1
EXHIBIT 10.18
LEXUS
DEALER AGREEMENT
2
LEXUS DEALER AGREEMENT
AND
STANDARD PROVISIONS
TABLE OF CONTENTS
I. TERM OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. OWNERSHIP AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
III. MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
IV. APPROVED DEALER LOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
V. CERTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
VI. ACQUISITION, DELIVERY AND INVENTORY OF LEXUS PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. APPOINTMENT OF DEALER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B. AVAILABILITY AND ALLOCATION OF PRODUCT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
C. PRICES AND TERMS OF SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
D. MODE, PLACE AND CHARGES FOR DELIVERY OF PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
E. DAMAGE CLAIMS AGAINST TRANSPORTATION CARRIERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
F. DELAY OR FAILURE OF DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
G. DIVERSION CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
H. CHANGES OF DESIGN, OPTIONS OR SPECIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
I. DISCONTINUANCE OF MANUFACTURE OR IMPORTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
J. MINIMUM VEHICLE INVENTORIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
K. PRODUCT MODIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
VII. DEALER MARKETING OF LEXUS PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
A. DEALER'S SALES RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
B. EXPORT POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
C. LEXUS DEALER ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
D. USED VEHICLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
E. PRIMARY AREA OF RESPONSIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
F. EVALUATION OF DEALER'S SALES AND MARKETING PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . 5
III. DEALER SERVICE OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
A. CUSTOMER SERVICE STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
B. NEW MOTOR VEHICLE PRE-DELIVERY SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
C. WARRANTY AND POLICY SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-i-
3
IX. USE OF PARTS AND ACCESSORIES IN NON-WARRANTY SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A. WARRANTY DISCLOSURES AS TO NON-GENUINE PARTS AND ACCESSORIES . . . . . . . . . . . . . . . . . . . . 7
B. ROADSIDE ASSISTANCE PROGRAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
C. SERVICE CAMPAIGN INSPECTIONS AND CORRECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
D. COMPLIANCE WITH SAFETY AND EMISSION CONTROL REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . 8
E. COMPLIANCE WITH CONSUMER PROTECTION STATUTES, RULES AND REGULATIONS . . . . . . . . . . . . . . . . 8
X. SERVICE AND PARTS ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
A. ORGANIZATION AND STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
B. SERVICE EQUIPMENT AND SPECIAL TOOLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
C. PARTS STOCKING LEVEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
D. AFTER-HOURS DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
E. ASSISTANCE PROVIDED BY DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1. Service Manuals And Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2. Field Service Personnel Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
F. EVALUATION OF DEALER'S SERVICE AND PARTS
PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
XI. CUSTOMER SATISFACTION RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
A. DEALER'S CUSTOMER SATISFACTION OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1. DEALER's Customer Satisfaction Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2. Employee Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3. Customer Satisfaction Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. Customer Assistance Response System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
B. EVALUATION OF DEALER'S CUSTOMER SATISFACTION PERFORMANCE . . . . . . . . . . . . . . . . . . . . . 11
XII. DEALERSHIP FACILITIES AND IDENTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
A. FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
B. SERVICE RECEPTION AREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
C. DEALER'S OPERATING HOURS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
D. SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
E. EVALUATION OF DEALERSHIP FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
F. USE OF LEXUS MARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1. Use By Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2. Discontinuance of Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-ii-
4
XIII. CAPITAL, CREDIT, RECORDS AND UNIFORM SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
A. NET WORKING CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
B. FLOORING AND LINES OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
C. PAYMENT TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
D. UNIFORM ACCOUNTING SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
E. RECORDS MAINTENANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
F. EXAMINATION OF DEALERSHIP ACCOUNTS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
G. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
H. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
I. DATA TRANSMISSION SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
J. SALES REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
XIV. TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A. SALE OF OWNERSHIP INTEREST IN DEALERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
B. RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1. Rights Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2. Exercise of Distributor's Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3. Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4. Option to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. Dealer's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
XV. SUCCESSION RIGHTS UPON DEATH OR INCAPACITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
A. SUCCESSION TO OWNERSHIP AFTER DEATH OF OWNER . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
B. INCAPACITY OF OWNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
C. NOMINATION OF SUCCESSOR PRIOR TO DEATH OR INCAPACITY OF OWNER . . . . . . . . . . . . . . . . . . 20
XVI. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
A. VOLUNTARY TERMINATION BY DEALER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
B. TERMINATION FOR CAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1. Immediate Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2. Termination Upon Sixty Days Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3. Termination for Failure of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4. Termination Upon Death or Incapacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
C. NOTICE OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
D. CONTINUANCE OF BUSINESS RELATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
E. REPURCHASE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
1. DISTRIBUTOR'S Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2. Responsibilities of DEALER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3. Payment by DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-iii-
5
XVII. MANAGEMENT OF DISPUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
A. ALTERNATIVE DISPUTE RESOLUTION PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
B. APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
C. MUTUAL RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
XVIII. DEFENSE AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
A. DEFENSE AND INDEMNIFICATION BY DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
B. DEFENSE AND INDEMNIFICATION BY DEALER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
C. CONDITIONAL DEFENSE AND/OR INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
D. THE EFFECT OF SUBSEQUENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
E. TIME TO RESPOND AND RESPONSIBILITIES OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . 30
XIX. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
A. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
B. NO IMPLIED WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
C. SOLE AGREEMENT OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
D. DEALER NOT AN AGENT OR REPRESENTATIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
E. ASSIGNMENT OF RIGHTS OR DELEGATION OF DUTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
F. NO FRANCHISE FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
G. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
H. NEW AND SUPERSEDING DEALER AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
I. BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
XX. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
A. DEALER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
B. OWNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
C. GENERAL MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
D. DEALER FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
E. APPROVED LOCATION(S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
F. LEXUS MARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
G. LEXUS MOTOR VEHICLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
H. GENUINE LEXUS PARTS AND ACCESSORIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
I. LEXUS PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
XXI. ADDITIONAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-iv-
6
LEXUS DEALER AGREEMENT
This is an Agreement between LEXUS, A Division of TOYOTA MOTOR SALES, U.S.A.,
INC., (LEXUS" or "DISTRIBUTOR") and SMC Luxury Cars, Inc. ("DEALER") a closely
held corporation, incorporated in the State of Texas and doing business as
Sterling McCall Lexus.
LEXUS GOALS AND COMMITMENT
LEXUS is committed to creating luxury automobiles which are and will be among
the finest ever built anywhere in the world. LEXUS is equally committed to
setting a new standard for extraordinary customer satisfaction throughout the
ownership cycle. To achieve this goal, LEXUS intends to maintain the finest
dealer network in the industry.
This Agreement embodies the LEXUS commitment to promote fairness within a
harmonious and mutually profitable business relationship between LEXUS and
DEALER. The ultimate goal shared by all parties to this Agreement is the
satisfaction of the LEXUS customer.
PURPOSES OF AGREEMENT
LEXUS is the exclusive distributor in the continental United States of LEXUS
Products which are manufactured or approved by TOYOTA MOTOR CORPORATION
("FACTORY"). The principal purposes of this Agreement are to set forth and
affirm the commitment of LEXUS and DEALER to the goals of LEXUS; authorize
DEALER to sell and service LEXUS Products; and identify the rights and
responsibilities of LEXUS and DEALER.
I. TERM OF AGREEMENT
This Agreement is effective on the date signed by LEXUS and shall
continue for a period of six years unless ended earlier by mutual
agreement or terminated as provided herein. This Agreement may
not be extended except by written consent of LEXUS. Any
continuation of business relations between the parties following
expiration of this Agreement shall be on a day-to-day basis and
subject to the provisions of this Agreement. Such a continuation
shall not be deemed a waiver of the right of termination nor shall
it imply that either party has committed to continue to do
business with the other at any time in the future.
Upon the expiration of this Agreement, DISTRIBUTOR shall have no
obligation to renew the Agreement or to extend DEALER a subsequent
Agreement. However, should this Agreement be renewed or any other
form of agreement be offered to DEALER, DISTRIBUTOR reserves the
right to offer an agreement of a term to be determined at
DISTRIBUTOR'S sole discretion.
7
II. OWNERSHIP AND OFFICERS
This is a personal service Agreement and has been entered into by
LEXUS upon, and in consideration of, DEALER'S representation that
only the following named persons are the owners and officers of
DEALER, and that such persons are committed to achieving the
purposes, goals and commitments of this Agreement:
PERCENT OF
OWNERS NAMES ADDRESS OWNERSHIP
Sterling B. McCall, Jr. 9400 Southwest Freeway 100%
Houston, TX 77057
OFFICERS NAMES ADDRESS TITLE
Sterling B. McCall, Jr. 9400 Southwest Freeway President
Sterling B. McCall, III Houston, TX 77057 Secretary
III. MANAGEMENT
LEXUS and DEALER agree that qualified dealership management and
active, day-to-day owner involvement are critical to the
successful operation of DEALER. OWNERS agree, and LEXUS enters
into this Agreement on the condition that at least one OWNER will
be involved on a full-time basis in the day-to-day operations of
the dealership. If no OWNER is involved on a full-time basis in
DEALER's day-to-day operations, the General Manager named below
shall devote his or her personal services on a full-time basis to
the general management of the dealership.
DEALER appoints Sterling B. McCall, Jr. as General Manager. The
General Manager has full managerial authority to make all
operating decisions on behalf of DEALER. DEALER shall make no
change in the dealership's ownership or General Manager without
the prior written approval of LEXUS.
IV. APPROVED DEALER LOCATIONS
In order that DISTRIBUTOR may establish and maintain an effective
network of authorized LEXUS dealers, DEALER agrees that it shall
conduct its LEXUS operations only in facilities and at locations
herein designated and approved by DISTRIBUTOR. DISTRIBUTOR hereby
designates and approves the following facilities as the exclusive
location(s) for the sale and servicing of LEXUS Products and the
display of LEXUS Marks:
NEW VEHICLE SALES AND SHOWROOM USED VEHICLE DISPLAY AND SALES
10422 Southwest Freeway 10422 Southwest Freeway
Houston, TX 77074 Houston, TX 77074
-2-
8
SALES AND GENERAL OFFICE BODY AND PAINT
10422 Southwest Freeway
Houston, TX 77074
PARTS AND SERVICE OTHER FACILITIES
10422 Southwest Freeway
Houston, TX 77074
DEALER shall not modify or change the designated usage or function
of any facility without the prior written consent of LEXUS.
V. CERTIFICATION
By their signatures hereto, the parties certify that they have
read and understood this Agreement, including the Standard
Provisions which are incorporated herein, and agree to abide and
be bound by all of its terms and conditions.
Sterling McCall Lexus , DEALER
-------------------------------
DBA
DATE: 6/27/95 By: /s/ Sterling B. McCall Pres.
----------- --------------------------------------- ----------
SIGNATURE TITLE
LEXUS, A Division of
TOYOTA MOTOR SALES, U.S.A., INC.
DATE: 8/21/95 By: /s/ Shinji Sakai Pres.
----------- --------------------------------------- ----------
SIGNATURE TITLE
-3-
9
LOCATION AMENDMENT TO LEXUS DEALER AGREEMENT
Agreement by and between SMC Luxury Cars, Inc., d/b/a Sterling McCall Lexus ,
located at ---------------------------------------------------
(Dealer) McCall Lexus
10400 Southwest Freeway Houston, Texas
- --------------------------------------------------------------------------------
Address (City, State)
a (an) Corporation , hereinafter called DEALER,
------------------------------------------
(Individual / Partnership / Corporation)
and LEXUS, A Division of Toyota Motor Sales, U.S.A., Inc., hereinafter called
LEXUS.
In consideration of the mutual covenants of the parties hereto, and other good
and valuable consideration, DISTRIBUTOR and DEALER hereby agree that Paragraph
IV (Approved Dealer Locations) of the LEXUS Dealer Agreement entered into
between them on August 8, 1989, is hereby amended to read as follows:
IV. APPROVED DEALER LOCATIONS
In order that DISTRIBUTOR may establish and maintain an effective network of
authorized LEXUS dealers, DEALER agrees that it shall conduct its LEXUS
operations only in facilities and at locations herein designated and approved
by DISTRIBUTOR. DISTRIBUTOR hereby designates and approves the following
facilities as the exclusive location(s) for the-sale and servicing of LEXUS
Products and the display of LEXUS Marks:
NEW VEHICLE SALES AND SHOWROOM USED VEHICLE DISPLAY AND SALES
10422 Southwest Freeway 10422 Southwest Freeway
Houston, Texas 77074 Houston, Texas 77074
SALES AND GENERAL OFFICE BODY AND PAINT
10422 Southwest Freeway
Houston, Texas 77074
PARTS AND SERVICE OTHER FACILITIES
10422 Southwest Freeway
Houston, Texas 77074
DEALER shall not modify or change the designated usage or function of any
facility without prior written consent of LEXUS.
SMC Luxury Cars, Inc. , DEALER
------------------------------
(Dealer Entity Name)
DATE: By: /s/ Sterling B. McCall President
---------- --------------------------------------- ---------------
SIGNATURE TITLE
LEXUS, A Division of Toyota Motor Sales, U.S.A., Inc.
DATE: 5/21/90 By: /s/ Y. Togo President
----------- --------------------------------------- ----------
SIGNATURE TITLE
-1-
10
LEXUS DEALER AGREEMENT
STANDARD PROVISIONS
The following Standard Provisions are expressly incorporated in and made a part
of the LEXUS Dealer Agreement.
VI. ACQUISITION, DELIVERY AND INVENTORY OF LEXUS PRODUCTS
A. APPOINTMENT OF DEALER
DISTRIBUTOR hereby appoints DEALER and grants unto it the
non-exclusive right to buy and resell the LEXUS Products
identified in the LEXUS Product Addendum. DEALER accepts
such appointment and understands that its appointment as a
DEALER does not grant it an exclusive right to sell LEXUS
Products in any specified geographical area.
DEALER shall have the right to purchase LEXUS Products from
DISTRIBUTOR in accordance with the provisions set forth
herein and such other requirements as may be established
from time to time by LEXUS.
B. AVAILABILITY AND ALLOCATION OF PRODUCT
DISTRIBUTOR will allocate LEXUS Products among its dealers
in a fair and equitable manner. DEALER acknowledges and
agrees that DISTRIBUTOR may consider, among other things,
DEALER'S service capacity, customer satisfaction
performance, sales performance, sales potential and
facilities in determining the quantity of Product to offer
to DEALER. DISTRIBUTOR will, upon DEALER'S request, explain
the considerations and method used to distribute LEXUS
Products to DEALER.
C. PRICES AND TERMS OF SALE
DISTRIBUTOR, from time to time, shall establish and revise
prices and other terms for the sale of LEXUS Products to
DEALER Revised prices, terms, or provisions shall apply to
any LEXUS Product not invoiced to DEALER by DISTRIBUTOR at
the time the notice of such change is given to DEALER (in
the case of LEXUS Motor Vehicles), or upon issuance of a new
or modified Parts Price List or through change notices,
letters, bulletins, or revision sheets (in the case of
parts, options and accessories), or at such other times as
may be designated in writing by DISTRIBUTOR.
11
D. MODE, PLACE AND CHARGES FOR DELIVERY OF PRODUCTS
DISTRIBUTOR shall designate the distribution points and the
mode of transportation and shall select carrier(s) for the
delivery of LEXUS Products to DEALER. DEALER shall pay
DISTRIBUTOR such charges as DISTRIBUTOR in its sole
discretion establishes for such transportation services.
E. DAMAGE CLAIMS AGAINST TRANSPORTATION CARRIERS
DEALER shall promptly notify DISTRIBUTOR of any damage
occurring during transit and shall, if so directed by
DISTRIBUTOR, file claims against transportation carrier for
damage. DEALER agrees to assist DISTRIBUTOR in obtaining
recovery against any transportation carrier or insuree for
loss or damage to LEXUS Products shipped hereunder.
DISTRIBUTOR shall not be liable for loss or damage to LEXUS
Products sold hereunder occurring after delivery thereof to
premises of DEALER.
To the extent required by law, DEALER shall notify the
purchaser of a vehicle of any damage sustained by such
vehicle prior to sale. DEALER shall indemnify and hold
DISTRIBUTOR harmless from any liability resulting from
DEALER'S failure to so notify such purchasers.
F. DELAY OR FAILURE OF DELIVERY
DISTRIBUTOR shall not be liable for delay or failure to
deliver LEXUS Products which it has previously agreed to
deliver, where such delay or failure to deliver is the
result of any event beyond the control of DISTRIBUTOR,
including but not limited to any law or regulation of any
governmental entity, acts of God, foreign or civil wars,
riots, interruptions of navigation, shipwrecks, fires,
floods, storms, strikes, lockouts or other labor troubles,
embargoes, blockades, or delay or failure of FACTORY to
deliver LEXUS Products.
G. DIVERSION CHARGES
If after shipment DEALER fails or refuses to accept LEXUS
Products that it had agreed to purchase, DEALER shall pay
all charges incurred by DISTRIBUTOR as a result of such
diversion. Such charges shall not exceed the charge of
returning any such product to the point of original shipment
by DISTRIBUTOR plus all charges for demurrage, storage or
other charges related to such diversion.
DEALER also agrees to assume responsibility for, and shall
pay any and all reasonable charges for, demurrage, storage
or other charges accruing after arrival of shipment at the
diversion point established by DISTRIBUTOR.
-2-
12
H. CHANGES OF DESIGN, OPTIONS OR SPECIFICATIONS
DISTRIBUTOR may change the design or specifications of any
LEXUS Product or the options in any LEXUS Product and shall
be under no obligation to provide notice of same or to make
any similar change upon any product previously purchased by
or shipped to DEALER. No change shall be considered a model
year change unless so specified by DISTRIBUTOR.
I. DISCONTINUANCE OF MANUFACTURE OR IMPORTATION
FACTORY and/or DISTRIBUTOR may discontinue the manufacture,
importation or distribution of all or part of any LEXUS
Product, whether motor vehicle, parts, options, or
accessories, including any model, series, or body style of
any LEXUS Motor Vehicle at any time without any obligation
or liability to DEALER by reason thereof.
J. MINIMUM VEHICLE INVENTORIES
DEALER agrees that it shall, at all times, maintain in
showroom ready condition at least the minimum inventory of
LEXUS Motor Vehicles as may be established by DISTRIBUTOR
from time to time.
K. PRODUCT MODIFICATIONS
DEALER agrees that it will not install after market
accessories or make any modifications to LEXUS vehicles that
may impair or adversely affect a vehicle's safety,
emissions, structural integrity or performance.
VII. DEALER MARKETING OF LEXUS PRODUCTS
A. DEALER'S SALES RESPONSIBILITIES
DEALER recognizes that customer satisfaction and the
successful promotion and sale of LEXUS Products are
significantly dependent on DEALER'S advertising and sales
promotion activities. Therefore, DEALER at all times shall:
1. Use its best efforts to promote, sell and service new
and used LEXUS Products;
2. Advertise and merchandise LEXUS Products and use
current LEXUS showroom displays;
-3-
13
3. Ensure that its sales personnel meet the educational
and management standards established by DISTRIBUTOR and
have such personnel, as are appropriate, attend all
sales training courses prescribed by DISTRIBUTOR at
DEALER'S expense;
4. Maintain a high standard of ethics in advertising,
promoting and selling LEXUS Products and avoid engaging
in any misrepresentation or unfair or deceptive
practices. DEALER shall discontinue any advertising
that DISTRIBUTOR may find to be injurious to
DISTRIBUTOR'S business or reputation or to the LEXUS
Marks, or that are likely to be violative of applicable
laws or regulations;
5. Advertise in the local classified telephone directories
identifying itself as an authorized LEXUS DEALER Such
ad(s) shall properly display the LEXUS Marks; and
6. Accurately represent to customers the total selling
price of LEXUS Products. DEALER agrees to explain to
customers of LEXUS Products the items that make up the
total selling price and to give the customers itemized
invoices and all other information required by law.
DEALER understands and hereby acknowledges that it may
sell LEXUS Products at whatever price DEALER desires.
B. EXPORT POLICY
DEALER is authorized to sell LEXUS Motor Vehicles only to
customers located in the United States. DEALER agrees that
it will not sell LEXUS Motor Vehicles for resale or use
outside the United States. DEALER agrees to abide by any
export policy established by DISTRIBUTOR.
C. LEXUS DEALER ASSOCIATION
Except where prohibited by law, DEALER will participate in a
LEXUS Dealer Advertising Association. DEALER agrees to
cooperate in the establishment of such an association and to
fund its fair share of advertising and merchandising
programs undertaken by the association.
D. USED VEHICLES
DEALER agrees to display and sell used vehicles at the
Approved Location(s). DEALER shall maintain for resale an
adequate inventory of used vehicles.
-4-
14
E. PRIMARY AREA OF RESPONSIBILITY
DISTRIBUTOR will assign DEALER a geographic area called a
Primary Market Area ("PMA"). DEALER'S PMA may be altered or
adjusted by DISTRIBUTOR at any time. The PMA is a tool used
by DISTRIBUTOR to evaluate DEALER'S performance of its
obligations. DEALER agrees that it has no right or interest
in any PMA that DISTRIBUTOR, in its sole discretion, may
designate. As permitted by local law, DISTRIBUTOR may add
new dealers to, or relocate dealers in or into the PMA
assigned to DEALER.
F. EVALUATION OF DEALER'S SALES AND MARKETING PERFORMANCE
DISTRIBUTOR periodically will evaluate DEALER'S sales and
marketing performance under this Agreement. DEALER'S
evaluation will be based on such reasonable criteria as
DISTRIBUTOR may establish including, without limitation,
comparisons of DEALER'S sales with those of other LEXUS
dealers. DISTRIBUTOR will review such evaluations with
DEALER and DEALER shall take prompt corrective action, if
required, to improve its performance.
VIII. DEALER SERVICE OBLIGATIONS
A. CUSTOMER SERVICE STANDARDS
DEALER and DISTRIBUTOR agree that the success and future
growth of the LEXUS franchise is substantially dependent
upon the customers' ability to obtain responsive,
high-quality vehicle servicing. Therefore, DEALER agrees
to:
1. Take all reasonable steps to provide service of the
highest quality for all LEXUS Motor Vehicles,
regardless of where purchased and whether or not under
warranty;
2. Ensure that the customer is advised of the necessary
repairs and his or her consent is obtained prior to the
initiation of any repairs;
3. Ensure that necessary repairs on LEXUS Motor Vehicles
are accurately diagnosed and professionally performed;
and
4. Assure that the customer is treated courteously and
fairly at all times.
-5-
15
B. NEW MOTOR VEHICLE PRE-DELIVERY SERVICE
DEALER agrees that, prior to delivery of a new LEXUS Motor
Vehicle to a customer, it shall perform, if directed by
DISTRIBUTOR, pre-delivery service on each LEXUS Motor
Vehicle in accordance with LEXUS standards. DISTRIBUTOR
shall reimburse DEALER for such pre-delivery service
according to such directives and the applicable provisions
of the LEXUS Warranty Policies and Procedures Manual.
C. WARRANTY AND POLICY SERVICE
DEALER acknowledges that the only warranties of DISTRIBUTOR
or FACTORY applicable to LEXUS Products shall be the New
Vehicle Limited Warranty or such other written warranties
that may be expressly furnished by DISTRIBUTOR or FACTORY.
Except for its limited liability under such written warranty
or warranties, DISTRIBUTOR and FACTORY do not assume any
other warranty, obligation or liability. DEALER is not
authorized to assume any additional warranty obligations or
liabilities on behalf of DISTRIBUTOR or FACTORY. Any such
additional obligations assumed by DEALER shall be the sole
responsibility of DEALER.
DEALER shall perform warranty and policy service specified
by DISTRIBUTOR, in accordance with the LEXUS Warranty
Policies and Procedures Manual. DISTRIBUTOR agrees to
compensate DEALER for all warranty and policy work,
including labor, diagnosis and Genuine LEXUS Parts and
Accessories, in accordance with procedures and at rates to
be announced from time to time by DISTRIBUTOR and in
accordance with applicable law. Unless otherwise approved
in advance by DISTRIBUTOR, DEALER shall use only Genuine
LEXUS Parts and Accessories when performing LEXUS warranty
repairs. Warranty and policy service is provided for the
benefit of customers and DEALER agrees that the customer
shall not be obligated to pay any charges for warranty or
policy work or any other services for which DEALER is
reimbursed by DISTRIBUTOR, except as required by law.
IX. USE OF PARTS AND ACCESSORIES IN NON-WARRANTY SERVICE
Subject to the provisions of Sections VI(k) and VIII(c), DEALER
has the right to sell, install or use for making non-warranty
repairs products that are not Genuine LEXUS Parts or Accessories.
DEALER acknowledges, however, that its customers expect that any
parts or accessories that DEALER sells, installs or uses in the
sale, repair or servicing of LEXUS vehicles are, or meet the high
quality standards of, Genuine LEXUS Parts or Accessories.
-6-
16
DEALER agrees that in sales, repairs or servicing where DEALER
does not use Genuine LEXUS Parts or Accessories, DEALER only will
utilize such other parts or accessories as:
1. Will not adversely affect the mechanical operation of the
LEXUS vehicle being sold, repaired or serviced; and
2. Are equivalent in quality and design to Genuine LEXUS Parts
or Accessories.
DEALER further agrees that it will not offer to sell any
parts or accessories that for reasons of quality or image
are reasonably objected to by LEXUS.
A. WARRANTY DISCLOSURES AS TO NON-GENUINE PARTS AND ACCESSORIES
In order to avoid confusion and to minimize potential
customer dissatisfaction, in any non-warranty instance where
DEALER sells, installs or uses non Genuine LEXUS Parts or
Accessories, DEALER shall disclose such fact to the customer
and shall advise the customer that the item is not included
in warranties furnished by DISTRIBUTOR or FACTORY. Such
disclosure shall be written, conspicuous and stated on the
customer's copy of the service or repair order or sale
document. In addition, DEALER will clearly explain to the
customer the extent of any warranty covering the parts or
accessories involved and will deliver a copy of the warranty
to the customer.
B. ROADSIDE ASSISTANCE PROGRAM
Dealer agrees to participate in the LEXUS Roadside
Assistance Program as specified by DISTRIBUTOR.
C. SERVICE CAMPAIGN INSPECTIONS AND CORRECTIONS
DEALER agrees to perform service campaign inspections and/or
corrections for owners or users of all LEXUS Products that
qualify for such inspections and/or corrections. DEALER
further agrees to comply with all DISTRIBUTOR'S directives
and with the applicable procedures in the LEXUS Warranty
Policies and Procedures Manual relating to those inspections
and/or corrections. DISTRIBUTOR agrees to reimburse DEALER
for all replacement parts and/or other materials required
and used in connection with such work and for labor
according to such directives and the applicable provisions
of the LEXUS Warranty Policies and Procedures Manual.
-7-
17
D. COMPLIANCE WITH SAFETY AND EMISSION CONTROL REQUIREMENTS
DEALER agrees to comply and operate consistently with all
applicable provisions of the National Traffic and Motor
Vehicle Safety Act of 1966 and the Federal Clean Air Act, as
amended, including applicable rules and regulations issued
from time to time thereunder, and all other applicable
federal, state and local motor vehicle safety and emission
control statutes, rules and regulations.
In the event that the laws of the state in which DEALER is
located require motor vehicle dealers or distributors to
install in new or used motor vehicles, prior to their retail
sale, any safety devices or other equipment not installed or
supplied as standard equipment by FACTORY, then DEALER,
prior to the sale of any LEXUS Motor Vehicle on which such
installations are required, shall properly install such
devices or equipment on such LEXUS Motor Vehicles. DEALER
shall comply with state and local laws pertaining to the
installation and reporting of such equipment.
In the interest of motor vehicle safety and emission
control, DISTRIBUTOR and DEALER agree to provide to each
other such information and assistance as may reasonably be
requested by the other in connection with the performance of
obligations imposed on either party by the National Traffic
and Motor Vehicle Safety Act of 1966 and the Federal Clean
Air Act, as amended, and their rules and regulations, and
all other applicable federal, state and local motor vehicle
safety and emissions control statutes, rules and
regulations.
E. COMPLIANCE WITH CONSUMER PROTECTION STATUTES, RULES AND
REGULATIONS
Because certain customer complaints may impose liability
upon DISTRIBUTOR under various repair or replace laws or
other consumer protection laws and regulations, DEALER
agrees to provide prompt notice to DISTRIBUTOR of such
complaints and take such other steps as DISTRIBUTOR may
require. DEALER will do nothing to affect adversely
DISTRIBUTOR'S rights under such laws and regulations.
Subject to any law or any regulation to the contrary, DEALER
shall be liable to DISTRIBUTOR for any refunds or vehicle
replacements provided to customer where DISTRIBUTOR
reasonably establishes that DEALER failed to carry out
vehicle repairs in accordance with DISTRIBUTOR'S written
published policies and procedures or its express oral
instructions subsequently confirmed in writing. DEALER also
agrees to provide applicable required customer notifications
and disclosures as prescribed by repair or replacement laws
or other consumer laws or regulations.
-8-
18
X. SERVICE AND PARTS ORGANIZATION
A. ORGANIZATION AND STANDARDS
DEALER agrees to organize and maintain a complete service
and parts organization of the highest quality, including a
qualified Service Manager, Parts Manager, Diagnostic
Specialists, Technicians and a sufficient complement of
qualified customer relations, service and parts personnel as
recommended in the LEXUS Dealer Facility Planner. DEALER'S
personnel will meet the educational, management and
technical training standards established by DISTRIBUTOR, and
will attend all service, parts and customer satisfaction
training courses prescribed by DISTRIBUTOR at DEALER'S
expense.
B. SERVICE EQUIPMENT AND SPECIAL TOOLS
DEALER agrees to acquire and properly maintain adequate
service equipment and such special service tools and
instruments as are specified by DISTRIBUTOR.
C. PARTS STOCKING LEVEL
DEALER agrees to maintain its parts stock at minimum
stocking levels established by DISTRIBUTOR. In
consideration for DEALER'S maintenance of the Dealer
Stocking Guide, DISTRIBUTOR grants DEALER a one hundred
percent (100%) obsolescence parts return policy. For
non-stocking guide parts, parts orders will accrue a five
percent (5%) obsolescence eligibility.
D. AFTER-HOURS DELIVERY
Dealer agrees to provide DISTRIBUTOR, upon request, access
to a secure area for after-hours parts or vehicle delivery.
E. ASSISTANCE PROVIDED BY DISTRIBUTOR
1. SERVICE MANUALS AND MATERIALS
DISTRIBUTOR agrees to make available to DEALER copies
of such service manuals and bulletins, publications and
technical data as DISTRIBUTOR shall deem to be
necessary for the needs of DEALER'S service and parts
organization. DEALER shall be responsible for keeping
such manuals, publications and data current and
available for consultation by its employees.
-9-
19
2. FIELD SERVICE PERSONNEL ASSISTANCE
To assist DEALER in handling service responsibilities
under this Agreement, DISTRIBUTOR agrees to make
available qualified field service personnel who will,
from time to time, advise and counsel DEALER on
service-related subjects, including service policies,
product and technical adjustments, repair and
replacement of product components, customer relations,
warranty administration, service and parts
merchandising, and personnel management training.
F. EVALUATION OF DEALER'S SERVICE AND PARTS PERFORMANCE
DISTRIBUTOR will evaluate periodically DEALER'S: (i)
service performance in areas such as customer satisfaction,
warranty administration, service repairs, service
management, facilities, operating procedures, new vehicle
pre-delivery service; and (ii) parts operations, facilities,
tools and equipment. DISTRIBUTOR agrees to review such
evaluations with DEALER and DEALER agrees to take prompt
action to improve the service and parts performance to
satisfactory levels as DISTRIBUTOR may require. Such action
shall, if requested by DISTRIBUTOR, include an action plan
by DEALER for improvement of service and parts performance
within a specific time period approved by DISTRIBUTOR.
XI. CUSTOMER SATISFACTION RESPONSIBILITIES
A goal of DISTRIBUTOR and DEALER is to be recognized as marketing
the finest products and providing the best service in the
automobile industry. The LEXUS name should be synonymous with the
highest level of customer satisfaction.
A. DEALER'S CUSTOMER SATISFACTION OBLIGATIONS
DEALER will be responsible for satisfying LEXUS customers in
all matters except those that are directly related to
product design and manufacturing or are otherwise out of
DEALER'S control. DEALER will take all reasonable steps to
ensure that each customer is completely satisfied with his
or her LEXUS Products and the services and practices of
DEALER. DEALER will not engage in any practice or method of
operation if its nature or quality may impair the reputation
of LEXUS or LEXUS Products and it has been reasonably
objected to by DISTRIBUTOR.
1. DEALER'S CUSTOMER SATISFACTION PLAN
DEALER shall provide a detailed plan of DEALER'S
customer satisfaction program to DISTRIBUTOR and shall
implement such program on a continuous basis. This
plan shall include an ongoing system for emphasizing
-10-
20
customer satisfaction to all DEALER'S employees, for
training DEALER employees and for conveying to
customers that DEALER is committed to the highest
possible level of customer satisfaction.
2. EMPLOYEE TRAINING
DEALER agrees to participate and to have its employees
participate in LEXUS customer satisfaction training as
required by DISTRIBUTOR, at DEALER'S expense.
3. CUSTOMER SATISFACTION MANAGER
If requested by DISTRIBUTOR, DEALER agrees to employ a
full-time Customer Satisfaction Manager with the
necessary authority to make all decisions regarding
customer satisfaction and to resolve all customer
problems.
4. CUSTOMER ASSISTANCE RESPONSE SYSTEM
DEALER agrees to implement a system, approved by
DISTRIBUTOR, that will respond immediately to requests
for customer assistance from DISTRIBUTOR.
B. EVALUATION OF DEALER'S CUSTOMER SATISFACTION PERFORMANCE
DISTRIBUTOR periodically will evaluate DEALER'S customer
satisfaction performance based on the following
considerations and efforts by DEALER.
1. DISTRIBUTOR will provide DEALER with Owner Satisfaction
Index ("OSI") reports or such other equivalent data as
will permit DEALER to assess its performance and
maintain the highest level of customer satisfaction.
DEALER agrees to review with its employees on a regular
basis the results of the customer satisfaction reports
or other data it receives.
2. DEALER agrees to develop and implement specific action
plans to improve results in the event that DEALER is
below the average for other LEXUS dealers. The plans
are to be reviewed with DISTRIBUTOR on a basis that
DISTRIBUTOR deems appropriate. DEALER will use its
best efforts to respond on a timely basis to requests
from DISTRIBUTOR to take action on unsatisfactory
customer satisfaction matters and to commit necessary
resources to remedy deficiencies reasonably specified
by DISTRIBUTOR.
-11-
21
XII. DEALERSHIP FACILITIES AND IDENTIFICATION
A. FACILITIES
1. In order for DISTRIBUTOR to establish an effective
network of authorized LEXUS dealers, DEALER shall
provide, and at all times maintain, attractive
dealership facilities at the Approved Location(s) that
satisfy the image, size, layout, interior design,
color, equipment and identification required by
DISTRIBUTOR DEALER'S facility shall meet the minimum
facility standards established by LEXUS.
2. To assist DEALER in planning, building, remodeling, or
maintaining dealership facilities, DISTRIBUTOR will
provide DEALER a LEXUS Dealer Facility Planner and will
identify sources from which DEALER may purchase
facility consultation and planning services, and
architectural materials and furnishings that meet LEXUS
standards and guidelines. DISTRIBUTOR will also make
available to DEALER, upon request, sample copies of
building layout plans, facility planning
recommendations, and an applicable identification
program covering the placement, installation and
maintenance of required signs. In addition,
representatives of DISTRIBUTOR will be available to
DEALER from time to time to counsel and advise DEALER
and dealership personnel in connection with DEALER'S
planning and equipping the dealership premises.
B. SERVICE RECEPTION AREA
DEALER agrees to maintain a service reception area that
meets all requirements set forth in the LEXUS Dealer
Facility Planner, that is consistent with the LEXUS image
and that will promote a high level of customer satisfaction.
C. DEALER'S OPERATING HOURS
DEALER agrees to keep its dealership operations open for
business during all days and hours that are customary and
lawful for such operations in the community or locality in
which DEALER is located and in accordance with industry
standards.
D. SIGNS
Subject to applicable governmental statutes, ordinances and
regulations, DEALER agrees to erect, display and maintain,
at Approved Location(s) only and at DEALER'S sole expense,
such standard authorized product and service signs as
specified by DISTRIBUTOR.
-12-
22
E. EVALUATION OF DEALERSHIP FACILITIES
DISTRIBUTOR periodically will evaluate DEALER'S facilities.
In making such evaluations, DISTRIBUTOR may consider, among
other things: the actual building and land provided by
DEALER for the performance of its responsibilities under
this Agreement; compliance with DISTRIBUTOR'S current
requirements for dealership operations; the appearance,
condition, layout and sign age of the dealership facilities;
and such other factors as in DISTRIBUTOR'S opinion may
relate to DEALER'S performance of its responsibilities under
this Agreement. DISTRIBUTOR will discuss such evaluations
with DEALER and DEALER shall take prompt action to comply
with DISTRIBUTOR'S recommendations and minimum facility
standards.
F. USE OF LEXUS MARKS
1. USE BY DEALER
DISTRIBUTOR grants to DEALER the non-exclusive
privilege of displaying or otherwise using authorized
LEXUS Marks as specified in the LEXUS Graphic Standards
Manual at the Approved Location(s) in connection with
the selling or servicing of LEXUS Products.
DEALER further agrees that it promptly shall
discontinue the display and use of any such LEXUS
Marks, and shall change the manner in which any LEXUS
Marks are displayed and used, when for any reason it is
requested to do so by DISTRIBUTOR. DEALER may use the
LEXUS Marks only at Approved Location(s) and for such
purposes as are specified in this Agreement. DEALER
agrees that such LEXUS Marks may be used as part of the
name under which DEALER'S business is conducted only
with the prior written approval of DISTRIBUTOR.
2. DISCONTINUANCE OF USE
Upon termination, non-renewal, or expiration of this
Agreement, DEALER agrees that it shall immediately:
a. Discontinue the use of the word LEXUS and the
LEXUS Marks, or any semblance of same,
including without limitation, the use of all
stationery, telephone directory listing, and
other printed material referring in any way
to LEXUS or bearing any LEXUS Mark;
-13-
23
b. Discontinue the use of the word LEXUS or the
LEXUS Marks, or any semblance of same, as
part of its business or corporate name, and
file a change or discontinuance of such name
with appropriate authorities;
c. Remove all product signs bearing said word(s)
or LEXUS Marks at DEALER'S sole cost and
expense;
d. Cease representing itself as an authorized
LEXUS Dealer; and
e. Refrain from any action, including without
limitation, any advertising, stating or
implying that it is authorized to sell or
distribute LEXUS Products.
In the event DEALER fails to comply with the terms and
conditions of this Section, DISTRIBUTOR shall have the
right to enter upon DEALER'S premises and remove,
without liability, all such product signs and
identification bearing the word LEXUS or any LEXUS
Marks. DEALER agrees that it shall reimburse
DISTRIBUTOR for any costs and expenses incurred in such
removal, including reasonable attorney fees.
XIII. CAPITAL, CREDIT, RECORDS AND UNIFORM SYSTEMS
A. NET WORKING CAPITAL
DEALER agrees to establish and maintain actual net working
capital in an amount not less than the minimum net working
capital specified by DISTRIBUTOR. DISTRIBUTOR will have the
right to increase the minimum net working capital required,
and DEALER agrees promptly to establish and maintain the
increased amount.
B. FLOORING AND LINES OF CREDIT
DEALER agrees to obtain and maintain at all times a
confirmed and adequate flooring line with a bank or
financial institution or other method of financing
acceptable to DISTRIBUTOR to enable DEALER to perform its
obligations pursuant to this Agreement.
DISTRIBUTOR may increase the required amounts of flooring or
lines of credit, and DEALER agrees promptly to establish and
maintain the increased amount.
Subject to the foregoing obligations, DEALER is free to do
its financing business, wholesale, retail or both, with
whomever it chooses and to the extent it desires.
-14-
24
C. PAYMENT TERMS
All monies or accounts due DEALER from DISTRIBUTOR will be
considered net of DEALER'S indebtedness to DISTRIBUTOR.
DISTRIBUTOR may deduct or offset any amounts due or to
become due from DEALER to DISTRIBUTOR, or any amounts held
by DISTRIBUTOR, from or against any sums or accounts due or
to become due from DISTRIBUTOR to DEALER. Any amounts owed
by DEALER to DISTRIBUTOR that are not paid when due shall
bear interest as established by DISTRIBUTOR and permitted by
law. Payments by DEALER to DISTRIBUTOR shall be made in
such a manner as prescribed by DISTRIBUTOR and shall be
applied against DEALER'S indebtedness in accordance with
DISTRIBUTOR'S policies and practices.
D. UNIFORM ACCOUNTING SYSTEM
DEALER agrees to maintain its financial books and records in
accordance with the LEXUS Accounting Manual, as amended from
time to time by DISTRIBUTOR. In addition, DEALER shall
furnish to DISTRIBUTOR complete and accurate financial or
operating information, including without limitation, a
financial and/or operating statement covering the current
month and calendar year-to-date operations and showing the
true and accurate condition of DEALER'S business. DEALER
shall promptly furnish to DISTRIBUTOR copies of any adjusted
financial and/or operating statements, including any and all
adjusted, year-end statements prepared for tax or any other
purposes. All such information shall be furnished by DEALER
to DISTRIBUTOR via DISTRIBUTOR'S electronic communications
network and in such a format and at such times as prescribed
by DISTRIBUTOR.
E. RECORDS MAINTENANCE
DEALER agrees to keep complete, accurate and current records
regarding its sale, leasing and servicing of LEXUS Products
for a minimum of five (5) years, exclusive of any retention
period required by any governmental entity. DEALER shall
prepare, keep current and retain records in support of
requests for reimbursement for warranty and policy work
performed by DEALER in accordance with the LEXUS Warranty
Policies and Procedures Manual.
F. EXAMINATION OF DEALERSHIP ACCOUNTS AND RECORDS
DISTRIBUTOR shall have the right at all reasonable times and
during regular business hours to inspect DEALER'S facilities
and to examine, audit and to reproduce all records, accounts
and supporting data relating to the operations of
-15-
25
DEALER, including without limitation, sales reporting,
service and repair of LEXUS Products by DEALER.
G. TAXES
DEALER shall be responsible for and duly pay all sales
taxes, use taxes, excise taxes and other governmental or
municipal charges imposed, levied or based upon the purchase
or sale of LEXUS Products by DEALER, and shall maintain
accurate records of the same.
H. CONFIDENTIALITY
DISTRIBUTOR agrees that it shall not provide any financial
data or documents submitted to it by DEALER to any third
party unless authorized by DEALER, required by law, or
required to generate composite or comparative data for
analytical purposes.
DEALER agrees to keep confidential and not to disclose,
directly or indirectly, any information that DISTRIBUTOR
designates as confidential.
I. DATA TRANSMISSION SYSTEMS
DISTRIBUTOR has established a national, private, centralized
database of information about all LEXUS vehicles and
customers. In order to provide the highest level of service
and support and to facilitate accurate and timely reporting
of relevant DEALER operational and financial data, DEALER
shall provide information to DISTRIBUTOR as specified by
DISTRIBUTOR from time to time, including, but not limited
to, customer service, sales, parts inventory and accounting
information. All information shall be submitted by DEALER
via the LEXUS electronic communications network. DEALER
will acquire, install and maintain at its expense the
necessary equipment and systems compatible with the LEXUS
electronic communications network. DISTRIBUTOR will
recommend to DEALER an independent source for purchasing the
required equipment and systems. DEALER, however, may
purchase equipment from any source, provided the equipment
meets the LEXUS electronic communications network
specifications.
J. SALES REPORTING
DEALER agrees to accurately report to DISTRIBUTOR, with such
relevant information as DISTRIBUTOR may reasonably require,
the delivery of each new motor vehicle to a purchaser by the
end of the day in which the vehicle is delivered
-16-
26
to the purchaser thereof, and to furnish DISTRIBUTOR with
such other reports as DISTRIBUTOR may reasonably require
from time to time.
XIV. TRANSFERS
A. SALE OF OWNERSHIP INTEREST IN DEALERSHIP
This is a personal services Agreement based upon the
personal skills, service, qualifications and commitment of
DEALER'S OWNERS and General Manager. For this reason, and
because DISTRIBUTOR has entered into this Agreement in
reliance upon DEALER'S, OWNERS' and General Manager's
qualifications, DEALER agrees to obtain DISTRIBUTOR'S prior
written approval of any proposed change in its ownership,
General Manager or any proposed disposition of DEALER'S
principal assets.
DISTRIBUTOR shall not be obligated to renew this Agreement
or to execute a new Agreement to a proposed transferee
unless DEALER first makes arrangements acceptable to
DISTRIBUTOR to satisfy any outstanding indebtedness to
DISTRIBUTOR.
B. RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE
1. RIGHTS GRANTED
If a proposal to sell the dealership's assets or
transfer its ownership is submitted by DEALER to
DISTRIBUTOR, or in the event of the death of the
majority owner of DEALER, DISTRIBUTOR has a right of
first refusal or option to purchase the dealership
assets or stock, including any leasehold interest or
realty DISTRIBUTOR'S exercise of its right or option
under this Section supersedes DEALER'S right to
transfer its interest in, or ownership of, the
dealership. DISTRIBUTOR'S right or option may be
assigned by it to any third party and DISTRIBUTOR
hereby guarantees the full payment to DEALER of the
purchase price by such assignee. DISTRIBUTOR may
disclose the terms of any pending buy/sell agreement
and any other relevant dealership performance
information to any potential assignee. DISTRIBUTOR'S
rights under this Section will be binding on and
enforceable against any assignee or successor in
interest of DEALER or purchaser of DEALER'S assets.
2. EXERCISE OF DISTRIBUTOR'S RIGHTS
DISTRIBUTOR shall have thirty (30) days from the
following events within which to exercise its option to
purchase or right of first refusal.
-17-
27
(i) DISTRIBUTOR'S receipt of all data and documentation
customarily required by it to evaluate a proposed
transfer of ownership; (ii) DISTRIBUTOR'S receipt of
notice from DEALER of the death of the majority owner
of DEALER; or (iii) DISTRIBUTOR'S disapproving of any
application submitted by an OWNER'S heirs pursuant to
Section XIV. DISTRIBUTOR'S exercise of its right of
first refusal under this Section neither shall be
dependent upon nor require its prior refusal to approve
the proposed transfer.
3. RIGHT OF FIRST REFUSAL
If DEALER has entered into a bona fide written buy/sell
agreement for its dealership business or assets,
DISTRIBUTOR'S right under this Section is a right of
first refusal, enabling DISTRIBUTOR to assume the
buyer's rights and obligations under such buy/sell
agreement, and to cancel this Agreement and all rights
granted DEALER. Upon DISTRIBUTOR'S request, DEALER
agrees to provide other documents relating to the
proposed transfer and any other information which
DISTRIBUTOR deems appropriate, including, but not
limited to, those reflecting other agreements or
understandings between the parties to the buy/sell
agreement. Refusal to provide such documentation or to
state that no such documents exist shall create the
presumption that the buy/sell agreement is not a bona
fide agreement.
4. OPTION TO PURCHASE
In the event of the death of a majority OWNER or if
DEALER submits a proposal which DISTRIBUTOR determines
is not bona fide or in good faith, DISTRIBUTOR has the
option to purchase the principal assets of DEALER
utilizing the dealership business, including real
estate and leasehold interest, and to cancel this
Agreement and the rights granted DEALER. The purchase
price of the dealership assets will be determined by
good faith negotiations between the parties. If an
agreement cannot be reached, the purchase price will be
exclusively determined by binding arbitration in
accordance with the commercial arbitration rules of the
American Arbitration Association. The site of the
arbitration shall be the office of the American
Arbitration Association in the locality of
DISTRIBUTOR'S principal place of business.
5. DEALER'S OBLIGATIONS
Upon DISTRIBUTOR'S exercise of its right or option and
tender of performance under the buy/sell agreement or
upon whatever terms may be expressed in the buy/sell
agreement, DEALER shall forthwith transfer the affected
real property by warranty deed conveying marketable
title free and
-18-
28
clear of all liens, claims, mortgages, encumbrances,
tenancies and occupancies. The warranty deed shall be
in proper form for recording, and DEALER shall deliver
complete possession of the property and deed at the
time of closing. DEALER shall also furnish to
DISTRIBUTOR all copies of any easements, licenses or
other documents affecting the property or dealership
operations and shall assign any permits or licenses
that are necessary or desirable for the use of or
appurtenant to the property or the conduct of such
dealer operations. DEALER also agrees to execute and
deliver to DISTRIBUTOR instruments satisfactory to
DISTRIBUTOR conveying title to all personal property,
including leasehold interests, involved in the transfer
or sale to DISTRIBUTOR. If any personal property is
subject to any lien or charge of any kind, DEALER
agrees to procure the discharge and satisfaction
thereof prior to the closing of sale of such property
to DISTRIBUTOR.
XV. SUCCESSION RIGHTS UPON DEATH OR INCAPACITY
A. SUCCESSION TO OWNERSHIP AFTER DEATH OF OWNER
In the event that OWNER dies and his or her interest in
Dealership passes directly to any person or persons
("Heirs") who wish to succeed to OWNER'S interest, then
OWNER'S legal representative must notify DISTRIBUTOR within
sixty (60) days of the death of the OWNER of such Heir's or
Heirs' intent to succeed OWNER. The legal representative
also must then designate a proposed General Manager for
DISTRIBUTOR approval. The effect of such notice from
OWNER'S legal representative will be to suspend any notice
of termination provided for in Section XVI(B)(4) issued
hereunder.
Upon delivery of such notice, OWNER'S legal representative
shall immediately request any person(s) identified by it as
intending to succeed OWNER and the designated candidate for
General Manager to submit an application and to provide all
personal and financial information that DISTRIBUTOR may
reasonably and customarily require in connection with its
review of such applications. All requested information must
be provided promptly to DISTRIBUTOR and in no case later
than thirty (30) days after receipt of such request from
OWNER'S legal representative. Upon the submission of all
requested information, DISTRIBUTOR agrees to review such
application(s) pursuant to the then current criteria
generally applied by DISTRIBUTOR in qualifying dealer OWNERS
and/or General Managers. DISTRIBUTOR shall either approve
or disapprove the application(s) within ninety (90) days of
full compliance with all DISTRIBUTOR'S requests for
information. If DISTRIBUTOR approves the application(s), it
shall offer to enter into a new LEXUS Dealer Agreement with
OWNER'S Heir(s) in the form then currently in use, subject
to such additional conditions and for such term as
DISTRIBUTOR deems appropriate.
-19-
29
In the event that DISTRIBUTOR does not approve the
designated Heir(s) or designated candidate for Manager, or
if the OWNER'S legal representative withdraws his or her
notice of the Heir(s) intent to succeed as OWNER(S) or if
the legal representative or any proposed OWNERS or General
Manager fails to timely provide the required information,
DISTRIBUTOR may reinstate or issue a notice of termination.
Nothing in this Section shall waive DISTRIBUTOR'S right to
exercise its Option to Purchase set forth in Section XIV
herein.
B. INCAPACITY OF OWNER
The parties agree that, as used herein, incapacity shall
refer to any physical or mental ailment that, in
DISTRIBUTOR'S opinion, adversely affects OWNER'S ability to
meet his or her obligations under this Agreement.
DISTRIBUTOR may terminate this Agreement when an
incapacitated OWNER also is the General Manager identified
herein.
Prior to the effective date of any notice of termination, an
incapacitated OWNER who is also the General Manager, or his
or her legal representative, may propose a new candidate for
the position of General Manager. Such proposal shall be in
writing and shall suspend any pending notice of termination
until DISTRIBUTOR advises DEALER of its approval or
disapproval of the new candidate. Upon receipt of such
notice, DISTRIBUTOR and DEALER shall follow the
qualification procedures set forth in subsection A above.
C. NOMINATION OF SUCCESSOR PRIOR TO DEATH OR INCAPACITY OF OWNER
An OWNER owning a majority of DEALER'S stock may nominate a
candidate to assume ownership and/or the position of General
Manager of the dealership upon his or her death or
incapacity.
As soon as practicable after such nomination, DISTRIBUTOR
will request such personal financial information from the
nominated OWNER and/or General Manager candidate as it
reasonably and customarily may require in evaluating such
candidates. DISTRIBUTOR shall apply criteria then currently
used by DISTRIBUTOR in qualifying OWNERS and/or General
Managers of authorized dealers. Upon receipt of all
requested information, DISTRIBUTOR shall either approve or
disapprove such candidate. If DISTRIBUTOR initially
approves the candidate, said approval shall remain in effect
for the duration of the current Agreement. DISTRIBUTOR
agrees that DEALER may renominate the candidate after the
expiration of this Agreement, and DISTRIBUTOR will approve
such nomination provided: (i) DISTRIBUTOR and DEALER have
entered into a new LEXUS Dealer Agreement; and (ii) the
proposed candidate continues to comply
-20-
30
with the then current criteria used by DISTRIBUTOR in
qualifying such candidates. If DISTRIBUTOR does not
initially qualify the candidate, DISTRIBUTOR agrees to
review the reason(s) for its decision with OWNER. OWNER is
free at any time to renew its nomination. However, in such
instances, the candidate must again qualify pursuant to the
then current criteria. OWNER may, by written notice,
withdraw a nomination at any time, even if DISTRIBUTOR has
previously qualified said candidate.
XVI. TERMINATION
A. VOLUNTARY TERMINATION BY DEALER
DEALER may voluntarily terminate this Agreement at any time
by written notice to DISTRIBUTOR. Termination shall be
effective thirty (30) days after receipt of the notice by
DISTRIBUTOR, unless otherwise mutually agreed in writing.
B. TERMINATION FOR CAUSE
1. IMMEDIATE TERMINATION
DEALER and DISTRIBUTOR agree that the following conduct
is within DEALER'S control and is so contrary to the
goals, purposes and objectives of this Agreement as to
warrant its immediate termination. Accordingly, DEALER
agrees that if it engages in any of the following types
of conduct, DISTRIBUTOR shall have the right to
terminate this Agreement immediately:
a. If DEALER fails to conduct any customary
dealership operations for seven consecutive
business days, except in the event such
closure or cessation of operation is caused
by some physical event beyond the control of
the DEALER, such as strikes, civil war,
riots, fires, floods, earthquakes, or other
acts of God;
b. If DEALER becomes insolvent, or files any
petition under bankruptcy law, or executes an
assignment for the benefit of creditors, or
appoints a receiver or trustee or another
officer having similar powers is appointed
for DEALER and is not removed within thirty
(30) days from his appointment thereto or
there is any levy under attachment or
execution or similar process which is not
vacated or removed by payment or bonding
within ten (10) days;
c. If DEALER, or any OWNER or Officer of DEALER
is convicted of any felony;
-21-
31
d. If DEALER or any OWNER, Officer or General
Manager of Dealer makes any material
misrepresentation to DISTRIBUTOR; or
e. If DEALER fails to obtain or maintain any
license, permit or authorization necessary
for the conduct by DEALER of his or her
business pursuant to this Agreement, or such
license, permit or authorization is suspended
or revoked.
2. TERMINATION UPON SIXTY DAYS NOTICE
The following conduct violates the terms and conditions
of this Agreement and, if DEALER engages in such
conduct, DISTRIBUTOR shall have the right to terminate
this Agreement upon sixty (60) days notice:
a. Any attempted or actual sale, transfer or
assignment by DEALER of this Agreement or any
of the rights granted DEALER hereunder, or
any attempted or actual transfer, assignment
or delegation by DEALER of any of the
responsibilities assumed by it under this
Agreement without the prior written approval
of DISTRIBUTOR;
b. Any unreasonable removal of the General
Manager;
c. Appointment of a new General Manager without
the prior written approval of DISTRIBUTOR;
d. The conducting, directly or indirectly, of
any LEXUS dealer operation other than at the
Approved Location(s);
e. Failure of DEALER to pay DISTRIBUTOR for any
LEXUS Products;
f. Failure of DEALER to establish or maintain
during the existence of this Agreement the
required net working capital or adequate
flooring and lines of credit;
g. Any dispute, disagreement or controversy
among managers, officers or stockholders of
DEALER that, in the reasonable opinion of
DISTRIBUTOR, adversely affects the ownership,
operation, management, business, reputation
or interests of DEALER or DISTRIBUTOR;
h. Retention by DEALER of any General Manager,
who, in DISTRIBUTOR'S reasonable opinion, is
not competent or, if
-22-
32
previously approved by DISTRIBUTOR, no longer
possesses the requisite qualifications for
the position, or who has acted in a manner
contrary to the continued best interest of
both DEALER all DISTRIBUTOR;
i. Impairment of the reputation or financial
standing of DEALER subsequent to the
execution of this Agreement;
j. Refusal to permit DISTRIBUTOR to examine or
audit DEALER'S accounting records as provided
herein upon receipt by DEALER from
DISTRIBUTOR of written notice requesting such
permission or information;
k. Failure of DEALER to timely furnish accurate
sales or financial information and related
supporting data;
l. Breach or violation by DEALER of any other
term or provision of this Agreement; or
m. Any civil or administrative liability found
against DEALER or any OWNER or Officer of
DEALER for any automotive-related matter
which in DISTRIBUTOR'S opinion tends to
seriously and adversely affect the ownership,
operation, management, reputation, business
or interests of DEALER, or to impair the
goodwill associated with the LEXUS Marks.
3. TERMINATION FOR FAILURE OF PERFORMANCE
If, upon evaluation of DEALER's performance pursuant to
paragraphs II(F)-X(F), XI(B) or XII(E) herein,
DISTRIBUTOR concludes that DEALER has failed to perform
adequately its sales, service or customer satisfaction
responsibilities or to provide adequate dealership
facilities, DISTRIBUTOR shall notify DEALER in writing
of such failure(s) and will endeavor to review promptly
with DEALER the nature and extent of such failure(s),
and will grant DEALER 180 days or such other period as
may be required by law to correct such failure(s). If
DEALER fails or refuses to correct such failure(s) or
has not made substantial progress towards remedying
such failure(s) at the expiration of such period,
DISTRIBUTOR may terminate this Agreement upon sixty
(60) days notice or such other notice as may be
required by law.
-23-
33
4. TERMINATION UPON DEATH OR INCAPACITY
Subject to certain exceptions identified in Section XV,
DISTRIBUTOR may terminate this Agreement in the event
of the death of an OWNER or upon the incapacity of any
OWNER who is also the General Manager identified
herein, upon written notice to DEALER and such OWNER'S
legal representative. Termination, upon either of
these events shall be effective ninety (90) days from
the date of such notice.
C. NOTICE OF TERMINATION
Any notice of termination under this Agreement shall be in
writing and shall be mailed to the person(s) designated to
receive such notice, via certified mail, or shall be
delivered in person. Such notice shall be effective upon
the date of receipt. DISTRIBUTOR shall state the grounds on
which it relies in its termination of DEALER, and shall have
the right to amend such notice as appropriate.
DISTRIBUTOR'S failure to refer to additional grounds for
termination shall not constitute a waiver of its right later
to rely upon such grounds.
D. CONTINUANCE OF BUSINESS RELATIONS
Upon receipt of any notice of termination or non-renewal,
DEALER agrees to conduct itself and its operation until the
effective date of termination or non- renewal in a manner
that will not injure the reputation or goodwill of the LEXUS
Marks or DISTRIBUTOR.
E. REPURCHASE PROVISIONS
1. DISTRIBUTOR'S OBLIGATIONS
Upon the expiration or termination of this Agreement,
DISTRIBUTOR shall have the right to cancel any and all
shipments of LEXUS Products scheduled for delivery to
DEALER, and DISTRIBUTOR shall repurchase from DEALER
the following:
a. New, unused, unmodified and undamaged LEXUS
Motor Vehicles then unsold in DEALER'S
inventory. The prices of such Motor Vehicles
shall be the same as those at which they were
originally purchased by DEALER, less all
prior refunds or other allowances made by
DISTRIBUTOR to DEALER with respect thereto.
b. New, unused and undamaged LEXUS parts and
accessories then unsold in DEALER'S inventory
that are in good and saleable
-24-
34
condition. The prices for such parts and
accessories shall be the prices last
established by DISTRIBUTOR for the sale of
identical parts or accessories to dealers in
the area in which DEALER is located.
c. Special service tools recommended by
DISTRIBUTOR and then owned by DEALER and that
are especially designed for servicing LEXUS
Motor Vehicles. The prices for such special
service tools will be the price paid by
DEALER less appropriate depreciation, or such
other price as the parties may negotiate.
d. Signs that DISTRIBUTOR has recommended for
identification of DEALER. The price of such
signs shall be the price paid by DEALER less
appropriate depreciation or such other price
as the parties may negotiate.
2. RESPONSIBILITIES OF DEALER
DISTRIBUTOR'S obligations to repurchase the items set
forth in this Section are contingent upon DEALER
fulfilling the following obligations:
a. Within thirty (30) days after the date of
expiration or the effective date of
termination of this Agreement, DEALER shall
deliver or mail to DISTRIBUTOR a detailed
inventory of all items referred to in this
Section which it requests DISTRIBUTOR
repurchase and shall certify that such list
is true and accurate.
b. DEALER shall be entitled to request
repurchase of only those items which it
purchased from DISTRIBUTOR, unless
DISTRIBUTOR agrees otherwise.
c. Products and special service tools to be
repurchased by DISTRIBUTOR from DEALER shall
be delivered by DEALER to DISTRIBUTOR'S place
of business at DEALER'S expense. If DEALER
fails to do so, DISTRIBUTOR may transfer such
items and deduct the cost therefor from the
repurchase price.
d. DEALER will execute and deliver to
DISTRIBUTOR instruments satisfactory to
DISTRIBUTOR conveying good and marketable
title to the aforesaid items to DISTRIBUTOR.
If such items are subject to any lien or
charge of any kind, DEALER will procure the
discharge in satisfaction thereof prior to
their repurchase by DISTRIBUTOR.
-25-
35
DEALER will comply with the requirements of
any state or federal laws that relate to the
repurchase including bulk sales or transfer
laws.
e. DEALER will remove, at its own expense, all
signage from DEALER'S approved locations
including all LEXUS Marks before it is
eligible for payment hereunder.
3. PAYMENT BY DISTRIBUTOR
DISTRIBUTOR will pay DEALER for such items as DEALER
may request be repurchased and that qualify hereunder
as soon as practicable upon DEALER'S compliance with
the obligations set forth herein and upon computation
of any outstanding indebtedness of DEALER to
DISTRIBUTOR.
DISTRIBUTOR shall have the right to offset from any
amounts due to DEALER hereunder the total sum of
DEALER'S outstanding indebtedness to DISTRIBUTOR.
If DEALER disagrees with DISTRIBUTOR'S valuation of any
item herein, and DEALER and DISTRIBUTOR have not
resolved their disagreement within sixty (60) days of
the effective date of termination or expiration of this
Agreement, DISTRIBUTOR shall pay to DEALER the amount
to which it reasonably believes DEALER is entitled.
DEALER'S exclusive remedy to recover any additional
sums that it believes is due under this Section shall
be by resort to an Alternative Dispute Resolution
program, including arbitration, that is binding on both
parties.
XVII. MANAGEMENT OF DISPUTES
A. ALTERNATIVE DISPUTE RESOLUTION PROGRAMS
1. DISTRIBUTOR and DEALER acknowledge that disputes
involving the performance of this Agreement may from
time to time arise. In order to minimize the effects
of such disputes on their business relationship, the
parties agree to participate in such Alternative
Dispute Resolution programs as may be established by
DISTRIBUTOR.
2. Such Alternative Dispute Resolution programs may be
established to resolve disputes in matters including,
but not limited to, sales reporting and/or sales credit
disputes, product allocation disputes, DEALER liability
for repair/replace claims, warranty and service
campaign reimbursement, sales contests and
merchandising incentive programs, and accounts of debt
between the parties.
-26-
36
3. In all disputes between DEALER and DISTRIBUTOR, the
parties shall first resort to such Alternative Dispute
Resolution programs, including mediation, as may have
been established by DISTRIBUTOR.
4. It is expressly understood that, unless otherwise
specified in this Agreement, the results of any
Alternative Dispute Resolution program will not be
binding upon DEALER or DISTRIBUTOR.
5. The parties' commitment to support and participate in
non-binding Alternative Dispute Resolution programs
specifically is not a waiver of DEALER'S or
DISTRIBUTOR'S right to later resort to litigation
before any judicial or administrative forum.
B. APPLICABLE LAW
This Agreement shall be governed by and construed according
to the laws of the state in which DEALER is located.
C. MUTUAL RELEASE
Each party hereby releases the other from any and all claims
and causes of action that it may have against the other for
money damages arising from any event occurring prior to the
date of execution of this Agreement, except for any
accounts payable by one party to the other as a result of
the purchase of any LEXUS Products, audit adjustments or
reimbursement for any services. This release does not
extend to claims which either party does not know or
reasonably suspect to exist in its favor at the time of the
execution of this Agreement.
XVIII. DEFENSE AND INDEMNIFICATION
A. DEFENSE AND INDEMNIFICATION BY DISTRIBUTOR
DISTRIBUTOR agrees to assume the defense of DEALER and
to indemnify and hold DEALER harmless in any lawsuit
naming DEALER as a defendant and involving any LEXUS
Product when the lawsuit also involves allegations of:
1. Breach of warranty provided by DISTRIBUTOR,
bodily injury or property damage arising out
of an occurrence allegedly caused solely by a
defect or failure to warn of a defect in
design, manufacture or assembly of a LEXUS
Product (except for tires not manufactured by
FACTORY), provided that the defect could not
reasonably have been
-27-
37
discovered by DEALER during the pre-delivery
service of the LEXUS Product;
2. Any misrepresentation or misleading statement
or unfair or deceptive trade practice of
DISTRIBUTOR; or
3. Any damage to a LEXUS Product purchased by
DEALER from DISTRIBUTOR that was repaired by
DISTRIBUTOR and where DEALER had not been
notified of such damage in writing prior to
the delivery of the subject vehicle, part or
accessory to a retail Customer; and
Provided:
4. That DEALER delivers to DISTRIBUTOR, in a
manner to be designated by DISTRIBUTOR,
within twenty (20) days of the service of any
summons or complaint, copies of such
documents and requests in writing a defense
and/or indemnification therein (except as
provided in Paragraph (D) below;
5. That the complaint does not involve
allegations of DEALER misconduct, including
but not limited to, improper or
unsatisfactory service or repair,
misrepresentation, or any claim of DEALER'S
unfair or deceptive trade practice;
6. That the LEXUS Product which is the subject
of the lawsuit was not altered by or for
DEALER;
7. That DEALER agrees to cooperate fully in the
defense of such action as DISTRIBUTOR may
reasonably require; and
8. That DEALER agrees that DISTRIBUTOR may
offset any recovery on DEALER'S behalf
against any indemnification that may be
required hereunder.
B. DEFENSE AND INDEMNIFICATION BY DEALER
DEALER agrees to assume the defense of DISTRIBUTOR or
FACTORY and to indemnify and hold them harmless in any
lawsuit naming DISTRIBUTOR or FACTORY as a defendant when
the lawsuit involves allegations of:
1. DEALER'S alleged failure to comply, in whole or in
part, with any obligations assumed by DEALER pursuant
to this Agreement;
-28-
38
2. DEALER'S alleged negligent or improper repairing or
servicing of a new or used LEXUS Motor Vehicle or
equipment, or such other motor vehicles or equipment as
may be sold or serviced by DEALER;
3. DEALER'S alleged breach of any contract or warranty
other than that provided by DISTRIBUTOR or FACTORY;
4. DEALER'S alleged misleading statements,
misrepresentations, or deceptive or unfair trade
practices;
5. Any modification or alteration made by or on behalf of
DEALER to a LEXUS Product, except those made pursuant
to the express instruction or with the express approval
of DISTRIBUTOR; and
Provided:
6. That DISTRIBUTOR delivers to DEALER, within twenty (20)
days of the service of any summons or complaint, copies
of such documents, and requests in writing a defense
and/or indemnification therein (except as provided in
Paragraph (D) below);
7. That DISTRIBUTOR agrees to cooperate fully in the
defense of such action as DEALER may reasonably
require; and,
8. That the complaint does not involve allegations of
liability premised upon separate DISTRIBUTOR'S conduct
or omissions.
C. CONDITIONAL DEFENSE AND/OR INDEMNIFICATION
In agreeing to defend and/or indemnify each other, DEALER
and DISTRIBUTOR may make their agreement conditional on the
continued existence of the state of facts as then known to
such party and may provide for the withdrawal of such
defense and/or indemnification at such time as facts arise
which, if known at the time of the original request for a
defense and/or indemnification, would have caused either
DEALER or DISTRIBUTOR to refuse such request.
The party withdrawing from its agreement to defend and/or
indemnify shall give timely notice of its intent to
withdraw. Such notice shall be in writing and shall be
effective upon receipt. The withdrawing party shall be
responsible for all costs and expenses of defense up to the
date of receipt of its notice of withdrawal.
-29-
39
D. THE EFFECT OF SUBSEQUENT DEVELOPMENTS
In the event that subsequent developments in a case make
clear that the allegations which initially preclude a
request or an acceptance of a request for a defense and/or
indemnification are no longer at issue therein or are
without foundation, any party having a right to a defense
and/or indemnification hereunder may tender such request for
a defense and indemnification to the other party. Neither
DEALER nor DISTRIBUTOR shall be required to agree to such
subsequent request for a defense and/or indemnification
where that party would be unduly prejudiced by such delay.
E. TIME TO RESPOND AND RESPONSIBILITIES OF THE PARTIES
DEALER and DISTRIBUTOR shall have sixty (60) days from the
receipt of a request for a defense and/or indemnification to
conduct an investigation to determine whether or not, or
under what conditions, it may agree to defend and/or
indemnify pursuant to this Section.
If local rules require a response to the complaint in the
lawsuit prior to the time provided hereunder for a response
to such request, the requesting party shall take all steps
necessary, including obtaining counsel, to protect its own
interest in the lawsuit until DEALER or DISTRIBUTOR assumes
the requested defense and/or indemnification. In the event
that DEALER or DISTRIBUTOR agrees to assume the defense
and/or indemnification of a lawsuit, it shall have the right
to engage and direct counsel of its own choosing and, except
in cases where the request is made pursuant to Paragraph (D)
above, shall have the obligation to reimburse the requesting
party for all reasonable costs and expense, including actual
attorneys' fees, incurred prior to such assumption.
XIX. GENERAL PROVISIONS
A. NOTICES
Except as otherwise specifically provided herein, any notice
required to be given by either party to the other shall be
in writing and delivered personally or by certified mail,
return receipt requested, and shall be effective from the
date of mailing. Notices to DEALER shall be directed to
DEALER or its General Manager at DEALER'S Approved Location.
Notices to DISTRIBUTOR shall be directed to the General
Manager of DEALER'S LEXUS Area Office.
B. NO IMPLIED WAIVERS
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
-30-
40
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.
C. SOLE AGREEMENT OF THE PARTIES
There are no prior agreements or understandings, either oral
or written, between the parties affecting this Agreement or
relating to the sale or service of LEXUS Products, except as
otherwise specifically provided for or referred to in this
Agreement. DEALER acknowledges that no representations or
statements other than those expressly set forth therein were
made by DISTRIBUTOR or any officer, employee, agent or
representative thereof, or were relied upon by DEALER in
entering into this Agreement. This Agreement cancels and
supersedes all previous agreements between the parties
relating to the subject matters covered herein.
D. DEALER NOT AN AGENT OR REPRESENTATIVE
DEALER is an independent business. This Agreement is not a
property right and does not constitute DEALER the agent or
legal representative of DISTRIBUTOR or FACTORY for any
purpose whatsoever. DEALER is not granted any express or
implied right or authority to assume or create any
obligation on behalf of or in the name of DISTRIBUTOR or
FACTORY or to bind DISTRIBUTOR or FACTORY in any manner
whatsoever.
E. ASSIGNMENT OF RIGHTS OR DELEGATION OF DUTIES
This is a personal services agreement and may not be
assigned or sold in whole or in part, directly or
indirectly, voluntarily or by operation of law, without the
prior written approval of DISTRIBUTOR. Any attempted
transfer, assignment or sale without DISTRIBUTOR'S prior
written approval will be void and not binding upon
DISTRIBUTOR.
F. NO FRANCHISE FEE
DEALER warrants that it has paid no fee, nor has it provided
any goods or services in lieu of same, to DISTRIBUTOR in
consideration of entering into this Agreement. The sole
consideration for DISTRIBUTOR'S entering into this Agreement
is DEALER'S ability, integrity, assurance of personal
services and expressed intention to deal fairly and
equitably with DISTRIBUTOR and the public.
-31-
41
G. SEVERABILITY
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 provisions, and such provisions will be
deemed amended to comply with such law, or if it cannot be
so amended --without materially affecting the tenor of the
Agreement, then it will be deemed deleted from this
Agreement in such jurisdiction, and in either case, the
remainder of the initial Agreement will be valid and
binding.
H. NEW AND SUPERSEDING DEALER AGREEMENT
In the event any new and superseding form of dealer
agreement is offered by DISTRIBUTOR to authorized LEXUS
dealers generally at any time prior to the expiration of the
term of this Agreement, DISTRIBUTOR, may, by written notice
to DEALER, replace this Agreement with a new agreement in a
new and superseding form for a term not less than the then
unexpired term of this Agreement.
I. BENEFIT
This Agreement is entered into by and between DISTRIBUTOR
and DEALER 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.
XX. DEFINITIONS
As used in this Agreement, the parties agree that the following
terms shall be defined exclusively as set forth below.
A. DEALER: The entity that executes the Dealer Agreement and is
authorized by DISTRIBUTOR to sell and service LEXUS
Products.
B. OWNER: The persons identified in Section II hereof.
C. GENERAL MANAGER: The person identified in Section III
hereof.
D. DEALER FACILITIES: The buildings, improvements, fixtures,
and equipment situated at the Approved Location(s).
-32-
42
E. APPROVED LOCATION(S): The location(s) and any facilities
thereon, designated in SECTION IV that DISTRIBUTOR has
approved for the dealership operation(s) specified therein.
F. LEXUS MARKS: The various LEXUS trademarks, service marks,
names, logos and designs that DEALER is authorized by
DISTRIBUTOR to use in the sale and servicing of LEXUS
Products.
G. LEXUS MOTOR VEHICLES: All motor vehicles identified in the
current LEXUS Product Addendum that DISTRIBUTOR sells to
DEALER for resale.
H. GENUINE LEXUS PARTS AND ACCESSORIES: All LEXUS brand Parts
and Accessories manufactured by or on behalf of DISTRIBUTOR
or FACTORY, or other parts and accessories specifically
approved by FACTORY for use in servicing LEXUS Motor
Vehicles and sold by DISTRIBUTOR to DEALER for resale.
I. LEXUS PRODUCTS: All LEXUS Motor Vehicles, Parts and
Accessories that DISTRIBUTOR, in its sole discretion, sells
to DEALER for resale. The term "LEXUS PRODUCTS"
specifically excludes any motor vehicle, part or accessory
imported into the United States by any individual or company
other than DISTRIBUTOR.
-33-