EXHIBIT 10.3.12
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
--------
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
---------
1. THE CMO HOLDING COMPANY AGREEMENT
---------------------------------
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
-----------------------
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
2
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
---------
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
--------------------------
A. EXCLUSIVE REMEDY
----------------
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").
3
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
---------
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
-------------------
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, Vice President
-------------------- --------------------------------------
Thomas A Price Thomas H. Eastwood, Vice President
President and CEO Nissan Division
By: /s/ Jules Calavadetscher
------------------------------------------
Jules Clavadetscher
Regional Vice President
Acknowledged
Smart Nissan, Inc. FAA Serramonte, Inc
By: /s/ Thomas A. Price, President By: /s/ Thomas A. Price, President
------------------------------ ------------------------------
Thomas A Price President Thomas A Price, President
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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
--------
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
---------
1. THE CMO FORMATION AND LINKAGE AGREEMENT
---------------------------------------
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 Dearer.
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
---------
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
--------------------------
A. EXCLUSIVE REMEDY
----------------
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 PENINSULA 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
---------
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
-------------------
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, Vice President
-------------------- --------------------------------------
Thomas A Price Thomas H. Eastwood, Vice President
President and CEO Nissan Division
By: /s/ Jules Clavadetscher
---------------------------------------
Jules Clavadetscher
Regional Vice President