EXHIBIT 10.3.9
NISSAN CONTIGUOUS MARKET OWNERSHIP
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AREAS FORMATION AND LINKAGE AGREEMENT
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This Nissan Contiguous Market Ownership Areas Formation and Linkage Agreement
(the "CMO Formation and Linkage 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") concerning the commitments and
obligations of FAA and Nissan in respect to the acquisition and formation of
Contiguous Market Ownership Areas ("CMO") in the San Francisco Bay Area,
specifically, the "Peninsula CMO", the "South Bay CMO", the "East Bay CMO" and
the "East Shore CMO".
RECITALS
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WHEREAS, Nissan has developed a distribution network plan that seeks to create
CMOs in the San Francisco Bay Area (the Peninsula CMO, South Bay CMO, East Bay
CMO, and East Shore 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 acquire and develop these
CMOs;
WHEREAS, Nissan has advised FAA that Nissan would approve their acquisition of
individual dealers within the CMOs, 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 CMOs,
with an intent to form the complete San Francisco Bay Area CMO marketing
territories;
WHEREAS, FAA acknowledges that Nissan's business concept for the CMO envisioned
entering into one Nissan Dealer Sales and Service Agreement with one entity for
each CMO;
WHEREAS, FAA, desires affirm its commitment to implement Nissan's CMO concept in
each CMO;
WHEREAS, FAA will have dealer subsidiaries in operation in one or more of the
Bay Area CMOs, and FAA has committed to, and intends to continue to acquire
Nissan Dealers to complete the formation and operation of all San Francisco Bay
Area CMOs;
WHEREAS, Nissan and FAA have negotiated agreements to allow FAA's operation of
Bay Area CMOs, specifically, any CMO Holding Company Agreements, the Nissan
Dealer Term Sales and Service Agreements for each individual dealer entity, if
appropriate, and the relevant Nissan CMO Agreements for Bay Area CMOs;
WHEREAS, FAA and Nissan mutually agree and acknowledge that Nissan has placed
extraordinary trust in the qualifications, integrity, and ability of FAA and
Thomas A. Price; the
parties mutually acknowledge that Nissan's agreement and intent to approve FAA
and Price as Contiguous Multiple CMO Operators ("CMCMO") is unique to FAA and
Price based upon Nissan's experience, relationship, and the commitments between
the parties; and, accordingly, that a prospective transferee of one or more of
the CMOs must have the same high qualifications, and, further, that even a
qualified CMO operator may not have the extraordinary qualifications necessary
to be approved as a CMCMO.
WHEREAS, FAA and Nissan desire to treat the San Francisco Bay Area CMOs as part
and parcel of a single market;
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 FORMATION AND LINKAGE AGREEMENT
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FAA acknowledges that the San Francisco Bay Area market is a single
metropolitan market area which has been divided by Nissan into four CMOs
(Peninsula, South Bay, East Bay, and East Shore CMOs) for promotion and
marketing purposes. FAA agrees to use its best efforts to acquire all
Nissan dealership operations within the four CMO areas. Nissan and FAA
acknowledge that this will be a process that must occur over time, and that
Nissan cannot take any action adverse to current dealers in order to, or in
an effort to, require them to sell or transfer their dealerships to FAA.
Should FAA be successful in acquiring Nissan dealerships within the four
CMOs in the San Francisco Bay Area, Nissan agrees to approve that
acquisition, provided that FAA continues to possess the generally applied
qualifications necessary to become an Authorized Nissan Dealer.
Nissan and FAA acknowledge that each CMO, though a part of the San
Francisco Bay Market Area, has been designed to be sufficient to achieve
the benefits of a CMO as an independent entity. Nevertheless, 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 Nissan
Dealer Term Sales and Service Agreements, the Nissan Contiguous Market
Ownership Agreements, and any relevant Nissan CMO Holding Company
Agreement, as part and parcel of the single marketing entity in the San
Francisco Bay Area market. Consistent with the CMO concept reflected in the
CMO Agreements for the constituent CMOs, FAA agrees that it will exercise
its control and ownership of each CMO in ways consistent with this
agreement and will not take any actions or allow its subsidiaries in the
San Francisco Bay Area CMOs to take any action inconsistent with the intent
of this Agreement.
2. CMO FORMATION AND LINKAGE AGREEMENT TERM
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This Agreement shall be in effect while FAA, or any subsidiary dealer
entity, is operating as an Authorized Nissan Dealer within a CMO in the San
Francisco Bay Area, unless amended
by the parties. Termination of all Nissan dealer activities owned or
controlled by FAA will constitute termination this CMO Formation and
Linkage Agreement with no further notice or act required by any party.
3. TRANSFERS
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In view of Nissan's distribution plan and the efforts and resources
that Nissan has expended in order to establish the San Francisco Bay
Area CMOs, if FAA proposes or attempts to sell or otherwise transfer
of any one of the four San Francisco Bay Area CMOs, or those
dealership assets necessary for the conduct of appropriate and
effective CMO Operations, without Nissan's consent, Nissan in its
reasonable discretion, may require that FAA, or any subsidiary entity,
sell, transfer or terminate, one, all, or any combination thereof, of
the CMOs in the San Francisco Bay Area, to a proposed buyer acceptable
to Nissan.
Further, Nissan reserves the right, that, should FAA desire to
transfer two or more of the San Francisco Bay Area CMOs, then Nissan,
in its sole discretion, may require FAA to transfer to an entity
possessing the same, unusually high qualifications. Should Nissan, in
its sole discretion, not consent to a transfer of two or more of the
San Francisco Bay Area CMOs to a single entity, then Nissan may
require FAA to transfer these CMOs, if at all, to separate CMO
operators, acceptable to Nissan.
FAA acknowledges and agrees to identical Rights of First Refusal in
the CMO interests that each individual dealer or dealer entity (on
specific Dealership Assets and Dealership Facilities) as are contained
the Dealer Agreements, as well as any Right of First Refusal contained
in the individual CMO Agreements, 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), THE EAST BAY CMO
DEALERS(s) (CURRENTLY INCLUDING CONCORD NISSAN AND DUBLIN NISSAN) THE
SOUTH BAY CMO DEALER(s) (CURRENTLY STEVENS CREEK) AND THE EAST SHORE
CMO (CURRENTLY NO FAA DEALERS WITHIN THIS CMO), AGREE THAT THE DISPUTE
RESOLUTION PROCESS OUTLINED IN THIS PARAGRAPH 4, 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").
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, FAA 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 FAA representative designated
by FAA, 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 FAA and
Nissan have agreed in writing to waive Mediation, the Dispute will be
settled by Binding Arbitration in accordance with the procedures in
the Commercial Arbitration Procedures of the American Arbitration
Association, 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
NISSAN DEALERSHIP FACILITIES ADDENDUM
NISSAN MOTOR CORPORATION IN U.S.A.
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FACILITIES & LOCATION SIZE (Square Feet) REQUIREMENTS BASED ON TOTAL PLANNING VOLUME
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New Vehicle Used Vehicle
Sales New Vehicle Sales Used Vehicle
Site Address Building Sales Land Building Sales Land
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A. Main Location: 2,952 5,810 0 4,656
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B. Additional Location:. 5,000
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C. Additional Location:
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D. Additional Location:
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FACILITIES & LOCATION SIZE (Square Feet) REQUIREMENTS BASED ON TOTAL UNITS IN OPERATION
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Service
Site Address Service Bays Building Service Land Parts Building Parts Land
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A. Main Location: 8 5,000 4,368 1,900 376
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B. Additional Location:. 5 3,500 1,500 500 500
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C. Additional Location:
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D. Additional Location:
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FACILITIES & LOCATION SIZE (Square Feet)
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Body Shop Body Shop
Site Address Building Land
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A. Main Location: N/A N/A
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B. Additional Location:. N/A N/A
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C. Additional Location:
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D. Additional Location:
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BUILDING
&
TOTALS BUILDING LAND LAND
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Actual 2,952 10,810 0 4,656 13
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Guide 2,928 23,619 285 12,305 12
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Actual 100.8% 45.8% 0.0% 37.8% 108.3%
% Guide
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BUILDING
&
TOTALS BUILDING LAND LAND
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8,500 5,858 2,400 876 N/A N/A
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Guide 5,762 9,710 3,247 1,575 N/A N/A
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Actual 147.5% 60.4% 73.9% 55.6% N/A N/A
% Guide
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Makes Planning Units In
Sold Volume Operation
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1. Nissan
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2.
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3.
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4.
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5.
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6.
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TOTALS
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Guide
Figures
Utilized
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This Dealership Facilities Addendum is executed by Dealer and Seller pursuant to
Section 2.A of the Nissan Dealer Sales and Service Agreement in effect between
said parties and in effective as of the date set forth below. Dealer and Seller
agree that as of the effective date the information above accurately describes
the Dealership Location and Dealership Facilities, the purposes for which each
location is used and the current Guides for such facilities based on the
Planning Volumes stated herein. The execution of this Facilities Addendum shall
not be construed as evidence of Dealer's fulfillment of its responsibilities
under Section 2 of the Agreement. Changes in the Dealership Location, the
Dealership Facilities or their usage from the locations and specific uses stated
herein cannot be made by Dealer without the prior written consent of Seller.
Such changes and any changes in Seller's Guides will be reflected in a new
Dealership Facilities Addendum when deemed necessary by Seller. This Dealership
Facilities Addendum cancels and supersedes any prior Dealership Facilities
Addenda executed by Seller and Dealer.
DEALER:
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SMART NISSAN, INC
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Dealer Name
MARIN NISSAN
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Doing Business As
By /s/ San Rafael Ca 94901
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Signature City State Zip
Title President 3408
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Dealer Code
Accuracy of information verified for SELLER:
Seller ------
NISSAN DIVISION
By /s/ NISSAN MOTOR CORPORATION IN U.S.A.
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Title Assistant Regional Manager By /s/
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3-25-97 Title Vice President, Nissan Division
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By /s/
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THIS ADDENDUM IS EFFECTIVE AS OF Title Regional Vice President
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6/30/97
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