EXHIBIT 10.4.2
[LOGO OF TOYOTA]
DEALER AGREEMENT
----------------
TOYOTA DEALER AGREEMENT
TABLE OF CONTENTS
PURPOSES AND OBJECTIVES OF THIS AGREEMENT............................. 1
I. RIGHTS GRANTED TO THE DEALER...................................... 2
II. RESPONSIBILITIES ACCEPTED BY THE DEALER........................... 2
III. TERM OF AGREEMENT................................................. 2
IV. OWNERSHIP OF DEALERSHIP........................................... 3
V. MANAGEMENT OF DEALERSHIP.......................................... 3
VI. CHANGE IN MANAGEMENT OR OWNERSHIP................................. 3
VII. APPROVED DEALER LOCATIONS......................................... 4
VIII. PRIMARY MARKET AREA............................................... 4
IX. STANDARD PROVISIONS............................................... 5
X. ADDITIONAL PROVISIONS............................................. 5
XI. EXECUTION OF AGREEMENT............................................ 6
XII. CERTIFICATION..................................................... 6
XIII. ACQUISITION, DELIVERY AND INVENTORY OF TOYOTA PRODUCTS
A. Acquisition of Toyota Products................................. 8
B. Availability and Allocation of Product......................... 8
C. Prices and Terms of Sale....................................... 8
D. Mode, Place and Charges for Delivery of Products............... 9
E. Inventory Damage Claims and Liability.......................... 9
X. Xxxxx or Failure of Delivery................................... 9
G. Diversion Charges.............................................. 9
H. Changes of Design, Options or Specifications................... 10
I. Discontinuance of Manufacture or Importation................... 10
J. Minimum Vehicle Inventories.................................... 10
K. Product Modifications.......................................... 10
i
XIV. DEALER MARKETING OF TOYOTA PRODUCTS
A. DEALER's Sales Responsibilities.................................... 10
B. Export Prohibition................................................. 11
C. Used Vehicles...................................................... 11
D. Assistance Provided by DISTRIBUTOR................................. 11
1. Sales Training Assistance....................................... 11
2. Sales Promotion Assistance...................................... 12
3. Field Sales Personnel Assistance................................ 12
XV. DEALER SERVICE OBLIGATIONS
A. Customer Service Standards......................................... 12
B. New Motor Vehicle Pre-Delivery Service............................. 13
C. Warranty and Policy Service........................................ 13
D. Use of Parts and Accessories in Non-Warranty Servicing............. 00
X. Xxxxxxxx Disclosures as to Non-Genuine Parts and Accessories....... 14
F. Service Campaign Inspections and Corrections....................... 14
G. Compliance With Safety and Emission Control Requirements........... 14
H. Compliance With Consumer Protection Statutes, Rules and
Regulations........................................................ 15
XVI. SERVICE AND PARTS OPERATIONS
A. Organization and Standards......................................... 15
B. Service Equipment and Special Tools................................ 16
C. Parts Inventory.................................................... 16
D. Assistance Provided by DISTRIBUTOR................................. 16
1. Service Training Assistance..................................... 16
2. Manuals and Materials........................................... 16
3. Field Personnel Assistance...................................... 16
XVII. CUSTOMER SATISFACTION RESPONSIBILITIES................................ 17
XVIII. DEALERSHIP FACILITIES AND IDENTIFICATION
A. Facilities......................................................... 17
B. DEALER's Operating Hours........................................... 18
C. Signs.............................................................. 18
D. Use of Toyota Marks................................................ 18
1. Use by DEALER................................................... 18
2. Discontinuance of Use........................................... 19
XIX. EVALUATION OF DEALER'S PERFORMANCE
A. Sales Performance Evaluation....................................... 20
B. Service Performance Evaluation..................................... 20
C. Parts Performance Evaluation....................................... 20
D. Customer Satisfaction Performance Evaluation....................... 20
E. Dealership Facilities Evaluation................................... 21
ii
XX. CAPITAL, CREDIT, RECORDS AND UNIFORM SYSTEMS
A. Net Working Capital................................................ 21
B. Flooring Line...................................................... 21
C. Payment Terms and Settlement of Accounts........................... 22
D. Uniform Accounting System.......................................... 22
E. Records Maintenance................................................ 23
F. Examination of Dealership Accounts and Records..................... 23
G. Taxes.............................................................. 23
H. Confidentiality.................................................... 23
I. Information Communication Systems.................................. 24
J. Sales Reporting.................................................... 24
XXI. RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE
A. Rights Granted..................................................... 24
B. Exercise of DISTRIBUTOR's Rights................................... 24
C. Right of First Refusal............................................. 25
D. Option to Purchase................................................. 25
E. DEALER's Obligations............................................... 25
F. No Applicability to Nominated Successor............................ 26
XXII. SUCCESSION RIGHTS UPON DEATH OR INCAPACITY
A. Succession to Ownership After Death of Owner....................... 26
B. Incapacity of Owner................................................ 27
C. Nomination of Successor Prior to Death or Incapacity of Owner...... 27
XXIII. TERMINATION
A. Voluntary Termination by DEALER.................................... 28
B. Termination for Cause.............................................. 28
1. Immediate Termination........................................... 28
2. Termination Upon Sixty Days Notice.............................. 29
3. Termination for Failure of Performance.......................... 30
4. Termination Upon Death or Incapacity............................ 30
C. Notice of Termination.............................................. 31
D. Continuance of Business Relations.................................. 00
X. Xxxxxxxxxx Provisions.............................................. 31
1. DISTRIBUTOR's Obligations....................................... 31
2. Responsibilities of DEALER...................................... 32
3. Payment by DISTRIBUTOR.......................................... 32
XXIV. MANAGEMENT OF DISPUTES
A. Alternative Dispute Resolution Programs............................ 33
B. Applicable Law..................................................... 33
C. Mutual Release..................................................... 33
iii
XXV. DEFENSE AND INDEMNIFICATION
A. Defense and Indemnification by DISTRIBUTOR........................ 34
B. Defense and Indemnification by DEALER............................. 34
C. Conditional Defense and/or Indemnification........................ 35
XXVI. GENERAL PROVISIONS
A. Notices........................................................... 36
B. No Implied Waivers................................................ 37
C. Sole Agreement of the Parties..................................... 37
D. Dealer Not an Agent or Representative............................. 37
E. Assignment of Rights or Delegation of Duties...................... 38
F. No Franchise Fee.................................................. 38
G. Severability...................................................... 38
H. New and Superseding Dealer Agreements............................. 38
I. Benefit........................................................... 38
J. No Fiduciary Relationship......................................... 39
K. No Joint Employment............................................... 39
L. Consent of DISTRIBUTOR............................................ 39
M. DISTRIBUTOR's Policies............................................ 39
XXVII. DEFINITIONS
A. Owner............................................................. 40
B. General Manager................................................... 40
C. Dealer Facilities................................................. 40
D. Approved Location(s).............................................. 40
E. Toyota Marks...................................................... 40
F. Toyota Products................................................... 40
G. Toyota Motor Vehicles............................................. 40
H. Genuine Toyota Parts and Accessories.............................. 40
iv
TOYOTA DEALER AGREEMENT
This is an Agreement between TOYOTA MOTOR SALES, USA., INC. (DISTRIBUTOR), and
FAA San Bruno, Inc. (DEALER), a(n) [_] individual, [_] partnership, [X]
corporation. If a corporation, DEALER is duly incorporated in the State of
California and doing business as MELODY TOYOTA.
PURPOSES AND OBJECTIVES OF THIS AGREEMENT
DISTRIBUTOR sells Toyota Products which are manufactured or approved by Toyota
Motor Corporation (FACTORY) and imported and/or sold to DISTRIBUTOR by Toyota
Motor Sales, U.S.A., Inc. (IMPORTER). It is of vital importance to DISTRIBUTOR
that Toyota Products are sold and serviced in a manner which promotes consumer
confidence and satisfaction and leads to increased product acceptance.
Accordingly, DISTRIBUTOR has established a network of authorized Toyota dealers,
operating at approved locations and pursuant to certain standards, to sell and
service Toyota Products. DEALER desires to become one of DISTRIBUTOR's
authorized dealers. Based upon the representations and promises of DEALER, set
forth herein, DISTRIBUTOR agrees to appoint DEALER as an authorized Toyota
dealer and welcomes DEALER to DISTRIBUTOR's network of authorized dealers of
Toyota Products.
This Agreement sets forth the rights and responsibilities of DISTRIBUTOR as
seller and DEALER as buyer of Toyota Products. DISTRIBUTOR enters into this
Agreement in reliance upon DEALER's integrity, ability, assurance of personal
services, expressed intention to deal fairly with the consuming public and with
DISTRIBUTOR, and promise to adhere to the terms and conditions herein. Likewise,
DEALER enters into this Agreement in reliance upon DISTRIBUTOR's promise to
adhere to the terms and conditions herein. DISTRIBUTOR and DEALER shall refrain
from conduct which may be detrimental to or adversely reflect upon the
reputation of the FACTORY, IMPORTER, DISTRIBUTOR, DEALER or Toyota Products in
general. The parties acknowledge that the success of the relationship between
DISTRIBUTOR and DEALER depends upon the mutual understanding and cooperation of
both DISTRIBUTOR and DEALER.
Dealer Code 04062
-----------
1
I. RIGHTS GRANTED TO THE DEALER
Subject to the terms of this Agreement, DISTRIBUTOR hereby grants DEALER
the non-exclusive right:
A. To buy and resell the Toyota Products identified in the Toyota Product
Addendum hereto which may be periodically revised by IMPORTER;
B. To identity itself as an authorized Toyota dealer utilizing approved
signage at the location(s) approved herein;
C. To use the name Toyota and the Toyota Marks in the advertising,
promotion, sale and servicing of Toyota Products in the manner herein
provided.
DISTRIBUTOR reserves the unrestricted right to sell Toyota Products and to
grant the privilege of using the name Toyota or the Toyota Marks to other
dealers or entities, wherever they may be located.
II. RESPONSIBILITIES ACCEPTED BY THE DEALER
DEALER accepts its appointment as an authorized Toyota dealer and agrees
to:
A. Sell and promote Toyota Products subject to the terms and conditions of
this Agreement;
B. Service Toyota Products subject to the terms and conditions of this
Agreement;
C. Establish and maintain satisfactory dealership facilities at the
location(s) set forth herein; and
D. Make all payments to DISTRIBUTOR when due.
III. TERM OF AGREEMENT
This Agreement is effective this 30th day of June, 1997, and shall
continue for a period of 24 Months, and shall expire on June 29, 1999
unless ended earlier by mutual agreement or terminated as provided herein.
This Agreement may not be continued beyond its expiration date except by
written consent of DISTRIBUTOR and IMPORTER.
2
IV. OWNERSHIP OF DEALERSHIP
This Agreement is a personal service Agreement and has been entered into
by DISTRIBUTOR in reliance upon and in consideration of DEALER's
representation that only the following named persons are the Owners of
DEALER, that such persons will serve in the capacities indicated, and that
such persons are committed to achieving the purposes, goals and
commitments of this Agreement:
OWNERS' PERCENT OF
NAMES TITLE OWNERSHIP
FirstAmerica Automotive, Inc. Holding Company 100%
------------------------------ ------------------------------ -----------------------------
Xxxxxx X. Price President 0%
------------------------------ ------------------------------ -----------------------------
______________________________ ______________________________ _____________________________
______________________________ ______________________________ _____________________________
______________________________ ______________________________ _____________________________
______________________________ ______________________________ _____________________________
V. MANAGEMENT OF DEALERSHIP
DISTRIBUTOR and DEALER agree that the retention of qualified management is
of critical importance to satisfy the commitments made by DEALER in this
Agreement. DISTRIBUTOR, therefore, enters into this Agreement in reliance
upon DEALER's representation that Xxxxxxx X. Xxxxxx, and no other person,
will exercise the function of General Manager, be in complete charge of
DEALER's operations, and will have authority to make all decisions on
behalf of DEALER with respect to DEALER's operations. DEALER further
agrees that the General Manager shall devote his or her full efforts to
DEALER's operations.
VI. CHANGE IN MANAGEMENT OR OWNERSHIP
This is a personal service contract. DISTRIBUTOR has entered into this
Agreement because DEALER has represented to DISTRIBUTOR that the Owners
and General Manager of DEALER identified herein possess the personal
qualifications, skill and commitment necessary to ensure that DEALER will
promote, sell and service Toyota Products in the most effective manner,
enhance the Toyota image and increase market acceptance of Toyota
Products. Because DISTRIBUTOR has entered into this Agreement in reliance
upon these representations and DEALER's assurances of the active
involvement of such persons in DEALER operations, any change in ownership,
no matter what the share or relationship between parties, or any changes
in General Manager from the person specified herein, requires the prior
written consent of DISTRIBUTOR, which DISTRIBUTOR shall not unreasonably
withhold.
3
DEALER agrees that factors which would make DISTRIBUTOR's withholding of
consent reasonable would include, without limitation, the failure of a new
Owner or General Manager to meet DISTRIBUTOR'S standards with regard to
financial capability, experience and success in the automobile dealership
business.
VII. APPROVED DEALER LOCATIONS
In order that DISTRIBUTOR may establish and maintain an effective network
of authorized Toyota dealers, DEALER agrees that it shall conduct its
Toyota operation only and exclusively in facilities and at locations
herein designated and approved by DISTRIBUTOR. DISTRIBUTOR hereby
designates and approves the following facilities as the exclusive
location(s) for the sale and servicing of Toyota Products and the display
of Toyota Marks:
New Vehicle Sales and Showroom Used Vehicle Display and Sales
------------------------------ ------------------------------
000 Xx Xxxxxx Real 000 Xx Xxxxxx Xxxx
& &
000 Xx Xxxxxx Real 000 Xx Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx San Bruno, California
Sales and General Office Body and Paint
------------------------ --------------
000 Xx Xxxxxx Xxxx XXXX
Xxx Xxxxx, Xxxxxxxxxx
Parts Service
----- -------
000 X. Xxx Xxxxx Xxx. 000 X. Xxx Xxxxx Xxx.
Xxx Xxxxx, Xxxxxxxxxx San Bruno, California
Other Facilities
----------------
000 Xx Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx
DEALER may not, either directly or indirectly, display Toyota Marks or
establish or conduct any dealership operations contemplated by this
Agreement, including the display, sale and servicing of Toyota Products,
at any location or facility other than those approved herein without the
prior written consent of DISTRIBUTOR. DEALER may not modify or change the
usage or function of any location or facility approved herein or otherwise
utilize such locations or facilities for any functions other than the
approved function(s) without the prior written consent of DISTRIBUTOR.
VIII. PRIMARY MARKET AREA
DISTRIBUTOR will assign DEALER a geographic area called a Primary Market
Area ("PMA"). The PMA is used by DISTRIBUTOR to evaluate DEALER's
performance of its obligations,
4
among other things. DEALER agrees that it has no exclusive right to any
such PMA. DISTRIBUTOR may add new dealers, relocate dealers, or adjust
DEALER's PMA as it reasonably determines is necessary. DEALER's PMA is set
forth on the PMA Addendum hereto.
Nothing contained in this Agreement, with the exception of Section XIV(B),
shall limit or be construed to limit the geographical area in which, or the
persons to whom, DEALER may sell or promote the sale of Toyota products.
IX. STANDARD PROVISIONS
The "Toyota Dealer Agreement Standard Provisions" are incorporated herein
and made part of this Agreement as if fully set forth herein.
X. ADDITIONAL PROVISIONS
In consideration of DISTRIBUTOR's agreement to appoint DEALER as an
authorized Toyota dealer, DEALER further agrees:
1. DEALER agrees that this Agreement incorporates, here by this reference,
the terms of the Addendum to Section X Additional Provisions dated June
30, 1997
5
XI. EXECUTION OF AGREEMENT
Notwithstanding any other provision herein, the parties to this Agreement,
DISTRIBUTOR and DEALER, agree that this Agreement shall be valid and
binding only if it is signed:
A. On behalf of DEALER by a duly authorized person;
B. On behalf of DISTRIBUTOR by the President and/or an authorized General
Manager, if any, of DISTRIBUTOR; and
C. On behalf of IMPORTER, solely in connection with its limited
undertaking herein, by President of IMPORTER
XII. CERTIFICATION
By their signatures hereto, the parties agree that they have read and
understand this Agreement, including the Standard Provisions incorporated
herein, are committed to its purposes and objectives and agree to abide by
all of its terms and conditions.
FAA San Bruno, Inc. dba MELODY TOYOTA DEALER
-------------------------------------------------------------------
(Dealer Entity Name)
Date:________By:/s/ President
---------------------------------------- ---------------
Signature T. Price Title
Date:________By:________________________________________ _______________
Signature Title
Date:________By:________________________________________ _______________
Signature Title
TOYOTA MOTOR SALES, USA., INC. DISTRIBUTOR
--------------------------------------------------------------
(Distributor Name)
Date:________By: /s/ X. Xxxxx General Manager
---------------------------------------- ---------------
Signature X. Xxxxx Title
Date:________By:________________________________________ _______________
Signature Title
6
Undertaking by IMPORTER: In the event of termination of this Agreement by
virtue of termination or expiration of DISTRIBUTOR's contract with IMPORTER,
IMPORTER, through its designee, will offer DEALER a new agreement of no less
than one year's duration and containing the terms of the Toyota Dealer Agreement
then prescribed by IMPORTER.
TOYOTA MOTOR SALES, U.S.A., INC.
Date: JUN 30, 1997 By: /s/ Xxxxxx Xxxxxxxx President
-------------- -------------------------------- ----------------------
Signature Xxxxxx Xxxxxxxx Title
7
ADDENDUM TO PARAGRAPH X
-----------------------
These Additional Provisions to Toyota Dealer Agreement ("Additional
Provisions") are entered into as of June 30, 1997, among DISTRIBUTOR, DEALER,
and FIRST AMERICA AUTOMOTIVE, INC., a Nevada corporation (hereinafter "FAA"),
and form a part of and are incorporated into the Dealer Agreement.
RECITALS
1. DISTRIBUTOR and DEALER have entered into a Toyota Dealer
Agreement (the "Dealer Agreement") dated as of June 30, 1997.
2. FAA is the 100% shareholder of DEALER.
3. FAA and DEALER are hereinafter collectively referred to as the
"Dealer Parties". DISTRIBUTOR and the Dealer Parties are hereinafter
collectively referred to as the "Parties".
4. The Parties wish to enter into these Additional Provisions for
the purposes of agreeing to be bound by the terms of these Additional
Provisions, which are a part of and are incorporated into the Dealer Agreement.
5. The ownership of FAA shall be approximately as follows:
Xxxxxx X. Price: 41%
--------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxx: 11%
--------------------------------------------------------------------------------
TCW\Crescent Mezzanine Partners, L.P.: 19%
--------------------------------------------------------------------------------
Others: 29%
--------------------------------------------------------------------------------
NOW THEREFORE, in consideration for the mutual agreements contained
herein and in the Dealer Agreement, the Parties agree as follows:
1
A. General
-------
1. DISTRIBUTOR and FAA have entered into an Agreement dated June 30,
1997 (the "Agreement") relating, among other matters, to the number of Toyota
and Lexus dealerships which may be acquired by FAA and its affiliates and to
certain aspects of the management of Toyota and Lexus dealerships owned by FAA.
The Dealer Parties agree that the Agreement is incorporated into and forms a
part of the Dealer Agreement and these Additional Provisions. To the extent that
any provision of the Agreement is inconsistent with the Dealer Agreement or
these Additional Provisions, the provisions of the Agreement shall be
controlling.
2. The Dealer Parties acknowledge and agree that if any provision of
these Additional Provisions is violated in any material respect by any of the
Dealer Parties, DISTRIBUTOR will have the right to terminate the Dealer
Agreement on sixty (60) days' written notice to Dealer if Dealer fails to cure
such violation prior to the expiration of such sixty (60) days.
B. Provisions Relating to the Structure of DEALER
----------------------------------------------
1. Single Purpose Entity. DEALER will be maintained as a separate
---------------------
legal entity, and will not engage in any business other than operation of a
Toyota dealership and activities related thereto.
2. No Merger, Consolidation, Etc. DEALER will not be merged with or
-----------------------------
into, or be consolidated with, or acquire substantially all of the assets of,
any other entity, without the prior written consent of DISTRIBUTOR, in its sole
discretion.
2
C. Provisions Relating to Management
---------------------------------
1. Role of the Responsible Executive. Pursuant to Section 8 of the
---------------------------------
Agreement, Xxxxxx X. Price is hereby designated as the FAA executive who will
have responsibility and authority with respect to all matters concerning DEALER
and the relationship between DEALER and DISTRIBUTOR (the "FAA Executive"). The
FAA Executive will be actively involved in the management of all aspects of the
operations of DEALER.
(a) The FAA Executive will be an officer of DEALER. The FAA
Executive, in consultation with management of FAA, will have complete control
over all day-to-day management decisions of DEALER or relating to DEALER.
(b) The General Manager will report directly to and be
responsible to the FAA Executive.
(c) DISTRIBUTOR may rely on oral or written communications and
agreements from the FAA Executive as being the binding agreements of DEALER,
without any duty of DISTRIBUTOR to confirm that any such communication or
agreement has been duly authorized by the Board of Directors of DEALER, FAA, or
any other individual or entity.
2. Successors to the FAA Executive. In the event that the FAA
-------------------------------
Executive wishes to discontinue his role in the management of DEALER as set
forth in Section C.1., such action may be taken only with the prior written
consent of DISTRIBUTOR. Such consent of DISTRIBUTOR may be conditioned on
transfer of the FAA Executive's management responsibilities to an individual or
individuals approved by DISTRIBUTOR, taking into account such factors as
DISTRIBUTOR reasonably
3
deems to be relevant and are consistent with applicable laws.
3. Role of the General Manager.
---------------------------
(a) Xxxxxxx X. Xxxxxx or any subsequent General Manager of
DEALER approved by DISTRIBUTOR, will serve exclusively as General Manager of
DEALER on a full time basis and will not have any management responsibilities
with respect to any other dealership or other business or appear as the General
Manager on any automobile dealership franchise agreement other than that of
DEALER.
(b) The General Manager will have responsibility for and
authority with respect to the day-to-day operations of DEALER in the ordinary
course of business, under the supervision of the FAA Executive, and the General
Manager will have the following authority, without the need for obtaining the
prior approval of any other individual or entity:
(i) the authority to hire or terminate any employee of DEALER;
(ii) the authority to order vehicles and other products;
(iii) the authority to place advertising;
(iv) the authority to communicate with DISTRIBUTOR with respect to
all aspects of the business of DEALER;
(v) the authority to approve expenditures by DEALER in the ordinary
course of business in amounts of less than $50,000 per item;
(vi) the authority to approve capital improvements or modifications
to the DEALER'S facilities in amounts not to exceed $100,000
with respect to any expenditure.
4. Membership of Executive Committee. There shall be no change in
---------------------------------
4
the membership of the Executive Committee, Board of Directors or other governing
body of DEALER without the prior written approval of DISTRIBUTOR.
5. FAA Directors. FAA shall provide a list of all current members of
-------------
its Board of Directors, and resumes for each member, to DISTRIBUTOR, and provide
such information for each new member of the Board of Directors of FAA.
D. Provisions Relating to Capitalization and Accounting
----------------------------------------------------
1. No distributions will be made by DEALER to FAA if such
distributions would cause DEALER to fail to meet any of DISTRIBUTOR'S
capitalization guidelines, including but not limited to net working capital
requirements.
2. The operations and financial results of DEALER will be reported
to DISTRIBUTOR separately from those of any other entity, business or activity,
including but not limited to any of the Dealer Parties and any other dealerships
directly or indirectly owned or controlled by any of the Dealer Parties.
3. DEALER will maintain complete and separate departments for new
and used vehicle sales, service, parts sales, leasing and finance and insurance,
and will provide separate identifiable areas for each department. DEALER will
maintain a separate and permanent personnel staff and separate retail operations
from other dealerships directly or indirectly owned by any of the Dealer
Parties. DEALER shall not combine its used car operation with that of any other
entity, including any other dealerships directly or indirectly owned by any of
the Dealer Parties.
5
E. Provisions Relating to Ownership
--------------------------------
1. Successors and Assigns. In the event that any interest in DEALER
----------------------
is transferred in accordance with the provisions of the Dealer Agreement, the
Agreement and these Additional Provisions, as a condition to such transfer the
transferee must agree in writing to be bound by all of the terms and provisions
of the Dealer Agreement, the Agreement and these Additional Provisions, such
agreement to be in form and substance reasonably acceptable to DISTRIBUTOR.
2. Competitors. In no event may any interest in DEALER be
-----------
transferred to an entity which is directly or indirectly engaged in the business
of manufacturing and/or distributing automobiles, or an affiliate thereof, and
no such entity may acquire an ownership interest in FAA as described in Section
1 of the Agreement.
F. Provisions Relating to Performance
----------------------------------
1. Dealer agrees to achieve within nine (9) months from the
effective date of this Agreement and to thereafter maintain throughout the
duration of this Agreement, a satisfactory customer satisfaction performance, as
measured by all applicable standards established by Toyota Motor Sales, U.S.A.,
Inc., and which are modified from time to time.
2. Dealer agrees to achieve within nine (9) months from the
effective date of this Agreement and to thereafter maintain throughout the
duration of this Agreement, Toyota car and truck penetration in its Primary
Market Area that is at least equal to the Region's penetration rate.
6
IN WITNESS WHEREOF, the Parties have executed these Additional
Provisions as of the date first above written.
TOYOTA MOTOR SALES, USA, INC. TOYOTA MOTOR SALES, U.S.A., INC.
SAN FRANCISCO REGION
By: By:
----------------------------- -------------------------------
Title: President Title: GENERAL MANAGER
-------------------------- ----------------------------
FIRSTAMERICA AUTOMOTIVE, INC. FAA SAN BRUNO, INC.
d.b.a. MELODY TOYOTA
By: By:
----------------------------- -------------------------------
Title: Pres Title: Pres
-------------------------- ----------------------------
7
TOYOTA DEALER AGREEMENT
STANDARD PROVISIONS
The following Standard Provisions are expressly incorporated in and made a
part of the Toyota Dealer Agreement.
XIII. ACQUISITION, DELIVERY AND INVENTORY OF TOYOTA PRODUCTS
A. ACQUISITION OF TOYOTA PRODUCTS
DEALER shall have the right to purchase Toyota Products from
DISTRIBUTOR in accordance with the provisions set forth herein and
such other requirements as may be established from time to time by
DISTRIBUTOR.
B. AVAILABILITY AND ALLOCATION OF PRODUCT
DISTRIBUTOR agrees to use its best efforts to provide Toyota Products
to DEALER in such quantities and types as may be required by DEALER to
fulfill its obligations with respect to the sale and servicing of
Toyota Products under this Agreement, subject to available supply from
IMPORTER, DISTRIBUTOR's requirements, and any change or discontinuance
with respect to any Toyota Product. DISTRIBUTOR will endeavor to
allocate Toyota Products among its dealers in a fair and equitable
manner, which it shall determine in its sole discretion. DISTRIBUTOR
agrees to provide DEALER with an explanation of the method used to
distribute such products and, upon written request, will advise DEALER
of DISTRIBUTOR's total wholesale sales of new motor vehicles, by
series, in DISTRIBUTOR's area and to DEALER individually, for a
reasonable time frame.
C. PRICES AND TERMS OF SALE
DISTRIBUTOR shall have the right to establish and revise prices and
other terms for the sale of Toyota Products to DEALER. Ownership and
title of Toyota Products sold by DISTRIBUTOR to DEALER shall pass upon
payment therefor by DEALER to DISTRIBUTOR and DEALER shall have no
ownership interest in such Products until such payment is received.
Risk of loss for Toyota Products sold by DISTRIBUTOR to DEALER shall
pass upon delivery of such Products to DEALER. Revised prices and
terms shall apply to any Toyota Products not invoiced to DEALER by
DISTRIBUTOR at the time the notice of such change is given to DEALER
(in the case of Toyota Motor Vehicles), or upon issuance of a new or
modified Parts Price List or through change notices, letters,
bulletins, or revision sheets (in the case of parts, options and
accessories), or at such other times as may be designated in writing
by DISTRIBUTOR.
8
Payment for all Toyota Products shall be made when billed, unless
other terms are established by DISTRIBUTOR in writing.
D. MODE, PLACE AND CHARGES FOR DELIVERY OF PRODUCTS
DISTRIBUTOR shall designate the distribution points and the mode of
transportation and shall select carrier(s) for the transportation of
Toyota Products to DEALER. DEALER shall pay DISTRIBUTOR such charges
as DISTRIBUTOR in its sole discretion establishes for such
transportation services.
E. INVENTORY DAMAGE CLAIMS AND LIABILITY
DEALER shall promptly notify DISTRIBUTOR of any damage occurring
during transit and shall, if so directed by DISTRIBUTOR, file claims
on DISTRIBUTOR's behalf against transportation carrier for damage.
DEALER agrees to assist DISTRIBUTOR in obtaining recovery against any
transportation carrier or insurer for loss or damage to Toyota
Products shipped hereunder.
To the extent required by law, DEALER shall notify the purchaser of a
vehicle of any damage sustained by such vehicle prior to sale. DEALER
shall indemnify and hold DISTRIBUTOR harmless from any liability
resulting from DEALER's failure to so notify such purchasers.
X. XXXXX OR FAILURE OF DELIVERY
DISTRIBUTOR shall not be liable for delay or failure to deliver Toyota
Products which it has previously agreed to deliver, where such delay
or failure to deliver is the result of any event beyond the control of
DISTRIBUTOR, IMPORTER or FACTORY, including but not limited to fire,
floods, storms or other acts of God, any law or regulation of any
governmental entity, foreign or civil wars, riots, interruptions of
navigation, shipwrecks, strikes, lockouts or other labor troubles,
embargoes, blockades, or delay or failure of FACTORY to deliver Toyota
Products.
G. DIVERSION CHARGES
If after delivery DEALER fails or refuses to accept Toyota Products
that it has agreed to purchase, DEALER shall pay all charges incurred
by DISTRIBUTOR as a result of such refusal. Such charges shall not
exceed the charge of returning any such product to the point of
original shipment by DISTRIBUTOR plus all charges for demurrage,
storage or other charges related to such refusal.
9
DEALER also agrees to assume responsibility for, and shall pay any and
all reasonable charges for, demurrage, storage or other charges
accruing after arrival of shipment at the point of original shipment.
H. CHANGES OF DESIGN, OPTIONS OR SPECIFICATIONS
DISTRIBUTOR, IMPORTER or FACTORY may change the design or
specifications of any Toyota Product or the options in any Toyota
Product and shall be under no obligation to provide notice of same or
to make any similar change upon any product previously purchased by or
shipped to DEALER. No change shall be considered a model year change
unless so specified by DISTRIBUTOR.
I. DISCONTINUANCE OF MANUFACTURE OR IMPORTATION
FACTORY, IMPORTER and/or DISTRIBUTOR may discontinue the manufacture,
importation or distribution of all or part of any Toyota Product,
whether motor vehicle, parts, options, or accessories, including any
model, series, or body style of any Toyota Motor Vehicle at any time
without any obligation or liability to DEALER by reason thereof.
J. MINIMUM VEHICLE INVENTORIES
Subject to the ability of DISTRIBUTOR to supply Toyota Motor Vehicles
to DEALER, DEALER agrees that it shall, at all times, maintain at
least the minimum inventory of Toyota Motor Vehicles as may be
established by DISTRIBUTOR from time to time. DEALER also agrees that
it shall have available at all times, for purposes of display and
demonstration, the number of Toyota Motor Vehicles of the most current
models as may be established by DISTRIBUTOR from time to time, and
shall, at all times, maintain such Motor Vehicles in showroom ready
condition.
K. PRODUCT MODIFICATIONS
DEALER agrees that it will not make any modifications to Toyota
Products that may impair or adversely affect a vehicle's safety,
emissions or structural integrity.
XIV. DEALER MARKETING OF TOYOTA PRODUCTS
A. DEALER'S SALES RESPONSIBILITIES
DEALER recognizes that customer satisfaction and the successful
promotion and sale of Toyota Products are significantly dependent on
DEALER's advertising and sales promotion activities. DEALER shall
actively and effectively promote, through DEALER's own
10
advertising and sales promotion activities, the purchase of Toyota
Products by customers. Therefore, DEALER at all times shall:
1. Actively and effectively advertise, merchandise, promote and sell
Toyota Products;
2. Maintain an adequate, stable and trained sales organization, and,
to that end, make all reasonable efforts to ensure that its sales
personnel attend all sales training courses prescribed by
DISTRIBUTOR at DEALER's expense;
3. Maintain high standards of ethics in advertising, promoting and
selling Toyota Products and avoid engaging in any
misrepresentation or unfair or deceptive practices; and
4. Accurately represent to customers the total selling price of
Toyota Products. DEALER agrees to explain to customers of Toyota
Products the items that make up the total selling price and to
give the customers itemized statements and all other information
required by law. DEALER understands and hereby acknowledges that
it may sell Toyota Products at whatever price DEALER desires.
B. EXPORT PROHIBITION
DEALER is authorized to sell Toyota Motor Vehicles only to customers
located in the continental United States. DEALER agrees that it will
not sell Toyota Motor Vehicles for resale or use outside the
continental United States. DEALER agrees to abide by any export policy
established by DISTRIBUTOR.
C. USED VEHICLES
DEALER agrees to display, promote and sell used vehicles at the
Approved Location. DEALER shall maintain for resale an inventory of
used vehicles.
D. ASSISTANCE PROVIDED BY DISTRIBUTOR
1. SALES TRAINING ASSISTANCE
To assist DEALER in the fulfillment of its sales responsibilities
under this Agreement, DISTRIBUTOR agrees to offer general and
specialized sales management and sales training programs for the
benefit and use of DEALER's sales organization. When requested by
DISTRIBUTOR, DEALER's personnel shall participate in such
programs at DEALER's expense.
11
2. SALES PROMOTION ASSISTANCE
In order that authorized Toyota dealers may be assured of the
benefits of comprehensive advertising and promotion of Toyota
Products, DISTRIBUTOR 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 sales of such Toyota Products at a reasonable
charge where applicable.
3. FIELD SALES PERSONNEL ASSISTANCE
To assist DEALER in handling its sales responsibilities under
this Agreement, DISTRIBUTOR agrees to provide trained field sales
personnel to advise and counsel DEALER on sales-related subjects,
including merchandising, training and sales management.
XV. DEALER SERVICE OBLIGATIONS
A. CUSTOMER SERVICE STANDARDS
DEALER and DISTRIBUTOR agree that the success and future growth of
DISTRIBUTOR and DEALER are substantially dependent upon the customer's
ability to obtain high-quality vehicle servicing. Therefore, DEALER
agrees to:
1. Take all reasonable steps to provide service of the highest
quality for all Toyota Motor Vehicles, regardless of where
purchased and whether or not under warranty;
2. Ensure that the customer is advised of the necessary repairs and
that his or her consent is obtained prior to the initiation of
any repairs;
3. Ensure that problems on Toyota Motor Vehicles are accurately
diagnosed and repairs are promptly and professionally performed;
and
4. Ensure that the customer is treated courteously and fairly at all
times.
12
B. NEW MOTOR VEHICLE PRE-DELIVERY SERVICE
DEALER agrees that prior to delivery of a new Toyota Motor Vehicle to
a customer it shall perform, as directed by DISTRIBUTOR, pre-delivery
service on each Toyota Motor Vehicle in accordance with Toyota
standards. DISTRIBUTOR shall pay DEALER for such pre-delivery service
according to such directives and the applicable provisions of the
Toyota Warranty Policy and Procedures Manual.
C. WARRANTY AND POLICY SERVICE
DEALER acknowledges that the only warranties of DISTRIBUTOR or FACTORY
applicable to Toyota Products shall be the New Vehicle Limited
Warranty or such other written warranties that may be expressly
furnished or sold by DISTRIBUTOR or FACTORY. Except for its limited
liability under such written warranty or warranties, DISTRIBUTOR and
FACTORY do not assume any other warranty obligation or liability.
DEALER is not authorized to assume any additional warranty obligations
or liabilities on behalf of DISTRIBUTOR, IMPORTER or FACTORY. Any such
additional obligations assumed by DEALER shall be the sole
responsibility of DEALER. Any extended service contract sold by
IMPORTER, DISTRIBUTOR or Toyota-affiliated entity shall be governed
by its own terms.
DEALER shall perform warranty service specified by DISTRIBUTOR in
accordance with the Toyota Warranty Policy and Procedures Manual.
DISTRIBUTOR agrees to compensate DEALER for all warranty work,
including labor, diagnosis and Genuine Toyota Parts and Accessories,
in accordance with procedures and at rates to be announced from time
to time by DISTRIBUTOR. Unless otherwise approved in writing in
advance by DISTRIBUTOR, DEALER shall use only Genuine Toyota Parts and
Accessories when performing Toyota warranty repairs. Warranty service
is provided for the benefit of customers and DEALER agrees that the
customer shall not be obligated to pay any charges for warranty work
or any other services for which DEALER is reimbursed or paid by
DISTRIBUTOR.
D. USE OF PARTS AND ACCESSORIES IN NON-WARRANTY SERVICING
Subject to the provisions set forth below, DEALER has the right to
sell, install or use, for making non-warranty repairs, products that
are not Genuine Toyota Parts or Accessories.
DEALER acknowledges, however, that its customers expect that any parts
or accessories that DEALER sells, installs or uses in the sale, repair
or servicing of Toyota Motor Vehicles are, or meet the high quality
standards of, Genuine Toyota Parts or
13
Accessories. DEALER agrees that in sales, repairs or servicing where
DEALER does not use Genuine Toyota Parts or Accessories, DEALER will
only utilize such other parts or accessories that will not adversely
affect the mechanical operation of the Toyota Motor Vehicle being
sold, repaired or serviced, and that are equivalent in quality and
design to Genuine Toyota Parts or Accessories.
E. WARRANTY DISCLOSURES AS TO NON-GENUINE PARTS AND ACCESSORIES
In order to avoid confusion and to minimize potential customer
dissatisfaction, in any instance where DEALER sells, installs or uses
other than Genuine Toyota Parts or Accessories, DEALER shall disclose
such fact to the customer and shall advise the customer that these
items are not included in warranties furnished by DISTRIBUTOR. Such
disclosure shall be written, conspicuous and stated on the customer's
copy of the service or repair order or sale document. In addition,
DEALER will clearly explain to the customer the extent of any warranty
covering the parts or accessories involved and will deliver a copy of
the warranty to the customer.
F. SERVICE CAMPAIGN INSPECTIONS AND CORRECTIONS
DEALER agrees to perform service campaign inspections and/or
corrections for owners or users of all Toyota Products that qualify
for such inspections and/or corrections. DEALER further agrees to
comply with all DISTRIBUTOR's directives and with the applicable
procedures in the Toyota Warranty Policy and Procedures Manual
relating to those inspections and/or corrections. DISTRIBUTOR agrees
to reimburse DEALER for all replacement parts and/or other materials
required and used in connection with such work and for labor according
to such directives and the applicable provisions of the Toyota
Warranty Policy and Procedures Manual.
G. COMPLIANCE WITH SAFETY AND EMISSION CONTROL REQUIREMENTS
DEALER agrees to comply and operate consistently with all applicable
provisions of the National Traffic and Motor Vehicle Safety Act of
1966 and the Federal Clean Air Act, as amended, including applicable
rules and regulations issued from time to time thereunder, and all
other applicable federal, state and local motor vehicle safety and
emission control statutes, rules and regulations.
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 their retail sale, any safety devices or
other equipment not installed or supplied as standard equipment by
FACTORY, then DEALER, prior to the sale of any Toyota Motor Vehicle on
which such
14
installations are required, shall properly install such devices or
equipment on such Toyota Motor Vehicles. DISTRIBUTOR agrees to
reimburse DEALER for all parts and/or other materials required and
used in connection with such work and for labor according to the
applicable provisions of the Toyota Warranty Policy and Procedures
Manual. DEALER shall comply with state and local laws pertaining to
the installation and reporting of such equipment.
In the interest of motor vehicle safety and emission control,
DISTRIBUTOR and DEALER agree to provide to each other 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 their rules and regulations,
and all other applicable federal, state and local motor vehicle safety
and emissions control statutes, rules and regulations.
H. COMPLIANCE WITH CONSUMER PROTECTION STATUTES, RULES AND REGULATIONS
Because certain customer complaints may impose liability upon
DISTRIBUTOR under various repair or replace laws or other consumer
protection laws and regulations, DEALER agrees to provide prompt
notice to DISTRIBUTOR of such complaints and take such other steps as
DISTRIBUTOR may reasonably require. DEALER will do nothing to affect
adversely DISTRIBUTOR's rights under such laws and regulations.
Subject to any law or any regulation to the contrary, DEALER shall be
liable to DISTRIBUTOR for any refunds or vehicle replacements provided
to customer where DISTRIBUTOR reasonably establishes that DEALER
failed to carry out vehicle repairs in accordance with DISTRIBUTOR's
written published policies and procedures or its express oral
instructions subsequently confirmed in writing. DEALER also agrees to
provide applicable required customer notifications and disclosures as
pre-scribed by repair or replacement laws or other consumer laws or
regulations.
XVI. SERVICE AND PARTS OPERATIONS
A. ORGANIZATION AND STANDARDS
DEALER agrees to organize and maintain an adequate, stable and trained
service and parts organization of the highest quality, including a
qualified Service Manager and a qualified Parts Manager, and a number
of competent customer relations, service and parts personnel
sufficient to meet the needs of the marketplace in the reasonable
opinion of DISTRIBUTOR. DEALER's personnel will meet the educational,
management and technical training standards established by
DISTRIBUTOR.
15
B. SERVICE EQUIPMENT AND SPECIAL TOOLS
DEALER agrees to acquire and properly maintain adequate service
equipment and such special service tools and instruments as are
specified by DISTRIBUTOR.
C. PARTS INVENTORY
DEALER and DISTRIBUTOR recognize that the owners and users of Toyota
Motor Vehicles may reasonably expect that DEALER will have Genuine
Toyota 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 an adequate inventory of Genuine
Toyota Parts or Accessories, as listed in DISTRIBUTOR's current
inventory guide, to enable DEALER to meet its customers' needs and to
fulfill its service responsibilities under this Agreement.
D. ASSISTANCE PROVIDED BY DISTRIBUTOR
1. SERVICE TRAINING ASSISTANCE
To assist DEALER in fulfilling its service and parts
responsibilities under this Agreement, DISTRIBUTOR agrees to
offer general and specialized service and parts training programs
for the benefit and use of DEALER's service and parts
organizations. When requested by DISTRIBUTOR, DEALER's personnel
shall participate in such programs at DEALER's expense.
2. MANUALS AND MATERIALS
DISTRIBUTOR agrees to make available to DEALER, at DEALER's
expense, copies of such dealer manuals, catalogs, bulletins,
publications and technical data as DISTRIBUTOR shall deem to be
necessary for the needs of DEALER's service and parts
organization. DEALER shall be responsible for keeping such
manuals, publications and data current and available for
consultation by its employees.
3. FIELD PERSONNEL ASSISTANCE
To assist DEALER in handling its parts and service
responsibilities under this Agreement, DISTRIBUTOR agrees to make
available qualified field parts and service personnel who will,
from time to time, advise and counsel DEALER on parts and
service-related subjects, including parts and service policies,
product quality, technical adjustments, repair and replacement of
product components, customer relations,
16
warranty administration, service and parts merchandising, and
personnel/management training.
XVII. CUSTOMER SATISFACTION RESPONSIBILITIES
A goal of DISTRIBUTOR and DEALER is to be recognized as marketing the
finest products and providing the best service in the automobile
industry. The Toyota name should be synonymous with the highest level of
customer satisfaction. DEALER will take all reasonable steps to ensure
that each customer is completely satisfied with his or her Toyota
Products and the services and practices of DEALER.
Whenever requested by DISTRIBUTOR, DEALER shall:
A. Designate an employee responsible for customer satisfaction
commensurate with the needs of the marketplace; and
B. Provide a detailed written plan of DEALER's customer satisfaction
program to DISTRIBUTOR and implement such program on a continuous
basis. This plan shall include an ongoing system for:
1. Emphasizing customer satisfaction to all DEALER's employees;
2. Training DEALER's employees, including participation in
DISTRIBUTOR's customer satisfaction training at DEALER's
expense; and
3. Responding immediately to, and resolving promptly, requests for
customer assistance, and conveying to customers that DEALER is
committed to the highest possible level of customer satisfaction.
XVIII. DEALERSHIP FACILITIES AND IDENTIFICATION
A. FACILITIES
1. In order for DISTRIBUTOR to establish an effective network of
authorized Toyota dealers, DEALER shall provide, and at all times
maintain, attractive dealership facilities at the Approved
Location(s) that satisfy the image, size, layout, interior
design, color, equipment, identification and other factors
established by DISTRIBUTOR. DEALER shall meet the minimum
facility standards and policies established by DISTRIBUTOR which
can be amended from time to time.
17
2. To assist DEALER in planning, building, or remodeling dealership
facilities, DISTRIBUTOR will provide DEALER, upon request, a
Toyota Dealer Facility Planner and will assist in identifying
sources from which DEALER may purchase architectural materials
and furnishings that meet Toyota standards and guidelines. In
addition, representatives of DISTRIBUTOR will be available to
DEALER from time to time to counsel and advise DEALER in
connection with DEALER's planning and equipping the dealership
premises.
B. DEALER'S OPERATING HOURS
DEALER agrees to keep all of its dealership operations open for
business during all days and hours that are customary and lawful for
such operations in the community or locality in which DEALER is
located and in accordance with industry standards. The dealership
shall not be considered open unless all sales, service and parts
operations are open to the public and dealership personnel are present
to assist customers.
C. SIGNS
Subject to applicable governmental ordinances, regulations, and
statutes, DEALER agrees to comply with IMPORTER's signage program and
to display only standard authorized signage which conforms to the
approved corporate identification program.
D. USE OF TOYOTA MARKS
1. USE BY DEALER
DISTRIBUTOR grants to DEALER the non-exclusive privilege of
displaying or otherwise using authorized Toyota Marks as
specified in the Toyota Brand Graphic Standards Manual at the
Approved Location(s) in connection with the selling or servicing
of Toyota Products.
DEALER further agrees that it promptly shall discontinue the
display and use of any Toyota Marks, or shall change the manner
in which any Toyota Marks are displayed and used, when for any
reason it is requested to do so by DISTRIBUTOR DEALER may use the
Toyota Marks as specified in the Toyota Brand Graphic Standards
Manual only at Approved Location(s) and for such purposes as are
specified in this Agreement. DEALER agrees that such Toyota Marks
may be used as part of the name under which DEALER's business is
conducted only with the prior written approval of DISTRIBUTOR.
18
DEALER shall discontinue any advertising that DISTRIBUTOR may
find to be injurious to DISTRIBUTOR's business or reputation or
the Toyota Marks.
2. DISCONTINUANCE OF USE
Upon termination, non-renewal, or expiration of this Agreement,
DEALER agrees that it shall immediately:
a. Discontinue the use of Toyota Marks, or any semblance of same,
including without limitation, the use of all stationery,
telephone directory listing, and other printed material
referring in any way to Toyota or bearing any Toyota Xxxx;
b. Discontinue the use of the Toyota Marks, or any semblance of
same, as part of its business or corporate name, and file a
change or discontinuance of such name with appropriate
authorities;
c. Remove all product signs bearing Toyota Marks. Product signs
owned by DEALER shall be removed and disposed of at DEALER's
sole cost and expense. Product signs leased to DEALER by or
through IMPORTER or its representative shall be removed from
DEALER's premises at IMPORTER's sole cost and expense. DEALER
hereby grants permission for DISTRIBUTOR to enter upon
DEALER's premises to remove signs leased to DEALER by
IMPORTER;
d. Cease representing itself as an authorized Toyota Dealer; and
e. Refrain from any action, including without limitation, any
advertisement, statement or implication that it is authorized
to sell or distribute Toyota Products.
In the event DEALER fails to comply promptly with the terms and
conditions of this Section, DISTRIBUTOR shall have the right to
enter upon DEALER's premises and remove, without notice or
liability, all such product signs and identification bearing the
Toyota Marks. DEALER agrees that it shall reimburse DISTRIBUTOR
for any costs and expenses incurred in the removal of signs owned
by DEALER bearing the Toyota Marks, including reasonable attorney
fees.
XIX. EVALUATION OF DEALER'S PERFORMANCE
DEALER acknowledges the importance of its overall performance in relation
to the purposes and objectives of this Agreement. DISTRIBUTOR will
periodically evaluate DEALER's performance of its responsibilities in the
areas of sales, service and parts, facili-
19
ties and customer satisfaction, based upon such reasonable criteria as
DISTRIBUTOR may establish from time to time. DISTRIBUTOR agrees to review
all such evaluations with DEALER and will provide DEALER a copy thereof.
Where performance is below acceptable standards of DISTRIBUTOR, DEALER
agrees to take prompt action to improve its performance and, if requested
by DISTRIBUTOR, to notify DISTRIBUTOR in writing of its detailed plans and
timetables for accomplishing those improvements.
A. SALES PERFORMANCE EVALUATION
Pursuant to Section XIV herein, DISTRIBUTOR will evaluate DEALER's
sales performance under criteria established by DISTRIBUTOR, which
may include, but is not limited to, the achievement of reasonable
sales objectives as DISTRIBUTOR may establish; comparisons of DEALER's
sales and/or registrations to those of comparable Toyota dealers and
other line makes within DEALER's Primary Market Area or such area(s)
which DISTRIBUTOR believes is a reasonable basis for comparison; sales
performance trends over a reasonable period of time; and the manner in
which DEALER has conducted its sales and marketing operations.
B. SERVICE PERFORMANCE EVALUATION
Pursuant to Sections XV and XVI herein, DISTRIBUTOR will evaluate
DEALER's service performance in such areas as, without limitation,
warranty management, compliance with the Toyota Warranty Policy and
Procedures Manual, service management, service operating procedures,
service staffing and training, administration, service facilities and
equipment, new vehicle pre-delivery service, customer handling and
customer retention.
C. PARTS PERFORMANCE EVALUATION
Pursuant to Section XVI herein, DISTRIBUTOR will evaluate DEALER'S
parts performance in such areas as, without limitation, general parts
management, parts operating procedures, parts staffing and training,
parts facilities, parts inventory management, parts sales, accessory
sales, parts merchandising and parts availability to customers.
D. CUSTOMER SATISFACTION PERFORMANCE EVALUATION
Pursuant to Section XVII, herein, DISTRIBUTOR will evaluate DEALER's
performance of its responsibilities in the area of customer
satisfaction based on the following considerations:
20
1. DISTRIBUTOR will provide DEALER with customer satisfaction
reports or such other equivalent data as will permit DEALER to
assess its performance and maintain the highest level of customer
satisfaction. DEALER agrees to review with its employees on a
regular basis the results of the customer satisfaction reports or
other data it receives.
2. DEALER agrees to develop, implement and review with DISTRIBUTOR
specific action plans for improving results in the event that
DEALER is below the average customer satisfaction levels for
other Toyota dealers in such areas that DISTRIBUTOR believes are
a reasonable basis for comparison. DEALER shall respond on a
timely basis to requests from DISTRIBUTOR to take action on
unsatisfactory customer satisfaction matters and to commit
necessary resources to remedy deficiencies reasonably specified
by DISTRIBUTOR, and DEALER shall remedy those deficiencies.
DISTRIBUTOR reserves the right to establish reasonable, uniform
criteria to be used to evaluate DEALER.
E. DEALERSHIP FACILITIES EVALUATION
Pursuant to Section XVIII, herein, DISTRIBUTOR will evaluate DEALER's
performance of its responsibilities in the area of dealership
facilities.
XX. CAPITAL, CREDIT, RECORDS AND UNIFORM SYSTEMS
A. NET WORKING CAPITAL
The amount and structure of the net working capital required to
properly conduct the business of DEALER 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 executed by DEALER and DISTRIBUTOR
concurrently with this Agreement. If, either because of changed
conditions or because DISTRIBUTOR adopts a new net working capital
formula, DISTRIBUTOR shall have the right to revise DEALER's minimum
net working capital requirement to be used in DEALER's operation. If
so revised, DEALER agrees to enter into the revised Minimum Net
Working Capital Agreement and to meet the new standard within a
reasonable period of time as established by DISTRIBUTOR.
B. FLOORING LINE
DEALER recognizes that its ability to fulfill its obligations under
this Agreement is dependent upon its maintenance of flooring which is
sufficient to sustain its ongoing
21
operations. DEALER agrees to obtain and maintain at all times a
confirmed and adequate flooring line with a bank or financial
institution or other method of financing acceptable to DISTRIBUTOR to
enable DEALER to perform its obligations pursuant to this Agreement.
Subject to the foregoing obligations, DEALER is free to do its
financing business, wholesale, retail or both, with whomever it
chooses and to the extent it desires.
C. PAYMENT TERMS AND SETTLEMENT OF ACCOUNTS
All monies or accounts due DEALER from DISTRIBUTOR will be considered
net of DEALER's obligations to DISTRIBUTOR on DEALER's parts/open
account. DISTRIBUTOR may deduct or offset any amounts due or to become
due from DEALER to DISTRIBUTOR, or any amounts held by DISTRIBUTOR,
from or against any sums or accounts due or to become due from
DISTRIBUTOR to DEALER. Payments by DEALER to DISTRIBUTOR shall be made
by electronic bank draft or in any other manner prescribed by
DISTRIBUTOR and shall be applied against DEALER's indebtedness in
accordance with DISTRIBUTOR's policies and practices. DISTRIBUTOR
shall have the right to apply payments received from DEALER to any
amount owed to DISTRIBUTOR, in DISTRIBUTOR's sole discretion. All
obligations owed by DEALER to DISTRIBUTOR shall be due and payable
when billed, unless other terms are established by DISTRIBUTOR in
writing.
Under no circumstances will DISTRIBUTOR enter into a new Agreement
with a proposed transferee unless DEALER first makes arrangements
acceptable to DISTRIBUTOR to satisfy any outstanding obligations to
DISTRIBUTOR on DEALER's parts/open account.
D. UNIFORM ACCOUNTING SYSTEM
DEALER agrees to maintain its financial books and records in
accordance with the Toyota Dealer Accounting Manual, as amended from
time to time by DISTRIBUTOR In addition, DEALER shall furnish to
DISTRIBUTOR, who may also furnish it to IMPORTER and FACTORY, complete
and accurate financial and operating information by the tenth (10th)
of each month in a format prescribed by DISTRIBUTOR. This information
shall include, without limitation, a complete and accurate financial
and operating statement covering the preceding month and calendar
year-to-date operations, including any adjusted year-end statements,
showing the true condition of DEALER's business. All such information
shall be furnished by DEALER to DISTRIBUTOR via DISTRIBUTOR's
electronic communications network and/or in hard copy and/or in any
other manner designated by DISTRIBUTOR.
22
E. RECORDS MAINTENANCE
DEALER agrees to keep complete, accurate and current records regarding
its sale, lease and servicing of Toyota Products for a minimum of five
(5) years, regardless of any retention period required by any
governmental entity. DEALER shall prepare, keep current and retain
records in support of requests for reimbursement for warranty and
policy work performed by DEALER in accordance with the IMPORTER's
Toyota Warranty Policy and Procedures Manual.
F. EXAMINATION OF DEALERSHIP ACCOUNTS AND RECORDS
DISTRIBUTOR, in its sole discretion, without notice and for any reason
whatsoever, shall have the right during regular business hours to
inspect DEALER's facilities and to examine, audit and to reproduce all
records, accounts and supporting data relating to the operations of
DEALER, including without limitation, sales, sales reporting, service
and repair of Toyota Products by DEALER. If requested by DEALER,
DISTRIBUTOR agrees to review any report with DEALER and to provide a
copy of any report of the examination or audit of DEALER.
G. TAXES
DEALER shall be responsible for and duly pay all taxes of any kind,
including, but not limited to, sales taxes, use taxes, excise taxes
and other governmental municipal charges imposed, levied or based upon
the sale of Toyota Products by DEALER, and shall maintain accurate
records of the same.
H. CONFIDENTIALITY
Except as provided in Sections XX(D) above and XXI(A), below,
DISTRIBUTOR agrees that it shall not provide any financial
information, documents or other information submitted to it by DEALER
to any third party, other than subsidiary and parent corporations of
DISTRIBUTOR, unless authorized by DEALER, required by law, required to
effectuate the terms and conditions of this Agreement, or required to
generate composite or comparative data for analytical purposes.
DEALER agrees to keep confidential and not to disclose, directly or
indirectly, any information that DISTRIBUTOR designates as
confidential,
23
I. INFORMATION COMMUNICATION SYSTEMS
To facilitate the accurate and prompt reporting of such relevant
dealership operational and financial information as DISTRIBUTOR may
require, DEALER agrees to install and maintain electronic
communication processing facilities which are compatible with and
which will facilitate the transmission and reception of such
information on the electronic communications network utilized by
DISTRIBUTOR.
J. SALES REPORTING
DEALER agrees to report accurately to DISTRIBUTOR, together with such
information as DISTRIBUTOR 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 to furnish
DISTRIBUTOR with such other reports in such form as DISTRIBUTOR may
reasonably require from time to time.
XXI. RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE
A. RIGHTS GRANTED
If a proposal to sell the dealership's assets or transfer its
ownership is submitted by DEALER to DISTRIBUTOR, or in the event of
the death of the majority Owner of DEALER, DISTRIBUTOR has a right of
first refusal or option to purchase the dealership assets or stock,
including any leasehold interests or realty. DISTRIBUTOR's exercise of
its right or option under this Section supersedes any right or attempt
by DEALER to transfer its interest in, or ownership of, the
dealership. DISTRIBUTOR's right or option may be assigned by it to any
third party and DISTRIBUTOR hereby guarantees the full payment to
DEALER of the purchase price by such assignee. DISTRIBUTOR may
disclose the terms of any pending buy/sell agreement and any other
relevant dealership performance information to any potential assignee.
DISTRIBUTOR's rights under this Section will be binding on and
enforceable against any successor in interest of DEALER or purchaser
of DEALER's assets or stock.
B. EXERCISE OF DISTRIBUTOR'S RIGHTS
DISTRIBUTOR shall have thirty (30) days from the following events
within which to exercise its right of first refusal or option to
purchase: (i) DISTRIBUTOR's receipt of all data and documentation
customarily required by it to evaluate a proposed transfer of
ownership; (ii) DISTRIBUTOR's receipt of written notice from DEALER of
the death of the majority Owner of DEALER, or (iii) DISTRIBUTOR's
disapproval of any application submitted by
24
an Owner's heirs pursuant to Section XXII. DISTRIBUTOR's exercise of
its right of first refusal under this Section shall neither be
dependent upon nor require its prior consideration of or refusal to
approve the proposed buyer or transferee.
C. RIGHT OF FIRST REFUSAL
If DEALER has entered into a bona fide written agreement to sell its
dealership stock or assets, DISTRIBUTOR's right under this Section is
a right of first refusal, enabling DISTRIBUTOR to assume the buyer's
rights and obligations under such agreement, and to terminate this
Agreement and all rights granted DEALER. Upon DISTRIBUTOR's request,
DEALER agrees to provide other documents relating to the proposed
transfer and any other information which DISTRIBUTOR deems
appropriate, including, but not limited to, those reflecting other
agreements or understandings between the parties to the buy/sell
agreement. Refusal to provide such documentation or to state in
writing that no such documents exist shall create the presumption that
the buy/sell agreement is not a bona fide agreement.
D. OPTION TO PURCHASE
In the event of the death of the majority Owner of DEALER or if DEALER
submits a proposal which DISTRIBUTOR reasonably believes is not bona
fide, DISTRIBUTOR has the option to purchase the principal assets of
DEALER utilized in the dealership business, including real estate and
leasehold interests, and to cancel this Agreement and the rights
granted DEALER. The terms and conditions of the purchase of the
dealership assets will be determined by good faith negotiations
between the parties. If an agreement cannot be reached, those terms
will be exclusively determined by arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association.
The site of the arbitration shall be the office of the American
Arbitration Association in the locality of DISTRIBUTOR's principal
place of business.
E. DEALER'S OBLIGATIONS
Upon DISTRIBUTOR's exercise of its right or option and tender of
performance hereunder, DEALER shall forthwith transfer the affected
real property by warranty deed or its equivalent, conveying marketable
title free and clear of all liens, claims, mortgages, encumbrances,
interests and occupancies. The warranty deed or its equivalent shall
be in proper form for recording, and DEALER shall deliver complete
possession of the property and deed at the time of closing. DEALER
shall also furnish to DISTRIBUTOR all copies of any easements,
licenses or other documents affecting the property or dealership
operations and shall assign any permits or licenses that are necessary
or desirable for the
25
use of or appurtenant to the property or the conduct of such
dealership operations. DEALER shall also forthwith execute and deliver
to DISTRIBUTOR instruments satisfactory to DISTRIBUTOR conveying title
to all affected personal property and leasehold interests involved in
the transfer or sale to DISTRIBUTOR. If any personal property is
subject to any lien or charge of any kind, DEALER agrees to procure
the discharge and satisfaction thereof prior to the closing of sale of
such property to DISTRIBUTOR.
F. NO APPLICABILITY TO NOMINATED SUCCESSOR
Section XXI shall not apply to any DEALER whose proposed transfer of
assets or ownership is to a candidate who is currently approved by
DISTRIBUTOR to be DEALER's nominated successor pursuant to Section
XXII(C).
XXII. SUCCESSION RIGHTS UPON DEATH OR INCAPACITY
A. SUCCESSION TO OWNERSHIP AFTER DEATH OF OWNER
In the event that Owner dies and his or her interest in Dealership
passes directly to any person or persons ("Heirs") who wish to succeed
to Owner's interest, then Owner's legal representative must notify
DISTRIBUTOR within sixty (60) days of the death of the Owner of such
Heir's or Heirs' intent to succeed Owner. The legal representative
also must then designate a proposed General Manager for DISTRIBUTOR
approval. The effect of such notice from Owner's legal representative
will be to suspend any notice of termination provided for in Section
XXIII(B)(4) issued hereunder.
Upon delivery of such notice, Owner's legal representative shall
immediately request any person(s) identified by it as intending to
succeed Owner and the designated candidate for General Manager to
submit an application and to provide all personal and financial
information that DISTRIBUTOR may reasonably and customarily require in
connection with its review of such applications. All requested
information must be provided promptly to DISTRIBUTOR and in no case
later than thirty (30) days after receipt of such request from Owner's
legal representative. Upon the submission of all requested
information, DISTRIBUTOR agrees to review such application(s) pursuant
to the then current criteria generally applied by DISTRIBUTOR in
qualifying dealer Owners and/or General Managers. DISTRIBUTOR shall
either approve or disapprove the application(s) within ninety (90)
days of full compliance with all DISTRIBUTOR's requests for
information. If DISTRIBUTOR approves the application(s), it shall
offer to enter into a new Toyota Dealer Agreement with Owner's Heir(s)
in the form then currently in use, subject to such additional
conditions and for such a term as DISTRIBUTOR deems appropriate.
26
In the event that DISTRIBUTOR does not approve the designated Heir(s)
or designated candidate for General Manager, or if the Owner's legal
representative withdraws his or her notice of the Heir(s) intent to
succeed as Owner(s), or if the legal representative or any proposed
owners or General Manager fails to timely provide the required
information, DISTRIBUTOR may reinstate or issue a notice of
termination. Nothing in this Section shall constitute a waiver of
DISTRIBUTOR's right under Section XXI to exercise its right of first
refusal or option to purchase.
B. INCAPACITY OF OWNER
The parties agree that, as used herein, incapacity shall refer to any
physical or mental ailment that, in DISTRIBUTOR's opinion, adversely
affects Owner's ability to meet his or her obligations under this
Agreement. DISTRIBUTOR may terminate this Agreement when an
incapacitated Owner also is the General Manager identified herein.
Prior to the effective date of any notice of termination, an
incapacitated Owner who is also the General Manager, or his or her
legal representative, may propose a new candidate for the position of
General Manager. Such proposal shall be in writing and shall suspend
any pending notice of termination until DISTRIBUTOR advises DEALER of
its approval or disapproval of the new candidate. Upon receipt of such
notice, DISTRIBUTOR and DEALER shall follow the qualification
procedures set forth in subsection (A) above.
C. NOMINATION OF SUCCESSOR
PRIOR TO DEATH OR INCAPACITY OF OWNER
An Owner owning a majority of DEALER's stock may nominate a candidate
to assume ownership and/or the position of General Manager of the
dealership upon his or her death or incapacity.
As soon as practicable after such nomination, DISTRIBUTOR will request
such personal and financial information from the nominated Owner
and/or General Manager candidate as it reasonably and customarily may
require in evaluating such candidates. DISTRIBUTOR shall apply
criteria then currently used by DISTRIBUTOR in qualifying Owners
and/or General Managers of authorized dealers. Upon receipt of all
requested information, DISTRIBUTOR shall either approve or disapprove
such candidate. Approval by DISTRIBUTOR will not be unreasonably
withheld. In the event of the death or incapacity of the nominating
Owner, DISTRIBUTOR will enter into a new Toyota Dealer Agreement with
the approved nominee of a length to be determined by DISTRIBUTOR.
DISTRIBUTOR agrees that DEALER may renominate the candidate
27
after the expiration of this Agreement, and DISTRIBUTOR will approve
such nomination provided: (1) DISTRIBUTOR and DEALER have entered into
a new Toyota Dealer Agreement; and (2) the proposed candidate
continues to comply with the then current criteria used by DISTRIBUTOR
in qualifying such candidates. If DISTRIBUTOR does not initially
qualify the candidate, DISTRIBUTOR agrees to review the reason(s) for
its decision with Owner. Owner is free at any time to renew its
nomination. However, in such instances, the candidate must again
qualify pursuant to the then current criteria. Owner may, by written
notice, withdraw a nomination at any time, even if DISTRIBUTOR has
previously qualified said candidate.
XXIII. TERMINATION
A. VOLUNTARY TERMINATION BY DEALER
DEALER may voluntarily terminate this Agreement at any time by written
notice to DISTRIBUTOR. Termination shall be effective thirty (30) days
after receipt of the notice by DISTRIBUTOR, unless otherwise mutually
agreed in writing.
B. TERMINATION FOR CAUSE
1. IMMEDIATE TERMINATION
DEALER and DISTRIBUTOR agree that the following conduct is within
DEALER's control and is so contrary to the goals, purposes and
objectives of this Agreement as to warrant its immediate
termination. Accordingly, DEALER agrees that if it engages in any
of the following types of conduct, DISTRIBUTOR shall have the
right to terminate this Agreement immediately:
a. If DEALER fails to conduct any customary dealership operations
for seven consecutive business days during DEALER's customary
business hours, except in the event such closure or cessation
of operation is caused by some physical event beyond the
control of DEALER, such as fires, floods, earthquakes, or
other acts of God;
b. If DEALER becomes insolvent, or files any petition under
bankruptcy law, or executes an assignment for the benefit of
creditors, or appoints a receiver or trustee or another
officer having similar powers is appointed for DEALER and is
not removed within thirty (30) days from his appointment
thereto 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;
28
c. If DEALER, or any Owner or officer or parent company of
DEALER, is convicted of any felony;
d. If DEALER or any Owner, officer or General Manager of DEALER
makes any material misrepresentation to DISTRIBUTOR,
including, but not limited to, any misrepresentations made by
DEALER to DISTRIBUTOR in applying for this Agreement or for
approval as Owner or General Manager of DEALER;
e. If DEALER fails to obtain or maintain any license, permit or
authorization necessary for the conduct by DEALER of his or
her business pursuant to this Agreement, or such license,
permit or authorization is suspended or revoked; or
f. If DEALER makes any attempted or actual sale, transfer or
assignment by DEALER of this Agreement or any of the rights
granted DEALER hereunder, or upon 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 approval of DISTRIBUTOR.
2. TERMINATION UPON SIXTY DAYS NOTICE
The following conduct violates the terms and conditions of this
Agreement and, if DEALER engages in such conduct, DISTRIBUTOR
shall have the right to terminate this Agreement upon sixty (60)
days notice:
a. Appointment of a new General Manager without the prior written
approval of DISTRIBUTOR;
b. Conducting, directly or indirectly, any Toyota dealership
operation at any location other than at the Approved
Location(s);
c. Failure of DEALER to make any payments to DISTRIBUTOR when
due;
d. Failure of DEALER to establish or maintain during the
existence of this Agreement the required net working capital
or adequate flooring line;
e. Any dispute, disagreement or controversy among Owners,
partners, managers, officers or stockholders of DEALER that,
in the reasonable opinion of DISTRIBUTOR, adversely affects
the ownership, operation, management, business, reputation or
interests of DEALER or DISTRIBUTOR;
29
f. Impairment of the reputation or financial standing of DEALER,
Owner, officer or parent company subsequent to the execution
of this Agreement;
g. Refusal to permit DISTRIBUTOR to examine or audit DEALER's
accounting records as provided herein upon receipt by DEALER
from DISTRIBUTOR of written notice requesting such permission
or information;
h. Failure of DEALER to furnish all required sales or financial
information and related supporting information in a timely
manner;
i. Any civil, criminal or administrative liability found against
DEALER or any Owner, officer or parent company of DEALER for
any automotive-related matter which adversely affects the
ownership, operation, management, reputation, business or
interests of DEALER, or impairs the goodwill associated with
the Toyota Marks; or
j. 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 Section
XIX, herein, DISTRIBUTOR concludes that DEALER has failed to
perform adequately its sales, service, parts or customer
satisfaction responsibilities or to provide adequate dealership
facilities, DISTRIBUTOR shall notify DEALER in writing of such
failure(s) and will endeavor to review promptly with DEALER the
nature and extent of such failure(s), and will grant DEALER 180
days or such other period as may be required by law 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, DISTRIBUTOR may
terminate this Agreement upon sixty (60) days notice or such
other notice as may be required by law. Section XXIII(B)(3) shall
not be applicable where DEALER has relocated without
DISTRIBUTOR's approval.
4. TERMINATION UPON DEATH OR INCAPACITY
DISTRIBUTOR may 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 and/or such
Owner's legal representative. Termination upon either of these events
shall be effective ninety (90) days from the date of such notice.
30
C. NOTICE OF TERMINATION
Any notice of termination under this Agreement shall be in writing and
shall be mailed to DEALER or its General Manager at DEALER's Approved
Location by certified mail, return receipt requested, or shall be
delivered in person to the dealership. Such notice shall be effective
upon the date of receipt. DISTRIBUTOR need not state all grounds on
which it relies in its termination of DEALER, and shall have the right
to amend such notice as appropriate. DISTRIBUTOR's failure to refer to
any additional grounds for termifiation shall not constitute a waiver
of its right later to rely upon such grounds.
D. CONTINUANCE OF BUSINESS RELATIONS
Upon receipt of any notice of termination or non-renewal, DEALER
agrees to conduct itself and its operation until the effective date of
termination or non-renewal in a manner that will not injure the
reputation or goodwill of the Toyota Marks or DISTRIBUTOR
E. REPURCHASE PROVISIONS
1. DISTRIBUTOR'S OBLIGATIONS
Upon the expiration or termination of this Agreement (other than
pursuant to an approved agreement to sell the dealership business
or assets or to otherwise transfer the ownership of DEALER),
DISTRIBUTOR shall repurchase from DEALER the following:
a. New; unused, never titled, unmodified, undamaged, current
model year Toyota Motor Vehicles with less than 100 miles,
then unsold in DEALER's inventory. The prices of such Motor
Vehicles shall be the same as those at which they were
originally purchased by DEALER, less all prior refunds or
other allowances made by DISTRIBUTOR to DEALER with respect
thereto.
b. New, unused and undamaged Toyota parts and accessories,
contained in the original packaging, then unsold in DEALER's
inventory that are in good and saleable condition. The prices
for such parts and accessories shall be the prices last
established by DISTRIBUTOR for the sale of identical parts or
accessories to dealers in the area in which DEALER is located.
c. Special service tools recommended by DISTRIBUTOR and then
owned by DEALER and that are especially designed for servicing
Toyota Motor Vehicles. The prices for such special service
tools will be the price paid by DEALER less appropriate
depreciation, or such other price as the parties may
negotiate.
31
d. Signs that DISTRIBUTOR has recommended for identification of
DEALER and are owned by DEALER. The price of such signs shall
be the price paid by DEALER less appropriate depreciation or
such other price as the parties may negotiate.
2. RESPONSIBILITIES OF DEALER
DISTRIBUTOR's obligations to repurchase the items set forth in this
Section are contingent upon DEALER fulfilling the following
obligations:
a. Within thirty (30) days after the date of expiration or the
effective date of termination of this Agreement, DEALER shall
deliver or mail to DISTRIBUTOR a detailed inventory of all items
referred to in this Section which it requests DISTRIBUTOR to
repurchase and shall certify that such list is true and accurate.
b. DEALER shall be entitled to request repurchase of only those
items which it purchased from DISTRIBUTOR, unless DISTRIBUTOR
agrees otherwise.
c. Products and special service tools to be repurchased by
DISTRIBUTOR from DEALER shall be delivered by DEALER to
DISTRIBUTOR's place of business at DEALER's expense.
d. DEALER will execute and deliver to DISTRIBUTOR instruments
satisfactory to DISTRIBUTOR conveying good and marketable title
to the aforesaid items to DISTRIBUTOR. If such items are subject
to any lien or charge of any kind, DEALER will procure the
discharge in satisfaction thereof prior to their repurchase by
DISTRIBUTOR.
e. DEALER will remove, at its own expense, all signage bearing
Toyota marks which it owns from DEALER's Approved Location(s)
before it is eligible for payment for any repurchased items
pursuant to Section XXIII(E).
3. PAYMENT BY DISTRIBUTOR
DISTRIBUTOR will pay DEALER for such items as DEALER may request be
repurchased and that 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 DISTRIBUTOR.
DISTRIBUTOR shall have the right to offset from any amounts due to
DEALER hereunder the total sum of DEALER's outstanding indebtedness to
DISTRIBUTOR.
32
If DEALER disagrees with DISTRIBUTOR's valuation of any item herein,
and DEALER and DISTRIBUTOR have not resolved their disagreement within
sixty (60) days of the effective date of termination or expiration of
this Agreement, DISTRIBUTOR shall pay to DEALER the amount to which it
reasonably believes DEALER is entitled. DEALER's exclusive remedy to
recover any additional sums that it believes is due under this Section
shall be by resort to any existing Alternative Dispute Resolution
program established by DISTRIBUTOR that is binding on DISTRIBUTOR. If
no Alternative Dispute Resolution program is then existing, DEALER's
exclusive remedy shall be by resort to arbitration in accordance with
the commercial arbitration rules of the American Arbitration
Association (AAA). The site of the arbitration shall be the office of
the AAA in the locality of DISTRIBUTOR's principal place of business.
XXIV. MANAGEMENT OF DISPUTES
A. ALTERNATIVE DISPUTE RESOLUTION PROGRAMS
DISTRIBUTOR and DEALER acknowledge that disputes involving the
performance of this Agreement may from time to time arise that cannot
be resolved at the DISTRIBUTOR level. In order to minimize the effects
of such disputes on their business relationship, the parties agree to
participate in such Alternative Dispute Resolution programs, including
mediation, as may be established by DISTRIBUTOR in its sole
discretion.
It is expressly understood that, unless otherwise specified in this
Agreement, the results of any Alternative Dispute Resolution program
will not be binding upon DEALER, but shall be binding upon
DISTRIBUTOR. The parties' commitment to support and participate in
Alternative Dispute Resolution programs specifically is not a waiver
of DEALER's right to later resort to litigation before any judicial or
administrative forum.
B. APPLICABLE LAW
This Agreement shall be governed by and construed according to the
laws of the state in which DEALER is located.
C. MUTUAL RELEASE
Each party hereby releases the other from any and all claims and
causes of action that it may have against the other for money damages
arising from any event occurring prior to the date of execution of
this Agreement, except for any accounts payable by one
33
party to the other as a result of the purchase of any Toyota Products,
audit adjustments or reimbursement for any services. This release does
not extend to claims which either party does not know or reasonably
suspect to exist in its favor at the time of the execution of this
Agreement.
XXV. DEFENSE AND INDEMNIFICATION
A. DEFENSE AND INDEMNIFICATION BY DISTRIBUTOR
DISTRIBUTOR agrees to assume the defense of DEALER and to indemnify
and hold harmless DEALER, expressly conditioned and subject to all
provisions of Section XXV(C), against loss in any lawsuit or claim
naming DEALER for bodily injury, property damage or breach of warranty
caused solely by an alleged defect in design, manufacture or assembly
of a Toyota Product (except for tires not manufactured by FACTORY)
sold by DISTRIBUTOR to DEALER for resale that has not been altered,
converted or modified by or for DEALER, provided that the alleged
defect could not reasonably have been discovered by DEALER during pre-
delivery inspection or service or installation of Toyota Products,
less any offset. DISTRIBUTOR agrees to defend, to indemnify and hold
harmless DEALER for alleged misrepresentations, misleading statements,
unfair or deceptive trade practices of DISTRIBUTOR, IMPORTER or
FACTORY or any substantial damage to a Toyota Product purchased by
DEALER from DISTRIBUTOR which was improperly repaired by DISTRIBUTOR
unless DEALER has been notified of such damage in writing prior to
retail delivery of the affected Toyota Product. Notwithstanding any
provision of this Agreement, DISTRIBUTOR shall not be required to
defend, to indemnify or hold harmless DEALER against loss resulting
from any claim, complaint, or action alleging DEALER misconduct,
including but not limited to, improper or unsatisfactory service or
repair, or misrepresentations, or any claim of DEALER's unfair or
deceptive trade practices or any claim of improper environmental or
work place practices or conditions.
B. DEFENSE AND INDEMNIFICATION BY DEALER
DEALER agrees to assume the defense of DISTRIBUTOR, IMPORTER or
FACTORY and to indemnify and hold them harmless, expressly conditioned
and subject to all provisions of Section XXV(C), against loss in any
lawsuit or claim naming DISTRIBUTOR, IMPORTER or FACTORY, or their
subsidiaries or affiliates, when the claim or lawsuit directly or
indirectly involves any allegations of: (1) DEALER's alleged failure
to comply, in whole or in part, with any obligation assumed by DEALER
pursuant to this Agreement; or (2) DEALER's alleged negligent or
improper repairing or servicing or installation of a new or used
Toyota Motor Vehicle or Toyota Product, or any loss related to other
motor vehicles or equipment, other than Toyota Motor Vehicles or
Products, as may be
34
sold, serviced, repaired or installed by DEALER; or (3) DEALER's
alleged breach of any contract or warranty other than that provided by
DISTRIBUTOR, IMPORTER or FACTORY; or (4) DEALER's alleged misleading
statements, misrep-resentations, or deceptive or unfair trade
practices; or (5) any modification, conversion or alteration made by
or for DEALER to a Toyota Product, except those made pursuant to the
express written approval and instruction of DISTRIBUTOR, IMPORTER or
FACTORY; or (6) any and all claims arising out of or in any way
connected to the hiring, retention or termination of any person by
DEALER, including but not limited to, claims of employment
discrimination, age, race or sex discrimination or harassment,
wrongful discharge or termination, breach of the covenant of good
faith and fair dealing, breach of contract, interference with
contractual relations, intentional and/or negligent infliction of
emotional distress, defamation, negligent hiring, violations of or
non-compliance with: the Occupational Safety and Health Act, the Fair
Labor Standards Act, or the Employment Retirement Income and Security
Act ("ERISA") or any similar state or local laws.
C. CONDITIONAL DEFENSE AND/OR INDEMNIFICATION
The obligations of the DEALER, DISTRIBUTOR, IMPORTER or FACTORY to
defend, to indemnify and hold harmless are expressly conditioned and
subject to all of the following terms:
1. The party initially requesting defense and/or indemnification
shall make such request in writing and deliver to the other party
within twenty (20) days of service of any legal process or within
twenty (20) days of discovery of facts giving rise to
indemnification, whichever is sooner.
2. The party requesting defense and/or indemnification covenants,
represents and warrants that it, its agents or employees have not
permitted a default judgment to be entered and have not made any
direct or indirect admissions of liability, and are not aware of
any credible evidence to support any independent claim of
liability or lack of unity of interest. Said party further agrees
to cooperate fully in the defense of such action as may be
reasonably required.
3. The party requested to defend and/or indemnify shall have sixty
(60) days from receipt of a request in writing to conduct an
investigation or otherwise determine whether or not, or under
what conditions, it will agree to defend and/or indemnify
4. During the pendency of a request for defense and/or
indemnification, and there-after, the requesting party shall have
a continuing duty to avoid undue prejudice to
35
the other party and to mitigate damages. The party requesting
indemnification shall protect its own interests until a decision
has been made to assume the defense and/or provide
indemnification.
5. The party accepting the request for defense and/or
indemnification shall have the right to engage and direct counsel
of its own choosing and shall have the obligation to reimburse
the requesting party for all reasonable costs and expenses,
including reasonable attorneys' fees, incurred prior to such
assumption except where the request is made under the
circumstances described in XXV(C)(6), and subject to the
provisions of XXV(C) (9).
6. If subsequent developments in a case, supported by credible
evidence, cause a party to reasonably conclude that the
allegations which initially preclude a request or acceptance of a
request for defense and/or indemnification are meritless or no
longer at issue, then the request may be retendered.
7. No party shall be required to agree to such a subsequent request
or retender of defense and/or indemnification where that party
would be unduly prejudiced by such delay. Initial acceptance by
any party of defense and/or indemnification is not a waiver of
the right to retender timely.
8. A party agreeing to defend and/or indemnify may make its written
agreement conditioned upon the continued existence of the state
of facts as then known as well as such other reasonable
conditions as may be dictated by the particular allegations or
claims.
9. Any party withdrawing from its agreement to defend and/or
indemnify, shall give timely written notice which shall be
effective upon receipt. The withdrawing party shall be
responsible for all costs and expenses of defense prior to
receipt of notice of withdrawal, except for those reasonable
costs and expenses, including reasonable attorneys' fees,
incurred solely for the benefit of the other party.
10. The defense, indemnification and hold harmless obligations of
this Agreement shall survive the termination of this Agreement.
XXVI. GENERAL PROVISIONS
A. NOTICES
Except as otherwise specifically provided herein, any notice required
to be given by either party to the other shall be in writing and
delivered personally to the dealership or by certi-
36
fled mail, return receipt requested, and shall be effective on the
date of receipt. Notices to DEALER shall be directed to DEALER or its
General Manager at DEALER's Approved Location. Notices to DISTRIBUTOR
shall be directed to the General Manager of DISTRIBUTOR.
B. NO IMPLIED WAIVERS
The failure of either party at any time to require performance by the
other party of any provision herein shall in no way affect the right
of such party to require such performance at any time thereafter, nor
shall any waiver by any party of a breach of any provision herein
constitute a waiver of any succeeding breach of the same or any other
provision, nor constitute a waiver of the provision itself.
Any continuation of business relations between the parties following
expiration of this Agreement shall not be deemed a waiver of the
expiration nor shall it imply that either party has committed to
continue to do business with the other at any time in the future.
Should this Agreement be renewed or any other form of agreement be
offered to DEALER, DISTRIBUTOR reserves the right to offer an
agreement of a length and upon such additional terms and conditions as
it deems reasonable.
C. SOLE AGREEMENT OF THE PARTIES
There are no prior agreements or understandings, either oral or
written, between the parties affecting this Agreement or relating to
the sale or service of Toyota Products, except as otherwise
specifically provided for or referred to in this Agreement. DEALER
acknowledges that no representations or statements other than those
expressly set forth herein were made by DISTRIBUTOR or any officer,
employee, agent or representative thereof, or were relied upon by
DEALER in entering into this Agreement. This Agreement cancels and
supersedes all previous agreements between the parties relating to the
subject matters covered herein. No change or addition to, or deletion
of, any portion of this Agreement (except as provided in Section III)
shall be valid or binding upon the parties hereto unless the same is
approved in writing by an officer of each of the parties hereto.
D. DEALER NOT AN AGENT OR REPRESENTATIVE
DEALER is an independent business. This Agreement is not a property
right and does not constitute DEALER, Owners or employees of DEALER as
the agent or legal representatives of DISTRIBUTOR for any purpose
whatsoever. DEALER, Owners and employees of DEALER or any other
persons acting on behalf of DEALER are not granted
37
any express or implied right or authority to assume or create any
obligation on behalf of or in the name of DISTRIBUTOR or to bind
DISTRIBUTOR in any manner whatsoever.
E. ASSIGNMENT OF RIGHTS OR DELEGATION OF DUTIES
This is a personal service agreement and may not be assigned or sold
in whole or in part, directly or indirectly, voluntarily or by
operation of law, without the prior written approval of DISTRIBUTOR.
Any attempted transfer, assignment or sale without DISTRIBUTOR's prior
written approval will be void and not binding upon DISTRIBUTOR
E. NO FRANCHISE FEE
DEALER warrants that it has paid no fee, nor has it provided any goods
or services in lieu of same, to DISTRIBUTOR or any other party in
consideration of entering into this Agreement. The sole consideration
for DISTRIBUTOR's entering into this Agreement is DEALER's ability,
integrity, assurance of personal services and expressed intention to
deal fairly and equitably with DISTRIBUTOR and the public.
G. SEVERABILITY
If any provision of this Agreement should be held invalid or
unenforceable for any reason whatsoever, or conflicts with any
applicable law, this 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 affecting
the tenor of the Agreement, then it will be deemed deleted from this
Agreement in such jurisdiction, and in either case, the remainder of
the Agreement will be valid and binding.
H. NEW AND SUPERSEDING DEALER AGREEMENTS
In the event any new and superseding form of dealer Agreement is
offered by DISTRIBUTOR to authorized Toyota dealers generally at any
time prior to the expiration of the term of this Agreement,
DISTRIBUTOR may, by written notice to DEALER, replace this Agreement
with a new agreement in a new and superseding form for a term not less
than the then unexpired term of this Agreement.
I. BENEFIT
This Agreement is entered into by and between DISTRIBUTOR and DEALER
for their sole and mutual benefit. Neither this Agreement nor any
specific provision contained in it is intended or shall be construed
to be for the benefit of any third party.
38
J. NO FIDUCIARY RELATIONSHIP
This Agreement shall not be construed to create a fiduciary
relationship between DEALER and DISTRIBUTOR.
K. NO JOINT EMPLOYMENT
DEALER acknowledges that it has assumed obligations under this
Agreement to use its best efforts to sell and service Toyota Products,
to increase the future growth in Toyota Product sales through
increased customer satisfaction and other obligations related to the
operation of the dealership and recognizes the necessity to employ and
train qualified personnel to satisfy these commitments. To this end,
DEALER agrees to employ only qualified persons who will fulfill the
commitments made by DEALER to DISTRIBUTOR in this Agreement.
Notwithstanding the foregoing, DEALER retains the sole and exclusive
right to determine whom to hire and their qualifications, to direct,
control and supervise DEALER's employees, and to establish all terms
and conditions of employment of DEALER's employees. All supervision,
control and direction of DEALER's employees shall be the sole and
exclusive responsibility of DEALER. DEALER shall at all times remain
the sole employer of persons employed by DEALER and, to this end,
DEALER and DISTRIBUTOR agree that no act or omission of DEALER or
DISTRIBUTOR shall be construed to make or render them joint employer,
co-employer or alter ego of each other.
L. CONSENT OF DISTRIBUTOR
Any time that this Agreement provides that DEALER must obtain
DISTRIBUTOR's consent to any proposed conduct or change, DEALER must
provide all information requested by DISTRIBUTOR concerning the
proposal, and DISTRIBUTOR shall have a reasonable amount of time in
which to evaluate the proposal.
M. DISTRIBUTOR'S POLICIES
This Agreement, from time to time, refers to certain policies and
standards. DEALER acknowledges that these policies and standards are
prepared by DISTRIBUTOR in its sole discretion based upon
DISTRIBUTOR's evaluation of the marketplace. DISTRIBUTOR may
reasonably amend its policies and standards as the marketplace changes
from time to time.
39
XXVII. DEFINITIONS
As used in this Agreement, the parties agree that the following terms
shall be defined as exclusively set forth below.
A. OWNER: The persons identified in Section IV hereof.
B. GENERAL MANAGER: The person identified in Section V hereof.
C. DEALER FACILITIES: The buildings, improvements, fixtures, and
equipment situated at the Approved Location(s).
D. APPROVED LOCATION(S): The location(s) and any facilities thereon,
designated in Section VII that DISTRIBUTOR has approved for the
dealership operation(s) specified therein.
E. TOYOTA MARKS: The various Toyota trademarks, service marks, names,
logos and designs that DEALER is authorized by DISTRIBUTOR to use in
the sale and servicing of Toyota Products as specified in the current
Toyota Brand Graphic Standards Manual.
F. TOYOTA PRODUCTS: All Toyota Motor Vehicles, parts, accessories and
equipment which IMPORTER, in its sole discretion, sells to DISTRIBUTOR
for resale to authorized Toyota dealers.
G. TOYOTA MOTOR VEHICLES: All motor vehicles identified in the current
Toyota Product Addendum that DISTRIBUTOR sells to DEALER for resale.
H. GENUINE TOYOTA PARTS AND ACCESSORIES: All Toyota brand Parts and
Accessories manufactured by or on behalf of DISTRIBUTOR or FACTORY or
other parts and accessories specifically approved by FACTORY for use
in servicing Toyota Motor Vehicles and sold by DISTRIBUTOR to DEALER
for resale.
40
ADDENDUM TO PARAGRAPH X
-----------------------
These Additional Provisions to Toyota Dealer Agreement ("Additional
Provisions") are entered into as of June 30, 1997, among DISTRIBUTOR, DEALER,
-------------
and FIRSTAMERICA AUTOMOTIVE, INC., a Nevada corporation (hereinafter "FAA"), and
form a part of and are incorporated into the Dealer Agreement.
RECITALS
--------
1. DISTRIBUTOR and DEALER have entered into a Toyota Dealer Agreement
(the "Dealer Agreement") dated as of June 30, 1997 .
------------------
2. FAA is the 100% shareholder of DEALER.
3. FAA and DEALER are hereinafter collectively referred to as the "Dealer
Parties". DISTRIBUTOR and the Dealer Parties are hereinafter collectively
referred to as the "Parties".
4. The Parties wish to enter into these Additional Provisions for the
purposes of agreeing to be bound by the terms of these Additional Provisions,
which are a part of and are incorporated into the Dealer Agreement.
5. The ownership of FAA shall be approximately as follows:
Xxxxxx X. Price: 41%
--------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxx: 11%
--------------------------------------------------------------------------------
TCW\Crescent Mezzanine Partners, L.P.: 19%
--------------------------------------------------------------------------------
Others: 29%
--------------------------------------------------------------------------------
NOW THEREFORE, in consideration for the mutual agreements contained herein
and in the Dealer Agreement, the Parties agree as follows:
1
A. General
1. DISTRIBUTOR and FAA have entered into an Agreement dated June
--------
30, 1997 (the "Agreement") relating, among other matters, to the number
------------
of Toyota and Lexus dealerships which may be acquired by FAA and its affiliates
and to certain aspects of the management of Toyota and Lexus dealerships owned
by FAA. The Dealer Parties agree that the Agreement is incorporated into and
forms a part of the Dealer Agreement and these Additional Provisions. To the
extent that any provision of the Agreement is inconsistent with the Dealer
Agreement or these Additional Provisions, the provisions of the Agreement shall
be controlling.
2. The Dealer Parties acknowledge and agree that if any provision of
these Additional Provisions is violated in any material respect by any of the
Dealer Parties, DISTRIBUTOR will have the right to terminate the Dealer
Agreement on sixty (60) days' written notice to Dealer if Dealer fails to cure
such violation prior to the expiration of such sixty (60) days.
B. Provisions Relating to the Structure of DEALER
----------------------------------------------
1. Single Purpose Entity. DEALER will be maintained as a separate
---------------------
legal entity, and will not engage in any business other than operation of a
Toyota dealership and activities related thereto.
2. No Merger, Consolidation, Etc. DEALER will not be merged with or
-----------------------------
into, or be consolidated with, or acquire substantially all of the assets of,
any other entity, without the prior written consent of DISTRIBUTOR, in its sole
discretion.
2
C. Provisions Relating to Management
---------------------------------
1. Role of the Responsible Executive. Pursuant to Section 8 of the
---------------------------------
Agreement, Xxxxxx X. Price is hereby designated as the FAA executive who will
have responsibility and authority with respect to all matters concerning DEALER
and the relationship between DEALER and DISTRIBUTOR (the "FAA Executive"). The
FAA Executive will be actively involved in the management of all aspects of the
operations of DEALER.
(a) The FAA Executive will be an officer of DEALER. The FAA
Executive, in consultation with management of FAA, will have complete control
over all day-to-day management decisions of DEALER or relating to DEALER.
(b) The General Manager will report directly to and be
responsible to the FAA Executive.
(c) DISTRIBUTOR may rely on oral or written communications and
agreements from the FAA Executive as being the binding agreements of DEALER,
without any duty of DISTRIBUTOR to confirm that any such communication or
agreement has been duly authorized by the Board of Directors of DEALER, FAA, or
any other individual or entity.
2. Successors to the FAA Executive. In the event that the FAA
-------------------------------
Executive wishes to discontinue his role in the management of DEALER as set
forth in Section C.1., such action may be taken only with the prior written
consent of DISTRIBUTOR. Such consent of DISTRIBUTOR may be conditioned on
transfer of the FAA Executive's management responsibilities to an individual or
individuals approved by DISTRIBUTOR, taking into account such factors as
DISTRIBUTOR reasonably
3
deems to be relevant and are consistent with applicable laws.
3. Role of the General Manager.
---------------------------
(a) Xxxxxxx X. Xxxxxx or any subsequent General Manager of DEALER
approved by DISTRIBUTOR, will serve exclusively as General Manager of DEALER on
a full time basis and will not have any management responsibilities with respect
to any other dealership or other business or appear as the General Manager on
any automobile dealership franchise agreement other than that of DEALER.
(b) The General Manager will have responsibility for and
authority with respect to the day-to-day operations of DEALER in the ordinary
course Of business, under the supervision of the FAA Executive, and the General
Manager will have the following authority, without the need for obtaining the
prior approval of any other individual or entity:
(i) the authority to hire or terminate any employee of DEALER;
(ii) the authority to order vehicles and other products;
(iii) the authority to place advertising;
(iv) the authority to communicate with DISTRIBUTOR with respect to
all aspects of the business of DEALER;
(v) the authority to approve expenditures by DEALER in the ordinary
course of business in amounts of less than $50,000 per item;
(vi) the authority to approve capital improvements or modifications
to the DEALER'S facilities in amounts not to exceed $100,000
with respect to any expenditure.
4. Membership of Executive Committee. There shall be no change in
---------------------------------
4
the membership of the Executive Committee, Board of Directors or other governing
body of DEALER without the prior written approval of DISTRIBUTOR.
5. FAA Directors. FAA shall provide a list of all current members of
-------------
its Board of Directors, and resumes for each member, to DISTRIBUTOR, and provide
such information for each new member of the Board of Directors of FAA.
D. Provisions Relating to Capitalization and Accounting
----------------------------------------------------
1. No distributions will be made by DEALER to FAA if such
distributions would cause DEALER to fail to meet any of DISTRIBUTOR'S
capitalization guidelines, including but not limited to net working capital
requirements.
2. The operations and financial results of DEALER will be reported
to DISTRIBUTOR separately from those of any other entity, business or activity,
including but not limited to any of the Dealer Parties and any other dealerships
directly or indirectly owned or controlled by any of the Dealer Parties.
3. DEALER will maintain complete and separate departments for new
and used vehicle sales, service, parts sales, leasing and finance and insurance,
and will provide separate identifiable areas for each department. DEALER will
maintain a separate and permanent personnel staff and separate retail operations
from other dealerships directly or indirectly owned by any of the Dealer
Parties. DEALER shall not combine its used car operation with that of any other
entity, including any other dealerships directly or indirectly owned by any of
the Dealer Parties.
5
E. Provisions Relating to Ownership
--------------------------------
1. Successors and Assigns. In the event that any interest in DEALER
----------------------
is transferred in accordance with the provisions of the Dealer Agreement, the
Agreement and these Additional Provisions, as a condition to such transfer the
transferee must agree in writing to be bound by all of the terms and provisions
of the Dealer Agreement, the Agreement and these Additional Provisions, such
agreement to be in form and substance reasonably acceptable to DISTRIBUTOR.
2. Competitors. In no event may any interest in DEALER be
-----------
transferred to an entity which is directly or indirectly engaged in the business
of manufacturing and/or distributing automobiles, or an affiliate thereof, and
no such entity may acquire an ownership interest in FAA as described in Section
1 of the Agreement.
F. Provisions Relating to Performance
----------------------------------
1. Dealer agrees to achieve within nine (9) months from the
effective date of this Agreement and to thereafter maintain throughout the
duration of this Agreement, a satisfactory customer satisfaction performance, as
measured by all applicable standards established by Toyota Motor Sales, U.S.A.,
Inc., and which are modified from time to time.
2. Dealer agrees to achieve within nine (9) months from the
effective date of this Agreement and to thereafter maintain throughout the
duration of this Agreement, Toyota car and truck penetration in its Primary
Market Area that is at least equal to the Region's penetration rate.
6
IN WITNESS WHEREOF, the Parties. have executed these Additional
Provisions as of the date first above written.
TOYOTA MOTOR SALES, USA, INC. TOYOTA MOTOR SALES, U.S.A., INC.
SAN FRANCISCO REGION
By: /s/ By: /s/
--------------------------- ---------------------------
Title: PRESIDENT Title: GENERAL MANAGER
------------------------ ------------------------
FIRSTAMERICA AUTOMOTIVE, INC. FAA SAN BRUNO, INC.
d.b.a. MELODY TOYOTA
By: /s/ By: /s/
--------------------------- ---------------------------
Title: [TITLE ILLEGIBLE] Title: [TITLE ILLEGIBLE]
------------------------ ------------------------
7
