EXHIBIT 10.4.1
AGREEMENT BETWEEN
TOYOTA MOTOR SALES, U.S.A., INC.
AND
FIRSTAMERICA AUTOMOTIVE, INC.
Agreement, dated May 2 1997, entered between FirstAmerica
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Automotive, Inc., a Nevada corporation, with its principal place of business at
100 The Embarcadero, Penthouse, San Francisco, CA, 94105, ("FAA"), and Toyota
Motor Sales, U.S.A., Inc.("TMS"), a California corporation, with its principal
place of business at 19001 South Western Avenue, Torrance, CA, 90509.
WHEREAS, FAA wishes to acquire, directly or through an Affiliate, certain Toyota
and Lexus dealerships; and
WHEREAS, FAA has issued securities traded on the NASDAQ Stock Exchange and
intends to issue additional securities to be traded on the NASDAQ Stock
Exchange; and
WHEREAS, FAA and TMS have agreed that FAA will not use a public ownership
structure for its Toyota and Lexus dealerships without TMS' prior consent, which
shall be given or withheld in TMS' sole discretion; and
WHEREAS, TMS has advised FAA of TMS' policy limiting the number of commonly
owned or controlled, directly or through an Affiliate (as defined below),
dealerships by a single entity, which is currently as follows:
A. TOYOTA
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A single entity shall not hold an ownership interest, directly or
through an Affiliate, in more than: (a) the greater of one (1)
dealership or 20% of the Toyota dealer count in a "Metro" market
("Metro" markets are multiple Toyota dealership markets as defined by
TMS);(b) the lesser of five (5) dealerships or 5% of the Toyota
dealerships in any Toyota Region (Toyota Region" currently includes
nine TMS Regions, Central Atlantic Toyota, Southeast Toyota, and Gulf
States Toyota); and c) seven (7) Toyota dealerships nationally.
LEXUS
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A single entity shall not hold an ownership interest, directly or
through an Affiliate, in more than: (a) two (2) Lexus dealerships in
any Area ("Area" currently includes Eastern, Southern, Central and
Western); and (b) three (3) Lexus dealerships nationally.
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"Affiliate" of, or a person or entity "affiliated" with, a specified person
or entity, means a person or entity that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the person or entity specified. For the purpose of this
definition, the term "control" (including the terms "controlling,"
"controlled by" and "under common control with" means the possession,
directly or indirectly, or the power to direct or cause the direction of
the management and policies of a person or entity, whether through the
ownership of securities, by contract or otherwise.
B. In order for an entity to acquire additional Toyota or Lexus dealerships,
within the limits of this Agreement, each Toyota or Lexus dealership which
it owns, directly or through an Affiliate, must: a) be in full compliance
with all of the terms of its Dealer Agreement; b) meet all of the
applicable Toyota or Lexus Market Representation policies and standards;
and c) meet applicable performance criteria for the most recent twelve (12)
month period.
C. In order to allow TMS sufficient time to evaluate performance at its
existing dealerships, an entity may not acquire any additional Toyota or
Lexus dealership with nine (9) months of its prior acquisition of a similar
make dealership.
D. If the purchase of any Toyota or Lexus dealership would result in exceeding
the limits set forth in Paragraph 1 above, TMS will reject a dealer's
application for approval of the ownership transfer until such time as the
dealer shall divest itself of the appropriate number of dealerships to
bring it into compliance with the requirements of this Agreement.
WHEREAS, FAA and TMS are willing to resolve these issues in accordance with the
terms set forth herein,
NOW THEREFORE, FAA and TMS agree as follows:
1. CHANGE IN OWNERSHIP OF FAA
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TMS shall have the right to approve any ownership or voting rights of FAA
of twenty percent (20%) or greater by any individual or entity; PROVIDED
HOWEVER, that if TMS reasonably determines that such individual or entity
is unqualified to own a Toyota or Lexus dealership, or has interests
incompatible with TMS, and such transfer is effected, FAA must, within
ninety (90) days from the date of notification by TMS of its determination,
either: a) transfer the assets of its Toyota and Lexus dealerships to a
third party acceptable to TMS; b) voluntarily terminate its Toyota and
Lexus Dealership Agreements; or c) demonstrate that such individual or
entity in fact owns less that 20% of the outstanding shares of FAA, or does
not have 20% of the voting rights in FAA.
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2. OWNERSHIP OF CONTIGUOUS DEALERSHIPS
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FAA shall not own contiguous dealerships (as that term is defined in the
applicable Toyota or Lexus Dealer Agreement or policy) with common
boundaries.
3. SEPARATE LEGAL ENTITIES FOR EACH TOYOTA AND LEXUS DEALERSHIP
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FAA shall create separate legal entities for each Toyota and Lexus
dealership which it owns, directly or through an Affiliate, shall obtain a
separate motor vehicle license for each dealership, and shall maintain
separate financial statements for each such dealership. Consistent with TMS
policy, the name "Toyota" or "Lexus," as applicable shall appear in the
d/b/a of each dealership.
4. FACILITY STANDARDS
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In no instance shall a Toyota or Lexus dealership or any department(s)
thereof be dualled with any other brand without TMS' prior written
approval.
5. GENERAL MANAGERS
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Each Toyota and Lexus dealership owned or controlled by FAA shall have a
qualified, approved (subject to the exception noted in Paragraph 6 below)
General Manager. Each General Manager shall work at the Toyota or Lexus
dealership premises, shall devote all of his/her efforts to the management
of the dealership and shall have no other business interests or management
responsibilities.
6. APPROVAL OF THE GENERAL MANAGER
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Whenever FAA nominates a new General Manager candidate for a Toyota or
Lexus dealership, TMS shall have the right to withhold a decision
concerning approval or rejection of the candidate for a period of up to one
year, at its sole discretion; PROVIDED, HOWEVER, that the candidate may
operate in the capacity of General Manager until TMS has approved or
rejected him/her.
7. LIMITATIONS ON THE AUTHORITY OF THE GENERAL MANAGER
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FAA shall advise TMS of the limitations, by category and, where applicable,
by specific action, on the authority of the General Manager regarding the
operation of the dealership, and shall provide the name of the individual
at FAA who has such authority with respect to each listed category or
specific action, in accordance with Paragraph 8 below.
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8. IDENTIFICATION OF FAA CONTACT OFFICIAL
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FAA shall identify, in each Toyota and Lexus Dealer Agreement, the FAA
executive (other than the General Manager of the dealership) who will
respond directly to any Toyota or Lexus concerns regarding the operation or
performance of the dealership, which executive will have full authority, in
accordance with FAA management policies, to resolve issues raised by TMS in
connection with the operation of the dealership.
9. SELLING TOYOTA AND LEXUS PRODUCTS
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FAA shall make available to the customers at its Toyota and Lexus
dealerships, all Toyota and/or Lexus products, including vehicles, Genuine
Parts and Accessories, retail financing (whether for purchases or leases)
and extended service contracts.
10. REPRESENTATION ON TOYOTA AND LEXUS DEALER ORGANIZATIONS
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No more than one representative each from the Toyota, and, separately,
Lexus, dealerships owned, directly or through an Affiliate, by FAA, may
serve on the National Dealer Council or any future Toyota or Lexus national
board(s) which may be established, and no more than one representative each
may serve on either a Regional or Area Dealer Council, or Toyota or Lexus
Dealer Association Board of Directors.
11. DEALERSHIP PERSONNEL TRAINING
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FAA shall not substitute training courses or certification programs of its
own for those provided or sponsored by TMS without the prior approval of
TMS.
12. PUBLIC OFFERING OF SECURITIES BY FAA
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TMS shall not object to the transfer of Toyota and Lexus dealerships to
FAA, a public company, so long as the limitations on ownership of voting
control of FAA contained in this Agreement are not exceeded or breached in
any way.
13. FINANCIAL DISCLOSURES
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FAA shall provide TMS with copies of all information and materials filed
with the Securities Exchange Commission, including, but not limited to,
quarterly and annual financial statement filings, prospectuses and other
materials related to FAA.
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14. PROSPECTUS DISCLAIMER AND INDEMNIFICATION AND HOLD HARMLESS AGREEMENT
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FAA shall place in its registration statement and its prospectus, as well
as in any other document offering shares in FAA to public or private
investors, the following disclaimer:
No Manufacturer (as defined in this Prospectus) has been
involved, directly or indirectly, in the preparation of this
Prospectus or in the Offering being made hereby. No
Manufacturer has made any statements or representations in
connection with the Offering or has provided any information
or materials that were used in connection with the Offering,
and no Manufacturer has any responsibility for the accuracy
or completeness of this Prospectus.
FAA shall indemnify and hold harmless TMS pursuant to the terms of the
Indemnification and Hold Harmless Agreement set forth in Attachment 1 to
this Agreement.
15. SOLE AGREEMENT OF THE PARTIES
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There are no prior agreements or understandings, either oral or written,
between the Parties affecting this Agreement, except as otherwise specified
or referred to in this Agreement. No change or addition to, or deletion of
any portion of this Agreement shall be valid or binding upon the parties
hereto unless approved in writing signed by an officer of each of the
parties hereto.
16. SEVERABILITY
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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 provision(s), and such
provision(s) will be deemed amended to comply with such law, or if it
(they) cannot be so amended without materially affecting the tenor of the
Agreement, then it (they) will be deemed deleted from this Agreement in
such jurisdiction, and in either case, the remainder of the Agreement will
be valid and binding.
17. NO IMPLIED WAIVERS
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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.
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18. TMS POLICIES
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This Agreement refers to certain policies and standards. FAA acknowledges
that these policies and standards are prepared by TMS in its sole
discretion based upon TMS' evaluation of the marketplace. TMS may
reasonably amend its policies and standards from time to time.
19. APPLICABLE LAW
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This Agreement shall be governed by and construed according to the laws of
California.
20. BENEFIT
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This Agreement is entered into by and between TMS and FAA 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.
21. NOTICE TO THE PARTIES
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Any notices permitted or required under the terms of this Agreement shall
be directed to the following respective addresses of the parties, or if
either of the parties shall have specified another address by notice in
writing to the other party, then to the address last specified:
TOYOTA MOTOR SALES, U.S.A., INC.
19001 South Western Avenue
Torrance, CA 90509
FIRSTAMERICA AUTOMOTIVE, INC.
100 The Embarcadero, Penthouse
San Francisco, CA 94105
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
FIRSTAMERICA AUTOMOTIVE, INC.
BY:/s/
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ITS:
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TOYOTA MOTOR SALES, U.S.A., INC.
BY: /s/
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ITS:______________________________
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ADDENDUM TO PARAGRAPH X
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These Additional Provisions to Toyota Dealer Agreement ("Additional
Provisions") are entered into as of June 30, 1997, among DISTRIBUTOR, DEALER,
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and FIRSTAMERICA AUTOMOTIVE, INC., a Nevada corporation (hereinafter "FAA"), and
form a part of and are incorporated into the Dealer Agreement.
RECITALS
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1. DISTRIBUTOR and DEALER have entered into a Toyota Dealer Agreement
(the "Dealer Agreement") dated as of June 30, 1997 .
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2. FAA is the 100% shareholder of DEALER.
3. FAA and DEALER are hereinafter collectively referred to as the "Dealer
Parties". DISTRIBUTOR and the Dealer Parties are hereinafter collectively
referred to as the "Parties".
4. The Parties wish to enter into these Additional Provisions for the
purposes of agreeing to be bound by the terms of these Additional Provisions,
which are a part of and are incorporated into the Dealer Agreement.
5. The ownership of FAA shall be approximately as follows:
Thomas A. Price: 41%
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Donald V. Strough: 11%
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TCW\Crescent Mezzanine Partners, L.P.: 19%
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Others: 29%
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NOW THEREFORE, in consideration for the mutual agreements contained herein
and in the Dealer Agreement, the Parties agree as follows:
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A. General
1. DISTRIBUTOR and FAA have entered into an Agreement dated June
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30, 1997 (the "Agreement") relating, among other matters, to the number
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of Toyota and Lexus dealerships which may be acquired by FAA and its affiliates
and to certain aspects of the management of Toyota and Lexus dealerships owned
by FAA. The Dealer Parties agree that the Agreement is incorporated into and
forms a part of the Dealer Agreement and these Additional Provisions. To the
extent that any provision of the Agreement is inconsistent with the Dealer
Agreement or these Additional Provisions, the provisions of the Agreement shall
be controlling.
2. The Dealer Parties acknowledge and agree that if any provision of
these Additional Provisions is violated in any material respect by any of the
Dealer Parties, DISTRIBUTOR will have the right to terminate the Dealer
Agreement on sixty (60) days' written notice to Dealer if Dealer fails to cure
such violation prior to the expiration of such sixty (60) days.
B. Provisions Relating to the Structure of DEALER
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1. Single Purpose Entity. DEALER will be maintained as a separate
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legal entity, and will not engage in any business other than operation of a
Toyota dealership and activities related thereto.
2. No Merger, Consolidation, Etc. DEALER will not be merged with or
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into, or be consolidated with, or acquire substantially all of the assets of,
any other entity, without the prior written consent of DISTRIBUTOR, in its sole
discretion.
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C. Provisions Relating to Management
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1. Role of the Responsible Executive. Pursuant to Section 8 of the
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Agreement, Thomas A. Price is hereby designated as the FAA executive who will
have responsibility and authority with respect to all matters concerning DEALER
and the relationship between DEALER and DISTRIBUTOR (the "FAA Executive"). The
FAA Executive will be actively involved in the management of all aspects of the
operations of DEALER.
(a) The FAA Executive will be an officer of DEALER. The FAA
Executive, in consultation with management of FAA, will have complete control
over all day-to-day management decisions of DEALER or relating to DEALER.
(b) The General Manager will report directly to and be
responsible to the FAA Executive.
(c) DISTRIBUTOR may rely on oral or written communications and
agreements from the FAA Executive as being the binding agreements of DEALER,
without any duty of DISTRIBUTOR to confirm that any such communication or
agreement has been duly authorized by the Board of Directors of DEALER, FAA, or
any other individual or entity.
2. Successors to the FAA Executive. In the event that the FAA
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Executive wishes to discontinue his role in the management of DEALER as set
forth in Section C.1., such action may be taken only with the prior written
consent of DISTRIBUTOR. Such consent of DISTRIBUTOR may be conditioned on
transfer of the FAA Executive's management responsibilities to an individual or
individuals approved by DISTRIBUTOR, taking into account such factors as
DISTRIBUTOR reasonably
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deems to be relevant and are consistent with applicable laws.
3. Role of the General Manager.
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(a) Timothy M. Nelson or any subsequent General Manager of DEALER
approved by DISTRIBUTOR, will serve exclusively as General Manager of DEALER on
a full time basis and will not have any management responsibilities with respect
to any other dealership or other business or appear as the General Manager on
any automobile dealership franchise agreement other than that of DEALER.
(b) The General Manager will have responsibility for and
authority with respect to the day-to-day operations of DEALER in the ordinary
course Of business, under the supervision of the FAA Executive, and the General
Manager will have the following authority, without the need for obtaining the
prior approval of any other individual or entity:
(i) the authority to hire or terminate any employee of DEALER;
(ii) the authority to order vehicles and other products;
(iii) the authority to place advertising;
(iv) the authority to communicate with DISTRIBUTOR with respect to
all aspects of the business of DEALER;
(v) the authority to approve expenditures by DEALER in the ordinary
course of business in amounts of less than $50,000 per item;
(vi) the authority to approve capital improvements or modifications
to the DEALER'S facilities in amounts not to exceed $100,000
with respect to any expenditure.
4. Membership of Executive Committee. There shall be no change in
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the membership of the Executive Committee, Board of Directors or other governing
body of DEALER without the prior written approval of DISTRIBUTOR.
5. FAA Directors. FAA shall provide a list of all current members of
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its Board of Directors, and resumes for each member, to DISTRIBUTOR, and provide
such information for each new member of the Board of Directors of FAA.
D. Provisions Relating to Capitalization and Accounting
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1. No distributions will be made by DEALER to FAA if such
distributions would cause DEALER to fail to meet any of DISTRIBUTOR'S
capitalization guidelines, including but not limited to net working capital
requirements.
2. The operations and financial results of DEALER will be reported
to DISTRIBUTOR separately from those of any other entity, business or activity,
including but not limited to any of the Dealer Parties and any other dealerships
directly or indirectly owned or controlled by any of the Dealer Parties.
3. DEALER will maintain complete and separate departments for new
and used vehicle sales, service, parts sales, leasing and finance and insurance,
and will provide separate identifiable areas for each department. DEALER will
maintain a separate and permanent personnel staff and separate retail operations
from other dealerships directly or indirectly owned by any of the Dealer
Parties. DEALER shall not combine its used car operation with that of any other
entity, including any other dealerships directly or indirectly owned by any of
the Dealer Parties.
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E. Provisions Relating to Ownership
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1. Successors and Assigns. In the event that any interest in DEALER
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is transferred in accordance with the provisions of the Dealer Agreement, the
Agreement and these Additional Provisions, as a condition to such transfer the
transferee must agree in writing to be bound by all of the terms and provisions
of the Dealer Agreement, the Agreement and these Additional Provisions, such
agreement to be in form and substance reasonably acceptable to DISTRIBUTOR.
2. Competitors. In no event may any interest in DEALER be
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transferred to an entity which is directly or indirectly engaged in the business
of manufacturing and/or distributing automobiles, or an affiliate thereof, and
no such entity may acquire an ownership interest in FAA as described in Section
1 of the Agreement.
F. Provisions Relating to Performance
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1. Dealer agrees to achieve within nine (9) months from the
effective date of this Agreement and to thereafter maintain throughout the
duration of this Agreement, a satisfactory customer satisfaction performance, as
measured by all applicable standards established by Toyota Motor Sales, U.S.A.,
Inc., and which are modified from time to time.
2. Dealer agrees to achieve within nine (9) months from the
effective date of this Agreement and to thereafter maintain throughout the
duration of this Agreement, Toyota car and truck penetration in its Primary
Market Area that is at least equal to the Region's penetration rate.
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IN WITNESS WHEREOF, the Parties. have executed these Additional
Provisions as of the date first above written.
TOYOTA MOTOR SALES, USA, INC. TOYOTA MOTOR SALES, U.S.A., INC.
SAN FRANCISCO REGION
By: /s/ By: /s/
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Title: PRESIDENT Title: GENERAL MANAGER
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FIRSTAMERICA AUTOMOTIVE, INC. FAA SAN BRUNO, INC.
d.b.a. MELODY TOYOTA
By: /s/ By: /s/
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Title: [TITLE ILLEGIBLE] Title: [TITLE ILLEGIBLE]
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