Exhibit 10.2.1.2
HONDA
AUTOMOBILE DEALER
SALES AND SERVICE
AGREEMENT
STANDARD PROVISIONS
HONDA AUTOMOBILE DEALER SALES AND SERVICE AGREEMENT
STANDARD PROVISIONS
TABLE OF CONTENTS
PAGE
1. THE OBLIGATIONS OF AMERICAN HONDA . . . . . . . . . . 1
2. SALE OF HONDA PRODUCTS TO DEALER. . . . . . . . . . . 4
3. THE OBLIGATIONS OF DEALER . . . . . . . . . . . . . . 6
4. WARRANTY. . . . . . . . . . . . . . . . . . . . . . . 9
5. ADVERTISING AND PROMOTIONAL PROGRAMS. . . . . . . . . 9
6. TRADEMARKS AND SERVICE MARKS. . . . . . . . . . . . . 10
7. GENERAL BUSINESS REQUIREMENTS . . . . . . . . . . . . 11
8. APPOINTMENT OF SUCCESSOR AND REPLACEMENT DEALERS. . . 13
9. TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . 14
10. RIGHTS, OBLIGATIONS AND DEALINGS UPON TERMINATION . . 19
11. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . 23
12. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 25
HONDA AUTOMOBILE DEALER SALES AND SERVICE AGREEMENT
STANDARD PROVISIONS
The following Standard Provisions are, by reference, incorporated in and made a
part of the Honda Automobile Dealer's Sales and Service Agreement. These
Standard Provisions accompany the Honda Dealer's Sales and Service Agreement
which has been executed on behalf of both American Honda and Dealer.
1. THE OBLIGATIONS OF AMERICAN HONDA
1.1. It is the obligation of American Honda to supply to Dealer, and
to all authorized dealers, Honda Products in a fair and
reasonable manner in order that Dealer may conduct Dealership
Operations in a businesslike manner. In fulfilling this
obligation, Honda Products may be supplied either on the basis of
dealer order or on the basis of allocation, depending on market
conditions and availability. There are numerous factors which
affect the availability of Honda Products. Among those factors
are component availability and production capacity, consumer
demand, strikes and other labor troubles, weather and
transportation conditions, and government regulations. Because
such factors affect individual dealer supply, American Honda
necessarily reserves discretion in accepting orders and
allocating and distributing Honda Products, and its judgment and
decision in such matters will be final.
1.2. To assist Dealer in the fulfillment of its obligations under the
Agreement, which it has as a retail seller of Honda Products,
American Honda agrees to provide Dealer sales, service and parts
support.
1.2.A. To assist Dealer in fulfilling its sales
responsibility, American Honda agrees to offer general
and specialized product information and to provide
field sales personnel to advise and counsel Dealer's
sales organization on sales-related subjects such as
merchandising, training and sales management.
1.2.B. To assist Dealer in fulfilling its service and parts
responsibilities, American Honda agrees to offer, or
cause to be offered, general and specialized service
and parts training courses. Based on the service
training needs of Dealer's service personnel, to be
determined by American Honda with the
assistance of Dealer, Dealer agrees to have members of
Dealer's service organization attend such courses.
Further, American Honda agrees to make available to
Dealer field service personnel capable of advising and
counseling Dealer's service personnel on service-
related subjects, including product quality, technical
adjustments, repairs and replacement of product
components, recall, product improvement or product
update campaigns which American Honda may conduct,
owner complaints, warranty administration, service and
parts merchandising, and training and service
management.
1.3. To assist Dealer in planning, establishing and maintaining the
Dealership Premises, American Honda will, at its sole option,
make available to Dealer, upon request, sample copies of building
layout plans or facility planning recommendations, including
sales, service and parts space and the placement, installation
and maintenance of recommended signs. In addition,
representatives of American Honda will be available to Dealer
from time to time to counsel and advise Dealer and its personnel
in connection with Dealer's planning and equipping the Dealership
Premises.
1.4. American Honda agrees to make available to Dealer, at reasonable
cost, such sales, service and parts manuals, brochures, special
service tools and equipment and other data for Honda Products as
American Honda deems necessary for Dealership Operations.
1.5. American Honda agrees to maintain a nationwide system of
authorized dealers of Honda Products. In order that those
authorized dealers may be assured of the benefits of
comprehensive advertising of Honda Products, American Honda
agrees to establish and maintain general advertising programs in
such manner and amount as it may deem appropriate and will make
sales promotion and campaign materials available to Dealer.
1.6. American Honda agrees to compensate Dealer for the labor and
parts used by Dealer in performing its obligations under any
American Honda warranty and in connection with any recall,
product improvement or product update campaign which American
Honda may undertake and require Dealer to perform. Such
2
compensation will be in such reasonable amounts, and pursuant to
such requirements and instructions, as American Honda shall
establish from time to time, and such compensation shall
constitute full and complete payment by American Honda to Dealer
for such work.
1.7. American Honda agrees to assume the defense of Dealer and to
indemnify Dealer against any money judgment, less any offset
recovered by Dealer, in any lawsuit naming Dealer as a defendant,
where such lawsuit relates to: (a) an alleged breach of any Honda
warranty relating to Honda Products; (b) bodily injury or
property damage claimed to have been caused by a defect in the
design, manufacture or assembly of a Honda Product prior to
delivery thereof to Dealer (other than a defect which could have
been detected by Dealer in a reasonable inspection); or (c) a
misrepresentation or misleading statement of American Honda;
provided, however, that if any information discloses the
possibility of Dealer error or omission in servicing or otherwise
(including but not limited to Dealer not having performed all
recalls of which Dealer has notice on the Honda Product involved
in the lawsuit if the defect subject to the recall is alleged or
contended to be a contributing cause of the breach of warranty,
injury or damage which is the subject matter of the lawsuit), or
should it appear that the Honda Product involved in such lawsuit
had been altered by or for Dealer, or if Dealer has violated any
of the provisions of this Paragraph 1.7, then Dealer will
immediately obtain its own counsel and defend itself, and
American Honda will not be obligated to defend or indemnify
Dealer further. Dealer will promptly notify American Honda of
any claim which Dealer will assert American Honda might be
obligated to defend under this Paragraph 1.7. American Honda will
have not less than thirty (30) days to conduct a reasonable
investigation to initially determine whether or not American
Honda is obligated to defend under this Paragraph 1.7. Dealer
will take the steps necessary to protect its own interests
involved in the lawsuit until American Honda assumes the active
defense of Dealer. American Honda will, upon assuming the
defense of Dealer, reimburse Dealer for all attorneys' fees or
court costs incurred by Dealer from the date of the tender.
American Honda, upon assuming Dealer's defense, will have the
right to retain and direct counsel of its own choosing, and
Dealer will cooperate in all matters during the course of
defending the lawsuit. If, upon final
3
judgment in a lawsuit, it is determined that American Honda
wrongfully failed or refused to defend Dealer, American Honda
will reimburse Dealer for all costs and attorneys' fees incurred
by Dealer from the date of the tender of defense.
2. SALE OF HONDA PRODUCTS TO DEALER.
2.1. To the extent that Honda Products are the subject of dealer
order, such orders will be submitted and processed in accordance
with procedures established by American Honda. No order will be
binding on American Honda, as evidenced by either the issuance of
an invoice or shipment of the ordered Honda Products, and any
such order may be accepted in whole or in part. All orders by
Dealer will be deemed firm orders and binding upon the Dealer,
except that at any time prior to acceptance, an order may be
canceled by Dealer by giving actual notice to American Honda in
writing of the desire by Dealer to cancel such order.
2.2. While it is the intent of American Honda to provide Honda
Automobiles to Dealer in such quantities and types as are ordered
by Dealer, American Honda and Dealer recognize that Honda
Automobiles may not always be available in desired quantities.
It is therefore understood and agreed that American Honda, at its
sole election, will have the right to allocate Honda Automobiles
among authorized dealers of Honda Products in a fair and
reasonable manner. American Honda will provide to Dealer an
explanation, in writing, of any allocation system it may adopt.
2.3. American Honda will have the right at any time and from time to
time to establish and revise prices and other terms, including
payment by Dealer, for its sales of Honda Products to Dealer.
Revised prices, terms or provisions will apply to the sale of any
Honda Products as of the effective date of the revised prices,
terms or provisions, even though a different price or different
terms may have been in effect at the time such Honda Products
were allocated to or ordered by Dealer.
2.4. American Honda will have the right to select the distribution
points and the mode of transportation and may pay carriers for
all charges in effecting delivery of Honda Products to Dealer.
Dealer agrees to pay to American Honda such charges for delivery
as American Honda may assess. Subject to the terms of sale which
may be established from time to time by American Honda, risk of
loss to
4
Honda Products will pass to Dealer upon tender of the Honda
Products to Dealer or its authorized agent, and title will pass
to Dealer upon receipt by American Honda of payment.
2.5. If Dealer should fail or refuse or for any reason be unable to
accept delivery of any Honda Products ordered by Dealer, or if
Dealer should request diversion of a shipment from American
Honda, Dealer will be responsible for and pay to American Honda,
promptly on demand, all costs and expenses incurred by American
Honda in filling and shipping Dealer's order and by reason of
such diversion, including costs of demurrage and storage, plus
restocking charges as determined by American Honda. American
Honda may direct that such returned Honda Products be delivered
to another destination, but the amount charged Dealer for return
to such other destination will not be greater than the costs and
expenses of returning such Honda Products to their original place
of shipment plus any demurrage, storage and restocking charges.
2.6. As between American Honda and Dealer, American Honda assumes
responsibility for damage to Honda Products caused prior to
delivery to Dealer or its authorized agent.
2.7. American Honda will not be liable in any manner for delay or
failure in supplying any Honda Products where such delay or
failure is the result of any event beyond the control of American
Honda. Such event may include, but is not limited to, any law or
regulation or any acts of God, foreign or civil wars, riots,
interruptions of navigation, shipwrecks, fires, strikes,
lockouts, or other labor troubles, embargoes, blockades, demand
for, or delay or failure of any supplier to deliver or in making
delivery, of Honda Products.
2.8. American Honda reserves the right at any time to change or
modify, without notice, any specification, design or model of
Honda Products. In the event of any change or modification with
respect to any Honda Products, Dealer will not be entitled to
have such or similar change or modification made with respect to
any other Honda Products, except as may be required by applicable
law. American Honda may, however, in its sole discretion, make
such changes or modifications to all Honda Products in its
inventory or control, whether or not invoiced to Dealer. No such
change
5
will be considered a model year change unless specified by
American Honda.
2.9. American Honda may at any time discontinue, without obligation to
Dealer or Dealer's customers, the sale of any Honda Products, or
models or lines thereof or any other items, goods or services.
Further, American Honda will have no obligation, under any
circumstances, to accept orders for any Honda Products which are
not in current inventory.
3. THE OBLIGATIONS OF DEALER.
3.1. It is the obligation of Dealer to promote and sell, at retail,
Honda Products, and to promote and render service, whether or not
under warranty, for those products within the Dealer's Primary
Market Area.
3.2. Dealer's performance of its sales obligations for Honda Products
will be evaluated by American Honda on the basis of such
reasonable criteria as American Honda may develop from time to
time, including, but not limited to, such reasonable sales
objectives as American Honda may establish and a comparison of
Dealer's sales performance with other authorized dealers of Honda
Products.
3.3. To enable Dealer to fulfill its obligations satisfactorily,
Dealer agrees to establish and maintain an adequate and trained
sales and customer relations organization. Dealer further agrees
to establish and maintain a complete service and parts
organization, including a qualified service manager and a
qualified parts manager and a number of competent service and
parts personnel adequate to care for the service obligations to
be performed by Dealer under the Agreement.
3.4. Dealer agrees to acknowledge, investigate and resolve
satisfactorily all complaints received from owners of Honda
Products in a businesslike manner in order to secure and maintain
the goodwill of the public. Any complaint received by Dealer
which, in the opinion of Dealer, cannot be readily remedied,
shall be promptly reported to American Honda by Dealer.
3.5. Dealer agrees that it will not make any misrepresentations or
misleading statements regarding the items making up the total
selling price of Honda Products or as to the prices or
6
charges relating to such items. With the understanding that
Dealer is the sole judge of the price at which it sells Honda
Products, dealer recognizes that a retail customer has the right
to purchase Honda Automobiles without being required to purchase
any optional equipment or accessories which the purchaser does
not want or order unless such equipment or accessories are
required under applicable laws or regulations.
3.6. Dealer agrees to make certain that all Honda Products sold by it
have received predelivery services and inspection in accordance
with applicable procedures and directives issued by American
Honda. Dealer further agrees that all Honda Products sold by it
will be in proper operating condition prior to delivery to any
customer. To enable Dealer to fulfill its obligations in this
regard, Dealer agrees that an appropriate number of its service
personnel will be fully qualified to perform all necessary
predelivery service and inspection.
3.7. Dealer agrees to comply with, and operate consistent with, all
applicable provisions of the National Traffic and Motor Vehicle
Safety Act of 1966 and the Federal Clean Air Act, as amended,
including such applicable rules and regulations as may be issued
thereunder, and all other applicable federal, state and local
motor vehicle safety and emission control requirements. In the
interests of motor vehicle safety and emission control, American
Honda agrees to provide to Dealer, and Dealer to American Honda,
such information and assistance as may reasonably be requested by
the other in connection with the performance of obligations
imposed on either party by the National Traffic and Motor Vehicle
Safety Act of 1966 and the Federal Clean Air Act, as amended, and
the rules and regulations issued thereunder, and all other
applicable federal, state and local motor vehicle safety and
emission control requirements.
3.8. Dealer agrees to conduct a used vehicle operation at or in
connection with the Dealership Premises, to the extent reasonably
required to enhance the opportunity for sales of Honda
Automobiles.
3.9. American Honda and Dealer recognize that it may be necessary for
American Honda to formulate new or different policies or
directives to meet new or changing technology, laws or
circumstances. In the operation of Dealer's business and in the
sale
7
and promotion of Honda Products, in rendering service and in all
other activities of the Dealership Operations, Dealer will follow
all reasonable directives, suggestions and policies of American
Honda. All written directives, suggestions and policies of
American Honda contained in any of its bulletins or manuals,
which are in effect as of the date of the Agreement or are issued
thereafter, will be deemed a part of the Agreement.
3.10. Dealer agrees that it will, at all times, maintain in effect all
licenses required for Dealership Operations and for the
Dealership Premises.
3.11. Dealer agrees that it will comply with all laws, rules,
regulations and guides relating to the conduct of its business.
3.12. Dealer agrees that it will perform any and all warranty, recall,
product improvement or product update service in compliance with
instructions and directives issued by American Honda, regardless
of where the Honda Product involved was purchased. To protect
and maintain the goodwill and reputation of Honda Products and
the Honda Trademarks, Dealer agrees that it will not charge any
customer for warranty service or any work done in connection with
such warranty, recall, product improvement or update or any other
service as to which Dealer is reimbursed by American Honda.
3.13. Dealer fully understands that the success of its Dealership
Operations depends to a great extend upon the amount of net
working capital, owner's equity, flooring and lines of credit
which Dealer maintains. Accordingly, for the benefit of both
American Honda and Dealer, Dealer agrees that it will, at all
times, pay for Honda Products promptly and, to do so, maintain
its minimum net working capital, owner's equity, flooring and
lines of credit in the amounts specified in Paragraph G of the
Agreement. American Honda will have the right, reasonably, to
specify an increased amount of minimum net working capital,
owner's equity, flooring, or lines of credit to be used in
Dealership Operations and Dealer agrees promptly to establish and
maintain the increased amount. Dealer and American Honda agree
to execute such new documents as American Honda may reasonably
require to evidence revised capital requirements.
8
3.14. Dealer agrees to assume the defense of American Honda and to
indemnify American Honda against any money judgment, less any
offset recovered by American Honda, in any lawsuit naming
American Honda as a defendant where such lawsuit relates to: (a)
an alleged failure by Dealer to comply, in whole or in part, with
any obligation assumed by Dealer pursuant to the Agreement, (b)
Dealer's alleged negligent or improper repairing or servicing of
Honda Products, or such other motor vehicles or equipment as may
be sold or serviced by Dealer, (c) Dealer's alleged breach of any
contract between Dealer and Dealer's customer, or (d) Dealer's
alleged misrepresentation or misleading statement, either direct
or indirect, to any customer of Dealer. American Honda may, at
its sole option and at its expense, participate in defending any
such lawsuit.
4. WARRANTY.
4.1. Dealer understands and agrees that the only warranties that will
be applicable to Honda Products will be such written warranty or
warranties as may be furnished by American Honda. Except for its
express liability under such written warranties, American Honda
neither assumes nor authorizes any other person or party to
assume for it any other obligation or liability in connection
with any Honda Product or component thereof.
4.2. Dealer agrees that it will expressly incorporate any warranty
furnished by American Honda with a Honda Automobile as a part of
each order form or other contract for the sale of such Honda
Automobile by Dealer to any buyer. Dealer further agrees that it
will deliver to the buyer of all Honda Products, at the time of
delivery of such Honda Products, copies of such applicable
warranties as may be furnished by American Honda. Dealer agrees
to abide by and implement in all other respects American Honda's
warranty procedures in effect at the time of Dealer's sale.
5. ADVERTISING AND PROMOTIONAL PROGRAMS.
5.1. Dealer agrees to develop and actively utilize programs for the
advertisement and promotion of Honda Products and its servicing
of such products. Such programs will include the prominent
display and use or demonstration of Honda Automobiles. Dealer
further agrees to cooperate with all
9
reasonable promotional programs developed by American Honda.
5.2. Dealer agrees that it will not advertise, promote or trade in
Honda Products or the servicing thereof in such a manner as to
injure or be detrimental to the goodwill and reputation of
American Honda and the Honda Trademarks. Dealer further agrees
that it will not publish or otherwise disseminate any
advertisement or announcement or use any form or media of
advertising which is objectionable to American Honda. Dealer
agrees to discontinue immediately any advertisement or form of
advertising deemed objectionable upon request of American Honda.
5.3. Subject to applicable federal, state or local ordinances,
regulations and statutes, Dealer agrees to erect and maintain, at
the Dealership Location, at Dealer's expense, authorized product
and service signs of types required by American Honda, as well as
such other authorized signs as are necessary to advertise the
Dealership Operations effectively and as are required by American
Honda.
6. TRADEMARKS AND SERVICE MARKS.
6.1. Dealer agrees that American Honda has the exclusive right to use
and to control the use of the Honda Trademarks and but for the
right and license granted by Paragraph 6.2 hereof to use and
display the Honda Trademarks, Dealer would have no right to use
the same.
6.2. Dealer is hereby granted the nonexclusive right and license to
use and display the Honda Trademarks at the Dealership Premises.
Such use or display is limited to that which is necessary in
connection with the sale, offering for sale and servicing of
Honda Products at retail at the Dealership Location. Dealer
agrees that it will promptly discontinue the use of any of the
Honda Trademarks or change the manner in which any of the Honda
Trademarks is used when requested to do so by American Honda.
6.3. American Honda and Dealer recognize that Dealer is free to sell
Honda Products to customers wherever they may be located.
However, in order that American Honda may establish and maintain
an effective network of authorized dealers for the sale and
service of Honda Products, Dealer specifically agrees that it
will not display Honda
10
Trademarks, or, either directly or indirectly, establish any
place or places of business for the conduct of any of its
Dealership Operations except at the locations and for the purpose
described in Paragraph E of the Agreement without the prior
written approval of American Honda. Dealer further agrees that
the rights and license granted by Paragraph 6.2 hereof will be
automatically canceled upon a change in the location of the
Dealership Location unless such change in location was previously
approved in writing by American Honda. Dealer further agrees
that such right and license terminates with the termination of
the Agreement.
6.4. If Dealer refuses or neglects to keep and perform its obligations
assumed under this Article 6 or under paragraph 10.3 hereof,
Dealer will reimburse American Honda for all costs, attorneys'
fees and other expenses incurred by American Honda in connection
with any action to require Dealer to comply therewith.
7. GENERAL BUSINESS REQUIREMENTS.
7.1. It is to the mutual benefit of Dealer and American Honda that
uniform accounting systems and practices be maintained by
authorized dealers. Accordingly, Dealer agrees to maintain such
systems and practices as are required by American Honda. In the
event Dealer engages in the sale of any other product, Dealer
agrees to maintain and keep separate records and books relating
to the sale and servicing of Honda Products.
7.2. Dealer agrees to furnish monthly to American Honda, on or before
the times designated by American Honda, on forms prescribed by
American Honda, a complete and accurate financial and operating
statement covering the preceding month and calendar-year-to-date
operations and showing the true and accurate condition of
Dealership Operations. Financial statements and other business
information furnished to American Honda will not be submitted to
any third party unless authorized by Dealer or required by law,
or the information is pertinent to a proceeding in which American
Honda and Dealer are parties.
7.3. Dealer agrees to keep complete and current records regarding the
sale and servicing of Honda Products and to prepare for American
Honda such reports, based on those records, as American Honda may
reasonably request. In order that policies and
11
procedures relating to the applications for reimbursement for
warranty and other applicable work and for other credits or
reimbursements may be applied uniformly to all authorized
dealers, Dealer agrees to prepare, keep current and retain
records in support of requests for reimbursement or credit in
accordance with policies and procedures designated by American
Honda.
7.4. Dealer agrees to permit, during reasonable business hours,
American Honda, or its designee, to examine, audit, reproduce and
take copies of all reports, accounts and records pertaining to
the sale, servicing and inventorying of Honda Products,
including, but not limited to, records in support of claims for
reimbursement or credit from American Honda, and with the prior
approval of Dealer, which approval will not be unreasonably
withheld, to interview Dealer employees with respect thereto.
7.5. Dealer agrees that Dealership Operations will be conducted in the
normal course of business during and for not less than the days
of the week and hours of the day customary for automobile
dealerships in the Primary Market Area.
7.6. Dealer agrees and understands that any retail price which may be
suggested by American Honda is merely a suggested price, and
Dealer has no obligation to sell any Honda Products at such
price. Dealer further understands and agrees that it is the sole
judge of the price at which it sells Honda Products and the price
it charges others for service, subject only to applicable local,
state and federal laws, rules and regulations.
7.7. Dealer understands and agrees that it will be responsible for and
will pay any and all taxes, whether sales, use or excise, and all
other governmental or municipal charges imposed upon the sale of
Honda Products by American Honda to Dealer and will maintain
accurate records of the same, which records will be available to
American Honda, or its designee, during regular business hours
for inspection.
7.8. Dealer understands and agrees that, while it has responsibility
for the promotion and retail sale and servicing of Honda Products
within the Primary Market Area, it has no territorial
exclusivity. Further, American Honda reserves the right, based
upon reasonable criteria, to appoint other
12
authorized dealers of Honda Products in the Primary Market Area.
8. APPOINTMENT OF SUCCESSOR AND REPLACEMENT DEALERS.
8.1. The parties recognize that Honda Products are marketed through a
system of authorized dealers developed by American Honda and that
customers and American Honda have a vital interest in the
preservation and efficient operation of the system. American
Honda has the responsibility of continuing to administer the
system and of selecting the most suitable dealer candidate in
each circumstance. Accordingly, Dealer agrees that American
Honda has the right to select each successor and replacement
dealer and to approve its owners and principal management and the
location of dealership facilities. Further, Dealer agrees to
provide written notice to American Honda of any potential change
in the involvement, ownership or management specified in
Paragraphs C and D of the Agreement. No change affecting such
involvement, ownership or management will be made without the
prior written approval of American Honda, which approval will not
be unreasonably withheld.
8.2. Upon Dealer's request, American Honda will execute with Dealer a
Successor Addendum designating proposed Dealer operators or
owners of a successor dealer to be established if the Agreement
expires or is terminated because of death or incapacity. The
request must be executed by all persons identified in Paragraph C
of the Agreement and all proposed dealer operators or owners and
be submitted to American Honda prior to such death or incapacity;
provided that such proposed dealer operators or owners must be
acceptable to American Honda.
8.3. Dealer, but not American Honda, may cancel any executed Successor
Addendum. If American Honda notifies Dealer that it does not
plan to permit Dealership Operations to continue at the
Dealership Location, American Honda shall have no obligation to
execute a new Successor Addendum.
8.4. If the Agreement expires or is terminated because of death or
incapacity and Dealer and American Honda have not executed a
Successor Addendum, the remaining owners, successors or heirs may
propose a successor dealer entity to continue Dealership
Operations at the Dealership Location. Such proposal must be
made within thirty days of the
13
event causing expiration or termination by submitting a written
proposal to American Honda. Such proposal will be accepted by
American Honda if it does not introduce new owners or if the
proposed new owners are acceptable to American Honda.
8.5. Any successor dealer entity approved by American Honda pursuant
to this Article 8 must establish that it can conduct Dealership
Operations in an efficient and businesslike manner. Such
successor dealer entity will have one year to meet reasonable
performance criteria established from time to time by American
Honda. In the event such successor dealer entity fails to meet
those criteria, such failure will be separate grounds for
termination of the Agreement.
9. TERMINATION OF AGREEMENT.
9.1. The Agreement may be terminated, at any time, by mutual agreement
of American Honda and Dealer.
9.2. Dealer may terminate the Agreement, at any time, by giving
American Honda notice of such termination. Such termination
shall be effective upon the date specified by Dealer, or if no
date is specified, then upon receipt by American Honda of such
notice.
9.3. American Honda may terminate the Agreement, at any time, by
serving on Dealer a written notice of such termination by
certified or registered mail to Dealer at the Dealership
Premises. Subject to other provisions of the Agreement,
termination will be effective ninety (90) days after mailing of
such notice to dealer or such longer period as American Honda may
specify; provided, however, that termination will be effective
ten (10) days after mailing if for an occurrence of any
circumstance referred to in Paragraphs 9.4.A, 9.4.B, 9.4.J or
9.4.M hereof.
9.4. It is recognized that each of the following grounds is within
control of Dealer or originates from action taken by Dealer or
its employee(s) and is contrary to the spirit and objectives of
the Agreement. Therefore, American Honda may terminate the
Agreement upon the occurrence of any of the following:
9.4.A. Failure by Dealer to secure and continuously maintain
any license necessary for the conduct by Dealer of
14
its business pursuant to the Agreement or the
termination or expiration without renewal, or
suspension or revocation of any such license for any
reason whatsoever, whether or not license is
reinstated.
9.4.B. Any change, transfer or attempted transfer by Dealer or
any Dealer Owner, voluntarily or by operation of law,
of the whole or any part of the Agreement or any
interest or legal or beneficial ownership therein or
any right or obligation thereunder, directly or
indirectly, such as, for example only, by way of a sale
of an underlying ownership interest in Dealer or the
Dealership Premises or a change in the persons having
control or managerial authority, without prior written
consent of American Honda. Any purported change,
transfer or assignment shall be null and void and not
binding on American Honda.
9.4.C. Any dispute, disagreement, controversy or personal
difficulty between or among Dealer Owners or in the
management of Dealer which, in American Honda's
opinion, may adversely affect the conduct of Dealer's
business, or the presence in the management of Dealer
of any person who, in American Honda's opinion, does
not have or no longer has requisite qualifications for
his position.
9.4.D. Impairment of the reputation or the financial standing
of Dealer or of any Dealer Owner subsequent to the
execution of the Agreement; or the ascertainment by
American Honda of any facts existing at or prior to
execution of the Agreement which tend to impair such
reputation or financial standings; or the failure of
Dealer continuously to meet American Honda's minimum
requirements of net working capital, owner's equity or
line(s) of credit.
9.4.E. Failure by Dealer to pay, within ten (10) days after
written demand from American Honda, any delinquent
accounts
15
or other monies due to American Honda from Dealer.
9.4.F. Submission or participation in the submission to
American Honda of any false or fraudulent statement,
application, report, request for issuance of
reimbursement, compensation, refund or credit,
including but not limited to any false or fraudulent
claim for warranty work, labor rate, setup
reimbursement or warranty coverage.
9.4.G. Use by Dealer of any deceptive or fraudulent practice,
whether willful, negligent or otherwise, in the sale of
any Honda Product.
9.4.H. Any conviction in any court of original jurisdiction of
Dealer or any Dealer Owner or any employee of the
Dealership Operations for any crime or violation of any
law if, in the opinion of American Honda, such
conviction or violation may adversely affect the
conduct of the Dealership Operations or tend to be
harmful to the goodwill of American Honda or to the
reputation of Honda Products or the Honda Trademarks,
or the violation or refusal or neglect of Dealer to
comply with the provisions of the National Traffic and
Motor Vehicle Safety Act of 1966, as amended, or the
Clean Air Act, or any rules, regulations or standards
under either of said Acts, including but not limited to
performance of any product update or recall operation
as directed by American Honda.
9.4.I. Dealer's entering into any agreement, combination,
understanding or contract, oral or written, with any
other corporation, person, firm or other legal entity
for the purpose of fixing prices of Honda Products or
otherwise violating any law.
9.4.J. Dealer's abandonment of Dealership Premises or failure
to maintain Dealership Operations as a going business,
open during customary business hours for the days and
hours as are customary for automobile dealerships in
the Primary Market Area, provided such
16
failure is not due to causes beyond Dealer's control.
Failure of the Dealership Premises to remain open for
seven (7) consecutive days will constitute, without
more, such abandonment.
9.4.K. Death or incapacity of any Dealer Owner or Dealer
Manager, subject to the provisions of Article 8.
9.4.L. Failure of Dealer to make improvements, alterations or
modifications of its Dealership Premises which are
required to meet reasonable facility requirements of
American Honda or which Dealer has agreed or
represented to American Honda that Dealer will make or
do.
9.4.M. The movement of Dealership Premises to a new location
or the establishment of an additional location for the
sale or service of any Honda Products without the prior
written approval of American Honda.
9.4.N. The failure of Dealer to provide adequate
representation, promotion, sales or service, including
warranty work, of any Honda Products.
9.4.O. Dealer's breach of any provision of the Agreement or
Dealer's failure to comply with any contained in the
Agreement.
9.5. The Agreement will also be terminated upon written notice by
American Honda in the event:
9.5.A. Of termination of American Honda's distribution
agreement as a Honda Automobile distributor.
9.5.B. Of withdrawal by American Honda from the market in
which Dealer is located.
9.5.C. American Honda will, for any reason, discontinue the
distribution of Honda Automobiles.
9.6. Upon the occurrence of any of the following facts or
circumstances, the Agreement will terminate automatically,
without notice or other action by American Honda or Dealer; and
upon such termination, any dealings between American Honda
17
and dealer will be on a day-to-day basis at the sole option of
American Honda and may be discontinued at any time by American
Honda:
9.6.A. Insolvency by any definition of Dealer, or
9.6.B. The existence of facts or circumstances which would
allow the voluntary commencement by Dealer, or the
involuntary commencement against Dealer, of any
proceedings under any bankruptcy act or law or under
any state insolvency law; or
9.6.C. The appointment of a receiver or other officer having
similar powers for Dealer or the Dealership Premises;
or
9.6.D. Any levy against Dealer under attachment, garnishment
or execution or similar process which is not within ten
(10) days vacated or removed by payment or bonding.
9.7. American Honda may select any applicable provision under which it
elects to terminate the Agreement and give notice thereunder,
notwithstanding the existence of any other grounds for
termination or the failure to refer to such other grounds in the
notice of termination. The failure by American Honda to specify
additional ground(s) for cancellation in its notice will not
preclude American Honda from later establishing that termination
is also supported by such additional ground(s).
9.8. The acceptance by American Honda of orders from Dealer or the
continued sale of Honda Products to Dealer or any other act or
course of dealing of American Honda after termination of the
Agreement will not be construed as or deemed to be a renewal of
the Agreement for any further term or a waiver of such
termination. Any dealings after termination will be on a day-to-
day basis.
9.9. In all cases, Dealer agrees to conduct itself and Dealership
Operations until the effective date of termination and after
termination or expiration of the Agreement, so as not to injure
the reputation or goodwill of the Honda Trademarks or American
Honda.
18
10. RIGHTS, OBLIGATIONS AND DEALINGS UPON TERMINATION.
10.1. Upon the mailing of a written notice of termination or after date
of the expiration of the Agreement without renewal, American
Honda will have the right to cancel all pending orders of Dealer
for Honda Products, special tools and equipment, whether
previously accepted by American Honda or not, except as
specifically otherwise provided in this Section 10.
Notwithstanding the foregoing, if American Honda chooses to fill
any orders, it will not be obligated to fill any other orders and
will not be precluded from changing the terms of any sale.
10.2. Not later than the effective date of the termination or
expiration of the Agreement, Dealer will cease to hold itself out
as being authorized to sell Honda Products and will discontinue
selling Honda Products or performing service as an authorized
dealer.
10.3. In addition to the requirements of Section 10.2, not later than
the effective date of the termination or expiration of the
Agreement, Dealer will, at its sole expense, discontinue any and
all uses of any Honda Trademarks and any words, symbols and marks
which are confusingly similar thereto; will remove all signs
bearing any Honda Trademark and will destroy all stationery,
repair orders, advertising and solicitation materials, and all
other printed matter bearing any Honda Trademark or referring
directly or indirectly to American Honda or Honda Products in any
way which might make it appear to members of the public that
Dealer is still an authorized dealer. The foregoing will
include, but not be limited to, discontinuing the use of a Honda
Trademark as part of Dealer's business and corporate name.
Dealer will also deliver to American Honda, at American Honda's
place of business, or to a person designated by American Honda,
or will destroy the same upon request by American Honda, any and
all technical or service literature, advertising and other
printed material then in Dealer's possession which relates to
Honda Products and which was acquired or obtained by Dealer from
American Honda. Dealer will destroy any sign bearing a Honda
Trademark which has not been repurchased by American Honda.
10.4. In the event the Agreement is terminated pursuant to the
provisions of paragraph 9.3 hereof, upon request of American
Honda for copying Dealer's
19
records of predelivery service, warranty service, recall or
update service or other service of Honda Products. In the event
the Agreement is terminated pursuant to the provisions of
paragraphs 9.1 or 9.2 hereof, upon the request of American Honda,
Dealer will deliver to American Honda copies of such Dealer
records.
10.5. Dealer may, at any time within five (5) days after the effective
date of termination or expiration of the Agreement, notify
American Honda in writing of Dealer's desire to have American
Honda repurchase from Dealer Honda Products in Dealer's inventory
which were purchased from American Honda and which, when American
Honda accepts sole possession:
10.5.A. In the case of Honda Automobiles, are new and of the
then current model year, as designated by American
Honda, unused, undamaged and in first-class resalable
condition, regardless of whether or not American Honda
has exercised its right of inspection; and
10.5.B. In the case of Honda Parts are new, listed as current
in the Parts Price Book unused, undamaged, in their
original package and in first-class resalable
condition.
10.6. Upon termination or expiration without renewal, upon request of
Dealer given no later than five (5) days after the effective date
of termination or expiration, American Honda will repurchase all
signs which use a Honda Trademark as were authorized in advance
by American Honda and all service information and materials,
special tools and equipment designed specifically for service of
Honda Automobiles and which were purchased from American Honda
and are usable on current Honda Products, provided that such
signs, information, materials, tools and equipment are less than
five (5) years old and are in good working order.
10.7. American Honda will repurchase from Dealer Honda Products and
signs, information, materials, tools and equipment as aforesaid
on the condition that Dealer furnishes an inventory to American
Honda within thirty (30) day after the termination or expiration
without renewal of the Agreement and complies strictly with all
procedures and conditions of repurchase issued by American Honda
at the time of repurchase. American Honda will
20
have the right and option to assign to another person or entity
the right to purchase such Honda Products.
10.7.A. The price for Honda Products, other than tools,
equipment, information, materials and signs, will be
the price at which they were originally purchased by
Dealer from American Honda or the price last
established by American Honda for the sale of identical
Honda Products, whichever may be lower, and in either
case will be less all prior refunds and allowances made
by American Honda with respect thereto, if any. The
price for tools, equipment, information, materials and
signs will be the price paid by Dealer reduced by
straight-line depreciation on the basis of a useful
life of five (5) years. In all cases, the price will
be reduced by any applicable restocking charge which
may be in effect at the time American Honda's receipt
of goods to be repurchased.
10.7.B. Dealer agrees to store Honda Products and other items
which American Honda desires or is obligated to
repurchase until receipt from American Honda of
rejection of repurchase or instructions for shipping
and return to American Honda. Dealer agrees to
strictly follow and abide by all instructions for
return as may be issued from time to time by American
Honda. All Honda Products will be properly and
suitably packaged and containered for safe
transportation to American Honda. All damage,
regardless of nature or cause, will be the
responsibility of Dealer until the Honda Products are
inspected and accepted by American Honda for
repurchase. Storage of such Honda Products and other
items will be at Dealer's expense for a period of
ninety (90) days after Dealer requests repurchase and
provides an inventory as provided by paragraphs 10.6
and 10.7 hereof. Thereafter, Dealer will be entitled
to charge American Honda a reasonable storage charge.
10.7.C. American Honda, or its designee, at such reasonable
time and for such a
21
reasonable period of time as American Honda may
determine, will have the right to enter the premises
where items for repurchase are being held for the
purpose of checking the inventory submitted by Dealer
or examining, inspecting and inventorying any and all
Honda Products. If American Honda agrees to repurchase
and Dealer fails to furnish an inventory, Dealer will
reimburse American Honda for all costs of American
Honda taking an inventory.
10.7.D. Only those Honda Products meeting the requirements of
Paragraphs 10.5 and 10.6 hereof are or will be eligible
for return to American Honda. American Honda will not
be obligated to give Dealer credit for any Honda
Products which do not meet those requirements.
10.7.E. Dealer warrants and represents that all Honda Products
tendered to American Honda for repurchase will be free
of all liens, encumbrances, security interests or
attachments at the time repurchase is requested by
Dealer. Clear title will be vested in American Honda
upon receipt of goods. Dealer will execute and deliver
any documents necessary to vest clear title in American
Honda, and Dealer will be responsible for complying
with all applicable procedures, including but not
limited to those relating to bulk transfers.
10.7.F. Dealer will pay all freight and insurance charges from
Dealer to the place of delivery designated by American
Honda, provided that Dealer will not be liable for any
amount greater than the freight and insurance charges
from Dealer to American Honda's closest automobile
warehouse or parts center as American Honda may
designate. Claims for damage or allegedly caused by
any carrier will be the sole responsibility of Dealer,
and in no event will American Honda be obligated to
make a claim against a carrier or be liable to Dealer
for damage.
10.7.G. As a condition of repurchase and notwithstanding any
other agreement or
22
offer to repurchase, payment for repurchase will first
be applied against any obligations or money owed by
Dealer to American Honda. All payment due from
American Honda to Dealer pursuant to any provisions of
the Agreement or in connection with the termination of
the Agreement or in connection with the termination of
the Agreement will be made by American Honda after
receipt of the goods to be repurchased and after all
debits and credits have been ascertained and applied to
Dealer's accounts, and Dealer has delivered to American
Honda the manufacturer's certificate of origin or other
document of title for Honda Automobiles tendered to
American Honda for repurchase. In the event it be
found that a balance is due from Dealer to American
Honda, Dealer will pay such sum to American Honda
within ten (10) days of written notice of such balance.
11. GENERAL PROVISIONS.
11.1. Dealer acknowledges that only the President or a designated Vice
President, Secretary or Assistant Secretary of American Honda is
authorized to execute the Agreement, agree to any variation,
modification or amendment of any of the provisions thereof,
including authorized location, or to make commitments for or on
behalf of American Honda. No other employee of American Honda
may make any promise or commitment on behalf of American Honda or
in any way bind American Honda. Dealer agrees that it will not
rely on any statements or purported statements except from
personnel as authorized hereinabove.
11.2. The Agreement contains the entire agreement between Dealer and
American Honda. Dealer acknowledges that no representations or
statements other than those expressly set forth therein were made
by American Honda or any officer, employee, agent or
representative thereof, or were relied upon by Dealer in entering
into the Agreement. The Agreement terminates and supersedes, as
of the execution thereof, all prior agreements relating to Honda
Products, if any.
11.3. Dealer hereby waives, abandons and relinquishes any and all
claims of any kind and nature whatsoever arising from or out of
or in connection
23
with any prior agreement entered into between Dealer and American
Honda; provided, however, that nothing herein contained shall be
deemed a release or waiver of any claim arising out of prior
sales of Honda Products by American Honda to Dealer.
11.4. The Agreement is personal to the individuals identified as
principals, owner(s), partners or shareholder(s) in Paragraph C.
Neither the Agreement, nor any part hereof or any interest
therein, may be transferred or assigned by Dealer, in whole or in
part, directly or indirectly, voluntarily or by operation of law,
without the prior written approval of American Honda. Any
attempted transfer or assignment will be void and not binding
upon American Honda.
11.5. All notices, notifications or requests under or pursuant to the
provisions of the Agreement will be directed to the address of
the principal places of business of the respective parties to the
Agreement. If either party cannot effect notice at the place of
business of the other because a party has abandoned its place of
business or refuses to accept notice, then, and only in such
case, notice may be served on American Honda through its
designated agent for service of process and upon Dealer through
the Department of Motor Vehicles (or its equivalent) in the state
where the Dealership Location is authorized by American Honda.
11.6. The waiver by either party of any breach or violation of or
default under any provision of the Agreement will not be a waiver
by such party of any other provision or of any subsequent breach
or violation thereof or default thereunder. The failure or delay
of either party to take prompt action upon any breach or
violation of the Agreement will not be deemed a waiver of the
right to take action for such breach, default or violation at any
time in the future.
11.7. Dealer agrees to keep confidential and not disclose, directly or
indirectly, any information which American Honda designates as
confidential.
11.8. The Agreement is and shall be deemed to have been entered into in
California and shall be governed by and construed in accordance
with the laws of the State of California.
11.9. If any provision of this Agreement should be held invalid or
unenforceable for any reason whatsoever
24
or to conflict with any applicable law, the Agreement will be
considered divisible as to such provisions, and such provisions
will be deemed amended to comply with such law, or if it cannot
be so amended without materially altering the tenor of the
Agreement, then it will be deemed deleted from the Agreement in
such jurisdiction, and in either case, the remainder of the
Agreement will be valid and binding.
11.10. The terms of the Agreement may not be modified except in writing
signed by an authorized officer of the parties. Without limiting
the generality of the foregoing, no course of dealing will serve
to modify or alter the terms of the Agreement.
11.11. Dealer is an independent business. The Agreement does not
constitute Dealer the agent or legal representative of American
Honda for any purpose whatsoever. Dealer is not granted any
expressed or implied right or authority to assume or create any
obligation on behalf of or in the name of American Honda or to
bind American Honda in any manner or thing whatsoever. Dealer
has paid no consideration for the Agreement. Neither the
Agreement nor any right granted under it is a property right.
11.12. The expiration or termination of the Agreement will not
extinguish any claims American Honda may have for the collection
of money or the enforcement of any obligations which may be in
the nature of continuing obligations.
12. DEFINITIONS.
12.1. American Honda means American Honda Motor Co., Inc. a California
corporation, and the Honda Automobile Division that markets Honda
Automobiles.
12.2. Dealer means the person, firm, corporation, partnership or other
legal entity that signs the Agreement and each of the persons
identified in Paragraph C.
12.3. Dealer Manager means the principal manager of Dealer identified
in Paragraph D upon whose personal service American Honda relies
in entering into the Agreement.
12.4. Dealer Owner means the owner(s) of Dealer identified in Paragraph
C upon whose personal
25
service American Honda relies in entering into the Agreement.
12.5. Dealership Location means the location approved by American Honda
for the purpose of conducting Dealership Operations.
12.6. Dealership Operations means all operations contemplated by the
Agreement. These operations include the sale and service of
Honda Products, and any other activities undertaken by Dealer
related to Honda Products, including rental and leasing
operations, used car sales and body shop operations, and finance
and insurance operations, whether conducted directly or
indirectly by Dealer.
12.7. Dealership Premises means the facilities provided by Dealer at
its Dealership Location for the conduct of Dealership Operations
as approved by American Honda.
12.8. Honda Automobiles means such new passenger cars as are from time
to time offered for sale by American Honda to Dealer for resale
as part of the Honda automobile line as defined by American
Honda.
12.9. Honda Parts means parts, accessories and optional equipment
marketed by American Honda for use with Honda Automobiles.
12.10. Honda Products means Honda Automobiles and Honda Parts.
12.11. Honda Trademarks means the various trademarks, service marks,
names and designs which American Honda uses or is authorized to
use in connection with Honda Products or services relating
thereto.
12.12. Primary Market Area means the geographical area designated for
Dealer by American Honda from time to time.
12.13. The Agreement means the Honda Automobile Dealer's Sales and
Service Agreement and these Standard Provisions which are
incorporated therein by reference.
26
