EXHIBIT 10.3.18
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 25th day of September, 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, FAA Stevens Creek, Inc.,
("Stevens Creek Nissan") and FAA Capitol N, Inc., ("Capitol Nissan"), and any
other entities which FAA may acquire within the designated area described
hereinafter as the "South Bay 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 "South Bay
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 South Bay 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
South Bay CMO, with an intent to form the complete South Bay 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 South Bay 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 FAA Stevens Creek, Inc. and FAA Capitol N, 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 Stevens Creek Nissan and Capitol Nissan in connection
with the formation of the South Bay 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 South Bay 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 South Bay 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 Stevens Creek Nissan, Capitol Nissan,
and any and all subsequently acquired or created dealer entities within the
South Bay CMO, as if they were one dealer operating within the South Bay
CMO. Similarly, defaults or breaches of the Dealer Sales & Service
Agreement by either Stevens Creek Nissan or Capitol Nissan will constitute
a breach of both agreements. Holding Company shall cause Stevens
Creek Nissan and Capitol 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 South Bay 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
Stevens Creek Nissan, Capitol Nissan, or any subsequently acquired or
created dealer entities acquired in the South Bay CMO, FAA will merge the
companies so as to achieve the joint business objective of one dealer
company for the South Bay 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 dealer entities within the South Bay CMO
(currently including Steven Creek Nissan and Capitol Nissan). Termination
of any of the Nissan Dealer Sales and Service Agreements of dealer entities
owned and controlled by FAA and constituting the South Bay CMO (currently
including those of Steven Creek Nissan or Capitol Nissan) will constitute
termination of all dealer agreements of dealer
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entities within the South Bay 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 South Bay CMO, if FAA, or dealer entities within the
South Bay CMO owned and controlled FAA (currently including Stevens
Creek Nissan or Capitol 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 South Bay CMO (currently including Stevens
Nissan or Capitol Nissan) sell all or none of such assets or
Dealership Facilities comprising the South Bay 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 South Bay 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 SOUTH BAY CMO DEALER(s) (CURRENTLY
INCLUDING STEVENS CREEK NISSAN AND CAPITOL 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").
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.
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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
Northwest Region
Acknowledged:
FAA Stevens Creek, Inc. FAA Capitol N, 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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NISSAN DEALERSHIP FACILITIES ADDENDUM NISSAN MOTOR CORPORATION IN U.S.A.
[LOGO]
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FACILITIES & LOCATION SIZE (Square Feet) REQUIREMENTS BASED ON TOTAL PLANNING VOLUME
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New Vehicle New Vehicle Used Vehicle Used Vehicle
Site Address Sales Sales Sales Sales
Building Land Building Land
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A. Main Location:
1120 Capitol Expressway Auto Mall 9,212 70,946 735 62,146
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B. Additional Location:
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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 45,662 185,301 230,963 9,212 70,946 735 62,146
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Guide 23,846 106,486 130,332 5,305 50,261 451 29,164
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Actual
% Guide 191.5% 174.0% 177.2% 173.6% 141.2% 163.0% 213.1%
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FACILITIES & LOCATION SIZE (Square Feet) REQUIREMENTS BASED ON TOTAL UNITS IN OPERATION
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Service Service Service Parts Parts Body Body
Site Address Bays Building Land Building Land Shop Shop
Building Land
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A. Main Location:
1120 Capitol Expressway Auto Mall 43 23,450 39,813 12,265 12,396 N/A N/A
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B. Additional Location: 445 Serramonte Blvd.
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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 43 23,450 39,813 12,265 12,396 N/A N/A
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Guide 27 12,251 24,856 5,839 2,205 N/A N/A
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Actual
% Guide 159.3% 191.4% 160.2% 210.1% 562.2% N/A N/A
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MAKES PLANNING UNITS IN
SOLD VOLUME OPERATION
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1. Nissan 1599 5795
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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 1599 5795
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Guide
Figures 1500 6000
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 is 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 he 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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FAA CAPITOL N, INC.
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Dealer Name
CAPITOL NISSAN
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Doing Business As
By /s/ San Jose CA 95136
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Signature City State Zip
Title President 3474
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Dealer Code
Accuracy of information verified for SELLER
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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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9-25-97 Title Vice President, Nissan Division
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Date Verified
By /s/
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THIS ADDENDUM IS EFFECTIVE AS OF
Title Regional Vice President
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9/25/97
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