EXHIBIT 10.3.8
NISSAN CONTIGUOUS MARKET OWNERSHIP
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HOLDING COMPANY AGREEMENT
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This Nissan Contiguous Market Ownership Holding Company Agreement (the "CMO
Holding Company Agreement") is entered into this 30th day of JUNE, 1997, by and
among Nissan Motor Corporation in U.S.A. ("Nissan"), and FirstAmerica
Automotive, Inc., ("FAA" or "Holding Company") concerning the commitments and
obligations of FAA in respect to its subsidiaries, Smart Nissan, Inc., ("Marin
Nissan") and FAA Serramonte, Inc., ("Serramonte Nissan"), and any other entities
which FAA may acquire within the designated area described hereinafter as the
"Peninsula CMO".
RECITALS
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WHEREAS, Nissan has developed a distribution network plan that seeks to create a
Contiguous Market Ownership Area in the San Francisco Bay Area (the "Peninsula
CMO");
WHEREAS, Nissan recognizes this new distribution plan is to be implemented over
time with consideration of existing dealers' rights;
WHEREAS, FAA has approached Nissan with a request to develop the Peninsula CMO;
WHEREAS, Nissan has advised FAA that Nissan would approve their acquisition of
individual dealers, provided FAA satisfies Nissan's requirements for applicants;
and Nissan has advised FAA that Nissan cannot make existing dealers sell or
otherwise transfer their dealerships to FAA;
WHEREAS, FAA acknowledges the rights of existing dealers, yet commits to use its
best good faith and reasonable efforts to acquire dealerships within the
Peninsula CMO, with an intent to form the complete Peninsula CMO marketing
territory;
WHEREAS, FAA acknowledges that Nissan's business concept for the CMO envisioned
entering into one Nissan Dealer Sales and Service Agreement with one corporate
entity for the entire CMO;
WHEREAS, FAA, while affirming its commitment to implement Nissan's CMO concept
in the Peninsula CMO, has requested, in order to accommodate their business
purposes, that Nissan permit FAA to maintain the corporate entities they are
creating (or subsequently will acquire or create) to form the CMO and that
Nissan enter into separate, but related, dealer agreements with these entities;
WHEREAS, FAA owns 100% of the stock of the subsidiary dealer corporation
(currently Smart Nissan, Inc., and FAA Serramonte, Inc.,).
WHEREAS, Nissan has communicated its willingness to accommodate FAA's request
subject to FAA's agreement to the terms and conditions set forth herein;
WHEREAS, based on the foregoing, Nissan will enter into separate, but related
dealer agreements with Marin Nissan and Serramonte Nissan in connection with the
formation of the Peninsula CMO;
NOW, THEREFORE, in consideration of the agreements and mutual covenants set
forth herein, and other good and valuable consideration, the receipt and
sufficiency which is hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
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1. THE CMO HOLDING COMPANY AGREEMENT
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FAA acknowledges that while, technically, the Peninsula CMO is comprised of
separate dealer corporations, as a practical matter, and consistent with
its intent as originally communicated, Nissan intends, and FAA agrees, that
Nissan will treat these wholly-owned subsidiary dealer corporations, and
their related Sales and Service Agreements, as part and parcel of one
single CMO entity for all purposes under this and those separate
Agreements. Specifically, the parties to this agreement acknowledge and
agree that, while the Peninsula CMO is comprised of separate dealer
corporations, Holding Company and Nissan will treat those dealers and their
dealer agreements as one dealer with one agreement FOR ALL PURPOSES,
consistent with the CMO concept reflected in the CMO Addenda to those
dealer's agreements. Accordingly, with respect to allocation of vehicles,
financial reporting, sales incentives, business plans, performance
standards and evaluation and for all other purposes under the Sales &
Service Agreements, Nissan will treat Marin Nissan, Serramonte Nissan, and
any and all subsequently acquired or created dealer entities within the
Peninsula CMO, as if they were one dealer operating within the Peninsula
CMO. Similarly, defaults or breaches of the Dealer Sales & Service
Agreement by either Marin Nissan or Serramonte Nissan will constitute a
breach of both agreements. Holding Company shall cause Marin Nissan and
Serramonte Nissan, and any subsequently acquired and/or created dealer
entities, to cooperate fully in accomplishing the objectives and intent of
the CMO addenda to their agreements, including the Business Plans and
Market Area Plans incorporated therein, and this Holding Company CMO
Agreement. Moreover, FAA agrees that it will exercise its control and
ownership in ways consistent with this agreement and will not take any
actions or allow its subsidiaries in the Peninsula CMO to take any action
inconsistent with the intent of this Agreement.
ONE AGREEMENT OBJECTIVE
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FAA agrees that when reasonable business considerations permit FAA to merge
Marin Nissan, Serramonte Nissan, or any subsequently acquired or created
dealer entities acquired in the Peninsula CMO, FAA will merge the companies
so as to achieve the joint business objective of one dealer company for the
Peninsula CMO area.
Until such time, however, Nissan will not enforce its policy and the
contractual obligation that each and every dealer corporation appoint an
exclusively dedicated Executive Manager as manager of the dealer
corporation. Specifically, the appointment of a qualified Executive
Manager, acceptable to Nissan, as the Executive Manager of all CMO Nissan
dealerships will not be deemed a breach of the related dealer agreements.
2. CMO HOLDING COMPANY AGREEMENT TERM
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This Agreement shall have a term beginning with, running concurrent to, and
expiring simultaneously as, the Nissan Dealer Term Sales and Service
Agreements of all FAA owned
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dealer entities within the Peninsula CMO (currently including Marin Nissan
and Serramonte Nissan). Termination of any of the Nissan Dealer Sales and
Service Agreements of dealer entities owned and controlled by FAA and
constituting the Peninsula CMO (currently including those of Marin Nissan
or Serramonte Nissan) will constitute termination of all dealer agreements
of dealer entities within the Peninsula CMO, and will, at Nissan's option,
cause this CMO Holding Company Agreement to terminate with no further
notice or act required by any party.
3. TRANSFERS
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In view of the efforts and resources that Nissan has expended in order
to establish the Peninsula CMO, if FAA, or dealer entities within the
Peninsula CMO owned and controlled FAA (currently including Marin
Nissan or Serramonte Nissan), proposes to sell those dealership assets
necessary for the conduct of appropriate and effective Dealership
Operations, or those Dealership Facilities necessary to conduct
Dealership Operations, without Nissan's consent, Nissan in its sole
discretion may require that FAA, and any FAA owned or controlled
dealer entities within the Peninsula CMO (currently including Marin
Nissan or Serramonte Nissan) sell all or none of such assets or
Dealership Facilities comprising the Peninsula CMO to a proposed buyer
acceptable to Nissan.
Holding Company acknowledges and agrees to identical Rights of First
Refusal on Dealership Assets and Dealership Facilities as are
contained the Dealer Agreements for the subsidiary Dealer entities
within the Peninsula CMO as well as identical Option to Purchase
provisions.
4. DISPUTE RESOLUTION PROCESS
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A. EXCLUSIVE REMEDY
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The parties acknowledge that, at the state and federal levels, various
courts and agencies would, in the absence of this Paragraph 4, be
available to them to resolve claims or controversies which might arise
between them. The parties agree that it is inconsistent with their
relationship for either to use courts or governmental agencies to
resolve such claims or controversies.
THEREFORE, CONSISTENT WITH THE PROVISIONS OF THE UNITED STATES
ARBITRATION ACT (9 U.S.C. (S)(S) 1 et seq.), NISSAN, FAA, IN ITS OWN
RIGHT AND AS THE OWNER OF THE PENINSULA CMO DEALER(s) (CURRENTLY
INCLUDING MARIN NISSAN AND SERRAMONTE NISSAN) AGREE THAT THE DISPUTE
RESOLUTION PROCESS OUTLINED IN THIS PARAGRAPH 12, WHICH INCLUDES
BINDING ARBITRATION, SHALL BE THE EXCLUSIVE MECHANISM FOR RESOLVING
ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING IN ANY
WAY TO THIS AGREEMENT OR TO THE RELATIONSHIP BETWEEN THE PARTIES,
INCLUDING BUT NOT LIMITED TO CLAIMS UNDER ANY STATE OR FEDERAL
STATUTES (hereinafter "Disputes").
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There are two steps in the Dispute Resolution Process: a) Mediation
and b) Binding Arbitration. All Disputes must first be submitted to
Mediation, unless that step is waived by written agreement of the
parties. If Mediation does not resolve the Dispute to their mutual
satisfaction, the HOLDING COMPANY or Nissan can submit the Dispute to
Binding Arbitration.
B. MEDIATION
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Any party to this Agreement can submit a Dispute to Mediation.
Mediation is conducted by a panel consisting of a Nissan
representative designated by Nissan, a HOLDING COMPANY representative
designated by HOLDING COMPANY, and an independent professional
mediator chosen by the parties' representatives. The Mediation Panel
will evaluate each position and recommend a solution. This recommended
solution is not binding.
C. BINDING ARBITRATION
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If a Dispute has not been resolved after Mediation, or if HOLDING
COMPANY and Nissan have agreed in writing to waive Mediation, the
Dispute will be settled by Binding Arbitration in accordance with the
procedures in the Dealer Dispute Resolution Guide, with the prevailing
party to recover its costs and attorneys fees from the other party.
All awards of the arbitration are binding and non-appealable except as
otherwise provided in the United States Arbitration Act. Judgment upon
any award rendered by the arbitrator(s) may be entered and enforced in
any court having jurisdiction.
FIRSTAMERICA AUTOMOTIVE, INC. NISSAN MOTOR CORPORATION IN U.S.A.
By: /s/ Thomas A. Price By: /s/ Thomas H. Eastwood
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Thomas A. Price Thomas H. Eastwood, Vice President
President and CEO Nissan Division
By: /s/ Jules Clavadetscher
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Jules Clavadetscher
Regional Vice President
Acknowledged
Smart Nissan, Inc. FAA Serramonte, Inc.
By: /s/ Thomas A. Price By: /s/ Thomas A. Price
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Thomas A. Price President Thomas A. Price, President
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