EXHIBIT 10.6.1
FORD MOTOR COMPANY
SEATTLE DISTRICT
Mercury Sales and Service Agreement
AGREEMENT made as of the 28TH day of DECEMBER, 1979, by and between
XXXXXXXX LINCOLN-MERCURY, INC., A CORPORATION DELAWARE doing business as VALLEY
LINCOLN-MERCURY and with a principal place of business at 000 X. XXXXXXXXX,
XXXXXXX, XXXXXXX, XXXXXX, 00000.
(hereinafter called the "Dealer") and Ford Motor Company, a Delaware corporation
with its principal place of business at Dearborn, Michigan (hereinafter called
the "Company").
PREAMBLE
The purpose of this agreement is to (i) establish the Dealer as an
authorized dealer in COMPANY PRODUCTS including VEHICLES (as herein defined),
(ii) set forth the respective responsibilities of the Company in producing and
selling those products to the Dealer and of the Dealer in reselling and
providing service for them and (iii) recognize the interdependence of both
parties in achieving their mutual objectives of satisfactory sales, service and
profits by continuing to develop and retain a broad base of satisfied owners of
COMPANY PRODUCTS.
In entering into this agreement, the Company and the Dealer recognize that
the success of the Company and of each of its authorized dealers depends largely
on the reputation and competitiveness of COMPANY PRODUCTS and dealers' services,
and on how well each fulfills its responsibilities under this agreement.
It is the opinion of the Company that sales and service of COMPANY PRODUCTS
usually can best be provided to the public through a system of independent
franchised dealers, with each dealer fulfilling his responsibilities in a given
locality from properly located, adequate, well-equipped and attractive
dealerships, which are staffed by competent personnel and provided with the
necessary working capital. The Dealer recognizes that, in such a franchise
system, the Company must plan for the establishment and maintenance of the
numbers, locations and sizes of dealers necessary for satisfactory and proper
sales and service representation in each market area as it exists and as it
develops and changes. At the same time, the Company endeavors to provide each
of its dealers with a reasonable profit opportunity based on the potential for
sales and service of COMPANY PRODUCTS within his locality.
The Company endeavors to make available to its dealers a variety of quality
products, responsive to broad wants and needs of the buying public, which are
attractively styled, of sound engineering design and produced on a timely basis
at competitive prices. The development, production and sale of such products
require that the Company and its manufacturing sources make large continuing
investments in plants, equipment, tools and other facilities, engineering and
styling research and development, quality control procedures, trained personnel
and marketing programs. Heavy commitments must also be made in advance for raw
materials and finished parts. For purposes of making these investments and
commitments, planning production and estimating costs for
setting prices, the Company assumes in advance an estimated volume of sales for
each of its products. Within each year, it develops monthly production
schedules from basic orders submitted by its franchised dealers for the
following month and its and their best estimates of the market for subsequent
months.
In turn, each of the Company's franchised dealers makes important
investments or commitments in retail sales and service facilities and equipment,
in working capital, in inventories for vehicles, parts and accessories, and
trained sales and service personnel based on annual planning volumes for their
markets.
If satisfactory volumes for either the Company or a dealer are not
realized, each may suffer because of commitments already made and the cost of
manufacturing and of selling each product may be increased. Each month each
dealer must forecast and give the Company a basic order for the products needed
to serve his market. During the month each dealer should submit specific orders
for products covered by his basic order. If dealers' specific orders for any
product are greater than or different from their basic orders, the Company seeks
to revise production schedules to the extent feasible, and to allocate fairly
any product in short supply, but inevitably both the Company and its dealers
suffer loss of profits to the extent they cannot meet market demands. Thus, the
automotive business is a high risk business in which the Company, its
manufacturing sources and its dealers can succeed only through cooperative and
competitive effort in their respective areas of manufacturing, sales, service
and customer satisfaction.
Since it is the dealer who deals directly with, and develops the sale of
COMPANY PRODUCTS to, the consuming public, the Company substantially relies on
its dealers to provide successful sales and merchandising programs, competent
service operations and effective owner relations programs. To do this, dealers
must carry out their responsibilities of establishing and maintaining adequate
wholesale and retail finance plans, new and used vehicle sales programs, parts
and service sales programs, personnel training and supportive capitalization and
working capital. To assist its dealers in these responsibilities, the Company
establishes and periodically updates standards of operation and planning guides
based on its experience and current conditions. It also offers sales and
service training courses, advice as to facilities, counseling in the various
phases of dealership operations and, through other agreements and the activities
of its affiliates, assistance in financing, new and used vehicle merchandising,
parts and service merchandising, leasing, daily rentals and facilities
development. It also conducts national advertising, promotional and other
marketing programs and assists dealers in developing complementary group and
individual programs.
To enable the Company to provide such assistance, it requires dealers to
submit uniform and accurate sales, operating and financial reports from which it
can derive and disseminate analytical and comparative operating data and advice
to dealers. The Company also solicits dealers to bring to its attention through
their National Dealer Council organization any mutual dealer problems or
complaints as they arise.
Because the Company relies heavily on its dealers for success, it reserves
the right to cease doing business with any dealer who is not contributing
sufficiently to such success. Similarly, the Company recognizes that its
dealers look to it to provide competitive products and programs and that, if it
does not do so, any dealer may elect to cease doing business with the Company.
The Company has elected to enter into this agreement with the Dealer with
confidence in the Dealer's integrity and ability, his intention to carry out his
responsibilities set forth in this agreement, and his desire to provide
courteous, competent and satisfying sales and service representation to
consumers for COMPANY PRODUCTS, and in reliance upon his representations as to
the persons who will participate in the ownership and management of the
dealership.
The Dealer has elected to enter into this agreement with the Company with
confidence in its integrity and ability, its intention to provide competitive
products and assist the Dealer to market them successfully, and its desire to
maintain high quality dealers.
Both parties recognize that the rights of the Dealer and the Company under
this agreement are defined and limited by the terms of this agreement and
applicable law.
The Company and the Dealer further acknowledge that their methods of
operation and business practices have an important effect on the reputation of
the Dealer, the Company, COMPANY PRODUCTS and other franchised dealers of the
Company. The Company and the Dealer also acknowledge that certain practices are
detrimental to their interests, such as deceptive, misleading or confusing
advertising, pricing, merchandising or business practices, or misrepresenting
the characteristics, quality, condition or origin of any item of sale.
It is the expectation of each of the parties that by entering into this
agreement, and by the full and faithful observance and performance of its
duties, a mutually satisfactory relationship will be established and maintained.
IN CONSIDERATION of the mutual agreements and acknowledgements hereinafter
made, the parties hereto agree as follows:
A. The Company hereby appoints the Dealer as an authorized dealer at
retail in VEHICLES and at retail and wholesale in other COMPANY PRODUCTS and
grants the Dealer the privilege of buying COMPANY PRODUCTS from the Company for
sale in its DEALERSHIP OPERATIONS (as herein defined). The Company also grants
to the Dealer the privilege of displaying, at approved locations), the Company's
trademarks and trade names applicable to COMPANY PRODUCTS. The Dealer hereby
accepts such appointment.
B. Subject to and in accordance with the terms and conditions of this
agreement, the Company shall sell COMPANY PRODUCTS to the Dealer and the Dealer
shall purchase COMPANY PRODUCTS from the Company.
C. The Ford Motor Company Mercury Sales and Service Agreement Standard
Provisions (Form "LM-7939a SALES OFC 4-72"), a duplicate original of which is
attached to the Dealer's duplicate original of this agreement, have been read
and agreed to by the Company and by the Dealer, and such Standard Provisions and
any duly executed and delivered supplement or amendment thereto, are hereby made
a part of this agreement with the same force and effect as if set forth herein
in full.
D. This agreement shall bind the Company when it bears the facsimile
signature of the General Manager, and the manual countersignature of the General
Sales Manager, Market Representation Manager, or a Regional or District Sales
Manager, of the Lincoln-Mercury Division of the Company and a duplicate original
thereof is delivered personally or by mail to the Dealer or the Dealer's
principal place of business.
E. The Dealer acknowledges that (i) this agreement may be executed only
in the manner provided in paragraph D hereof, (ii) no one except the General
Manager, the General Sales Manager, or Market Representation Manager of the
Lincoln-Mercury Division of the Company, or the Secretary or an Assistant
Secretary of the Company, is authorized to make or execute any other agreement
relating to the subject matter hereof on behalf of the Company, or in any manner
to enlarge, vary or modify the terms of this agreement, and then only by an
instrument
in writing, and (iii) no one except the General Manager of the
Lincoln-Mercury Division of the Company, or the Secretary or an Assistant
Secretary of the Company, is authorized to terminate this agreement on behalf of
the Company, and then only by an instrument in writing.
F. In view of the personal nature of this agreement and its objectives
and purposes, the Company expressly reserves to itself the right to execute a
Mercury Sales and Service Agreement with individuals or other entities
specifically selected and approved by the Company. Accordingly, this agreement
and the rights and privileges conferred on the Dealer hereunder are not
transferable, assignable or salable by the Dealer and no property right or
interest, direct or, indirect, is sold, conveyed or transferred to the Dealer
under this agreement. This agreement has been entered into by the Company with
the Dealer in reliance (i) upon the representation and agreement that the
following person(s), and only the following person(s), shall be the principal
owners of the Dealer:
NAME HOME PERCENTAGE
ADDRESS OF INTEREST
Lithia Motors, Inc. 000 X. Xxxxxxx, Xxxxxxx, XX 100%
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(ownership: X.X. Xxxxx-10%; X.X. Xxxxxxx-15%; X.X. XxXxxx-25%;
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X.X. XxXxxx-25%; X.X. XxXxxx-25%, controlling trustee for all stock)
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(ii) upon the representation and agreement that the following person(s), and
only the following person(s), shall have full managerial authority for the
operating management of the Dealer in the performance of this agreement:
NAME HOME TITLE
ADDRESS
X.X. XxXxxx 000 X. Xxxxx, Xxxxxxx, XX 00000 President, G.M.
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and (iii) upon the representation and agreement that the following person(s),
and only the following person(s), shall be the remaining owners of the Dealer:
NAME HOME PERCENTAGE
ADDRESS OF INTEREST
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The Dealer shall give the Company prior notice of any proposed change in the
said ownership or managerial authority, and immediate notice of the death or
incapacity of any such person. No such change or notice, and no assignment of
this agreement or of any right or interest herein, shall be effective against
the Company unless and until embodied in an appropriate amendment to or
assignment of this agreement, as the case may be, duly executed and delivered by
the Company and by the Dealer. The Company shall not unreasonably withhold its
consent to any such change.
G. (Strike out either subparagraph (1) or (2) whichever is not
applicable.)
(1) This agreement shall continue in force and effect from the date of its
execution until terminated by either party under the provisions of paragraph 17
hereof.
(2) This agreement shall continue in force and effect for a term
commencing on the date of its execution and expiring __________ unless sooner
terminated under the provisions of paragraph 17 hereof.
H. Both the Company and the Dealer assume and agree to carry out and
perform their respective responsibilities under this agreement.
IN WITNESS WHEREOF the parties hereto have duly executed this agreement in
duplicate as of the day and year first above written.
FORD MOTOR COMPANY
General Manager, VALLEY LINCOLN-MERCURY
Lincoln-Mercury Division
By [Signature]
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Countersigned by (Title) [President]
[Signature] -----------------------
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