EXHIBIT 10.27
HYUNDAI MOTOR AMERICA
DEALER SALES AND SERVICE AGREEMENT
STANDARD PROVISIONS
The Standard Provisions set forth below are expressly incorporated in and
made a part of the HMA Dealer Sales and Service Agreement.
10. SALE OF HYUNDAI PRODUCTS
A. DEALER'S AGREEMENT TO PURCHASE HYUNDAI PRODUCTS
1. Quantities
DEALER agrees to purchase Hyundai Products in such quantities and varieties
as may be necessary to fulfill its obligations under this Agreement. HMA will
distribute such products pursuant to such procedures as HMA may deem appropriate
from time to time. HMA's agreement to sell may only be established by written
confirmation by HMA that the product will be shipped. HMA will use its best
efforts to provide Hyundai Products to DEALER subject to available supply from
FACTORY, HMA's marketing requirements, and any change or discontinuance with
respect to any Hyundai Product.
HMA and DEALER recognize that certain Hyundai Products may be in short
supply from time to time because of factors which are beyond the control of HMA
or FACTORY. Where such a shortage is determined by HMA to exist, HMA will
endeavor to allocate the affected Hyundai Product(s) among its Dealers in a fair
and equitable manner, as it may determine in its sole discretion.
HMA agrees to provide DEALER with an explanation of the method used to
distribute such products and, upon written request, will advise DEALER of total
sales by model to all Dealers collectively in the Region and to DEALER
individually.
DEALER acknowledges that certain products manufactured by or for FACTORY
may be distributed in the United States by distributors other than HMA. Entering
into this Agreement, therefore, confers no rights or benefits upon DEALER with
respect to the sale or servicing of such products.
2. Prices and Other Terms of Sale
HMA reserves the right, without prior notice to DEALER, to establish and
revise prices and other terms of sale for all Hyundai Products sold to DEALER
under this Agreement. HMA, however, will provide notice to DEALER of any
revision in prices and other terms of sale before shipping any Hyundai Product
subject to such revision.
3. Payment For Hyundai Products
DEALER agrees to pay for Hyundai Products pursuant to such procedures as
HMA may designate from time to time. Such procedures may include electronic
funds transfer and other automatic collection systems. Automatic collections
will be against DEALER's then applicable wholesale credit line. HMA will advise
DEALER in writing of the implementation
of such systems. DEALER will make arrangements with its designated financial
institution to accommodate the use of such systems.
4. Delivery of Hyundai Products
a. Mode and Place of Delivery
HMA will select the distribution points, carriers and the mode of
transportation and will be responsible for all charges in effecting delivery of
Hyundai Products to DEALER. DEALER agrees to reimburse HMA for all delivery,
freight and other related charges as they appear on HMA's invoice to DEALER.
b. Title and Risk of Loss
Subject to the terms of sale which HMA may establish from time to time,
title and risk of loss to Hyundai Products will pass to DEALER upon tender of
the Hyundai Products to DEALER or its authorized agent HMA will retain, and
DEALER hereby grants to HMA, a security interest in, and the right to retain or
repossess, all Hyundai Products sold to DEALER by HMA until HMA is paid in full
therefor.
c. Diversion of Deliveries
If DEALER should fail or refuse or for any reason be unable to take
delivery of any Hyundai Products, or if DEALER should request diversion of a
shipment from HMA, DEALER will be responsible, and will pay HMA promptly upon
demand, for all costs and expenses incurred by HMA as a result of such
diversion. HMA may direct that the returned Hyundai Products be delivered to
another destination. The amount charged DEALER, however, will not exceed the
charge of returning the products to the original point of shipment plus any
demurrage, storage or related charges.
d. Failure or Delay of Delivery
DEALER will not be liable for any delay or failure to accept delivery and
HMA will not be liable for delay or failure to deliver Hyundai Products, where
such delay or failure to deliver is due, in whole or in part, to any event of
Force Majeure, or any delay or failure of FACTORY or other supplier of HMA or
any carrier to deliver Hyundai Products.
e. Damage Claims
As between HMA and DEALER, HMA assumes responsibility for damage to Hyundai
Products occurring prior to delivery to DEALER or its authorized agent. DEALER
agrees, however, to submit such claims in the manner required in the Hyundai
Warranty Policies and Procedures Manual.
f. Option to Repurchase Damaged Motor Vehicles
DEALER agrees to notify HMA promptly if any new motor vehicle(s) in
DEALER's inventory, other than those used as demonstrators, should for any
reason be substantially damaged. To preserve the quality and value of new
Hyundai Motor Vehicles offered to the public, HMA will have the option to
repurchase any or all such vehicles at a price equal to the net purchase price
paid by DEALER to HMA. HMA will make appropriate payment for repurchased
vehicles directly to any lienholder. DEALER agrees to assign its rights under
any insurance contract relating to the repurchased vehicle(s) to HMA.
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5. Warranties on Hyundai Products
DEALER understands and agrees that the only warranties that will be
applicable to each new Hyundai Product sold to DEALER by HMA will be the written
limited warranty or warranties expressly furnished by FACTORY or HMA or as
stated in the Hyundai Warranty Policies and Procedures Manual, as it may be
revised from time to time. With respect to DEALER, such limited warranties are
in lieu of all other warranties, express or implied, including any implied
warranty of merchantability or fitness for a particular purpose or any liability
for commercial losses based on negligence or strict liability. Except for its
limited liability under such written warranty or warranties, neither FACTORY nor
HMA assumes any other warranty obligation or liability. DEALER is not authorized
to assume any additional warranty obligations or liabilities on behalf of HMA or
FACTORY. Any such additional obligations or liabilities assumed by DEALER will
be solely the responsibility of DEALER.
6. Effect of Change of Design, Specifications or Options
HMA reserves the right at any time in its sole discretion and without
notice to change the design or specifications of any Hyundai Product or the
availability of options in any Hyundai Product. HMA is under no obligation to
make any similar change upon any product previously purchased by or shipped to
DEALER. No change will be considered a model year change unless so specified by
HMA.
7. Effect of Discontinuance of Manufacture
The manufacture and production of all or part of any Hyundai Product,
whether motor vehicle, parts, options, or accessories, including any model,
series, or body style of any Hyundai Motor Vehicle, may be discontinued at any
time without any obligation or liability to DEALER on the part of FACTORY or HMA
by reason thereof.
B. DEALER'S AGREEMENT TO PROMOTE AND SELL HYUNDAI PRODUCTS
1. Best Efforts
DEALER is an integral part of a network of authorized Hyundai Dealers
dedicated to the vigorous and effective promotion and sale of Hyundai Products.
Accordingly, DEALER agrees to use its best efforts to effectively promote and
sell Hyundai Products to Customers in DEALER's primary market area.
2. Adequate Vehicle Inventory
As a duly authorized Hyundai Dealer, DEALER recognizes that its Customers
will expect DEALER to stock a reasonable quantity and variety of current model
Hyundai Motor Vehicles. Accordingly, DEALER agrees to stock and sell, subject to
available supply, all models and types of Hyundai Motor Vehicles in the Hyundai
Product Addendum and that it will, at all times, maintain at least the minimum
inventory of Hyundai Motor Vehicles requested by HMA. DEALER will maintain all
Hyundai Motor Vehicles for display and demonstration purposes in showroom ready
condition
3. Hyundai Dealer Advertising Association
HMA and DEALER recognize the benefits which may be derived from a
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comprehensive joint advertising effort by Hyundai Dealers. Accordingly, HMA
agrees to assist Hyundai Dealers, including DEALER, in the establishment of a
cooperative advertising association. DEALER agrees to cooperate with HMA in the
formation of such association and, once it is established, to participate
actively and to contribute to it in accordance with the by-laws of the
association.
The Hyundai Dealer Advertising Association will finance its
advertising programs through the assessment of a fixed amount for each new
Hyundai Motor Vehicle purchased by Hyundai Dealers. As a service to the Dealer
Association, HMA will collect the agreed amount, provided that the Association
maintains control over the amount of the assessment and the manner in which the
funds are expended and so long as such funds are expended for the promotion of
Hyundai Products which may also include Parts and Service advertising campaigns
from time to time.
4. Primary Market Area
While DEALER is required to vigorously develop its primary market area,
nothing contained in this Agreement will limit or be construed to limit the
geographical area in which DEALER may promote, or the persons to whom DEALER may
sell, Hyundai Products.
The primary market area is a geographic area which HMA will designate from
time to time for the sole purpose of evaluating DEALER'S performance of its
sales and service obligations hereunder. DEALER recognizes that the designation
of a primary market area is not intended to be permanent and that HMA may, in
its sole discretion, change DEALER's primary market area from time to time.
5. Appointment of New Dealers
DEALER agrees that HMA will have the right, from time to time, to appoint
or to relocate new or additional authorized Hyundai Dealers in or near the
primary market area served by DEALER based upon such reasonable criteria as HMA
may establish in its sole discretion.
C. DEALER'S SALES OPERATIONS
1. Sales Organization
To enable DEALER to fulfill its responsibilities satisfactorily under this
Agreement, DEALER agrees to organize and maintain an adequate and trained sales
organization.
2. Fair Dealing
HMA has selected DEALER because of the reputation of its Owner(s) and the
General Manager, identified herein, for integrity and their commitment to fair
dealing. DEALER will at all times maintain a high standard of ethics in
advertising, promoting and selling Hyundai Products and will not engage in any
misrepresentation or unfair or deceptive trade practices. DEALER will not
advertise Hyundai Products in a manner likely to mislead or deceive the public
or to impair the good will of HMA or DEALER or the reputation of Hyundai
Products. Furthermore, DEALER will deal with its Customers in a courteous, fair
and forthright manner and will not engage in any deceptive or fraudulent
practices, including without limitation, bait and switch and improper retention
of deposits.
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3. Disclosure as to Prices of Hyundai Products
DEALER agrees to explain to purchasers of Hyundai Products the items which
make up the purchase price and to give such purchasers itemized invoices and any
other information required by law. DEALER further agrees that it will not make
any misleading statements as to the items which make up the total selling price
of any Hyundai Motor Vehicle, or as to the prices related to such items
including destination or other charges paid to HMA. DEALER also agrees not to
charge Customers for any services for which DEALER is reimbursed by HMA,
including predelivery inspection and adjustment services, without disclosing the
fact of such reimbursement to the Customer.
4. Disclosure as to Parts or Accessories
DEALER recognizes that its Customers have a right to expect that any
product that they purchase from DEALER meets the high quality standards
associated with HMA, FACTORY, the Hyundai Marks and Hyundai Products in general.
Accordingly, DEALER agrees that, if it sells or installs any part or accessory
that is not a Hyundai Genuine Part or Accessory, it will disclose such fact to
the Customer and will advise the Customer that the item is not included in
warranties furnished by HMA or FACTORY. In all cases, the purchaser's contract
of purchase and sale will include written notice of such disclosure. In
addition, DEALER will clearly explain to the Customer the extent of any warranty
covering the equipment, part or accessory involved and will deliver a copy of
such warranty to the Customer at the time of sale.
DEALER agrees that it will not represent or offer to sell as new Hyundai
Genuine Parts or Accessories, any parts or accessories used by it in the repair
or servicing of Hyundai Motor Vehicles which are not in fact Hyundai Genuine
Parts or Accessories.
D. ASSISTANCE PROVIDED BY HMA
1. Sales Training Assistance
To assist DEALER in the fulfillment of its sales responsibilities under
this Agreement, HMA will offer general and specialized sales management and
sales training programs for the benefit and use of DEALER's sales organization.
DEALER recognizes the importance of having a well trained sales staff to meet
its obligations hereunder and agrees to require its sales personnel to
participate in such programs as HMA may offer from time to time for their
benefit.
2. Sales Promotion Assistance
In order that authorized Hyundai Dealers may be assured of the benefits of
comprehensive advertising and promotion of Hyundai Products, HMA agrees to
establish and maintain general advertising and promotion programs and will from
time to time make sales promotion and campaign materials available to DEALER to
promote the sale of such Hyundai Products at a reasonable charge where
applicable. DEALER agrees to cooperate in HMA's advertising programs and to
fully utilize the materials offered DEALER by HMA.
3. Field Sales Personnel Assistance
To assist DEALER in handling its sales responsibilities under this
Agreement, HMA agrees to provide trained field sales personnel to advise and
counsel DEALER on sales-related
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subjects, including but not limited to merchandising, training and sales
management.
E. EVALUATION OF DEALER'S SALES PERFORMANCE
HMA will evaluate DEALER's sales performance at least annually and agrees
to review such evaluations with DEALER so that DEALER may take prompt action if
necessary to improve its sales performance to such satisfactory levels as HMA
may reasonably require. HMA will provide DEALER with a copy of such evaluation
upon request. HMA may, at its discretion, evaluate DEALER's sales performance
based on one or more of the following criteria:
1. Achievement of fair and reasonable sales objectives as HMA may establish
at its discretion;
2. A comparison of sales and/or registrations of Hyundai Motor Vehicles to
sales and/or registrations of other line makes: (i) in DEALER's primary market
area; (ii) in HMA's Region or any area thereof as HMA may reasonably establish;
or (iii) nationally;
3. The trend of DEALER's sales performance over a reasonable period of
time,
4. The manner in which DEALER has conducted its sales operations, including
advertising, sales promotions and Customer relations;
5. The availability of new motor vehicles to DEALER from HMA; or
6. Significant local conditions that may have affected DEALER's
performance.
11. SERVICE AND PARTS
A. DEALER RESPONSIBILITIES
DEALER recognizes that its Customers are entitled to prompt, courteous and
professional service and that Customer satisfaction is vital to the mutual
success of DEALER and HMA. DEALER agrees, therefore: to take all reasonable
steps to provide service and parts for all Hyundai Motor Vehicles, regardless of
where purchased, and whether or not under warranty; to ensure that necessary
repairs on Customer vehicles are accurately diagnosed and performed in
accordance with the highest professional standards; to advise the Customer and
obtain his or her consent prior to the initiation of any repairs; and, to treat
the Customer courteously and fairly at all times.
1. New Motor Vehicle Predelivery Service
DEALER will perform predelivery service on each new Hyundai Motor Vehicle
prior to delivery to the retail Customer according to HMA'S instructions. Any
required campaign or policy service will also be completed at the time of
predelivery service.
2. Warranty and Policy Service
DEALER will perform warranty service on each Hyundai Motor Vehicle at the
time of
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predelivery service and when requested by the owner according to the
requirements of the Hyundai Warranty Policies and Procedures Manual. DEALER will
perform policy service as HMA may require from time to time. DEALER will provide
each owner for whom warranty or policy service is performed with a copy of the
repair order stating all services performed.
3. Campaign Inspections
HMA may, from time to time, require DEALER to inspect and correct
conditions in Hyundai Motor Vehicles. DEALER agrees to perform such campaign
inspections regardless of where or from whom the subject Hyundai Motor Vehicles
were purchased. Because of the importance of campaign inspections to the overall
reputation of Hyundai Motor Vehicles for their high quality standards, HMA may
ship parts and other materials to DEALER without DEALER's authorization. DEALER
will accept such shipments and upon completion of the campaign, HMA will credit
DEALER for any extra parts and materials so shipped provided DEALER returns or
otherwise disposes of such parts and materials according to HMA's instructions.
4. Reimbursement Rates
HMA agrees to compensate DEALER for all warranty, policy, and campaign
inspection work, including labor and diagnosis, in accordance with procedures
and at rates to be announced from time to time by HMA and in accordance with
applicable law. DEALER agrees that such rates will constitute full and complete
payment to DEALER for such work. Both parties agree that warranty and policy
service is provided for the benefit of Customers and DEALER agrees that the
Customer will not be obligated to pay any charges for warranty or policy work,
except as required by law.
HMA will reimburse DEALER for predelivery service at an authorized labor
and/or diagnosis rate and according to the predelivery service time allowances
as established by HMA or as required by law.
If DEALER wishes to adjust the established reimbursement rate for labor and
diagnosis in connection with warranty, policy or predelivery service performed
on Customer's vehicles, DEALER agrees to make the appropriate written
application to HMA and to comply with such applicable procedures or policies as
may be set forth in the Hyundai Warranty Policies and Procedures Manual.
5. Independent Warranty or Service Contract
DEALER recognizes that HMA's limited warranties are provided to Customer at
no additional expense. HMA recognizes that DEALER is free to sell warranty or
service contract protection for Hyundai Motor Vehicles which is different from
and independent of HMA's warranties. In order to avoid any misconception among
its Customers, however, DEALER agrees that if it elects to sell such independent
warranties or service contracts to Customers:
a. DEALER will conspicuously disclose in writing upon the Customer's
purchase order the extent to which the independent warranty or service contract
protection purchased by the Customer overlaps that provided by HMA or FACTORY;
and
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b. Whenever a Customer purchases such independent warranty or service
contract protection and seeks service on a Hyundai Product during the period of
time that such Product is also covered by the limited warranty provided by HMA
or FACTORY, DEALER will not apply for, and agrees that it will not be entitled
to, reimbursement under such limited warranty unless DEALER has advised the
Customer in writing, on all copies of the repair order, that the service was
provided pursuant to HMA's limited warranty and not the independent warranty or
service contract protection that the Customer purchased.
6. Installation and Use of Non-Genuine Parts or Accessories
DEALER understands that it has the right to sell, install or use products
which are not Hyundai Genuine Parts or Accessories.
DEALER agrees, however, that its Customers may reasonably expect that any
part or accessory which DEALER sells, installs or uses in the repair or
servicing of Hyundai Motor Vehicles meets the high quality standards of Hyundai
Genuine Parts or Accessories. Therefore, in cases where DEALER does not sell,
install or use a Hyundai Genuine Part or Accessory, DEALER will only utilize
such other parts or accessories as:
Will not adversely affect the mechanical operation of the Hyundai Motor
Vehicle being serviced or repaired; or
Are equivalent in quality and design to Hyundai Genuine Parts or
Accessories.
In the event any disagreement arises between HMA and DEALER regarding the
use by DEALER of parts other than Hyundai Genuine Parts or Accessories or parts
expressly approved by HMA, DEALER agrees that it will have the burden of proving
either:
That the parts replaced will not adversely affect the mechanical operation
of the Hyundai Motor Vehicle being serviced or repaired; or
That parts used by it are equivalent in quality and design to Hyundai
Genuine Parts or Accessories or parts expressly approved by HMA.
If DEALER uses parts or accessories which are not Hyundai Genuine Parts or
Accessories or are not approved in writing by HMA for use in Hyundai Motor
Vehicles, DEALER does so at its own risk and neither HMA nor FACTORY will be
responsible to DEALER or to any third party for any products liability, warranty
or other claim which may arise as a consequence of the installation and/or use
of such parts.
7. Safety and Emission Control Laws
DEALER agrees to comply and operate consistently with all applicable
provisions of federal, state and local motor vehicle safety and emission control
laws, rules and regulations.
In addition, HMA and DEALER will each provide the other with such
information and assistance as may reasonably be requested by the other in
connection with the performance of obligations imposed on either party by any
applicable federal, state and local motor vehicle
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safety and emission control requirements.
In the event that the laws of the state in which DEALER is located require
motor vehicle dealers or distributors to install in new or used motor vehicles,
prior to the retail sale thereof, any safety devices or other equipment not
installed or supplied as standard equipment by FACTORY or HMA, then DEALER,
prior to its sale of any Hyundai Motor Vehicles on which such installations are
so required, will properly install such devices or equipment on such Hyundai
Motor Vehicles. DEALER will comply with state and local laws pertaining to
installation of such equipment, including without limitation, the reporting
thereof.
B. SERVICE AND PARTS OPERATIONS
1. Service and Parts Personnel
DEALER agrees to establish and maintain a complete service and parts
organization, including a service manager, a parts manager and a sufficient
number of Customer relations, service and parts personnel who meet such
educational, management, technical training and competency standards as HMA may
establish or approve.
2. Handling of Service Complaints
DEALER understands that the development and maintenance of Customer
confidence and satisfaction in Hyundai Products requires DEALER's full support.
DEALER, therefore, agrees to investigate and handle all complaints from
Customers according to procedures prescribed by HMA and in a manner calculated
to secure and maintain the Customers' good will towards DEALER, HMA and Hyundai
Products. Moreover, DEALER agrees to cooperate with HMA and to provide such
information as HMA may in its judgment require to comply with any federal or
state consumer protection law, rule or regulation, including without limitation,
warranty and repair or replace laws or to avoid any liability thereunder.
Furthermore, DEALER agrees to participate in and cooperate with such Customer
complaint resolution procedures as HMA may designate from time to time.
3. Service Equipment and Special Tools
DEALER agrees to procure such service equipment and special tools as HMA
may require from time to time, and to maintain the same in good repair and in
proper calibration to enable DEALER to fulfill its service responsibilities
under this Agreement.
4. Parts Inventory
DEALER will stock a sufficient quantity and variety of parts and
accessories to meet Customer demand and to perform warranty repairs and special
policy work. DEALER recognizes, however, that its Customers may reasonably
expect that DEALER will have Hyundai Genuine Parts or Accessories immediately
available for purchase or installation. DEALER, therefore, agrees to carry in
stock at all times during the term of this Agreement a complete inventory of
Hyundai Genuine Parts or Accessories, as listed in HMA's current inventory
guide, to enable DEALER to meet its Customers' needs and to fulfill its service
responsibilities under this Agreement. HMA reserves the right to audit DEALER's
inventory from time to time and may require DEALER to supplement its inventory
to meet its obligations hereunder.
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DEALER will install and maintain a parts inventory control system approved
by HMA to track availability and sales of parts.
C. ASSISTANCE PROVIDED BY HMA
1. Service Training Assistance
DEALER recognizes the importance of providing consistent, dependable and
high quality service to its Customers. DEALER agrees that frequent training and
refresher courses are a necessary prerequisite to providing such service.
To assist DEALER in fulfilling its service and parts responsibilities
hereunder, HMA from time to time will offer general and specialized service and
technical training programs and materials. DEALER will require its service
and/or parts personnel to participate in such programs.
2. Service Manuals and Materials
HMA agrees to provide DEALER with copies of such DEALER service manuals and
bulletins, publications and technical data as HMA deems necessary for the
effective operation of DEALER's service and parts organization. DEALER will have
responsibility for keeping such manuals, publications and data current and
available for consultation by its parts and service employees.
3. Field Service Personnel Assistance
To assist DEALER in handling its parts and service responsibilities under
this Agreement, HMA agrees to make available field service personnel who will,
from time to time, advise and counsel DEALER on parts and service related
subjects, including product quality, technical adjustment, repair and
replacement of product components, parts inventory, parts sales, Customer
relations, warranty administration, and service and parts merchandising,
training and management.
D. EVALUATION OF DEALER'S SERVICE AND PARTS PERFORMANCE
DEALER's service and parts performance is extremely important to the
effective representation of Hyundai Products. Therefore, under this Agreement,
HMA will periodically evaluate DEALER'S performance of its service and parts
responsibilities, including without limitation: warranty service; Customer
relations; service and parts merchandising, management and operations; new
vehicle predelivery service; parts inventory; tools and equipment; competency of
service and parts personnel; participation of DEALER's personnel in various
training programs; and the adequacy of service and parts facilities. HMA agrees
to review such evaluations with DEALER so that DEALER may take prompt action if
necessary to improve its service and parts performance to satisfactory levels as
HMA may reasonably require. HMA will provide DEALER with a copy of the
evaluation upon request.
12. DEALER LOCATION
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A. RESPONSIBILITIES OF DEALER
HMA has entered into this Agreement in reliance upon DEALER's
representation that it will establish and maintain dealership facilities and
operations only at the location(s) identified in paragraph 6. DEALER agrees,
therefore, that it will not, under any circumstances, conduct Dealer operations
at any other location, whether as a satellite operation, subdealership, through
an associate Dealer or otherwise, without the prior written consent of HMA.
Moreover, it is the mutual desire of DEALER and HMA that DEALER's
facilities reflect a distinctive first-class appearance in common with all other
duly authorized Hyundai Dealers. Accordingly, DEALER agrees to procure from
approved sources and install all items necessary to insure that DEALER'S retail
environment complies in all respects with such distinctive first-class
appearance. In addition, DEALER agrees that all of its facilities will be
satisfactory as to space, appearance, amenities, layout, equipment, and signage
and will at all times be in accordance with HMA's minimum facilities standards,
as amended from time to time.
B. OPERATING HOURS
DEALER agrees that the transportation, service and maintenance needs of its
Customers can be met properly only if DEALER keeps its dealership premises open
for business during hours which are reasonable and convenient for such
Customers. Accordingly, DEALER will maintain its respective dealership
operations open for business during days and hours which are customary and
lawful for such operations in the community or locality in which DEALER is
located and in accordance with industry standards.
C. SIGNS
Subject to applicable law, DEALER agrees to purchase from sources
designated by HMA and to erect and maintain at the dealership location(s),
entirely at DEALER's expense, standard product and service signs of types
authorized by HMA, as well as such other authorized signs as are necessary to
identify the dealership operations effectively and as recommended by HMA. DEALER
shall in no way alter or modify such authorized signs without obtaining prior
written approval from HMA.
D. DATA PROCESSING SYSTEMS
To facilitate the accurate and prompt reporting of relevant DEALER
operational and financial data including, without limitation, sales reports,
warranty claims and parts purchasing and to ensure rapid communication with
authorized Hyundai Dealers, HMA requires DEALER, and DEALER agrees, to acquire,
install, maintain and upgrade at DEALER's sole expense, electronic data
processing systems, compatible with HMA's data systems, from a source designated
by HMA. The computer terminals for such system will be installed and maintained
at the DEALER location(s) identified herein Furthermore, DEALER agrees to
utilize said system in accordance with HMA's instructions.
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E. FACILITY PLANNING ASSISTANCE
To assist DEALER in planning, building and maintaining the dealership
facilities, HMA will make available to DEALER, upon request, sample copies of
building layout plans, facility planning recommendations, and an applicable
identification program covering the placement, installation and maintenance of
authorized signs. In addition, representatives of HMA will be available to
DEALER from time to time to counsel and advise DEALER regarding the proper
organization and maintenance of the dealership's exterior and interior
facilities and any expansion or alteration thereof.
F. EVALUATION OF DEALERSHIP FACILITIES
HMA will periodically evaluate the adequacy of DEALER's facilities pursuant
to its responsibilities under this Agreement. In making such evaluations, HMA
will consider: the actual building and land space provided by DEALER for the
performance of its responsibilities under this Agreement; compliance with HMA's
then current requirements for dealership operations, the appearance, condition,
layout and signage of the dealership facilities; and such other factors, if any.
which in HMA's judgment may directly relate to DEALER's performance of its
responsibilities under this Agreement. HMA will discuss such evaluations with
DEALER, so that DEALER may take prompt action, if necessary, to comply with
HMA's minimum facility standards. HMA will provide DEALER with a copy of the
evaluation upon request.
13. CAPITAL STANDARDS
A. NET WORKING CAPITAL
The net working capital required to conduct the business of DEALER properly
depends upon many factors, including the nature, size and volume of DEALER's
vehicle sales, service and parts operations. Therefore, DEALER agrees to
establish and maintain actual net working capital in an amount not less than the
minimum net working capital specified in a separate Minimum Net Working Capital
Agreement made between DEALER and HMA and executed by DEALER and HMA
concurrently with this Agreement. If HMA determines, in its sole discretion,
that changed circumstances require it to adjust the net working capital
requirement hereunder, DEALER agrees to revise its minimum net working capital
to be used in the dealership's operation accordingly and within a reasonable
period of time.
B. WHOLESALE CREDIT
DEALER recognizes that in order to operate its dealership successfully and
to fulfill its responsibilities hereunder, it must maintain flooring and lines
of credit adequate to meet its ongoing obligations. Accordingly, DEALER agrees
to obtain, maintain and increase as HMA may require, adequate flooring and lines
of credit from any reputable financial institution or other credit source.
Subject to the foregoing obligations, DEALER is free to do its financing
business, wholesale or retail or both, with whomever it chooses and to the
extent it desires.
14. ACCOUNTS, RECORDS AND REPORTS
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A. UNIFORM ACCOUNTING SYSTEM
HMA uses the operating information provided by its Dealers to develop
composite operating statistics which are useful to Dealers and to HMA in
business management. In order for such information to be useful, however,
Hyundai Dealers must submit data which is accurate and based on uniform
accounting procedures. Accordingly, DEALER agrees to maintain a uniform
accounting system designated by HMA, and in accordance with the Hyundai
Accounting Manual, as amended from time to time. In addition, DEALER will
furnish to HMA, by the tenth (10th) of each month, in a format prescribed by
HMA, a complete and accurate financial and operating statement covering the
preceding month and calendar year-to-date operations. DEALER will also promptly
furnish to HMA a copy of any adjusted financial or operating statement prepared
by or for DEALER.
B. SALES REPORTING
HMA requires timely sales information to evaluate correctly current market
trends and to maintain a fair and equitable vehicle distribution system. In
addition, such data is necessary for HMA to evaluate DEALER's sales performance
and to provide meaningful advice and recommendations to DEALER.
Accordingly, DEALER agrees to:
1. Accurately report to HMA, with such relevant information as HMA may
reasonably require, the delivery of each new motor vehicle to a purchaser by the
end of the day in which the vehicle is delivered to the purchaser thereof; and
2. Furnish HMA with such other reports as HMA may reasonably require from
time to time.
C. SALES AND SERVICE RECORDS
DEALER agrees to keep complete and up-to-date records regarding the sale
and servicing of Hyundai Products for a minimum of five (5) years, exclusive of
any retention period required by any governmental entity. In order that the
policies and procedures relating to the application for reimbursement for
warranty, policy work and predelivery service may be applied uniformly to all
Dealers, DEALER agrees to prepare, keep current and retain records in support of
requests for reimbursement for warranty and policy work performed by DEALER in
accordance with the policies and procedures prescribed in the Hyundai Warranty
Policies and Procedures Manual and standards established by HMA consistent with
said manual.
D. AUDIT OF DEALER RECORDS
DEALER agrees that HMA will have the right, at all reasonable times and
during DEALER'S regular business hours, to examine, audit and reproduce all
records, accounts and all other data relating to the sale and service of Hyundai
Products by DEALER. HMA will provide a
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copy of the report of the examination or audit to DEALER upon request.
E. CONFIDENTIALITY
HMA agrees that it will not provide any data or documents submitted to it
by DEALER to any third party, except FACTORY, unless authorized by DEALER,
required by law, or otherwise pertinent to legal proceedings. DEALER agrees,
however, that HMA may use such data or documents to generate composite data
which HMA believes will be useful to assist its Dealers in improving dealership
operations. Such composite data will not specifically identify any Dealer.
15. TRADEMARKS, SERVICE MARKS AND TRADE NAMES
A. USE BY DEALER
HMA is the exclusive owner of, or is authorized to use and to permit DEALER
and others to use, the Hyundai Marks. HMA grants to DEALER the nonexclusive
privilege of displaying or otherwise using the Hyundai Marks in connection with
the promotion and sale of Hyundai Products and the conduct of DEALER operations
at the location(s) approved herein.
DEALER agrees, however, that it will promptly discontinue the display and
use of any such Hyundai Marks, and will change the manner in which any Hyundai
Marks are displayed and used, when for any reason, it is requested to do so by
HMA. DEALER further agrees that it will do nothing to impair the value of or
contest the right of HMA to the exclusive use of any trademark, design xxxx,
service xxxx or trade name at any time acquired, claimed or adopted by HMA. In
addition, no company owned by or affiliated with DEALER or any of its Owners may
use any Hyundai Xxxx or product name without the prior written consent of HMA.
B. DISCONTINUANCE OF USE
Upon termination, non-renewal or expiration of this Agreement, DEALER
agrees that it will immediately discontinue all use of the word Hyundai and the
Hyundai Marks, or any semblance thereof and cease representing itself as an
authorized Hyundai Dealer. Thereafter, DEALER will not use, either directly or
indirectly, any Hyundai Marks or any other similar marks in a manner likely to
cause confusion or mistake or to deceive the public. In addition, DEALER will
promptly remove all product signs bearing the word Hyundai or the Hyundai Marks
from its facilities at DEALER's sole cost and expense.
In the event DEALER fails to comply with its obligations herein within
thirty (30) days of termination, non-renewal or expiration, HMA will have the
right to enter upon DEALER'S premises and remove, without liability, all signs
bearing the word Hyundai or any Hyundai Marks. DEALER will reimburse HMA for any
costs and expenses incurred in connection with the enforcement of this
paragraph, including reasonable attorney's fees.
16. TERMINATION OF AGREEMENT
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A. TERMINATION BY DEALER
DEALER may voluntarily terminate this Agreement at any time by written
notice to HMA. Termination will be effective thirty (30) days after HMA receives
such notice unless otherwise mutually agreed in writing.
B. TERMINATION FOR CAUSE
1. Immediate Termination
HMA will have the right to terminate this Agreement immediately in any of
the following situations:
a. Any misrepresentation to HMA by DEALER or any Owner or General
Manager in applying for this Agreement or for approval as Owner or General
Manager of DEALER;
b. If DEALER, or any Owner, officer, or General Manager of DEALER, is
convicted of any felony or for any violation of law which in HMA's sole
opinion tends to adversely affect the operation, management, reputation,
business or interests of DEALER or HMA, or to impair the good will
associated with the Hyundai Marks. Such violations of law may include,
without limitation, any finding or adjudication by any court of competent
jurisdiction or government agency that DEALER has engaged in any
misrepresentation or unfair or deceptive trade practice;
c. Submission by DEALER to HMA of: (i) false claims for reimbursement,
sales incentives, refunds, rebates or credits; (ii) false financial
information, sales reports or other data required by HMA; or (iii) false
statements relating to predelivery preparation, testing, warranties,
servicing, repairing, or maintenance required by HMA;
d. If the dealership is closed for a period of seven (7) consecutive
days, except when due to an event of Force Majeure;
e. Failure of DEALER to obtain or maintain any license, or the
suspension or revocation of any license, necessary for the conduct by
DEALER of its business pursuant to this Agreement, or
f. If DEALER becomes insolvent, or files any voluntary petition under
any bankruptcy law, or executes an assignment for the benefit of creditors,
or any petition is filed by any third party to have DEALER declared
bankrupt or to appoint a receiver or trustee, or another officer having
similar power, and such filing or appointment is not vacated within thirty
(30) days or there is any levy under attachment or execution or similar
process which is not vacated or removed by payment or bonding within ten
(10) days.
2. Termination Upon Sixty Days Notice
If HMA learns that any of the following events have occurred and
determines, in its sole discretion, that the matter may require termination of
this Agreement, HMA will so advise
15
DEALER in writing. If DEALER does not correct the condition or explain the
matter to HMA's satisfaction within thirty (30) days of such notice, then HMA
will have the right to terminate this Agreement upon sixty (60) days notice.
Events which may result in such termination include:
a. Any sale or transfer of ownership interest by DEALER without the
prior written consent of HMA;
b. Any removal, withdrawal or change, whether voluntary or
involuntary, of a General Manager having an ownership interest in DEALER
without the prior written consent of HMA;
c. Any attempted or actual sale, transfer or assignment by DEALER of
this Agreement or any of the rights granted DEALER hereunder, or any
attempted or actual transfer, assignment or delegation by DEALER of any of
the responsibilities assumed by it under this Agreement, without the prior
written consent of HMA;
d. The conduct, directly or indirectly, of any dealership operation at
any location other than those specifically approved herein, without the
prior written consent of HMA;
e. Any sale or transfer, by operation of law or otherwise, or any
relinquishment or discontinuance of use by DEALER, of any of the locations
approved herein or of other principal assets required in the conduct of
dealership operations, without the prior written consent of HMA;
f. Any dispute, disagreement or controversy between or among partners,
managers, officers or stockholders of DEALER which, in the sole opinion of
HMA, adversely affects DEALER's operations or the interests of DEALER or
HMA;
g. Retention by DEALER of any General Manager, who in HMA's reasonable
opinion is not competent, whether or not such person was previously
approved by HMA as General Manager of DEALER;
h. Any conduct which in HMA'S opinion impairs the reputation of DEALER
or HMA;
i. Any refusal to permit HMA to examine or audit DEALER's accounts and
records as provided herein upon receipt by DEALER of written notice from
HMA requesting such permission or information;
j. Repeated failure of DEALER to furnish timely sales or financial
information and related data;
k. Failure of DEALER to establish or maintain required net working
capital or adequate wholesale credit;
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1. Failure of DEALER to pay HMA for any Hyundai Products in accordance
with the terms and conditions of sale;
m. Failure of DEALER to comply with the provisions of any laws or
regulations relating to the sale or service of Hyundai Products;
n. Repeated failure of DEALER'S sales, service or parts personnel,
including but not limited to management, to fully participate in any
training program offered by HMA to DEALER;
o. Failure of DEALER to properly obtain, erect, maintain, repair and
illuminate signs and other displays in a manner approved by HMA;
p. Failure to maintain an adequate supply of general and special tools
and equipment designated by HMA;
q. Failure by DEALER to maintain good relations with its Customers
including but not limited to failure to notify HMA of complaints by
Customers, as HMA may require, and repeated failure to properly resolve
Customer complaints;
r. Failure to maintain the required minimum inventory of Hyundai Motor
Vehicles, whether for showroom display, demonstration or immediate sale;
s. Failure to maintain an adequate parts inventory;
t. Repeated failure to use proper parts and accessories in the repair
and servicing of Hyundai Motor Vehicles; or
u. Breach or violation by DEALER of any other term or provision of
this Agreement.
3. Termination For Failure of Performance
If, upon evaluation of DEALER's performance pursuant to paragraphs 10(E),
11(D) and/or 12(F) herein, HMA determines that DEALER has failed to perform
adequately its sales, service or parts responsibilities or to provide adequate
dealership facilities, HMA will endeavor to review promptly with DEALER the
nature and extent of such failure(s). As soon as practicable thereafter, HMA
will notify DEALER in writing of DEALER's failure of performance and will grant
DEALER 180 days from the date of such notice to correct such failure(s). If
DEALER fails or refuses to correct such failure(s) or has not made substantial
progress towards remedying such failure(s) at the expiration of such period, HMA
may terminate this Agreement upon sixty (60) days notice or such other notice as
may be required by law.
4. Termination of HMA
This Agreement will terminate upon the effective date of the termination or
expiration of HMA's right to distribute Hyundai Products.
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5. Termination Upon Death or Incapacity
HMA has entered into this Agreement in reliance upon the personal services
of Owner(s) and General Manager and is concerned that DEALER continues to be
owned and operated by persons who meet HMA's requirements. In order to ensure
that it is represented by qualified persons, and to protect its interests, and
subject to paragraphs 16(B)(5)(a)-(c), HMA will have the right to terminate this
Agreement in the event of the death of an Owner or upon the incapacity of any
Owner who is also the General Manager identified herein, upon written notice to
DEALER. HMA will provide such notice within a reasonable time after Owner's
death or incapacity. Termination hereunder will be effective ninety (90) days
from the date of such notice.
a. Succession to Majority Ownership by Designated Successor
Notwithstanding its right to terminate upon the death of any Owner, HMA
agrees to permit succession to majority ownership by any person approved as a
Successor Owner as provided herein. Accordingly, at any time during the term of
this Agreement, any Majority Owner may nominate a candidate to assume his or her
ownership interest in the dealership upon the death or incapacity of the
requesting Owner. Such nomination must be made on a form provided by HMA. In the
event that the Majority Owner is also the General Manager, such Owner may also
nominate the candidate to succeed as General Manager.
As soon as practicable after such nomination, HMA will request such
personal and financial information from the Majority Owner and/or the candidate
as it reasonably and customarily may require in evaluating candidates for
ownership and/or management. Owner agrees that HMA may apply criteria then
currently used by HMA in qualifying Owners and/or General Managers of authorized
Dealers. Upon receipt of all requested information, HMA will either approve or
disapprove such candidate. If HMA initially approves the candidate, said
approval will remain in effect for the term of this Agreement. HMA agrees that
the Majority Owner may renominate a candidate after the expiration of this
Agreement and HMA will review such nomination: (i) so long as HMA and DEALER
have entered into a new Hyundai Dealer Sales and Service Agreement; and (ii) the
proposed candidate continues to comply with the then current criteria used by
HMA in qualifying such candidates.
If HMA does not initially qualify the candidate, HMA agrees to review its
decision with the Majority Owner. The Majority Owner is free at any time to
renew his or her nomination. However, in such instance, the candidate must again
qualify pursuant to HMA's then current criteria. The Majority Owner may, by
written notice, withdraw a nomination at any time, even if HMA previously has
qualified said candidate.
In the event that the Majority Owner has obtained approval of his or her
candidate as Successor Owner, and upon the death of the Majority Owner, HMA
agrees to enter into a new Hyundai Dealer Sales and Service Agreement promptly
with the Successor Owner and any remaining Owner(s). The term of the new
agreement shall be for one year. The Majority Owner recognizes, however, that
before HMA shall be obligated to appoint the approved Successor Owner as the new
Majority Owner, HMA shall have the right to request assurances from the legal
representative of the Majority Owner's estate that there is no conflict between
the appointment of the Successor Owner hereunder and any valid will executed by
the Majority Owner. In any case where a Successor Owner has been designated
pursuant to this paragraph but
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the beneficial interest of the deceased Majority Owner in DEALER has passed by
will or by the laws of intestate succession to another person, then HMA will
proceed as though the Majority Owner had withdrawn his or her nomination of the
Successor Owner pursuant to this paragraph.
b. Succession to Ownership After Death of Owner
Except for those cases in which a Successor Owner is appointed pursuant to
the foregoing paragraph 16(B)(5)(a), if any Owner's interest in DEALER passes by
will (or in the absence of a will, if such interest would pass by the laws of
intestate succession) to any person (heir), HMA agrees to review the
qualifications of such heir to succeed as Owner of DEALER. Such right to be
considered will not arise until the legal representative of the Owner's estate
notifies HMA within ninety (90) days of the date of notice of termination
hereunder of the heir's interest in succeeding Owner and provided that:
(i) there has been no change in the General Manager of
DEALER; or
(ii) the notice from the legal representative proposes a new
DEALER General Manager candidate for HMA's approval.
The effect of notice from the legal representative will be to suspend the
notice of termination issued hereunder.
Upon receipt of such notice, HMA will investigate and make a determination
as to the proposed new Owner's qualifications as provided in paragraph
16(B)(5)(d) herein. HMA expressly retains the right to terminate this Agreement
if the proposed new Owner fails to meet HMA's then current ownership and/or
General Manager qualification requirements.
c. Succession Upon Incapacity of Owner
The parties agree that, as used herein, incapacity will refer to any
physical or mental ailment which, in HMA's opinion, adversely affects Owner's
ability to meet his or her obligations under this Agreement. Termination for
incapacity will apply only where the incapacitated Owner is also the General
Manager identified herein.
Prior to the effective date of any notice of termination hereunder, an
incapacitated Owner, or his or her legal representative, may propose a new
candidate for the position of General Manager to HMA. Such proposal must be in
writing and will suspend the pending notice of termination until HMA advises
DEALER of its approval or disapproval of the new candidate. Upon receipt of the
notice, HMA will investigate and make a determination as to the qualifications
of the proposed General Manager as provided in paragraph 16(B)(5)(d) herein.
d. HMA's Investigation and Determination
Any heir wishing to succeed to ownership pursuant to paragraph 16(B)(5)(b)
or any person seeking to be a General Manager pursuant to either paragraph
16(B)(5)(b) or (c) must complete such application and submit such personal and
financial information in such form as HMA may reasonably and customarily require
in connection with its review. All requested information must be provided
promptly and in no case later than thirty (30) days after receipt of
19
such request. Upon the submission of all requested information, HMA agrees to
review the qualifications of the applicant pursuant to the then current criteria
generally applied by HMA in qualifying Dealer Owners and/or General Managers.
HMA will either approve or disapprove the application within ninety (90) days of
full compliance with all of HMA's requests for information. If HMA approves the
application, it will offer to enter into a new Hyundai Dealer Sales and Service
Agreement with DEALER or its successor in interest in the form then currently in
use, except that the newly approved applicants will be identified as new Owner
and/or General Manager as appropriate. Except in cases involving the death of a
Minority Owner, discussed in the next sentence, the new agreement will be for a
term of one (1) year. In cases involving the death of a Minority Owner, which
does not result in a change in General Manager, if HMA approves the heir as new
Minority Owner, then HMA and DEALER will simply amend the current Agreement to
reflect the new minority ownership.
In the event that HMA disapproves the applicant or the applicant withdraws
his or her application to be approved as Owner or General Manager or fails to
provide the required information in a timely fashion, HMA may reinstate the
notice of termination by written notice to DEALER and to the proposed new Owner,
candidate for General Manager and/or incapacitated Owner.
C. EFFECTIVE DATE OF TERMINATION
If any period of notice of termination required under this paragraph 16 is
less than that required by applicable law, the period of notice required
hereunder will be deemed to be the minimum period required by such law.
D. EFFECT OF TERMINATION
1. DEALER's Conduct
Upon receipt of any notice of termination, expiration or non-renewal,
DEALER agrees to conduct itself and its operations until the effective date of
termination, expiration or non-renewal in a manner which will not injure the
reputation or good will of the Hyundai Marks or HMA and is consistent with its
obligations hereunder.
2. The Right to Purchase
Upon sending any notice of termination, expiration or non-renewal
hereunder, HMA will have no further obligation whatsoever to sell and DEALER
will have no right to purchase any Hyundai Products. Any decision to permit
DEALER to purchase Hyundai Products thereafter will be in HMA's sole discretion
and will not be construed as a waiver of the termination or a renewal, extension
or continuation of this Agreement.
Upon the expiration or prior termination of this Agreement, HMA will have
the right to cancel any and all pending requests by DEALER to purchase Hyundai
Products and any shipments of same scheduled for delivery to DEALER.
3. Repurchase of Hyundai Products
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a. HMA's Obligations
Upon expiration, non-renewal or termination of this Agreement, HMA will
repurchase from DEALER the following products which DEALER initially purchased
from HMA or from a source designated by HMA:
(i) New, unused, unmodified and undamaged current model Hyundai Motor
Vehicles then in DEALER's inventory. The prices of such Motor Vehicles will be
the price at which they were originally purchased by DEALER, less all prior
refunds or other allowances made by HMA to DEALER with respect thereto.
(ii) New, unused and undamaged Hyundai Genuine Parts or Accessories then
unsold in DEALER's inventory which are in good and saleable condition, provided
that they are listed in the then current Hyundai Dealer Parts Price List. The
prices for such parts and accessories will be the prices last established by HMA
for the sale of identical parts or accessories to Dealers in the area in which
DEALER is located.
(iii) Tools and equipment required or recommended by HMA and then owned by
DEALER which are especially designed for servicing Hyundai Motor Vehicles. The
prices for such tools and equipment will be the price paid by DEALER less
appropriate depreciation or such other price as the parties may negotiate.
(iv) Signs which HMA has required or recommended for identification of
DEALER. The price of such signs will be the price paid by DEALER less
appropriate depreciation or such other price as the parties may negotiate.
HMA shall have no obligation to repurchase products as provided herein in
the event it agrees to enter into a new Hyundai Dealer Sales and Service
Agreement with DEALER.
b. DEALER's Responsibilities
DEALER's right to reimbursement hereunder is contingent upon the following:
(i) Within thirty (30) days after the date of expiration or the effective
date of termination of this Agreement, DEALER will request HMA in writing to
purchase its qualifying inventory and will provide HMA with a detailed and
accurate list of such inventory. After receiving such list, HMA may, in its
discretion, enter upon DEALER's premises to verify such inventory as qualifying
under Paragraph 16(D)(3)(a) herein. If DEALER does not provide HMA with a list
of inventory, then HMA may enter upon DEALER's premises, without liability, to
take inventory and DEALER will reimburse HMA for any costs and expenses incurred
in connection therewith.
(ii) Upon HMA's instructions, DEALER will deliver such products as HMA will
agree to repurchase hereunder to HMA's place of business at DEALER's expense. If
DEALER fails to do so. HMA may transport such products and deduct the cost
therefor from the repurchase price.
(iii) DEALER agrees to execute and deliver to HMA instruments satisfactory
21
to HMA conveying good and marketable title to such property as HMA may require.
If such property is subject to any lien or charge of any kind, DEALER agrees to
secure the discharge and satisfaction thereof prior to the repurchase of such
property by HMA. DEALER further agrees to comply with the requirements of any
federal or state laws which relate to the repurchase including bulk sales or
transfer laws.
(iv) DEALER agrees that it must remove, at its own expense, all signage
bearing the Hyundai Marks before it is eligible for payment hereunder.
c. Payment by HMA
HMA will pay DEALER for such items as DEALER may request repurchase and
which qualify hereunder as soon as practicable upon DEALER's compliance with the
obligations set forth herein and upon computation of any outstanding
indebtedness of DEALER to HMA, which indebtedness HMA may offset from any
amounts due to DEALER hereunder.
d. Disagreement Regarding Valuation
If DEALER disagrees with HMA's valuation of any item herein, and DEALER and
HMA have not resolved their disagreement within sixty (60) days of the effective
date of termination or expiration of this Agreement, HMA will pay to DEALER the
amount to which it reasonably believes DEALER is entitled. DEALER's exclusive
remedy to recover any additional sums which it believes is due under this
paragraph will be by arbitration in accordance with the commercial arbitration
rules of the American Arbitration Association. The site of the arbitration will
be the office of the American Arbitration Association in the locality of HMA's
principal place of business or Regional Office.
17. RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE
HMA has entered into this Agreement to secure market representation at the
location(s) identified herein. The vitality of HMA's authorized Dealer network
and the effective sale and servicing of Hyundai Products nationwide is dependent
upon the continued representation of HMA by its authorized Dealers at their
approved location(s). Accordingly, DEALER agrees that in the event that HMA
refuses to approve a transfer or sale of any ownership interest in the
dealership, pursuant to paragraph 5, HMA will have the right of first refusal or
an option to purchase the dealership assets, including any leasehold interest or
realty, as provided herein.
A. HMA'S RIGHTS
HMA must advise DEALER in writing of its decision to exercise its right of
first refusal or option to purchase the dealership within thirty (30) days of
its refusal to approve any sale or transfer pursuant to paragraph 5. DEALER
agrees that HMA will have the right to assign its rights hereunder to any third
party it may select. HMA hereby guarantees the full payment of the purchase
price by such assignee. DEALER may render HMA's exercise of its rights hereunder
null and void if it withdraws its buy/sell proposal within thirty (30) days
following receipt of HMA's notice exercising such rights.
22
If DEALER has entered into a bona fide arm's length written buy/sell
agreement regarding ownership of DEALER or its rights under this Agreement,
HMA's right under this paragraph will be a right of first refusal, permitting
HMA to assume the buyer's rights and obligations under such written agreement.
If DEALER has not entered into a bona fide arm's length written buy/sell
agreement governing such transfer or sale, then HMA'S rights hereunder will be
the option to purchase the principal assets of DEALER utilized in the dealership
operations, including real estate and/or leasehold interest, and to terminate
this Agreement.
B. PURCHASE PRICE
If DEALER has entered into a bona fide arm's length buy/sell agreement as
provided herein, the purchase price and other terms of sale will be those set
forth in such agreement and any related documents. HMA may request and DEALER
agrees to provide any and all supporting documents relating to the transfer
which HMA may require to assess the bona fides of the agreement. Refusal to
provide such documentation or to state that no such documents exist will create
the presumption that the buy/sell agreement is not a bona fide agreement. In the
absence of a bona fide arm's length buy/sell agreement, the purchase price will
be the fair market value as negotiated by the parties. If the parties are unable
to reach a negotiated sale in a reasonable time, the price and other terms of
sale will be established exclusively by arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association. The site
of the arbitration will be the office of the American Arbitration Association in
the locality of HMA's principal place of business or Regional Office.
C. TRANSFER CONDITIONS
Upon HMA's exercise of its rights and tender of the purchase price
hereunder, DEALER will transfer the affected real property by warranty deed
conveying marketable title free and clear of all liens, claims, mortgages,
encumbrances, tenancies and occupancies. The warranty deed will be in proper
form for recording and DEALER will deliver complete possession of the property
and the deed at time of closing. DEALER will also furnish to HMA copies of any
easements, licenses or other documents affecting the property or dealership
operations and will assign any permits or licenses which are necessary for the
use of the property or the conduct of such DEALER operations.
DEALER also agrees to execute and deliver to HMA instruments satisfactory
to HMA conveying title to all personal property, including leasehold interests,
involved in the transfer or sale to HMA. If any personal property is subject to
any lien or charge of any kind, DEALER agrees to secure the discharge and
satisfaction thereof prior to the transfer or sale of such property to HMA.
18. DEFENSE AND INDEMNIFICATION
A. DEFENSE AND INDEMNIFICATION BY HMA
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HMA will assume the defense of DEALER and agrees to indemnify and hold
DEALER harmless in any legal proceeding naming DEALER as a defendant and
involving any Hyundai Product when the proceeding also involves allegations of:
(1) Breach of any Hyundai warranty related to the Hyundai Product,
bodily injury or property damage allegedly caused solely by a
defect in design, manufacture or assembly of a Hyundai Product
(except for tires not manufactured by FACTORY), provided that the
defect could not reasonably have been discovered by DEALER by
reasonable inspection or during the predelivery service on the
Hyundai Product required hereunder;
(2) Any misrepresentation or misleading statement or unfair or
deceptive trade practice of HMA; or
(3) Any substantial damage to a Hyundai Product purchased by DEALER
from HMA which was repaired by HMA and where DEALER had not been
notified of such damage in writing prior to the delivery of the
subject vehicle, part or accessory to a retail Customer; and
Provided:
(4) That DEALER promptly delivers to HMA, in a manner to be
designated by HMA, copies of any summons and complaint and
requests in writing a defense and/or indemnification as provided
herein;
(5) That the complaint does not involve allegations of DEALER
misconduct, including but not limited to, improper or
unsatisfactory service or repair, misrepresentation, or any claim
of DEALER's unfair or deceptive trade practice;
(6) That the Hyundai Product which is the subject of the lawsuit was
not altered by or for DEALER;
(7) That DEALER agrees to cooperate fully in the defense of such
action as HMA may reasonably require; and
(8) That DEALER agrees that HMA may offset any recovery on DEALER's
behalf against any indemnification that may be required
hereunder.
B. DEFENSE AND INDEMNIFICATION BY DEALER
DEALER will assume the defense of HMA and FACTORY and indemnify and hold
them harmless in any legal proceeding naming HMA or FACTORY as a defendant when
the legal proceeding involves allegations of:
(1) DEALER's alleged failure to comply, in whole or in part, with any
24
obligation assumed by DEALER pursuant to this Agreement;
(2) DEALER's alleged negligent or improper repairing or servicing of
a new or used Hyundai Motor Vehicle or equipment, or such other
motor vehicles or equipment as may be sold or serviced by DEALER;
(3) DEALER's alleged breach of any contract or warranty other than
that provided by HMA or FACTORY;
(4) DEALER'S alleged misleading statements, misrepresentations, or
deceptive or unfair trade practices; or
(5) Any modification or alteration made by or on behalf of DEALER to
a Hyundai Product, except those made pursuant to the express
instruction of HMA; and
Provided:
(6) That HMA or FACTORY promptly delivers to DEALER, copies of any
summons and complaint and requests in writing a defense and/or
indemnification as provided herein.
(7) That HMA or FACTORY agree to cooperate fully in the defense of
such action as DEALER may reasonably require; and
(8) That the complaint does not involve allegations of liability
premised upon separate HMA or FACTORY conduct or omissions.
C. EXTENT OF RESPONSIBILITY
The assumption of the defense of a party includes the obligation of
selecting counsel and paying all attorney's fees, court costs and expenses
(including expert's fees). The assumption of the obligation to indemnify and
hold harmless will include payment of any judgment amount awarded on any claim
subject to the indemnity and hold harmless provision and any settlement amount
as the indemnifying party may agree to pay to resolve such claim.
D. CONDITIONAL DEFENSE AND/OR INDEMNIFICATION
In agreeing to defend and/or indemnify each other, DEALER and HMA each may
make their agreement conditional on the continued existence of the state of
facts as then known to such party and may provide for the withdrawal of such
defense and/or indemnification at such time as facts arise which, if known at
the time of the original request for a defense and/or indemnification, would
have caused either DEALER or HMA to refuse such request.
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The party withdrawing from its agreement to defend and/or indemnify will
give timely notice of its intent to withdraw. Such notice will be in writing and
will be effective upon receipt. Moreover, the withdrawing party will be
responsible for all costs and expenses of defense up to the date of receipt of
the notice of withdrawal.
E. THE EFFECT OF SUBSEQUENT DEVELOPMENTS
In any case where a request for a defense and/or indemnification is
rejected, or is not made at the outset of any legal proceeding, and subsequent
developments in the case make clear that the allegations which initially
precluded a request or an acceptance of a request for a defense and/or
indemnification are no longer at issue therein or are without foundation, then
any party having a right to a defense and/or indemnification hereunder may still
tender such request for a defense and/or indemnification to the other party.
Neither DEALER nor HMA, however, will be required to agree to such subsequent
request for a defense and/or indemnification where that party would be unduly
prejudiced by such a delay.
F. TIME TO RESPOND AND RESPONSIBILITIES OF THE PARTIES
DEALER and HMA will have thirty (30) days from the receipt of a request for
a defense and/or indemnification to conduct an investigation to determine
whether or not, or under what conditions, it may agree to defend and/or
indemnify pursuant to this paragraph 18. If local rules require a response to
the complaint in the lawsuit prior to the time provided hereunder for a response
to such request, the requesting party will take all steps necessary, including
obtaining counsel, to protect its own interest in the lawsuit until DEALER or
HMA assumes the requested defense and/or indemnification. In the event that HMA
or DEALER agrees to assume defense and/or indemnification obligations hereunder,
such party will have the right to engage and direct counsel of its own choosing
and, except in cases where the request is made pursuant to paragraph 18(E)
herein, will have the obligation to reimburse the requesting party for all
reasonable costs and expenses, including attorney fees, incurred prior to such
assumption.
G. SURVIVAL OF OBLIGATION
The obligations of the parties set forth in this Paragraph 18 shall survive
the termination of this Agreement.
19. MISCELLANEOUS PROVISIONS
A. ENTIRE AGREEMENT
Except as otherwise specifically provided for herein, this Agreement
constitutes the entire agreement of the parties and contains all covenants,
warranties or representations made by the parties to each other and supersedes
any and all previous agreements, either oral or in writing, between the parties
and relating to the subject matters covered herein.
B. AMENDMENT
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No amendment of any portion of this Agreement will be valid or binding upon
the parties hereto unless the same is approved in writing by an authorized
representative of each of the parties.
C. RELEASE OF CLAIMS
Upon execution of this Agreement by DEALER, and in consideration of HMA
entering into this Agreement, DEALER hereby releases HMA from any and all
claims, demands, contracts and liabilities (including, but not limited to,
statutory liabilities) known or unknown, of any kind whatsoever, arising out of
or in connection with any prior agreements, business transactions, course of
dealing, discussions or negotiations between the parties prior to the effective
date hereof and regardless of whether DEALER knows or suspects the claim to
exist in its favor at the time of executing the release and whether or not if
known to it, it would have materially affected its release hereunder.
Notwithstanding any other provision herein, however, this release does not
extend to any accounts payable by one party to the other as a result of the
purchase of any Hyundai Products, audit adjustments or reimbursement for any
services.
D. ASSIGNMENT
Except as provided in this Agreement, neither this Agreement nor the rights
or obligations of either party hereunder may be sold, assigned. delegated or
otherwise transferred without the prior written consent of the other party.
E. SEVERABILITY
If any term or provision of this Agreement, or the application thereof to
any person or circumstance, will be contrary to any law or will be adjudged by
any court or government agency to be invalid, void or unenforceable, such term
or provision will be deemed deleted from this Agreement and the remaining
provisions and any application thereof will continue in full force and effect
without being impaired or invalidated in any way.
F. CAPTIONS
The various captions used in this Agreement are for organizational purposes
only and may not be used to interpret the provisions hereof. In any case where
the caption and the related text conflict, the text will govern.
G. GOVERNING LAW
This Agreement will be governed and construed according to the laws of the
state in which DEALER is located.
H. WAIVERS
Any failure of either party at any time to require performance by the other
party of any provision herein will not be deemed to be a waiver by such party of
any subsequent breach
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or violation of the same or any other provision.
I. NOTICES
Unless otherwise specifically provided herein, any notice required to be
given by either party to the other under or in connection with this Agreement
will be in writing and delivered personally or by certified mail, return receipt
requested and will be effective from the date of receipt. Notices to DEALER will
be directed to DEALER or its representative at DEALER's place of business
identified herein. Notices to HMA will be directed to the President of HMA at
its national headquarters. In the event that any party refuses to accept
delivery of notice hereunder, such notice will be effective on the date delivery
is refused.
J. NEW AND SUPERSEDING DEALER AGREEMENTS
In the event any new and superseding form of Dealer agreement is offered by
HMA to authorized Hyundai Dealers in general at any time prior to the expiration
of the term of this Agreement, HMA may, by written notice to DEALER, terminate
this Agreement and replace it with a new agreement in the new and superseding
form for a term not less than the then unexpired term of this Agreement. Unless
otherwise agreed in writing, the rights and obligations of DEALER that may
otherwise become applicable upon any termination or expiration of the term of
this Agreement will not be applicable in the event of the execution by HMA and
DEALER of any new or superseding Dealer agreement and the matured rights and
obligations of either party hereunder will continue under the new agreement.
K. INDEPENDENT ENTITY
DEALER is an independently owned business entity. This Agreement does not
make DEALER the agent or legal representative of HMA or FACTORY for any purpose
whatsoever. DEALER is not granted any express or implied right or authority to
assume or to create any obligation or responsibility on behalf of or in the name
of HMA or FACTORY or to bind it (or them) in any manner whatsoever.
L. FORCE MAJEURE
Neither party will be liable for any breach of this Agreement to the extent
caused by or resulting from prohibition or restriction by law or regulation of
any government, fire, flood, storm, war, strike, lockout or other labor
troubles, accident, riot, act of God or other events beyond that party's
control.
M. NO FRANCHISE FEE
DEALER warrants and agrees that it has paid no fee, nor has it provided any
goods or services in lieu of same, to HMA in consideration of entering into this
Agreement and that the sole consideration for HMA's entering into this Agreement
was DEALER's ability, integrity, assurance of personal services and expressed
intention to deal fairly and equitably with HMA and the public and any other
promises recited herein.
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N. WAIVER OF TRIAL BY JURY
HMA and DEALER hereby waive, to the extent permitted by law, the right to
trial by jury for all disputes, controversies or claims which may arise between
DEALER and HMA out of or in connection with this Agreement, or its construction,
interpretation, effect, performance or nonperformance, termination or the
consequences thereof, or in connection with any transaction contemplated between
the parties.
O. TAXES
DEALER will pay all local, state, federal or other applicable taxes,
including without limitation, sales taxes, use taxes, excise taxes, levied or
based upon the sale of Hyundai Products by HMA to DEALER and will maintain
accurate records of same for reporting purposes.
20. DEFINITIONS
The following terms, as used in this Agreement, will be defined exclusively
as set forth below:
A. Agreement: This Agreement consists of the HMA Dealer Sales and
Service Agreement entered into by DEALER and HMA and includes the Standard
Provisions.
B. Authorized Hyundai Dealer: Dealers who are authorized by HMA to
sell and service Hyundai Products, and to use the Hyundai Marks in connection
therewith, pursuant to a duly executed Hyundai Dealer Sales and Service
Agreement.
C. DEALER Facilities: The buildings, improvements, fixtures and
equipment situated at the approved DEALER location(s).
D. DEALER Location: The location or locations, and any facilities
located thereon, identified in paragraph 6, which HMA has approved for
dealership operations.
E. Dealership Operations: All Dealer operations contemplated by this
Agreement, including, without limitation, sale and servicing of Hyundai
Products, use and display of Hyundai Marks, advertising and promotion of Hyundai
Products, rental and leasing of Hyundai Motor Vehicles, sale of used cars, body
shop work, and financing or insurance services, whether conducted directly or
indirectly by DEALER.
F. General Manager: The person identified in paragraph 4 of the
Agreement considered to be a "Dealer Operator" with full operational
responsibility and authority for dealership operations.
G. Hyundai Genuine Parts or Accessories: All new or remanufactured
Hyundai parts, accessories and equipment marketed by BMA and listed in HMA's
parts catalog, or the functional equivalent thereof, as amended from time to
time.
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H. Hyundai Marks: The various Hyundai trademarks, service marks,
names, logos and designs used by HMA in connection with Hyundai Products and
which HMA authorizes DEALER to use in the sale and servicing of Hyundai
Products.
I. Hyundai Motor Vehicles: All automobiles, trucks, vans, cab/chassis
or other motor vehicles which FACTORY, in its sole discretion, sells to HMA for
resale to authorized Hyundai Dealers.
J. Hyundai Products: All Hyundai Motor Vehicles, parts, accessories
and equipment which FACTORY, in its sole discretion, and/or authorized suppliers
sell to HMA for resale to authorized Hyundai Dealers.
K. Hyundai Warranty Policies and Procedures Manual: The current
publication issued by HMA known as the Hyundai Warranty Policies and Procedures
Manual, or its functional equivalent, as it may be revised or supplemented from
time to time.
L. Owner: The person(s) identified in paragraph 3 of this Agreement.
M. Standard Provisions: The Standard Provisions are a part of all
Hyundai Dealer Sales and Service Agreements and are fully incorporated therein
by the express provision of paragraph 7 of the Agreement. The Standard
Provisions commence with paragraph 10 to reflect continuity with the first nine
paragraphs of the Agreement.
