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
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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.
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.
F. DELAY 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.
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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.
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.
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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 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.
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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.
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;
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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.
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
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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 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
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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 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
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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 prescribed 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.
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.
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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, 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.
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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
expenses; 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.
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
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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 MANUALS 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.
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,
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telephone directory listing, and other printed material
referring in any way to Toyota or bearing any Toyota Mark;
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, facilities
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
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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:
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
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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 operations. DEALER agrees to
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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
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electronic communications network and/or in hard copy and/or in any
other manner designated by DISTRIBUTOR.
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.
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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
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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 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 understanding 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
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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
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
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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.
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.
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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 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.
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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;
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
-24-
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;
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;
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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.
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
-26-
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 termination 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.
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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
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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.
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.
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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 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
-30-
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 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, misrepresentations, 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
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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 tendency of a request for defense and/or
indemnification, and thereafter, the requesting party shall
have a continuing duty to avoid undue prejudice to 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
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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
certified 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
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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 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 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.
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F. 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 or 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.
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
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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.
XXVII. DEFINITIONS
As used in this Agreement, the parties agree that the following terms
shall be denied as exclusively set forth below.
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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.
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