honda may terminate the
Agreement upon the occurrence of any of the following:
9.4.A Failure by Dealer to secure and continuously maintain
any license necessary for the conduct by Dealer of
its business pursuant to the Agreement or the
termination or expiration without renewal, or
suspension or revocation of any such license for any
reason whatsoever, whether or not license is
reinstated.
9
9.4.B. Any change, transfer or attempted transfer by
Dealer or any Dealer Owner, voluntarily or by
operation of law, of the whole or any part of the
Agreement or any interest or legal or beneficial
ownership therein or any right or obligation
thereunder, directly or indirectly, such as, for
example only, by way of a sale of an underlying
ownership interest in Dealer or the Dealership
Premises or a change in the persons having control or
managerial authority, without prior written consent
of American Honda. Any purported change, transfer or
assignment shall be null and void and not binding on
American Honda.
9.4.C. Any dispute, disagreement, controversy or personal
difficulty between or among Dealer Owners or in
the management of Dealer which, in American Honda's
opinion, may adversely affect the conduct of Dealer's
business, or the presence in the management of Dealer
of any person who, in American Honda's opinion, does
not have or no longer has requisite qualifications
for his position.
9.4.D. Impairment of the reputation or the financial
standing of Dealer or of any Dealer Owner subsequent
to the execution of the Agreement; or the
ascertainment by American Honda of any facts existing
at or prior to execution of the Agreement which tend
to impair such reputation or financial standings; or
the failure of Dealer continuously to meet American
Honda's minimum requirements of net working capital,
owner's equity or line(s) of credit.
9.4.E. Failure by Dealer to pay, within ten (10) days after
written demand from American Honda, any delinquent
accounts or other monies due to American Honda from
Dealer.
9.4.F. Submission or participation in the submission to
American Honda of any false or fraudulent statement,
application, report, request for issuance of
reimbursement, compensation, refund or credit,
including but not limited to any false or fraudulent
claim for warranty work, labor rate, set-up
reimbursement or warranty coverage.
9.4.G. Use by Dealer of any deceptive or fraudulent
practice, whether willful, negligent or otherwise, in
the sale of any Honda Product.
9.4.H. Any conviction in any court of original jurisdiction
of Dealer or any Dealer Owner or any employee of the
Dealership Operations for any crime or violation of
any law if, in the opinion of American Honda, such
conviction or violation may adversely affect the
conduct of the Dealership Operations or tend to be
harmful to the goodwill of American Honda or to the
reputation of Honda Products or the Honda Trademarks,
or the violation or refusal or neglect of Dealer to
comply with the provisions of the National Traffic
and Motor Vehicle Safety Act of 1966, as amended, or
the Clean Air Act, or any rules, regulations or
standards under either of said Acts, including but
not limited to performance of any product update or
recall operation as directed by American Honda.
9.4.I. Dealer's entering into any agreement, combination,
understanding or contract, oral or written, with any
other corporation, person, firm or other legal entity
for the purpose of fixing prices of Honda Products or
otherwise violating any law.
9.4.J. Dealer's abandonment of Dealership Premises or
failure to maintain Dealership Operations as a going
business, open during customary
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business hours for the days and hours as are
customary for automobile dealerships in the Primary
Market Area, provided such failure is not due to
causes beyond Dealer's control. Failure of the
Dealership Premises to remain open for seven (7)
consecutive days will constitute, without more, such
abandonment.
9.4.K. Death or incapacity of any Dealer Owner or Dealer
Manager, subject to the provisions of Article 8.
6.4.L. Failure of Dealer to make improvements, alterations
or modifications of its Dealership Premises which are
required to meet reasonable facility requirements of
American Honda or which Dealer has agreed or
represented to American Honda that Dealer will make
or do.
9.4.M. The movement of Dealership Premises to a new location
or the establishment of an additional location for
the sale or service of any Honda Products without the
prior written approval of American Honda.
9.4.N. The failure of Dealer to provide adequate
representation, promotion, sales or service,
including warranty work, of any Honda Products.
9.4.O. Dealer's breach of any provision of the Agreement or
Dealer's failure to comply with any contained in the
Agreement.
9.5. The Agreement will also be terminated upon written notice by
American Honda in the event:
9.5.A. Of termination of American Honda's distribution
agreement as a Honda Automobile distributor.
9.5.B. Of withdrawal by American Honda from the market in
which Dealer is located.
9.5.C. American Honda will, for any reason, discontinue the
distribution of Honda Automobiles.
9.6. Upon the occurrence of any of the following facts or
circumstances, the Agreement will terminate automatically,
without notice or other action by American Honda or Dealer;
and upon such termination, any dealings between American
Honda and dealer will be on a day-to-day basis at the sole
option of American Honda and may be discontinued at any time
by American Honda:
9.6.A. Insolvency by any definition of Dealer, or
9.6.B. The existence of facts or circumstances which would
allow the voluntary commencement by Dealer, or the
involuntary commencement against Dealer, of any
proceedings under any bankruptcy act or law or under
any state insolvency law; or
9.6.C. The appointment of a receiver or other officer having
similar powers for Dealer or the Dealership Premises;
or
9.6.D. Any levy against Dealer under attachment, garnishment
or execution similar process which is not within ten
(10) days vacated or removed by payment or bonding.
9.7. American Honda may select any applicable provision under which
it elects to terminate the Agreement and give notice
thereunder, notwithstanding the
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existence of any other grounds for termination or the failure
to refer to such other grounds in the notice of termination.
The failure by American Honda to specify additional ground(s)
for cancellation in its notice will not preclude American
Honda from later establishing that termination is also
supported by such additional ground(s).
9.8. The acceptance by American Honda of orders from Dealer or the
continued sale of Honda Products to Dealer or any other act or
course of dealing of American Honda after termination of the
Agreement will not be construed as or deemed to be a renewal
of the Agreement for any further term or a waiver of such
termination. Any dealings after termination will be on a
day-to-day basis.
9.9. In all cases, Dealer agrees to conduct itself and Dealership
Operations until the effective date of termination and after
termination or expiration of the Agreement, so as not to
injure the reputation or goodwill of the Honda Trademarks or
American Honda.
10. RIGHTS, OBLIGATIONS AND DEALINGS UPON TERMINATION.
10.1. Upon the mailing of a written notice of termination or after
date of the expiration of the Agreement without renewal,
American Honda will have the right to cancel all pending
orders of Dealer for Honda Products, special tools and
equipment, whether previously accepted by American Honda or
not, except as specifically otherwise provided in this Section
10. Notwithstanding the foregoing, if American Honda chooses
to fill any orders, it will not be obligated to fill any other
orders and will not be precluded from changing the terms of
any sale.
10.2. Not later than the effective date of the termination or
expiration of the Agreement, Dealer will cease to hold itself
out as being authorized to sell Honda Products and will
discontinue selling Honda Products or performing service as an
authorized dealer.
10.3. In addition to the requirements of Section 10.2, not later
than the effective date of the termination or expiration of
the Agreement, Dealer will, at its sole expense, discontinue
any and all uses of any Honda Trademarks and any words,
symbols and marks which are confusingly similar thereto; will
remove all signs bearing any Honda Trademark and will destroy
all stationery, repair orders, advertising and solicitation
materials, and all other printed matter bearing any Honda
Trademark or referring directly or indirectly to American
Honda or Honda Products in any way which might make it appear
to members of the public that Dealer is still an authorized
dealer. The foregoing will include, but not be limited to,
discontinuing the use of a Honda Trademark as part of Dealer's
business and corporate name. Dealer will also deliver to
American Honda, at American Honda's place of business, or to a
person designated by American Honda, or will destroy the same
upon request by American Honda, any and all technical or
service literature, advertising and other printed material
then in Dealer's possession which relates to Honda Products
and which was acquired or obtained by Dealer from American
Honda. Dealer will destroy any sign bearing a Honda Trademark
which has not been repurchased by American Honda.
10.4. In the event the Agreement is terminated pursuant to the
provisions of paragraph 9.3 hereof, upon request of American
Honda for copying Dealer's records of predelivery service,
warranty service, recall or update service or other service of
Honda Products. In the event the Agreement is terminated
pursuant to the provisions of paragraphs 9.1 or 9.2 hereof,
upon the request of
12
American Honda, Dealer will deliver to American Honda copies
of such Dealer records.
10.5. Dealer may, at any time within five (5) days after the
effective date of termination or expiration of the Agreement,
notify American Honda in writing of Dealer's desire to have
American Honda repurchase from Dealer Honda Products in
Dealer's inventory which were purchased from American Honda
and which, when American Honda accepts sole possession:
10.5.A. In the case of Honda Automobiles, are new and of the
then current model year, as designated by American
Honda, unused, undamaged and in first-class resalable
condition, regardless of whether or not American
Honda has exercised its right of inspection; and
10.5.B. In the case of Honda Parts are new, listed as current
in the Parts Price Book, unused, undamaged, in their
original package and in first-class resalable
condition.
10.6. Upon termination or expiration without renewal, upon request
of Dealer given no later than five (5) days after the
effective date of termination or expiration, American Honda
will repurchase all signs which use a Honda Trademark as were
authorized in advance by American Honda and all service
information and materials, special tools and equipment
designed specifically for service of Honda Automobiles and
which were purchased from American Honda and are usable on
current Honda Products, provided that such signs, information,
materials, tools and equipment are less than five (5) years
old and are in good working order.
10.7. American Honda will repurchase from Dealer Honda Products and
signs, information, materials, tools and equipment as
aforesaid on the condition that Dealer furnishes an inventory
to American Honda within thirty (30) day after the termination
or expiration without renewal of the Agreement and complies
strictly with all procedures and conditions of repurchase
issued by American Honda at the time of repurchase. American
Honda will have the right and option to assign to another
person or entity the right to purchase such Honda Products.
10.7.A. The price for Honda Products, other than tools,
equipment, information, materials and signs, will be
the price at which they were originally purchased by
Dealer from American Honda or the price last
established by American Honda for the sale of
identical Honda Products, whichever may be lower, and
in either case will be less all prior refunds and
allowances made by American Honda with respect
thereto, if any. The price for tools, equipment,
information, materials and signs will be the price
paid by Dealer reduced by straight-line depreciation
on the basis of a useful life of five (5) years. In
all cases, the price will be reduced by any
applicable restocking charge which may be in effect
at the time American Honda's receipt of goods to be
repurchased.
10.7.B. Dealer agrees to store Honda Products and other items
which American Honda desires or is obligated to
repurchase until receipt from American Honda of
rejection of repurchase or instructions for shipping
and return to American Honda. Dealer agrees to
strictly follow and abide by all instructions for
return as may be issued from time to time by American
Honda. All Honda Products will be properly and
suitably packaged and containered for safe
transportation to American Honda. All damage,
regardless of nature or cause, will be the
responsibility of Dealer until the Honda Products are
inspected and accepted by
13
American Honda for repurchase. Storage of such Honda
Products and other items will be at Dealer's expense
for a period of ninety (90) days after Dealer
requests repurchase and provides an inventory as
provided by paragraphs 10.6 and 10.7 hereof.
Thereafter, Dealer will be entitled to charge
American Honda a reasonable storage charge.
10.7.C. American Honda, or its designee, at such reasonable
time and for such a reasonable period of time as
American Honda may determine, will have the right to
enter the premises where items for repurchase are
being held for the purpose of checking the inventory
submitted by Dealer or examining, inspecting and
inventorying any and all Honda Products. If American
Honda agrees to repurchase and Dealer fails to
furnish an inventory, Dealer will reimburse American
Honda for all costs of American Honda taking an
inventory.
10.7.D. Only those Honda Products meeting the requirements of
Paragraphs 10.5 and 10.6 hereof are or will be
eligible for return to American Honda. American Honda
will not be obligated to give Dealer credit for any
Honda Products which do not meet those requirements.
10.7.E. Dealer warrants and represents that all Honda
Products tendered to American Honda for repurchase
will be free of all liens, encumbrances, security
interests or attachments at the time repurchase is
requested by Dealer. Clear title will be vested in
American Honda upon receipt of goods. Dealer will
execute and deliver any documents necessary to vest
clear title in American Honda, and Dealer will be
responsible for complying with all applicable
procedures, including but not limited to those
relating to bulk transfers.
10.7.F. Dealer will pay all freight and insurance charges
from Dealer to the place of delivery designated by
American Honda, provided that Dealer will not be
liable for any amount greater than the freight and
insurance charges from Dealer to American Honda's
closest automobile warehouse or parts center as
American Honda may designate. Claims for damage or
allegedly caused by any carrier will be the sole
responsibility of Dealer, and in no event will
American Honda be obligated to make a claim against a
carrier or be liable to Dealer for damage.
10.7.G. As a condition of repurchase and notwithstanding any
other agreement or offer to repurchase, payment for
repurchase will first be applied against any
obligations or money owed by Dealer to American
Honda. All payment due from American Honda to Dealer
pursuant to any provisions of the Agreement or in
connection with the termination of the Agreement or
in connection with the termination of the Agreement
will be made by American Honda after receipt of the
goods to be repurchased and after all debits and
credits have been ascertained and applied to Dealer's
accounts, and Dealer has delivered to American Honda
the manufacturer's certificate of origin or other
document of title for Honda Automobiles tendered to
American Honda for repurchase. In the event it be
found that a balance is due from Dealer to American
Honda, Dealer will pay such sum to American Honda
within ten (10) days of written notice of such
balance.
14
11. GENERAL PROVISIONS.
11.1. Dealer acknowledges that only the President or a designated
Vice President, Secretary or Assistant Secretary of American
Honda is authorized to execute the Agreement, agree to any
variation, modification or amendment of any of the provisions
thereof, including authorized location, or to make commitments
for or on behalf of American Honda. No other employee of
American Honda may make any promise or commitment on behalf of
American Honda or in any way bind American Honda. Dealer
agrees that it will not rely on any statements or purported
statements except from personnel as authorized hereinabove.
11.2. The Agreement contains the entire agreement between Dealer and
American Honda. Dealer acknowledges that no representations or
statements other than those expressly set forth therein were
made by American Honda or any officer, employee, agent or
representative thereof, or were relied upon by Dealer in
entering into the Agreement. The Agreement terminates and
supersedes, as of the execution thereof, all prior agreements
relating to Honda Products, if any.
11.3. Dealer hereby waives, abandons and relinquishes any and all
claims of any kind and nature whatsoever arising from or out
of or in connection with any prior agreement entered into
between Dealer and American Honda; provided, however, that
nothing herein contained shall be deemed a release or waiver
of any claim arising out of prior sales of Honda Products by
American Honda to Dealer.
11.4. The Agreement is personal to the individuals identified as
principals, owner(s), partners or shareholder(s) in Paragraph
C. Neither the Agreement, nor any part hereof or any interest
therein, may be transferred or assigned by Dealer, in whole or
in part, directly or indirectly, voluntarily or by operation
of law, without the prior written approval of American Honda.
Any attempted transfer assignment will be void and not binding
upon American Honda.
11.5. All notices, notifications or requests under or pursuant to
the provisions of the Agreement will be directed to the
address of the principal places of business of the respective
parties to the Agreement. If either party cannot effect notice
at the place of business of the other because a party has
abandoned its place of business or refuses to accept notice,
then, and only in such case, notice may be served on American
Honda through its designated agent for service of process and
upon Dealer through the Department of Motor Vehicles (or its
equivalent) in the state where the Dealership Location is
authorized by American Honda.
11.6. The waiver by either party of any breach or violation of or
default under any provision of the Agreement will not be a
waiver by such party of any other provision or of any
subsequent breach or violation thereof or default thereunder.
The failure or delay of either party to take prompt action
upon any breach or violation of the Agreement will not be
deemed a waiver of the right to take action for such breach,
default or violation at any time in the future.
11.7. Dealer agrees to keep confidential and not disclose, directly
or indirectly, any information which American Honda designates
as confidential.
11.8. The Agreement is and shall be deemed to have been entered into
in California and shall be governed by and construed in
accordance with the laws of the State of California.
15
11.9. If any provision of this Agreement should be held invalid or
unenforceable for any reason whatsover or to conflict with any
applicable law, the Agreement will be considered divisible as
to such provisions, and such provisions will be deemed
amended to comply with such law, or if it cannot be so
amended without materially altering the tenor of the
Agreement, then it will be deemed deleted from the Agreement
in such jurisdiction, and in either case, the remainder of the
Agreement will be valid and binding.
11.10. The terms of the Agreement may not be modified except in
writing signed by an authorized officer of the parties.
Without limiting the generality of the foregoing, no course of
dealing will serve to modify or alter the terms of the
Agreement.
11.11. Dealer is an independent business. The Agreement does not
constitute Dealer the agent or legal representative of
American Honda for any purpose whatsoever. Dealer is not
granted any expressed or implied right or authority to assume
or create any obligation on behalf of or in the name of
American Honda or to bind American Honda in any manner or
thing whatsover. Dealer has paid no consideration for the
Agreement. Neither the Agreement nor any right granted under
it is a property right.
11.12. The expiration or termination of the Agreement will not
extinguish any claims American Honda may have for the
collection of money or the enforcement of any obligations
which may be in the nature of continuing obligations.
16
12. DEFINITIONS.
12.1. American Honda means American Honda Motor Co., Inc. a
California corporation, and the Honda Automobile Division that
markets Honda Automobiles.
12.2. Dealer means the person, firm, corporation, partnership or
other legal entity that signs the Agreement and each of the
persons identified in Paragraph C.
12.3. Dealer Manager means the principal manager of Dealer
identified in Paragraph D upon whose personal service American
Honda relies in entering into the Agreement.
12.4. Dealer Owner means the owner(s) of Dealer identified in
Paragraph C upon whose personal service American Honda relies
in entering into the Agreement.
12.5. Dealership Location means the location approved by American
Honda for the purpose of conducting Dealership Operations.
12.6. Dealership Operations means all operations contemplated by the
Agreement. These operations include the sale and service of
Honda Products, and any other activities undertaken by Dealer
related to Honda Products, including rental and leasing
operations, used car sales and body shop operations, and
finance and insurance operations, whether conducted directly
or indirectly by Dealer.
12.7. Dealership Premises means the facilities provided by Dealer at
its Dealership Location for the conduct of Dealership
Operations as approved by American Honda.
12.8. Honda Automobiles means such new passenger cars as are from
time to time offered for sale by American Honda to Dealer for
resale as part of the Honda automobile line as defined by
American Honda.
12.9. Honda Parts means parts, accessories and optional equipment
marketed by American Honda for use with Honda Automobiles.
12.10. Honda Products means Honda Automobiles and Honda Parts.
12.11. Honda Trademarks means the various trademarks, service marks,
names and designs which American Honda uses or is authorized
to use in connection with Honda Products or services relating
thereto.
12.12. Primary Market Area means the geographical area designated for
Dealer by American Honda from time to time.
12.13. The Agreement means the Honda Automobile Dealer's Sales and
Service Agreement and these Standard Provisions which are
incorporated therein by reference.
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