EXHIBIT 10.3.1
[LOGO] FORD MOTOR COMPANY
Memphis Region
FORD SALES AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of December, 1997, by and between Central Ford
Center, Inc., an Arkansas corporation, doing business as Landers Ford and with
a principal place of business at 4600 S. University, PO Box 1649, Little Rock
(Pulaski County), AR 72209 (72018) (hereafter called the "Dealer") and Ford
Motor Company, a Delaware corporation with its principal place of business at
Dearborn, Michigan (hereinafter called the "Company").
- PREAMBLE -
The purpose of this agreement is to (i) establish the Dealer as an
authorized dealer in COMPANY PRODUCTS including VEHICLES (as herein defined),
(ii) set forth the respective responsibilities of the Company in producing and
selling those products to the Dealer and of the Dealer in reselling and
providing service for them and (iii) recognize the interdependence of both
parties in achieving their mutual objectives of satisfactory sales, service and
profits by continuing to develop and retain a broad base of satisfied owners of
COMPANY PRODUCTS.
In entering into this agreement, the Company and the Dealer recognize
that the success of the Company and of each of its authorized dealers depends
largely on the reputation and competitiveness of COMPANY PRODUCTS and dealers'
services, and on how well each fulfills its responsibilities under this
agreement.
It is the opinion of the Company that sales and service of COMPANY
PRODUCTS usually can best be provided to the public through a system of
independent franchised dealers, with each dealer fulfilling its
responsibilities in a given locality from properly located, adequate,
well-equipped and attractive dealerships, which are staffed by competent
personnel and provided with the necessary working capital. The Dealer
recognizes that, in such a franchise system, the Company must plan for the
establishment and maintenance of the numbers, locations and sizes of dealers
necessary for satisfactory and proper sales and service representation in each
market area as it exists and as it develops and changes. At the same time, the
Company endeavors to provide each of its dealers with a reasonable profit
opportunity based on the potential for sales and service of COMPANY PRODUCTS
within its locality.
The Company endeavors to make available to its dealers a variety of
quality products, responsive to broad wants and needs of the buying public,
which are attractively styled, of sound engineering design and produced on a
timely basis at competitive prices. The development, production and sale of
such products require that the Company and its manufacturing sources make large
continuing investments in plants, equipment, tools and other facilities,
engineering and styling research and development, quality control procedures,
trained personnel and marketing programs. Heavy commitments must also be made
in advance for raw materials and
finished parts. For purposes of making these investments and commitments,
planning production and estimating costs for setting prices, the Company
assumes in advance an estimated volume of sales for each of its products.
Within each year, it develops production schedules from orders submitted by its
franchised dealers and its and their best estimates of the market demand for
COMPANY PRODUCTS.
In turn, each of the Company's franchised dealers makes important
investments or commitments in retail sales and service facilities and
equipment, in working capital, in inventories of vehicles, parts and
accessories, and trained sales and service personnel based on annual planning
volumes for their markets.
If satisfactory volumes for either the Company or a dealer are not
realized, each may suffer because of commitments already made and the cost of
manufacturing and of selling each product may be increased. Each dealer must
give the Company orders for the products needed to serve its market. The
Company seeks to adjust production schedules, to the extent feasible, to fill
dealer orders, and to allocate fairly any product in short supply, but
inevitably both the Company and its dealers suffer loss of profits to the
extent they cannot meet market demands. Thus, the automotive business is a high
risk business in which the Company, its manufacturing sources and its dealers
can succeed only through cooperative and competitive effort in their respective
areas of manufacturing, sales, service and customer satisfaction.
Because it is the dealer who deals directly with, and develops the
sale of COMPANY PRODUCTS to the consuming public, the Company substantially
relies on its dealers to provide successful sales and merchandising programs,
competent service operations and effective owner relations programs. To do
this, dealers must carry out their responsibilities of establishing and
maintaining adequate wholesale and retail finance plans, new and used vehicle
sales programs, parts and service sales programs, personnel training and
supportive capitalization and working capital. To assist its dealers in these
responsibilities, the Company establishes and periodically updates standards of
operation and planning guides based on its experience and current conditions.
It also offers sales and service training courses, advice as to facilities,
counseling in the various phases of new and used vehicle merchandising, parts
and service merchandising, leasing, daily rentals and facilities development.
It also conducts national advertising, promotional and other marketing programs
and assists dealers in developing complementary group and individual programs.
To enable the Company to provide such assistance, it requires dealers
to submit uniform and accurate sales, operating and financial reports from
which it can derive and disseminate analytical and comparative operating data
and advice to dealers. The Company also solicits dealers to bring to its
attention through their National Dealer Council organization any mutual dealer
problems or complaints as they arise.
Because the Company relies heavily on its dealers for success, it
reserves the right to cease doing business with any dealer who is not
contributing sufficiently to such success. Similarly, the Company recognizes
that its dealers look to it to provide competitive products and programs and
that, if it does not do so, any dealer may elect to cease doing business with
the Company.
ii
The Company has elected to enter into this agreement with the Dealer
with confidence in the Dealer's integrity and ability, its intention to carry
out its responsibilities set forth in this agreement, and its desire to provide
courteous, competent and satisfying sales and service representation to
consumers for COMPANY PRODUCTS, and in reliance upon its representations as to
the persons who will participate in the ownership and management of the
dealership.
The dealer has elected to enter into this agreement with the Company
with confidence in its integrity and ability, its intention to provide
competitive products and assist the Dealer to market them successfully, and its
desire to maintain high quality dealers.
Both parties recognize the rights of the Dealer and the Company under
this agreement are defined and limited by the terms of this agreement and
applicable law. The Company and the Dealer further acknowledge that their
methods of operation and business practices have an important effect on the
reputation of the Dealer, the Company, COMPANY PRODUCTS and other franchised
dealers of the Company. The Company and the Dealer also acknowledge that
certain practices are detrimental to their interests, such as deceptive,
misleading or confusing advertising, pricing, merchandising or business
practices, or misrepresenting the characteristics, quality, condition or origin
of any item of sale.
It is the expectation of each of the parties that by entering into
this agreement, and by the full and faithful observance and performance of its
duties, a mutually satisfactory relationship will be established and
maintained.
- TERMS OF THE AGREEMENT -
IN CONSIDERATION of the mutual agreements and acknowledgements
hereinafter made, the parties hereto agree as follows:
A. The Company hereby appoints the Dealer as an authorized dealer at
retail in VEHICLES and at retail and wholesale in other COMPANY PRODUCTS and
grants the Dealer the privilege of buying COMPANY PRODUCTS from the Company for
sale in its DEALERSHIP OPERATIONS (as herein defined). The Company also grants
to the Dealer the privilege of displaying, at approved location(s), the
Company's trademarks and trade names applicable to COMPANY PRODUCTS. The Dealer
hereby accepts such appointment.
B. Subject to and in accordance with the terms and conditions of this
agreement, the Company shall sell COMPANY PRODUCTS to the Dealer and the Dealer
shall purchase COMPANY PRODUCTS from the Company.
C. The Ford Motor Company Ford Sales and Service Agreement Standard
Provisions (Form "FD925-A"), a duplicate original of which is attached to the
Dealer's duplicate original of this agreement, have been read and agreed to by
the Company and by the Dealer, and such Standard Provisions and any duly
executed and delivered supplement or amendment thereto, are hereby made a part
of this agreement with the same force and effect as if set forth herein in
full.
iii
D. This agreement shall bind the Company when it bears the facsimile
signature of the General Manager, and the manual countersignature of the
General Sales Manager, Market Representation Manager, or a Regional Sales
Manager, of the Ford Division of the company and a duplicate original thereof
is delivered personally or by mail to the Dealer or the Dealer's principal
place of business.
E. The Dealer acknowledges that (i) this agreement may be executed
only in the manner provided in paragraph D hereof, (ii) no one except the
General Manager, The General Sales Manager, or Market Representation Manager of
the Ford Division of the Company, or the Secretary or an Assistant Secretary of
the Company, is authorized to make or execute any other agreement relating to
the subject matter hereof on behalf of the Company, or in any manner to
enlarge, vary or modify the terms of this agreement, and then only by an
instrument in writing, and (iii) no one except the General Manager of the Ford
Division of the Company, or the Secretary or an Assistant Secretary of the
Company, is authorized to terminate this agreement on behalf of the Company,
and then only by an instrument in writing.
F. In view of the personal nature of this agreement and its objectives
and purposes, the Company expressly reserves to itself the right to execute a
Ford Sales and Service Agreement with individuals or other entities
specifically selected and approved by the Company. Accordingly, this agreement
and the rights and privileges conferred on the Dealer hereunder are not
transferable, assignable or salable by the Dealer and no property right or
interest, direct or indirect, is sold, conveyed or transferred to the Dealer
under this agreement. This Agreement has been entered into by the Company with
the Dealer in reliance (i) upon the representation and agreement that the
following person(s), and only the following person(s), shall be the principal
owners of the Dealer:
HOME PERCENTAGE OF
NAME ADDRESS INTEREST
BPT Holding, Inc. 7800 Alcoa Rd. - Benton, AR 72015 100
- -------------------------------------------------------------------------------------------------------------------------
Landers United Auto Group No. 5, Inc. 100
- -------------------------------------------------------------------------------------------------------------------------
Landers Auto Sales, Inc. 100
- -------------------------------------------------------------------------------------------------------------------------
United Auto Group, Inc. 100
- -------------------------------------------------------------------------------------------------------------------------
(ii) upon the representation and agreement that the following person(s), and
only the following person(s), shall have full managerial authority for the
operating management of the Dealer in the performance of this agreement:
HOME
NAME ADDRESS TITLE
Steve Landers 3316 Highway 5 - Benton, AR 72015 President
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
iv
and (iii) upon representation and agreement that the following person(s), and
only the following person(s), shall be the remaining owners of the Dealer:
HOME PERCENTAGE OF INTEREST
NAME ADDRESS
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
The Dealer shall give the Company prior notice of any proposed change in the
said ownership or managerial authority, and immediate notice of the death or
incapacity of any such person. No such change or notice, and no assignment of
this agreement or of any right or interest herein, shall be effective against
the Company unless and until embodied in an appropriate amendment to or
assignment of this agreement, as the case may be, duly executed and delivered
by the Company and by the Dealer. The Company shall not unreasonably withhold
its consent to any such change.
G. (Strike out either subparagraph (1) or (2) whichever is not
applicable.)
(1) This agreement shall continue in force and effect from the date of
its execution until terminated by either party under the provisions of
paragraph 17 hereof.
H. Both the Company and the Dealer assume and agree to carry out and
perform their respective responsibilities under this agreement.
The parties hereto have duly executed this agreement in duplicate as of the day
and year first above written.
[LOGO] FORD MOTOR COMPANY
/s/ LANDERS FORD
-----------------------------
(Dealer's Trade Name)
General Manager, Ford Division By /s/ Steve J. Landers
-------------------------
Countersigned by (Title) President
--------------------
/s/ [illegible]
- ----------------------------------
- ----------------------------------
v
FORD SALES & SERVICE AGREEMENT
FORD MOTOR COMPANY
FORD DIVISION
TABLE OF CONTENTS
Paragraph Page
1. DEFINITIONS..............................................................................................1
2. RESPONSIBILITIES WITH RESPECT TO VEHICLES................................................................3
(a) Sales.................................................................................................3
(b) Orders................................................................................................5
(d) Stocks................................................................................................6
(e) Demonstrators.........................................................................................6
(f) Factory Suggested Price Labels........................................................................7
(g) Owner Literature......................................................................................7
(h) Rebates and Allowances................................................................................7
(i) Warranty..............................................................................................7
3. RESPONSIBILITIES WITH RESPECT TO GENUINE PARTS...........................................................8
(a) Sales.................................................................................................8
(b) Orders................................................................................................8
(c) Consideration of Orders...............................................................................9
(d) Stocks................................................................................................9
(e) Returns and Allowances................................................................................9
(f) Warranty..............................................................................................9
4. RESPONSIBILITIES WITH RESPECT TO SERVICE.................................................................9
(a) Predelivery Service..................................................................................10
(b) Warranty and Policy and Campaign Service.............................................................10
(c) Maintenance and Repair Service.......................................................................11
(d) Service Tools and Equipment..........................................................................11
5. RESPONSIBILITIES WITH RESPECT TO DEALERSHIP FACILITIES..................................................11
(a) Locations and Facilities.............................................................................11
(b) Dealership Facilities Supplement.....................................................................11
(c) Changes and Additions................................................................................11
(d) Company Assistance...................................................................................12
(e) Fulfillment of Responsibility........................................................................12
6. OTHER DEALER AND COMPANY RESPONSIBILITIES...............................................................12
(a) Signs................................................................................................12
(b) Personnel............................................................................................12
(c) Dealer Residence.....................................................................................13
(d) Capital..............................................................................................13
(e) Accounting System....................................................................................13
(f) Financial Reports....................................................................................13
(g) Delivery and Sales Reports...........................................................................13
(h) Customer Handling....................................................................................14
(i) Business Practices, Advertising and Programs.........................................................14
(j) Compliance with Laws, Rules and Regulations..........................................................14
(k) Indemnification by the Company.......................................................................15
7. DEALER'S RESPONSIBILITIES WITH RESPECT TO HOURS OF BUSINESS.............................................16
8. PURCHASES FROM OTHERS AND SALES TO OTHERS...............................................................16
9. DETERMINATION OF DEALER REPRESENTATION..................................................................16
(a) Representation Planning..............................................................................16
(b) Information to Dealer................................................................................16
(c) Additional Dealers...................................................................................17
(d) Established Dealer Points............................................................................17
i
Paragraph Page
10. PRICES AND CHARGES......................................................................................17
11. TERMS AND TITLE.........................................................................................18
(a) Payment..............................................................................................18
(b) Title................................................................................................18
(c) Risk of Loss and Claims..............................................................................18
(d) Demurrage and Diversion Liability....................................................................18
(e) State and Local Taxes................................................................................19
12. RECORDS, INSPECTIONS AND TESTS..........................................................................19
(a) Record Retention.....................................................................................19
(b) Inspections and Tests................................................................................19
13. CHANGES IN COMPANY PRODUCTS.............................................................................19
14. DEALER NOT AGENT OF THE COMPANY.........................................................................20
15. TRADEMARKS AND TRADE NAMES..............................................................................20
(a) Use in Firm Name.....................................................................................20
(b) Limitations on Use...................................................................................20
16. REPORTS TO FORD MOTOR COMPANY'S DEALER POLICY BOARD.....................................................20
17. TERMINATION OR NONRENEWAL OF AGREEMENT..................................................................21
(a) By Dealer............................................................................................21
(b) By Company Due to Events Controlled by Dealer........................................................21
(c) By Company for Nonperformance by Dealer of Sales, Service, Facilities or Other Responsibilities......22
(d) By Company or Dealer Because of Death or Physical or Mental Incapacity of any Principal Owner........23
(e) By Company or Dealer for Failure of Dealer or Company to be Licensed.................................23
(f) By Company at Will...................................................................................24
(g) By Company Upon the Offer of a New Agreement.........................................................24
(h) Acts in Good Faith...................................................................................24
18. REQUIRED APPEAL TO POLICY BOARD--TERMINATIONS OR NONRENEWALS----OPTIONAL ARBITRATION PLAN...............25
(a) Arbitration Plan.....................................................................................25
(b) Appeal to Policy Board...............................................................................25
(c) Optional Arbitration.................................................................................25
(d) Limitation of Actions................................................................................26
(e) Expenses of Arbitration..............................................................................26
19. OBLIGATIONS UPON TERMINATION OR NONRENEWALS.............................................................27
(a) Sums Owing the Company...............................................................................27
(b) Discontinuance of Use of Trademarks and Trade Names..................................................27
(c) Warranty Work........................................................................................28
(d) Service Records......................................................................................28
(e) Orders and Customer Deposits.........................................................................28
(f) Deliveries After Termination or Nonrenewal...........................................................28
20. SUCCESSOR TO THE DEALER IN THE EVENT OF DEATH OR INCAPACITY.............................................29
(a) Interim Agreement....................................................................................29
(b) Buy-out..............................................................................................31
(c) Term/Continuation....................................................................................31
(d) Limitation of Offer..................................................................................31
(e) Limitation for Acceptance............................................................................32
ii
Paragraph Page
21. REACQUISITION OF COMPANY PRODUCTS AND ACQUISITION OF THE DEALER'S SIGNS, SPECIAL TOOLS AND
EQUIPMENT, AND MAINTENANCE ITEMS 33
(a) Vehicles.............................................................................................32
(b) Genuine Parts........................................................................................32
(c) Dealer's Signs.......................................................................................32
(d) Special Tools and Equipment..........................................................................33
(e) Procedure Delivery and Title.........................................................................33
(f) Payment..............................................................................................33
(g) Assignment of Benefits...............................................................................34
22. DEALERSHIP FACILITIES ASSISTANCE UPON NONRENEWAL OR CERTAIN TERMINATIONS BY THE COMPANY.................34
(a) Dealer Eligibility...................................................................................34
(b) Eligible Facilities..................................................................................35
(c) Company's Obligation.................................................................................35
(d) Limitations on Company's Obligation..................................................................36
(e) Satisfaction of Company's Obligation.................................................................36
23. TERMINATION BENEFITS FULL COMPENSATION; GENERAL RELEASE.................................................37
24. DISPOSITION OF THE DEALER'S ASSETS......................................................................37
(a) Company Right to Approve Change in Ownership.........................................................37
(b) Company Right to First Refusal to Purchase...........................................................38
25. NEW AGREEMENT...........................................................................................39
26. ACKNOWLEDGEMENTS........................................................................................39
27. NO IMPLIED WAIVERS......................................................................................40
28. RELATIONS AFTER TERMINATION NOT A RENEWAL...............................................................40
29. LIMITATION OF THE COMPANIES LIABILITY...................................................................40
30. NOTICES.................................................................................................40
31. AMENDMENT...............................................................................................41
32. MICHIGAN AGREEMENT......................................................................................41
33. CONFLICT WITH STATUTE...................................................................................41
iii
FORD MOTOR COMPANY
FORD SALES AND SERVICE AGREEMENT
STANDARD PROVISIONS
1. DEFINITIONS
As used herein, the following terms shall have the following meanings,
respectively:
(A) "COMPANY PRODUCTS" shall mean such
(1) new passenger cars,
(2) new trucks and chassis, excluding all trucks and chassis of series
850 or higher designations, and
(3) parts and accessories therefor,
as from time to time are offered for sale by the Company to all authorized Ford
dealers as such for resale, plus such other products as may be offered for sale
by the Company to the Dealer from time to time. The Company reserves the right
to offer any new, different and differently designated passenger car, truck or
chassis, and any other product, bearing any trademarks or brand names used or
claimed by the Company or any of its subsidiaries, including the name "Ford",
to selected authorized Ford dealers or others under existing or separate new
agreements; provided, however, that the Company shall not franchise any such
new passenger car bearing the name "Ford" (other than the Ford script-in-oval
corporate form of trademark) to anyone who is not an authorized Ford dealer.
(B) "CAR" shall mean any passenger car, and "TRUCK" shall mean any
truck or chassis, included in this agreement pursuant to paragraph 1(a) above.
"VEHICLE" shall mean any CAR or TRUCK and "VEHICLES" shall mean CARS and
TRUCKS.
(C) "COMPETITIVE CARS" and "COMPETITIVE TRUCKS" shall mean those new
cars and new trucks, respectively, not marketed by the Company which are
selected by the Company as generally comparable with CARS and TRUCKS,
respectively, in price and product characteristics.
(D) "INDUSTRY CARS" and "INDUSTRY TRUCKS" shall mean all new cars and
all new trucks, respectively, of all manufacturers to the extent data therefor
are reasonably available.
(E) "GENUINE PARTS" shall mean such parts, accessories and equipment
for VEHICLES as are offered for sale by the Company from time to time to the
Dealer.
(F) "DEALER PRICE" shall mean, with respect to each COMPANY PRODUCT to
which it refers, the price to the Dealer for such product, as from time to time
established by the Company, before deduction of any cash or other discount
applicable thereto. It shall not include any amount in the nature of a
predelivery or other holdback deposit or charge, any dealer association
collection, any charge by the Company for distribution, delivery or taxes, or
any other charge for special items or services.
(G) "VEHICLE TERMS OF SALE BULLETIN" shall mean the latest VEHICLE
TERMS OF SALE BULLETIN and amendments thereto furnished to the Dealer from time
to time by the Company setting forth the terms of sale and ordering procedures
applicable to sales of VEHICLES to authorized Ford dealers.
(H) "PARTS AND ACCESSORIES TERMS OF SALE BULLETIN" shall mean the
latest PARTS AND ACCESSORIES TERMS OF SALE BULLETIN and amendments thereto
furnished to the Dealer from time to time by the Company setting forth the
terms of sale and ordering procedures applicable to sales of GENUINE PARTS to
authorized Ford dealers.
(I) "CUSTOMER SERVICE BULLETIN" shall mean the latest CUSTOMER SERVICE
BULLETIN and amendments thereto furnished to the Dealer from time to time by
the Company establishing standards for authorized Ford dealers with respect to
service personnel, training, tools and equipment, for customer handling
procedures and for evaluating the Dealer's service performance.
(J) "DEALER'S LOCALITY" shall mean the locality designated in writing
to the Dealer by the Company from time to time as the area of the Dealer's
sales and service responsibility for COMPANY PRODUCTS.
(K) "DEALERSHIP LOCATION" shall mean the place or places of business
of the Dealer for carrying out this agreement which are approved by the Company
as provided in paragraph 5 of this agreement.
(L) "DEALERSHIP FACILITIES" shall mean the land areas, buildings and
improvements established at the DEALERSHIP LOCATION in accordance with the
provisions of paragraph 5 of this agreement.
(M) "DEALERSHIP OPERATIONS" shall mean the sale of COMPANY PRODUCTS
and used vehicles, service operations and (if the Dealer so elects) rental or
leasing of VEHICLES, conducted by the Dealer at or from the DEALERSHIP
FACILITIES.
-2-
(N) "CAR PLANNING VOLUME" and "TRUCK PLANNING VOLUME" shall mean the
average annual estimated sales base for CARS and TRUCKS, respectively,
established by the Company for the Dealer from time to time for planning
purposes under its standard procedures for authorized Ford dealers in single or
multiple DEALERS' LOCALITIES, as the case may be, based on historical sales and
registrations, and current trends, in CARS, TRUCKS, COMPETITIVE CARS and TRUCKS
and INDUSTRY CARS and TRUCKS in the DEALER'S LOCALITY. Consideration shall also
be given to the environs of the DEALERSHIP LOCATION and market trends therein,
consumer shopping habits, demographic factors and other appropriate data to the
extent available and pertinent. Such terms shall not represent the actual sales
volumes to be achieved by the Dealer to meet his responsibilities under
paragraph 2 of this agreement.
(O) "PERCENT RESPONSIBILITY" shall mean the ratio of the Dealer's CAR
PLANNING VOLUME, and of the Dealer's TRUCK PLANNING VOLUME, to the total CAR
PLANNING VOLUMES and to the total TRUCK PLANNING VOLUMES, respectively, for all
authorized Ford dealers M" the DEALER'S LOCALITY.
(P) "UIO" (units in operation) shall mean the CARS and TRUCKS of the
next preceding three or more model years (as determined by the Company from
time to time) licensed within the DEALER'S LOCALITY at a given time multiplied
by the Dealer's PERCENT RESPONSIBILITY therefor.
(Q) "GUIDES" shall mean such reasonable standards as may be
established by the Company for the Dealer from time to time under its standard
procedures for authorized Ford dealers (i) for DEALERSHIP FACILITIES and
equipment, capitalization and net working capital based on such factors as CAR
and TRUCK PLANNING VOLUMES, UIO, the DEALER'S LOCALITY and (ii) for
inventories, personnel, demonstrators and other elements of DEALERSHIP
OPERATIONS based on such factors as sales and service volumes.
2. RESPONSIBILITIES WITH RESPECT TO VEHICLES
(A) SALES. The Dealer shall promote vigorously and aggressively
the sale at retail (and, if the Dealer elects, the leasing and rental) of CARS
and TRUCKS to private and fleet customers within the DEALER'S LOCALITY, and
shall develop energetically and satisfactorily the potentials for such sales
and obtain a reasonable share thereof; but the Dealer shall not be limited to
the DEALER'S LOCALITY in making sales. To this end, the Dealer shall develop,
maintain and direct a trained, quality vehicle sales organization and shall
conduct throughout each model year aggressive advertising and sales promotion
activities, making use to the greatest feasible extent of the Company's
advertising and sales promotion programs relating to VEHICLES.
-3-
The Dealer's performance of his sales responsibility for CARS
shall be measured by such reasonable criteria as the Company may develop from
time to time, including:
(1) Dealer's sales of CARS to private and fleet users located in the
DEALER'S LOCALITY as a percentage of:
(i) all private and all fleet registrations of CARS in the
DEALER'S LOCALITY,
(ii) all private and all fleet registrations of COMPETITIVE CARS
in the DEALER'S LOCALITY,
(iii) all private and all fleet registrations of INDUSTRY CARS in
the DEALER'S LOCALITY, and
(iv) the private and fleet sales objectives for CARS established
by the Company for the Dealer from time to time.
(2) If the Dealer is not the only authorized dealer in CARS in the
DEALER'S LOCALITY, the following factors shall be used in
computing percentages pursuant to 2(a)(1) above:
(i) The Dealer's sales of CARS to users located in the DEALER'S
LOCALITY shall be deemed to be the total registrations
thereof in the DEALER'S LOCALITY multiplied by the Dealer's
percent of sales of all CARS made by all authorized Ford
dealers located in the DEALER'S LOCALITY unless the Dealer
or the Company shows that the Dealer actually has made a
different number of such sales,
(ii) The registrations of CARS and COMPETITIVE and INDUSTRY CARS
in the DEALER'S LOCALITY against which the Dealer shall be
measured shall be the total thereof multiplied by the
Dealer's PERCENT RESPONSIBILITY, and
(iii) The Dealer's objectives for CARS shall be the total
objectives therefor of all authorized Ford dealers in the
DEALER'S LOCALITY multiplied by the Dealer's PERCENT
RESPONSIBILITY.
(3) A comparison of each such percentage with percentages similarly
obtained for all other authorized Ford dealers combined in the
Company's sales zone and district in which the Dealer is located,
and where subparagraph 2(a)(2) applies,
-4-
for all other authorized Ford dealers combined in the DEALER'S
LOCALITY.
(4) In evaluating any comparisons provided for in subparagraph 2(a)(3)
above, the Company shall give consideration to the availability of
CARS to the Dealer and other authorized Ford dealers and any
special local marketing conditions that might affect the Dealer's
sales performance differently from the sales performance of
COMPETITIVE or INDUSTRY CAR dealers or other authorized Ford
dealers.
(5) The sales and registration data referred to in this subparagraph
2(a) shall include sales to and registrations in the name of
leasing and daily rental operations and shall be those utilized in
the Company's records or in reports furnished to the Company by
independent sources selected by it and generally available for
such purpose in the automotive industry. In the event such reports
of the registrations and/or sales of INDUSTRY or COMPETITIVE CARS
in the DEALER'S LOCALITY are not generally available, the
evaluation of the Dealer's sales performance shall be based on
such registrations and/or sales or purchase data as can be
reasonably obtained by the Company.
The Dealer's performance of his sales responsibility for TRUCKS shall
be determined in the same manner as for CARS.
The Company will provide to the Dealer an evaluation of his
performance under this subparagraph (2)(a) from time to time as initiated by
the Company, or not more than once a month upon the written request of the
Dealer.
(B) ORDERS.
(1) To enable the Company to plan for and establish, and its
manufacturing sources to carry out, production schedules, the
Dealer shall, on the dates and forms provided by the Company,
furnish the Company basic orders for types of VEHICLES and
specific orders for individual VEHICLES against the applicable
basic order as specified in the applicable VEHICLE TERMS OF
SALE BULLETIN.
(2) The Company is authorized to have installed on any VEHICLE
ordered by the Dealer any equipment or accessory required by
any applicable federal, state or local law, rule, or
regulation.
-5-
(3) Any order for a VEHICLE not shipped during the month for
which delivery was scheduled will remain in effect unless
canceled by the Dealer or the Company by written notice to the
other. An order for an "off standard" VEHICLE may be canceled
only by or with the consent of the Company. Any VEHICLE which
differs from the Company's standard specifications, or which
incorporates special equipment, shall be considered an "off
standard" VEHICLE.
(4) The Dealer shall not be liable to the Company for any failure
to accept shipments of VEHICLES ordered from the Company where
such failure is due to any labor difficulty at the DEALERSHIP
LOCATION or to any cause beyond the Dealer's control or
without the Dealer's fault or negligence.
(C) CONSIDERATION OF ORDERS.
(1) The Company may reject orders not submitted in accordance
with subparagraph 2(b)(1) above. The Company shall make
reasonable efforts to fill each order of the Dealer that is
accepted by the Company. During any period of shortage of any
VEHICLE, the Company shall be entitled to give priority to
accepted orders for such VEHICLES for resale to users residing
within the DEALER'S LOCALITY of the ordering dealer.
(2) The Company shall not be liable to the Dealer in any respect
for failure to ship or for delay in shipment of accepted
orders for VEHICLES where such failure or delay is due wholly
or in part to (i) shortage or curtailment of material, labor,
transportation, or utility services, (ii) any labor or
production difficulty in any of its own or any of its
suppliers' locations, (iii) any governmental action, or (iv)
any cause beyond the Company's control or without its fault or
negligence.
(D) STOCKS. The Dealer shall maintain stocks of current models of such
lines or series of VEHICLES, of an assortment and in quantities as are in
accordance with Company GUIDES therefor, or adequate to meet the Dealer's share
of current and anticipated demand for VEHICLES in the DEALER'S LOCALITY. The
Dealer's maintenance of VEHICLE stocks shall be subject to the Company's
filling the Dealer's orders therefor.
(E) DEMONSTRATORS. The Dealer shall maintain at all times in good
condition and running order for demonstration and loan to prospective
purchasers, such numbers of the latest model of such
-6-
lines or series of VEHICLES as are in accordance with Company GUIDES therefor.
(F) FACTORY SUGGESTED PRICE LABELS. If any CAR is delivered by the
Company to the Dealer with an incorrect label, or without a completed label,
affixed thereto pursuant to the Federal Automobile Information Disclosure Act,
the Dealer shall promptly complete and affix to such CAR a correct label on the
form and in accordance with the directions furnished by the Company.
(G) OWNER LITERATURE. The Dealer shall, in accordance with the
Company's instructions, complete, execute and deliver to each retail purchaser
of a VEHICLE from him the Company's then current publications for owners with
respect to the operation, maintenance and warranty of that VEHICLE (hereinafter
called "Owner's Literature"). The Dealer shall fulfill promptly all dealer
responsibilities under each piece of the Owner's Literature delivered by him.
The Company may specify in the Owner's Literature that the Dealer will perform
certain inspections of the VEHICLE. The Dealer authorizes the Company to charge
his account for work done by another Company authorized CAR or TRUCK dealer
under the Owner's Literature delivered by the Dealer, and to credit his account
for work done by him under Owner's Literature delivered by another Company
authorized CAR or TRUCK dealer. The charge or credit shall be in the amount
specified by the Company from time to time.
(H) REBATES AND ALLOWANCES. The Dealer shall be entitled to such
rebates and allowances from the Company on VEHICLES and factory-installed
options, subject to such conditions and procedures, as may be specified in the
applicable VEHICLE TERMS OF SALE BULLETIN or other notice pertaining thereto
sent to the Dealer by the Company, provided that any change in the model
close-out allowance shall be announced to the Dealer prior to the Company's
solicitation of the build-out order.
(I) WARRANTY. The Company shall from time to time establish, by notice
to the Dealer, the warranty to the owner applicable to each VEHICLE. There
shall be NO OTHER WARRANTY, express or implied, including any warranty of
MERCHANTABILITY OR FITNESS, or any other obligation of the Company to the
Dealer or the owner with respect to the VEHICLE or any part thereof except the
warranty established pursuant to this subparagraph. The Dealer shall expressly
incorporate such warranty as a part of each buyer's order form or other
contract for the sale of a VEHICLE and shall deliver a copy of the warranty,
in. the form furnished by the Company, to the owner at the time the VEHICLE is
delivered to the owner, all in accordance with instructions set forth in the
Company's then current Warranty and Policy Manual and supplements thereto
(hereinafter called "Warranty Manual").
-7-
3. RESPONSIBILITIES WITH RESPECT TO GENUINE PARTS
(A) SALES. The Dealer shall promote vigorously and aggressively the
sale of GENUINE PARTS to service, wholesale and other customers within the
DEALER'S LOCALITY, and shall develop energetically and satisfactorily the
potentials for such sale and obtain a reasonable share thereof; but the Dealer
shall not be limited to the DEALER'S LOCALITY in making sales. To this end, the
Dealer shall develop, maintain and direct a trained quality parts sales
organization and shall conduct aggressive advertising and sales promotion
activities, making use to the greatest feasible extent of the Company's
advertising and sales promotion programs relating to GENUINE PARTS. The Dealer
shall not sell or offer for sale or use in the repair of any COMPANY PRODUCT,
as a GENUINE PART, any part or accessory that is not in fact a GENUINE PART.
The Dealer's performance of his sales responsibility for GENUINE PARTS
shall be measured by such reasonable criteria as the Company may develop from
time to time including:
(1) His sales as a percentage of the sales objectives established
for him by the Company from time to time, and his sales per
UIO, and
(2) A comparison of such percentage and sales per UIO with the
percentage similarly obtained and sales per UIO of all other
authorized Ford dealers combined in one or more of the
following: (i) the DEALER'S LOCALITY, (ii) the Company's
sales or service zone, and (iii) the district in which the
Dealer is located, as the Company may determine.
(B) ORDERS.
(1) Stock orders for the Dealer's requirements of GENUINE PARTS
shall be furnished to the Company by the Dealer in accordance
with the applicable PARTS AND ACCESSORIES TERMS OF SALE
BULLETIN.
(2) Any order for a GENUINE PART not shipped in accordance with
normal shipping schedules will remain in effect unless
cancelled by the Dealer or the Company by written notice to
the other.
(3) The Dealer shall not be liable to the Company for any failure
to accept shipment of GENUINE PARTS ordered from the Company
where such failure is due to any labor difficulty in the
Dealer's place of business or to any cause beyond the
Dealer's control or without the Dealer's fault or negligence.
-8-
(C) CONSIDERATION OF ORDERS.
(1) The Company shall make reasonable efforts to fill each order
of the Dealer that is accepted by the Company.
(2) The Company shall not be liable to the Dealer in any respect
for failure to ship or for delay in shipment of accepted
orders for GENUINE PARTS where such failure or delay is due
wholly or in part to (i) shortage or curtailment of material,
labor, transportation or utility services, (ii) any labor or
production difficulty in any of its own or any of its
suppliers' locations, (iii) any governmental action or (iv)
any cause beyond the Company's control or without its fault
or negligence.
(D) STOCKS. The Dealer shall maintain a stock of parts, including
GENUINE PARTS, in accordance with Company GUIDES therefor, and of an assortment
in quantities adequate to meet the current and anticipated demand therefor. The
Dealer's maintenance of stocks of GENUINE PARTS shall be subject to the
Company's filling the Dealer's orders therefor.
(E) RETURNS AND ALLOWANCES. The Dealer shall be entitled to such
allowances, discounts, incentives and return privileges from the Company on
GENUINE PARTS subject to such conditions and procedures as may be specified in
the applicable PARTS AND ACCESSORIES TERMS OF SALE BULLETIN or other notice
pertaining thereto sent to the Dealer by the Company.
(F) WARRANTY. The Company shall from time to time establish, by notice
to the Dealer, the warranty applicable to each GENUINE PART. There shall be NO
OTHER WARRANTY, express or implied, including any warranty of MERCHANTABILITY
OR FITNESS, or any other obligation of the Company to the Dealer or the
customer with respect to any GENUINE PART or any part thereof except the
warranty established pursuant to this subparagraph. The Dealer shall expressly
incorporate such warranty as a part of each sale of a GENUINE PART, in
accordance with instructions set forth in the Warranty Manual.
4. RESPONSIBILITIES WITH RESPECT TO SERVICE
The Dealer shall develop, maintain and direct a trained, quality
service organization and render at the DEALERSHIP FACILITIES prompt,
workmanlike, courteous and willing service to owners and users of COMPANY
PRODUCTS, in accordance with the standards and procedures set forth in the
applicable CUSTOMER SERVICE BULLETIN, including without limitation all service
to which a purchaser of a COMPANY PRODUCT from any authorized Ford dealer may
be entitled.
-9-
(A) PREDELIVERY SERVICE. The Dealer shall perform or be responsible
for the performance of such inspection, conditioning and repair of each VEHICLE
before delivery as may be prescribed for such VEHICLE in the Company's
applicable predelivery inspection and conditioning schedules furnished by the
Company to the Dealer. The Dealer shall maintain or be responsible for the
maintenance of adequate records of all predelivery inspection, conditioning and
repair work performed by or for the Dealer.
(B) WARRANTY AND POLICY AND CAMPAIGN SERVICE.
(1) The Dealer shall perform all warranty and policy service on
each COMPANY PRODUCT it is certified to sell and service,
presented by owners, in accordance with the warranty and
policy applicable thereto and the applicable provisions of
the Warranty Manual and CUSTOMER SERVICE BULLETIN.
(2) The Dealer shall perform campaign inspections and/or
corrections for owners and users of all VEHICLES, subject to
the campaign instructions issued by the Company from time to
time and the applicable provisions of the Warranty Manual.
The Company may ship parts in quantity to the Dealer to
effect such campaign work and if such parts are in excess of
the Dealer's requirements, the Dealer may return unused parts
to the Company for credit after completion of the campaign.
(3) The Dealer shall use only GENUINE PARTS in performing
warranty, policy and campaign work, except as otherwise
provided in the Warranty Manual, CUSTOMER SERVICE BULLETIN or
campaign instructions, and shall give precedence to all such
work over other service work if the use of the vehicle is
impaired. The Dealer shall promptly report to the Company,
and seek the Company's assistance with respect to, any
warranty or policy or campaign work which cannot be performed
to the owner's or the Dealer's satisfaction. The Company
shall give precedence to such requests over other service
assistance. The Dealer shall provide the owner with a copy of
the repair order for such work itemizing the work performed.
The Dealer shall have such repair order signed by the owner
except in unusual circumstances where it is not feasible to
obtain such signature.
(4) The Dealer shall submit claims to the Company for
reimbursement for the parts and labor used in performing
warranty, policy and campaign work and the Company shall
reimburse the Dealer therefor,
-10-
in accordance with the provisions of the Warranty Manual or
campaign instructions and the Dealer's approved warranty
labor rate. The Dealer shall maintain adequate records and
documents supporting such claims in accordance with the
provisions of the Warranty Manual.
(C) MAINTENANCE AND REPAIR SERVICE. The Dealer shall perform all other
maintenance and repair services, including, where feasible, body repair
services, reasonably required by owners and users of VEHICLES and shall provide
each customer a copy of the repair order itemizing the work performed and the
charges therefor. The Dealer shall have the customer sign such repair order
except in unusual circumstances where it is not feasible to obtain such
signature.
(D) SERVICE TOOLS AND EQUIPMENT. The Dealer shall acquire and maintain
for use in DEALERSHIP OPERATIONS such diagnostic equipment and other tools,
equipment and machinery, comparable to the type and quality recommended by the
Company from time to time, as are necessary to meet the Dealer's service
responsibilities hereunder and substantially in accordance with Company GUIDES
therefor and the applicable CUSTOMER SERVICE BULLETIN.
5. RESPONSIBILITIES WITH RESPECT TO DEALERSHIP FACILITIES
(A) LOCATIONS AND FACILITIES. The Dealer shall establish and maintain
at the DEALERSHIP LOCATION approved by the Company DEALERSHIP FACILITIES of
satisfactory appearance and condition and adequate to meet the Dealer's
responsibilities under this agreement. The DEALERSHIP FACILITIES shall be
substantially in accordance with the GUIDES therefor established by the Company
from time to time.
(B) DEALERSHIP FACILITIES SUPPLEMENT. The Dealer and the Company have
executed, as a part of and simultaneously with this agreement, a Dealership
Facilities Supplement which includes a description of all of the DEALERSHIP
LOCATION and FACILITIES, the GUIDES therefor as of the date of this agreement
and the purpose for which each shall be used.
(C) CHANGES AND ADDITIONS. The Dealer shall not move or substantially
modify or change the usage of any of the DEALERSHIP LOCATION or FACILITIES for
COMPANY PRODUCTS, nor shall the Dealer or any person named in subparagraphs
F(i) or F(ii) hereof directly or indirectly establish or operate in whole or in
part any other locations or facilities for the sale or service of COMPANY
PRODUCTS or the sale of used vehicles without the prior written consent of the
Company. Any such change shall be evidenced by a new Dealership Facilities
Supplement executed by the Dealer and the Company. To ensure that all data
included on the Dealership Facilities Supplement are reasonably accurate, the
-11-
Company and the Dealer shall execute a new Dealership Facilities Supplement at
least once every five (5) years.
(D) COMPANY ASSISTANCE. To assist the Dealer in planning, establishing
and maintaining DEALERSHIP LOCATION and FACILITIES in accordance with his
responsibilities under this agreement, the Company will make available, at the
request of the Dealer, and at a mutually convenient time and place, personnel
to provide counsel and advice regarding location and facility planning,
including layout and design.
(E) FULFILLMENT OF RESPONSIBILITY. The Dealer shall be deemed to be
fulfilling his responsibilities under this paragraph 5 when and as long as the
DEALERSHIP LOCATION is approved by the Company and the DEALERSHIP FACILITIES
are substantially in accordance with the current GUIDES therefor. The execution
of this agreement or of any Dealership Facilities Supplement shall not of
itself be construed as evidence of the fulfillment by the Dealer of his
responsibilities to provide adequate DEALERSHIP LOCATION and FACILITIES.
6. OTHER DEALER AND COMPANY RESPONSIBILITIES
(A) SIGNS. The Dealer shall install and maintain at the DEALERSHIP
LOCATION signs of good appearance and adequate to identify such locations as
(1) authorized sales and service establishments for VEHICLES and other COMPANY
PRODUCTS identifying such products as products of the Company, (2) authorized
sales locations for used vehicles and (3) authorized locations for the leasing
or rental of vehicles, as the case may be. Each sign shall be compatible with
the design standards established by the Company from time to time and shall be
subject to the Company's approval with respect to any display of any trademark
or trade name used or claimed by the Company or any of its subsidiaries.
Fulfillment of any separate Dealership Identification Agreement between the
Dealer and the Company shall be deemed fulfillment of this subparagraph 6(a).
The Company will make available, at the request of the Dealer, and at a
mutually convenient time and place, personnel to provide counsel and advice
regarding dealership signs and identification.
(B) PERSONNEL. The Dealer shall employ and train such numbers and
classifications of competent personnel of good character, including, without
limitation, sales, parts, service, owner relations and other department
managers, salesmen and service technicians, as will enable the Dealer to
fulfill all his responsibilities under this agreement. The Company shall
provide assistance to the Dealer in determining personnel requirements. In
response to the training needs of the Dealer's personnel, the Dealer at his
expense shall cause his personnel to attend training schools or courses
conducted by the Company from time to time.
-12-
(C) DEALER RESIDENCE. Effective operation of the Dealer's business is
dependent in large part on the Dealer's management becoming a part of and
accepted within his local community. Accordingly, each person named in
subparagraph F(ii) hereof shall (unless otherwise approved in writing by the
Company because of individual circumstances) reside within the DEALER'S
LOCALITY.
(D) CAPITAL. The Dealer shall at all times maintain and employ in
connection with his DEALERSHIP OPERATIONS separately from any other business of
the Dealer, such total investment, net working capital, adequate lines of
wholesale credit and competitive retail financing plans for VEHICLES as are in
accordance with Company GUIDES therefor and will enable the Dealer to fulfill
all his responsibilities under this agreement.
(E) ACCOUNTING SYSTEM. It is in the mutual interests of the Dealer and
the Company that uniform accounting systems and practices be maintained by the
Company's authorized dealers in order that the Company may develop and
disseminate helpful information, evaluate the relative operating performance of
each dealer and develop criteria that will enable the Company to formulate
plans and policies in the interests of its dealers and the Company and that
will assist each dealer to obtain satisfactory results from his dealership
operations. Accordingly, the Dealer shall install and use in his DEALERSHIP
OPERATIONS, whether conducted as one or several business entities, an
accounting system, not exclusive of any other system the Dealer may wish to
use, in accordance with the Company's Manual of Dealer Accounting Procedures as
amended from time to time.
(F) FINANCIAL REPORTS. In furtherance of the mutual interests set
forth in paragraph 6(e) hereof, the Dealer shall furnish to the Company each
month, at the time and on the forms prescribed by the Company, a complete
statement reflecting the true financial condition and the month and
year-to-date operating results of his DEALERSHIP OPERATIONS as of the end of
the preceding month. The Dealer also shall promptly furnish to the Company a
copy of any adjusted annual statement that may be prepared by or for the
Dealer. All such statements, reports and data shall be based whenever
applicable upon the accounting system installed and used by the Dealer in
accordance with subparagraph 6(e). Financial information furnished by the
Dealer shall be handled on a confidential basis by the Company and, unless
authorized by the Dealer or required by law, or offered in evidence in judicial
or arbitration proceedings, shall not be furnished, except as an unidentified
part of a composite or coded report, to any party outside of the Company.
(G) DELIVERY AND SALES REPORTS. To assist the Company in evaluating
current sales and market trends, in advising its manufacturing sources of
adjustments desired in production and distribution schedules, and in providing
the type of information
-13-
necessary to provide assistance and counsel to the Dealer, the Dealer shall (1)
accurately complete the information prescribed on the vehicle delivery card and
forward such card to the Company at or as soon as reasonably possible after the
end of the day on which the new VEHICLE is delivered or sold, whichever shall
occur first, to the private or fleet customer or to rental or leasing
operations, if any, conducted or controlled by the Dealer, and (2) furnish the
Company with accurate and complete delivery or sales reports and data relating
to the Dealer and his DEALERSHIP OPERATIONS at the times and on such forms as
the Company may specify from time to time.
(H) CUSTOMER HANDLING. The Dealer shall cooperate with Company
programs, and develop and maintain his own programs, designed to develop good
relationships between the Dealer and the public. The Dealer shall promptly
investigate and handle all matters brought to his attention by the Company or
the public relating to the sale or servicing of COMPANY PRODUCTS in the
DEALER'S LOCALITY, in accordance with procedures set forth in the applicable
CUSTOM SERVICE BULLETIN, so as to develop public confidence in the Dealer, the
Company and COMPANY PRODUCTS. The Dealer shall report promptly to the Company
the details of each inquiry or complaint received by the Dealer relating to any
COMPANY PRODUCT which the Dealer cannot handle satisfactorily. The Dealer shall
not make, directly or indirectly, any false or misleading statement or
representation to any customer as to any VEHICLE, GENUINE PART or other COMPANY
PRODUCT as to the source, condition or capabilities thereof, or the Dealer's or
the Company's prices or charges therefor or for distribution, delivery, taxes
or other items.
(I) BUSINESS PRACTICES, ADVERTISING AND PROGRAMS. The Dealer shall
conduct DEALERSHIP OPERATIONS in a manner that will reflect favorably at all
times on the reputation of the Dealer, other Company authorized dealers, the
Company, COMPANY PRODUCTS and trademarks and trade names used or claimed by the
Company or any of its subsidiaries. The Dealer shall avoid in every way any
"bait", deceptive, misleading, confusing or illegal advertising or business
practice. The Company shall not publish or employ any such advertising or
practice or encourage any dealer or group of dealers to do so.
(J) COMPLIANCE WITH LAWS, RULES AND REGULATIONS. The Dealer shall
comply with all applicable federal, state, and local laws, rules and
regulations in the ordering, sale and service of COMPANY PRODUCTS and the sale
and service of used vehicles, including without limitation those related to
motor vehicle safety, emissions control and customer service. The Company shall
provide the Dealer, and the Dealer shall provide the Company, such information
and assistance as may be reasonably requested by the other in connection with
the performance of obligations under such laws, rules and regulations.
-14-
(K) INDEMNIFICATION BY THE COMPANY. The Company shall defend,
indemnify, hold harmless and protect the Dealer from any losses, damages or
expense, including costs and attorney's fees, resulting from or related to
lawsuits, complaints or claims commenced against the Dealer by third parties
concerning:
(1) Property damage to a COMPANY PRODUCT or bodily injury or
property damage arising out of an occurrence caused solely by
a "production defect" in that product (i.e., due to defective
materials or workmanship utilized or performed at the
factory, except for any "production defect" in tires and
diesel engines made by others, provided, however, that the
"production defect" could not have been discovered by the
Dealer in the reasonable pre-delivery inspection of the
VEHICLE, as recommended by the Company.
(2) Property damage to a COMPANY PRODUCT or bodily injury or
property damage arising out of an occurrence caused solely by
a defect in the design of that product, except for a defect
in the design of tires or diesel engines made by others.
(3) Any damage occurring to a new VEHICLE, and repaired by the
Company (excluding removal and replacement of an entire
component with a like component where no welding, riveting or
painting is involved), from the time the VEHICLE leaves the
Company's assembly plant or warehouse to the time it is
delivered to the Dealer's designated location, provided the
Company failed to notify the Dealer in writing of such damage
and repair in transit prior to delivery of the VEHICLE to the
first retail customer.
In the event that any legal action arising out of any of
these causes is brought against the Dealer, the Company shall
undertake, at its sole expense, to defend said action on
behalf of the Dealer when requested to do so by the Dealer,
provided that the Dealer promptly notifies the Company in
writing of the commencement of the action against the Dealer
and cooperates fully in the defense of the action in such
manner and to such extent as the Company may reasonably
require (provided, however, that the Company shall have the
right to continue the suit in the name of the Dealer, if the
Company deems such action to be necessary). Should the
Company refuse to undertake the defense on behalf of the
Dealer, or fail to undertake an adequate defense, the Dealer
may conduct its own defense and the Company shall be liable
for the
-15-
cost of such defense, including reasonable attorney's fees,
together with any verdict, judgment or settlement paid by the
Dealer (provided, however, that the Dealer shall notify the
Company within a reasonable period of any such settlement).
(4) Personal injury or property damage arising solely out of a
negligent or improper act of an employee of the Company.
7. DEALER'S RESPONSIBILITIES WITH RESPECT TO HOURS OF BUSINESS
To the end that the needs of customers and owners served by the Dealer
are fulfilled properly, the Dealer shall maintain DEALERSHIP OPERATIONS open
for business during all hours and days which are customary in the trade and
lawful for such operations in the DEALER'S LOCALITY.
8. PURCHASES FROM OTHERS AND SALES TO OTHERS
The Dealer reserves the right to make purchases from others without
obligation or liability of any kind to the Company, provided that the Dealer
shall not be relieved of any responsibility assumed by the Dealer under this
agreement; and, except as otherwise expressly provided herein, the Company
reserves the right to make sales to others (including without limitation to
other dealers) without obligation or liability of any kind to the Dealer.
9. DETERMINATION OF DEALER REPRESENTATION
(A) REPRESENTATION PLANNING. The Company reserves the right to
determine, from time to time, in its best judgment, the numbers, locations and
sizes of authorized dealers necessary for proper and satisfactory sales and
service representation for COMPANY PRODUCTS within and without the DEALER'S
LOCALITY. In making such determinations, the Company from time to time
conducts, to the extent deemed adequate by the Company and subject to the ready
availability of information, studies of the locality, including such factors as
its geographic characteristics, consumer shopping habits, competitive
representation patterns, sales and service requirements, convenience of
customers or potential customers and past and future growth and other trends in
marketing conditions, population, income, UIO, VEHICLE sales and registrations
and COMPETITIVE and INDUSTRY CAR and TRUCK registrations.
(B) INFORMATION TO DEALER. The Company will inform the Dealer of any
proposed change in the Company's market representation plans for the DEALER'S
LOCALITY, provided that if the Company's market representation plans do not
provide for the continuation of representation of COMPANY PRODUCTS from the
-16-
Dealer's DEALERSHIP FACILITIES (except for a relocation thereof), the Company
shall not be obligated to inform other dealers thereof, but shall give the
Dealer written notice thereof. If, in the Company's opinion, such changes
should be disclosed to other dealers in connection with the Company's market
representation plans for their respective DEALERSHIP OPERATIONS, the Company
may inform such other dealers thereof, without liability to the Dealer, no
earlier than thirty (30) days after such notice to the Dealer and shall inform
such other dealers that the Dealer may maintain his DEALERSHIP OPERATIONS for
so long as the Dealer desires and fulfills his responsibilities under this
agreement.
(C) ADDITIONAL DEALERS. The Company shall have the right to appoint
additional dealers in VEHICLES within or without the DEALER'S LOCALITY except
that, if an additional dealer will be within the DEALER'S LOCALITY and within
ten (10) miles driving distance of the Dealer's principal place of business,
the Company shall not appoint the additional dealer unless a study made
pursuant to subparagraph 9(a) reasonably demonstrates, in the Company's
opinion, that such appointment is necessary to provide VEHICLES with proper
sales and service representation in such locality with due regard to the
factors referred to above in subparagraph 9(a). The Company by written notice
to the Dealer will give the Dealer thirty (30) days in which to review the
applicable study (excluding information regarding other dealers considered
confidential by the Company), to discuss such additional dealer with
representatives of the Company and to give the Company written notice of
objection to the proposed addition. If the Dealer fails to give such written
notice by such time, he shall be deemed to have consented to the proposed
addition. The Company will give consideration to any such written objection and
advise the Dealer in writing of its decision before any commitment is made or
negotiations conducted with any dealer prospect. If the Dealer appeals to the
Dealer Policy Board within fifteen (15) days of such decision, no action will
be taken by the Company until the Dealer Policy Board has rendered a decision
on the matter.
(D) ESTABLISHED DEALER POINTS.
Nothing in this paragraph 9 shall restrict the right of the Company to
appoint a dealer in VEHICLES as a replacement for a dealer in VEHICLES, or to
fill an established open point for a dealer in VEHICLES, at or near a location
previously approved by the Company.
10. PRICES AND CHARGES
Sales of COMPANY PRODUCTS by the Company to the Dealer hereunder will
be made in accordance with the prices, charges, discounts and other terms of
sale set forth in price schedules or other notices published by the Company to
the Dealer from time to
-17-
time in accordance with the applicable VEHICLE TERMS OF SALE BULLETIN or PARTS
AND ACCESSORIES TERMS OF SALE BULLETIN. Except as otherwise specified in
writing by the Company, such prices, charges, discounts and terms of sale shall
be those in effect, and delivery to the Dealer shall be deemed to have been
made and the order deemed to have been filled on the date of delivery to the
carrier or the Dealer, whichever occurs first. The Company has the right at any
time and from time to time to change or eliminate prices, charges, discounts,
allowances, rebates, refunds or other terms of sale affecting COMPANY PRODUCTS
by issuing a new VEHICLE or PARTS AND ACCESSORIES TERMS OF SALE BULLETIN, new
price schedules or other notices. In the event the Company shall increase the
DEALER PRICE for any COMPANY PRODUCT, the Dealer shall have the right to
cancel, by notice to the Company within ten (10) days after receipt by the
Dealer of notice of such increase, any orders for such product placed by the
Dealer with the Company prior to receipt by the Dealer of notice of such
increase and unfilled at the time of receipt by the Company of such notice of
cancellation.
11. TERMS AND TITLE
(A) PAYMENT. Payment by the Dealer for each COMPANY PRODUCT shall be
in accordance with the terms and conditions set forth in the applicable VEHICLE
or PARTS AND ACCESSORIES TERMS OF SALE BULLETIN.
(B) TITLE. Title to each COMPANY PRODUCT purchased by the Dealer shall
(unless otherwise provided in the applicable VEHICLE or PARTS AND ACCESSORIES
TERMS OF SALE BULLETIN) pass to the Dealer, or to such financing institution or
other party as may have been designated to the Company by the Dealer, upon
delivery thereof to the carrier or to the Dealer, whichever occurs first, but
the Company shall retain a security interest in and right to repossess any
product until paid therefor.
(C) RISK OF LOSS AND CLAIMS. The Company shall assume all risk of loss
or damage to any VEHICLE purchased by the Dealer from the Company which is not
borne by the carrier while the VEHICLE is in the possession of the carrier
provided the Dealer properly inspects and records any loss or damage of the
VEHICLE upon receipt thereof. The Dealer shall cooperate with the Company in
processing all claims for loss or damage of the VEHICLE in accordance with the
Company's then current procedures.
(D) DEMURRAGE AND DIVERSION LIABILITY. The Dealer shall be responsible
for and pay any and all demurrage, storage and other charges accruing after
arrival of any shipment at its destination. In the event the Dealer shall fail
or refuse for any reason (other than labor difficulty in the Dealer's place of
business or any cause beyond the Dealer's control or without the Dealer's fault
or negligence) to accept delivery of any COMPANY PRODUCT ordered by the Dealer,
the Dealer shall also pay the
-18-
Company the amount of all expenses incurred by the Company in shipping such
product to the Dealer and in returning such product to the original shipping
point or diverting it to another destination; but in no event shall the Dealer
pay the Company more for any such diversion than the expense of returning the
product to its original shipping point.
(E) STATE AND LOCAL TAXES. The Dealer hereby represents and warrants
that all COMPANY PRODUCTS purchased from the Company are purchased for resale
in the ordinary course of the Dealer's business. The Dealer further represents
and warrants that the Dealer has complied with all requirements for his
collection and/or payment of applicable sales, use and like taxes, and has
furnished or will furnish evidence thereof to the Company. These
representations and warranties shall be deemed a part of each order given by
the Dealer to the Company.
The Dealer agrees that, as to any COMPANY PRODUCT put to a taxable use
by the Dealer, or in fact purchased by the Dealer other than for resale, the
Dealer shall make timely and proper return and payment of all applicable sales,
use and like taxes, and shall hold the Company harmless from all claims and
demands therefor.
12. RECORDS, INSPECTIONS AND TESTS
(A) RECORD RETENTION. The Dealer shall retain for at least two (2)
years all records and documents, including journals and ledgers, which relate
in any way, in whole or in part, to DEALERSHIP OPERATIONS, except for records
used as a basis for submission of warranty and policy claims, which shall be
retained for at least one (1) year.
(B) INSPECTIONS AND TESTS. The Dealer shall allow persons designated
by the Company, at reasonable times and intervals and during normal business
hours, to examine the DEALERSHIP FACIL1TIES and OPERATIONS, the Dealer's stocks
of COMPANY PRODUCTS and used vehicles and vehicles at the DEALERSHIP FACILITIES
for service or repair, to test the Dealer's equipment, to check and instruct
the Dealer and his employees in the proper handling of warranty and other
repairs and claims based thereon, and to examine, copy and audit any and all of
the Dealer's records and documents. The Company may charge back to the Dealer
all payments or credits made by the Company to the Dealer pursuant to such
claims or otherwise which were improperly claimed or paid.
13. CHANGES IN COMPANY PRODUCTS
The Company may change the design of any COMPANY PRODUCT, or add any
new or different COMPANY PRODUCT or line, series or body style of VEHICLES, at
any time and from time to time, without notice or obligation to the Dealer,
including any obligation with
-19-
respect to any COMPANY PRODUCT theretofore ordered or purchased by or delivered
to the Dealer. Such changes shall not be considered model year changes as
contemplated by the provisions of any VEHICLE TERMS OF SALE BULLETIN. The
Company may discontinue any VEHICLE or other COMPANY PRODUCT at any time
without liability to the Dealer.
14. DEALER NOT AGENT OF THE COMPANY
This agreement does not in any way create the relationship of
principal and agent between the Company and the Dealer and under no
circumstances shall the Dealer be considered to be an agent of the Company. The
Dealer shall not act or attempt to act, or represent himself, directly or by
implication, as agent of the Company or in any manner assume or create any
obligation on behalf of or in the name of the Company.
15. TRADEMARKS AND TRADE NAMES
(A) USE IN FIRM NAME. The Dealer may not use any trademark or trade
name used or claimed by the Company or any of its subsidiaries in the Dealer's
firm name or trade name except with the Company's prior written approval. If,
after such approval, the Company should at any time so request, the Dealer
shall promptly discontinue such use and take all steps necessary or appropriate
in the opinion of the Company to eliminate such trademark or trade name from
the Dealer's firm name or trade name.
(B) LIMITATIONS ON USE. The Dealer shall not use any trademark or
trade name used or claimed by the Company or any of its subsidiaries, or coined
words or combinations containing the same or parts thereof, in connection with
any business conducted by the Dealer other than in dealing in COMPANY PRODUCTS
to which such trademark or trade name refers, and then only in the manner and
form approved by the Company; provided that the word "Ford" may be used in
connection with a business operated by or affiliated with the Dealer as the
Dealer's used vehicle outlet if the Dealer obtains the Company's prior written
approval, which may be revoked at any time, and if the Dealer retains the right
to require any such affiliated business to discontinue such use at any time the
Dealer may direct. The Dealer shall direct such discontinuance on request of
the Company at any time.
The Dealer shall not contest the right of the Company to exclusive use
of any trademark or trade name used or claimed by the Company or any of its
subsidiaries.
16. REPORTS TO FORD MOTOR COMPANY'S DEALER POLICY BOARD
In the interest of maintaining harmonious relationships between the
parties to this agreement, the Dealer shall report promptly in writing to the
Company's Dealer Policy Board
-20-
(hereafter called "Policy Board") any act or failure to act on the part of the
Company or any of its representatives which the Dealer believes was not in
accordance with this agreement or was not reasonable, fair, for good cause or
provocation or in good faith as to the Dealer. For the purposes of this
agreement, the term "good faith" shall mean the Company and its representatives
acting in a fair and equitable manner toward the Dealer so as to guarantee the
Dealer freedom from coercion or intimidation from the Company. It is the
purpose of the Policy Board to receive, carefully evaluate and, to the extent
possible, resolve any such claim to the mutual satisfaction of the parties. Any
decision of the Policy Board shall be binding on the Company but shall not be
binding on the Dealer.
17. TERMINATION OR NONRENEWAL OF AGREEMENT
(A) BY DEALER. The Dealer may terminate or not renew this agreement at
any time at will by giving the Company at least thirty (30) days prior written
notice thereof.
(B) BY COMPANY DUE TO EVENTS CONTROLLED BY DEALER. The following
represent events which are substantially within the control of the Dealer and
over which the Company has no control, and which are so contrary to the intent
and purpose of this agreement as to warrant its termination or nonrenewal
(1) Any transfer or attempted transfer by the Dealer of any
interest in, or right, privilege or obligation under this
agreement; or transfer by operation of law or otherwise, of
the principal assets of the Dealer that are required for the
conduct of DEALERSHIP OPERATIONS; or any change, however
accomplished, without the Company's prior written consent,
which consent shall not be unreasonably withheld, in the
direct or indirect ownership or operating management of the
Dealer as set forth in paragraph F.
(2) Any misrepresentation in applying for this agreement by the
Dealer or any person named in paragraph F; or submission by
the Dealer to the Company of any false or fraudulent
application or claim, or statement in support thereof, for
warranty, policy or campaign adjustments, for wholesale parts
or VEHICLE sales incentives or for any other refund, credit,
rebate, incentive, allowance, discount, reimbursement or
payment under any Company program; or acceptance by the
Dealer of any payment for any work not performed by the
Dealer in accordance with the provisions of this agreement,
the Warranty Manual or any applicable CUSTOMER SERVICE
BULLETIN.
-21-
(3) Insolvency of the Dealer, inability of the Dealer to meet
debts as they mature, filing by the Dealer of a voluntary
petition under any bankruptcy or receivership law,
adjudication of the Dealer as a bankrupt or insolvent
pursuant to an involuntary petition under any such law,
appointment by a court of a temporary or permanent receiver,
trustee or custodian for the Dealer or the Dealer's assets,
or execution of an assignment by the Dealer for the benefit
of creditors; dissolution of the Dealer; or failure of the
Dealer for any reason to function in the ordinary course of
business, or to maintain the DEALERSHIP OPERATIONS open for
business during and for not less than the hours customary in
the trade and lawful in the DEALER'S LOCALITY as set forth in
paragraph 7.
(4) Conviction in a court of original jurisdiction of the Dealer
or any person named in paragraph F for any violation of law,
or any conduct by any such person unbecoming a reputable
businessman, or disagreement between or among any persons
named in paragraph F, which in the Company's opinion tends to
affect adversely the operation or business of the Dealer or
the good name, goodwill or reputation of the Dealer, other
authorized dealers of the Company, the Company, or COMPANY
PRODUCTS.
(5) The Dealer shall have engaged, after written warning by the
Company, in any advertising or business practice contrary to
the provisions of subparagraph 6(i) of this agreement.
(6) Failure of the Dealer to fulfill any provision of paragraph
10 (as to prices or charges), or paragraph 11 (as to terms
and title, including payment for COMPANY PRODUCTS), or
paragraph 15 (as to trademarks or trade names), or to pay the
Company any sum due pursuant to any agreement, including any
purchase or lease agreement, between the Company and the
Dealer.
Upon occurrence of any of the foregoing events, the Company may
terminate this agreement by giving the Dealer at least fifteen (15) days prior
written notice thereof.
(C) BY COMPANY FOR NONPERFORMANCE BY DEALER OF SALES, SERVICE,
FACILITIES OR OTHER RESPONSIBILITIES. If the Dealer shall fail to fulfill any
of his responsibilities with respect to:
-22-
(1) CARS or TRUCKS under the provisions of paragraph 2 of this
agreement,
(2) GENUINE PARTS under the provisions of paragraph 3 of this
agreement,
(3) Service under the provisions of paragraph 4 of this
agreement,
(4) DEALERSHIP LOCATION or FACILITIES under the provisions of
paragraph 5 of this agreement, or
(5) Other responsibilities under the provisions of subparagraphs
6(a) through 6(h) (as to signs, personnel residence, capital,
accounting system, financial reports, delivery or sales
reports or customer handling), subparagraph 6(j) (as to laws,
rules or regulations), paragraph 12 (as to records,
inspections and tests) or paragraph 14 (as to the Dealer not
being an agent of the Company) of this agreement,
the Company shall notify the Dealer in writing of such failure or failures,
will offer to review promptly with the Dealer the reasons which, in the
Company's or Dealer's opinion, account for such failure or failures and will
provide the Dealer with a reasonable opportunity to cure the same. If the
Dealer fails or refuses to cure the same within a reasonable time after such
notice, the Company may terminate or not renew this agreement by giving the
Dealer at least ninety (90) days prior written notice thereof.
(D) BY COMPANY OR DEALER BECAUSE OF DEATH OR PHYSICAL OR MENTAL
INCAPACITY OF ANY PRINCIPAL OWNER Since this agreement has been entered into by
the Company in reliance upon the continued participation in the ownership of
the Dealer by the persons named in subparagraph F(i) hereof, the Company or the
Dealer may (subject to the provisions of paragraph 20 hereof) terminate or not
renew this agreement, by giving the other at least fifteen (15) days prior
written notice thereof, in the event of the death or physical or mental
incapacity of any owner of the Dealer named in subparagraph F(i); provided,
however, that in order to facilitate orderly termination and liquidation of the
dealership, the Company shall defer for a period of three (3) months to one (1)
year, as the Company may determine, the exercise of its right to terminate in
such event if the executor or representative of such deceased or incapacitated
owner shall so request and shall demonstrate the ability to carry out the terms
and conditions of this agreement.
(E) BY COMPANY OR DEALER FOR FAILURE OF DEALER OR COMPANY TO BE
LICENSED. If the Company or the Dealer requires a license for the performance
of any responsibility under this agreement in
-23-
any jurisdiction where this agreement is to be performed and if either party
shall fail to secure and maintain such license, or if such license is suspended
or revoked, irrespective of the cause or reason, either party may terminate or
not renew this agreement by giving the other at least fifteen (15) days prior
written notice thereof.
(F) BY COMPANY AT WILL. If this agreement is not for a stated term
specified in paragraph G of this agreement, the Company may terminate this
agreement at will at any time by giving the Dealer at least one hundred and
twenty (120) days prior written notice thereof.
(G) BY COMPANY UPON THE OFFER OF A NEW AGREEMENT. The Company may
terminate this agreement at any time by giving the Dealer at least thirty (30)
days prior written notice thereof in the event the Company offers a new or
amended form of agreement to its authorized dealers in COMPANY PRODUCTS.
(H) ACTS IN GOOD FAITH.
(1) The Dealer acknowledges that each of his responsibilities
under this agreement is reasonable, proper and fundamental to
the purpose of this agreement and that (i) his failure to
fulfill any of them would constitute a material breach of
this agreement, (ii) the occurrence of any of the events set
forth in subparagraph 17(b), 17(c), or 17(e) would seriously
impair fundamental considerations upon which this agreement
is based, and (iii) the rights of termination or nonrenewal
reserved in the events specified in subparagraph 17(g) are
necessary to permit the Company to remain competitive at all
times. The Dealer acknowledges that any such failure,
occurrence or event constitutes a reasonable, fair, good, due
and just cause and provocation for termination or nonrenewal
of this agreement by the Company.
(2) The Dealer agrees that if the Company or any of its
representatives (i) requests the Dealer to fulfill any of
such responsibilities, (ii) believes that any such failure,
occurrence or event is occurring or has occurred and advises
the Dealer that, unless remedied, such failure, occurrence or
event may result in Company termination or nonrenewal of this
agreement, (iii) gives the Dealer notice of termination or
nonrenewal, or terminates or falls to renew this agreement,
because of any such failure, occurrence or event, then such
request, advice, notice, termination or nonrenewal shall not
be considered to constitute or be evidence of coercion or
-24-
intimidation, or threat thereof, or to be unreasonable,
unfair, undue or unjust, or to be not in good faith.
18. REQUIRED APPEAL TO POLICY BOARD--TERMINATIONS OR NONRENEWALS--OPTIONAL
ARBITRATION PLAN
(A) ARBITRATION PLAN. The Company has adopted the Ford Motor Company
Plan and Rules of Arbitration ("Arbitration Plan") effective June 1, 1972, a
copy of which was delivered to the Dealer with this agreement. The Company
reserves the right to terminate, change or modify the Arbitration Plan at any
time upon notice to the Dealer. Any arbitration pursuant to the Arbitration
Plan shall be governed by the terms of the Arbitration Plan in effect on the
date such arbitration is commenced.
(B) APPEAL TO POLICY BOARD. Any protest, controversy or claim by the
Dealer (whether for damages, stay of action or otherwise) with respect to any
termination or nonrenewal of this agreement by the Company or the settlement of
the accounts of the Dealer with the Company after any termination or nonrenewal
of this agreement by the Company or the Dealer has become effective, shall be
appealed by the Dealer to the Policy Board within fifteen (15) days after the
Dealer's receipt of notice of termination or nonrenewal, or, as to settlement
of accounts after termination or nonrenewal, within one year after the
termination or nonrenewal has become effective. Appeal to the Policy Board
shall be a condition precedent to the Dealer's right to pursue any other remedy
available under this agreement or otherwise available under law. The Company,
but not the Dealer, shall be bound by the decision of the Policy Board.
(C) OPTIONAL ARBITRATION. If the Dealer is dissatisfied with the
decision of the Policy Board in a case referred to in subparagraph 18(b), the
Dealer may, at his option, elect to arbitrate in accordance with the
Arbitration Plan or elect not to arbitrate and retain the right to pursue
whatever other remedies may be available, provided that:
(1) The Dealer's election to arbitrate shall be made by filing an
Arbitration Demand with the Secretary appointed under the
Arbitration Plan within thirty (30) days after receipt by the
Dealer of a decision by the Policy Board. The Arbitration
Demand shall set forth a clear and complete statement of the
nature of the Dealer's claim and the basis thereof, the
amount involved, if any, and the remedy sought. The
Arbitration Demand shall be in writing and shall be given by
personal delivery or sent by registered or certified mail,
postage prepaid, to the Secretary, Arbitration
-25-
Panel, Ford Motor Company, at the address shown in the Plan
and Rules of Arbitration.
(2) If the Dealer, by filing a timely Arbitration Demand, elects
to arbitrate, arbitration shall be the sole and exclusive
remedy of the Dealer in such cases, and the decision and
award of the Arbitration Panel provided for in the
Arbitration Plan shall be final and binding on both parties.
(3) If the Dealer elects to arbitrate, either party may enjoin
the other from pursuing any other remedy in such cases,
except that either party may sue to enforce any order or
award of the Arbitration Panel and judgment upon such order
or award may be entered by any court having jurisdiction.
(D) LIMITATION OF ACTIONS. If the Dealer elects not to arbitrate by
failing to file a timely Arbitration Demand, all causes of action at law or in
equity and all rights and remedies before federal, state, or local
administrative agencies, departments or boards shall be forever barred unless
commenced or instituted within one year after the date of the decision of the
Policy Board.
(E) EXPENSES OF ARBITRATION. During the first quarter of each calendar
year, the Company and the Chairmen of the Ford and Lincoln-Mercury National
Dealer Councils ("Dealer Council Chairmen") shall jointly establish a budget
for that calendar year for the retainer fees, daily few, clerical costs, travel
expenses and living allowances Compansation") of the Arbitrator selected by the
Dealer Council Chairmen, for one-half of the Compensation of the Arbitrator
selected as Chairman of the Arbitration Panel, and for one-half of the cost of
outside services employed by the Arbitration Panel, pursuant to the Arbitration
Plan.
(1) The amount of such budget shall be advanced by the Company to
a Trustee selected by the Company and the Dealer Council
Chairmen. The Trustee shall pay the Compensation of the
Arbitrator selected by the Dealer Council Chairmen, one-half
of the Compensation of the Chairman of the Arbitration Panel,
and one-half of the cost of outside services employed by the
Arbitration Panel, as statements are rendered therefor, from
and to the extent of such advance. All other costs of the
Arbitration Panel for that calendar year shall be borne by
the Company except as hereinafter provided. Any unexpended
portion of such budget shall be carried forward to the next
calendar year.
-26-
(2) The amount of such budget shall be spread in equal amounts
among all dealerships then having valid and outstanding Ford,
Mercury or Lincoln Sales and Service Agreements with the
Company ("Authorized Dealers"). Such equal amount shall be
charged to each Authorized Dealer. The Dealer shall promptly
pay the amount so charged.
(3) Each party shall pay and bear all costs of any witness called
or other evidence adduced by that party, of any attorney,
accountant or other person retained by that party and of any
transcript ordered by that party in connection with any
arbitration under the Arbitration Plan.
(4) The Arbitration Panel, as a part of any award, may assess,
against any party or parties to an arbitration under the
Arbitration Plan, all or any part of the costs of any witness
called, any other evidence adduced, or any outside service
employed, at the direct request of any Arbitrator.
19. OBLIGATIONS UPON TERMINATION OR NONRENEWALS
Upon termination or nonrenewal of this agreement by either party, the
Dealer shall cease to be an authorized Ford dealer; and:
(A) SUMS OWING THE COMPANY. The Dealer shall pay to the Company
all sums owing to the Company by the Dealer.
(B) DISCONTINUANCE OF USE OF TRADEMARKS AND TRADE NAMES. The Dealer
shall at his own expense (1) remove all signs erected or used by the Dealer, or
by any business associated or affiliated with the Dealer, and bearing the name
"Ford" or any other trademark or trade name used or claimed by the Company or
any of its subsidiaries (except signs owned by the Company and except as such
use may be permitted under other agreements relating to products of the Company
other than COMPANY PRODUCTS) or any word indicating that the Dealer is an
authorized dealer with respect to any COMPANY PRODUCT, (2) erase or obliterate
all such trademarks, trade names and words from stationery, forms and other
papers used by the Dealer, or any business affiliated with the Dealer, (3)
discontinue all advertising of the Dealer as an authorized dealer in COMPANY
PRODUCTS, (4) discontinue any use of any such trademark, trade name or word in
the Dealer's firm or trade name and take all steps necessary or appropriate in
the opinion of the Company to change such firm or trade name to eliminate any
such trademark, trade name or word therefrom, and (5) refrain from doing
anything whether or not specified above that would indicate that the Dealer is
or was an authorized Dealer in COMPANY PRODUCTS.
-27-
If the Dealer fails to comply with any of the requirements of this
subparagraph 19(b), the Dealer shall reimburse the Company for all costs and
expenses, including reasonable attorney's fees, incurred by the Company in
effecting or enforcing compliance.
(C) WARRANTY WORK. The Dealer shall cease to be eligible to receive
reimbursement from the Company with respect to any work thereafter performed or
part thereafter supplied under any warranty or policy applicable to any COMPANY
PRODUCT, unless specifically authorized by the Company in writing to perform
such work and then only in the manner and for the period of time set forth in
such authorization.
(D) SERVICE RECORDS. The Dealer shall deliver to the Company or its
nominee all of the Dealer's records with respect to predelivery, warranty,
policy, campaign and other service work of the Dealer.
(E) ORDERS AND CUSTOMER DEPOSITS. The Dealer shall assign to the
Company or its nominee all customer orders for COMPANY PRODUCTS which the
Dealer has not filled and which the Company is not obligated by subparagraph
19(f) to supply to the Dealer, and all customer deposits made thereon; and
deliver to the Company or its nominee the names and addresses of the Dealer's
existing and prospective customers for COMPANY PRODUCTS.
(F) DELIVERIES AFTER TERMINATION OR NONRENEWAL. If this agreement
shall be terminated or not renewed by the Company (1) because of the death or
physical or mental in capacity of any principal owner of Dealer pursuant to
subparagraph 17(d) hereof, or (2) at will pursuant to subparagraph 17(f)
hereof, the Company shall use its best efforts to fill the Dealer's bona fide
orders for COMPANY PRODUCTS outstanding on the effective date of termination or
nonrenewal. The Company's fulfillment of such orders for VEHICLES, however, may
be limited to the number and type of VEHICLES delivered to the Dealer by the
COMPANY during the ninety (90) days immediately preceding such date, or the
number and type of bona fide retail orders for VEHICLES accepted by the Dealer
and unfilled on such date, whichever is smaller. Deliveries under this
subparagraph shall be made in substantial accord with the Company's normal
delivery schedules for the area, unless the Company ejects to make all such
deliveries within thirty (30) days after the effective date of termination. The
Dealer shall inspect, condition and repair such VEHICLES in the manner
specified in this agreement and in accordance with procedures outlined by the
Company from time to time.
Except for deliveries required by this subparagraph 19(f), each order
for a COMPANY PRODUCT received by the Company from the Dealer and unfilled on
the effective date of termination or expiration of this agreement shall be
deemed cancelled.
-28-
20. SUCCESSOR TO THE DEALER IN THE EVENT OF DEATH OR INCAPACITY
In the event of termination or nonrenewal of this agreement by the
Company pursuant to subparagraph 17(d) because of the death or physical or
mental incapacity of a principal owner of the Dealer named in subparagraph F(i)
hereof:
(A) INTERIM AGREEMENT. The Company, subject to the other provisions of
this paragraph, shall offer an Interim Ford Sales and Service Agreement for
COMPANY PRODUCTS:
(1) To a successor dealership composed of the last person
nominated by such principal owner as his successor, together
with any other principal and remaining owners named in
subparagraphs, F(i) and F(iii) (hereafter called "Other
Owners") hereof, provided that:
(i) The nomination had been submitted to the Company in
writing on the form supplied by the Company with the
consent of the Other Owners prior to such death or the
occurrence of such incapacity, and
(ii) The Company, upon receipt of the nomination had accepted
the nominee as then being qualified (or as capable of
becoming qualified in five (5) years), and at the time
the notice of termination or nonrenewal is given,
approves the nominee as then being qualified, to assume
full managerial authority for the DEALERSHIP OPERATIONS,
which acceptance or approval shall not be unreasonably
withheld, and
(iii) The nominee has been named as a manager of, and has
been actively participating in the general management of,
the Dealer or a satisfactorily performing automotive or
comparable retail business for a reasonable period of
time prior to the time of the notice of termination or
nonrenewal, and
(iv) The successor dealership, at the time the Interim
Agreement is to be offered, has capital and facilities
substantially in accordance with Company GUIDES therefor,
and
(v) In the event more than one nominee fulfills the above
conditions, the Company, in its discretion, shall
determine which nominee or nominees, together with the
Other Owners, shall compose the successor dealership
-29-
towhich such Interim Agreement shall be offered;
(2) To a successor dealership, in the event that any principal
owner has notified the Company in writing that the spouse or
another relative or heir of such principal owner shall retain
or acquire a financial interest in the successor dealership
and the Company has approved such spouse, relative or heir
for such financial interest which approval shall not be
unreasonably withheld. Such successor dealership shall be
composed of such spouse, relative or heir, together with the
Other Owners and any nominee or nominee approved and
qualified pursuant to subparagraph 20(a)(1) hereof, provided
that:
(i) The Other Owners and any nominees and such spouse,
relative or heir agree in writing how each of them shall
participate in the ownership and management of the
successor dealership, and
(ii) Managerial authority, and responsibility of the
successor dealership shall be vested in a nominee
approved and qualified pursuant to subparagraph 20(a)(1)
hereof, or in a person or persons who have been named in
subparagraph F(ii) of this agreement and have been
actually participating in the general management of the
Dealer for a reasonable period of time prior to the
notice of termination or nonrenewal or in another person
or persons qualified to same managerial authority and
responsibility and approved by the Company to he so
named, which approval shall not be unreasonably withheld,
and
(iii) The successor dealership, at the time the Interim
Agreement is to be offered has capital and facilities
substantially in accordance with Company GUIDES therefor;
(3) To a successor dealership in the event that the deceased or
incapacitated Principal owner has neither nominated a
successor pursuant to subparagraph 20(a)(1) hereof, nor
notified the Company of a retained or acquired financial
interest pursuant to subparagraph 20(a)(2) hereof which
successor dealership shall be composed of the Other Owners;
provided that the Other Owners agree in writing how each of
them shall
-30-
participate in the ownership and management of the successor
dealership and the successor dealership fulfills the
conditions set forth in subparagraphs 20(a) (2) (ii) and
(iii) of this agreement
(B) BUY-OUT. The successor dealership named in such Interim Agreement
shall arrange in writing, subject to the approval of the Company which shall
not be unreasonably withheld, for one or more persons named in subparagraph
F(ii) of the Interim Agreement to have the right acquire during its term at
least a 20% ownership interest in the successor dealership and, if the
successor dealership is offered a standard Sales and Service Agreement for
COMPANY PRODUCTS at the expiration of the Interim Agreement, to have the right
to acquire additional ownership interests therein during the first five (5)
years of such standard agreement and, at the end of such five (5) years, to
acquire the entire ownership interest therein.
(C) TERM/CONTINUATION. Any Interim Agreement offered pursuant to this
paragraph 20 shall be in the form in effect between the Company and its
authorized dealers in COMPANY PRODUCTS at the time of such offer, and the term
of such Interim Agreement shall be for twenty-four (24) months, or such longer
term as the Company shall determine to be reasonable to permit the person or
persons named in subparagraph F(i) thereof to acquire a 20% ownership interest
in the successor dealership pursuant to subparagraph 20(b) of this agreement,
subject to termination during such term as provided in such Interim Agreement.
At least ninety (90) days prior to the end of the term of such Interim
Agreement, the Company shall determine whether or not the person or persons
composing the successor dealership with which such Interim Agreement shall have
been executed possess the qualifications with respect to management, capital
and facilities necessary to fulfill the responsibilities of an authorized
dealer in COMPANY PRODUCTS and, if the Company shall determine that they do
possess the same, which determination shall not be unreasonably made, the
Company shall offer to such successor dealership, upon the expiration of the
term of the Interim Agreement, a standard Sales and Service Agreement for
COMPANY PRODUCTS in the form then in effect.
(D) LIMITATION OF OFFER. Notwithstanding anything stated or implied to
the contrary in this paragraph 20, the Company shall not be obligated to offer
an Interim Agreement to any successor dealership if the Company has notified
the Dealer in writing prior to such death or physical or mental incapacity that
the Company's market representation plans do not provide for continuation of
representation from the DEALERSHIP FACILITIES as determined by the Company
under paragraph 9 of this agreement. If such market representation plans
provide for the relocation of the Dealer to another location, however, the
Company shall offer an Interim Agreement subject to the condition that the
successor
-31-
dealership relocate within a reasonable time to such other location
in facilities approved by the Company.
(E) LIMITATION FOR ACCEPTANCE. In the event that the person or persons
composing a proposed successor dealership to which any offer of an Interim
Agreement or Standard Sales and Service Agreement for COMPANY PRODUCTS shall
have been made pursuant to this paragraph 20, shall not accept the same within
thirty (30) days after notification to them of such offer, such offer shall
automatically expire.
21. REACQUISITION OF COMPANY PRODUCTS AND ACQUISITION OF THE DEALER'S SIGNS,
SPECIAL TOOLS AND EQUIPMENT, AND MAINTENANCE ITEMS
Upon termination or nonrenewal of this agreement by the Company, the
Dealer may elect as provided in paragraph 23 or, upon termination or nonrenewal
of this agreement by the Dealer, the Dealer may demand in his notice of
termination or nonrenewal, to have the Company purchase or accept upon return
from the Dealer, in return for his general release specified in paragraph 23:
(A) VEHICLES. Each unused, undamaged and unsold VEHICLE (together with
all factory-installed options thereon) in the Dealer's stock on the effective
date of such termination or nonrenewal, provided such VEHICLE is in first-class
salable condition, is of a then current model has not been altered outside the
Company's factory, and was purchased by the Dealer from the Company or another
authorized dealer in VEHICLES prior to giving or receiving notice of such
termination or nonrenewal. The price for such VEHICLE shall be its DEALER
PRICE, plus the Company's charges for distribution, delivery and taxes, at the
time it was purchased from the Company, less all allowances paid or applicable
allowances offered thereon by the Company.
(B) GENUINE PARTS. Each unused, undamaged and unsold GENUINE PART, and
each unopened item of appearance and maintenance materials and paints
(hereinafter called "maintenance items") in the Dealer's stock on the effective
date of such termination or nonrenewal, provided such GENUINE PART or
maintenance item is offered for sale by the Company to authorized dealers in
VEHICLES in the Company's then current Parts and Accessories Price Schedules,
is in first-class salable condition, including reasonably legible and usable
packaging and was purchased by the Dealer from the Company or another Company
authorized dealer in normal volume prior to giving or receiving notice of such
termination or nonrenewal. Notwithstanding the foregoing, the repurchase of
such GENUINE PARTS identified by the Company as accessories shall be limited to
those so purchased by the Dealer within twelve (12) months preceding such date,
or those sold to the Dealer by the Company for use in a VEHICLE that is a
current model on such effective date. The price for each
-32-
such GENUINE PART or maintenance item shall be its DEALER PRICE in effect on
the effective date of termination or nonrenewal, less all allowances paid or
applicable allowances offered thereon by the Company. The Dealer, at his own
expense, shall carefully pack and box such of the eligible GENUINE PARTS and
maintenance items as the Company may direct, and the Company shall pay the
Dealer an additional five percent (5%) of the DEALER PRICE of the eligible
GENUINE PARTS and maintenance items so packaged and boxed.
(C) DEALER'S SIGNS. Each sign at DEALERSHIP LOCATION which bears a
trademark or trade name used or claimed by the Company or any of its
subsidiaries, is owned by the Dealer on the effective date of termination or
nonrenewal, was approved by the Company pursuant to subparagraph 6(a) and, if
requested by the Company, is removed by the Dealer at his expense. The price
for each such sign shall be its fair market value on such effective date as
agreed by the Company and the Dealer, or, if they cannot agree, is determined
by a qualified independent appraiser selected by the Company and the Dealer.
(D) SPECIAL TOOLS AND EQUIPMENT. All special tools and automotive
service equipment owned by the Dealer on the effective date of termination or
nonrenewal which were designed especially for servicing VEHICLES, which are of
the type recommended in writing by the Company and designated as "special"
tools and equipment in the applicable CUSTOMER SERVICE BULLETIN or other notice
pertaining thereto sent to the Dealer by the Company, which are in usable and
good condition except for reasonable wear and tear, and which were purchased by
the Dealer within the three (3) year period preceding the effective date of
termination or nonrenewal. The price for each special tool and item of
automotive service equipment shall be its fair market value on such effective
date as agreed by the Company and the Dealer, or, if they cannot agree, as
determined by a qualified independent appraiser selected by the Company and the
Dealer.
(E) PROCEDURE DELIVERY AND TITLE. The Dealer shall return all property
to be Purchased or acquired by the Company pursuant to this paragraph 21 in
accordance with the Procedures and timetables then established by the Company,
shall deliver such property at the DEALERSHIP FACILITY unless the Company
directs otherwise (in which event the Company shall pay transportation costs to
the place of delivery), shall and hereby does warrant good clear title to all
such property, and shall furnish to the Company evidence satisfactory to the
Company that the Dealer has complied with all applicable bulk sales laws and
that such property is free and clear of all claims liens and encumbrances.
(F) PAYMENT. The Company shall pay the Dealer for the property
purchased or acquired by it pursuant to this paragraph 21 within a reasonable
time following the Dealer's fulfillment of all of the Dealer's obligations
under paragraph 19 and this
-33-
paragraph 21 subject to the Dealer's tender of a
general release as specified in paragraph 23, and further subject to offset of
any obligations owing by the Dealer to the Company. If the Company has not paid
the Dealer the net amount due the Dealer for such property within a period of
two (2) months after the Dealer has famed his obligations under this paragraph
21 and provided the Dealer has fully complied with Paragraphs 19 and 23, the
Company will, at the Dealers request advance the Dealer seventy-five percent
(75%) of the estimated amount due the Dealer net of any monies; owed to the
Company by the Dealer. The Company will pay the balance of such amount as soon
as practical thereafter.
(G) ASSIGNMENT OF BENEFITS. As an assist to the Dealer in effecting an
orderly transfer of his assets to a replacement dealer and to minimize possible
interruptions in customer convenience and service, in the event of termination
or nonrenewal by either party, any rights or benefits with respect to
subparagraphs 21(a), 21(b), 21(c) and 21(d), herein may be assigned by the
Dealer to anyone to whom the Dealer has agreed to sell the respective property
and whom the Company has approved as a replacement for the Dealer. Such
assignments will be subject to Dealer's fulfillment of his obligations under
paragraph 19 and this paragraph 21 and subject to the Dealer's tender of a
general release as specified in paragraph 23.
22. DEALERSHIP FACILITIES ASSISTANCE UPON NONRENEWAL OR CERTAIN TERMINATIONS
BY THE COMPANY
(A) DEALER ELIGIBILITY. The Dealer may elect, as provided in paragraph
23, to have the Company assist the Dealer with respect to the Dealer's Eligible
Facilities (as herein defined), in return for the Dealer's general release as
specified in paragraph 23, upon nonrenewal of this agreement by the Company, or
upon termination of this agreement by the Company, for the following reasons:
(1) Because of disagreement among persons named in paragraphs
pursuant to subparagraph 17(b)(4) or because of the Dealer's
failure with respect to prices or charges, terms or title or
trademarks or trade names, or other sums due the Company
pursuant to subparagraph 17(b)(6);
(2) Because of the Dealer's nonperformance of his
responsibilities set forth in paragraphs 2, 3, 4 or 6
pursuant to subparagraph 17(c);
(3) Because of the death or physical or mental incapacity of a
principal owner named in subparagraph F(i) pursuant to
subparagraph 17(d) providing that a successor dealership is
not appointed as provided under paragraph 20;
-34-
(4) Because of failure of the Dealer or the Company to be
licensed pursuant to subparagraph 17(e); or
(5) At will pursuant to subparagraph 17(f) if this agreement is
not for a stated term specified in paragraph G of this
agreement
(B) ELIGIBLE FACILITIES. "Eligible Facilities" are hereby defined as
only those DEALERSHIP FACILITIES which are listed in the Dealership Facilities
Supplement in effect at the time of such nonrenewal or termination, are
approved by the Company pursuant to paragraph 5, are owned or leased by the
Dealer and are being used by the Dealer solely for fulfilling his
responsibilities under this agreement (or under this agreement and one or more
vehicle sales agreements with the Company which are not renewed or are
terminated by the Company at the same time as this agreement) at the time the
Dealer received notice of such nonrenewal or termination.
(C) COMPANY'S OBLIGATION. Subject to the provisions of subparagraph
22(d) hereof, if neither the Dealer nor the Company can arrange with a third
party within ninety (90) days after the effective date of such termination or
nonrenewal:
(1) In the case of Eligible Facilities which are owned by the
Dealer, either a lease for one year commencing within such
ninety (90) days at fair rental value or a sale within such
ninety (90) days at fair market value; or
(2) In the case of Eligible Facilities which are leased by the
Dealer, either an assignment of lease, or a sublease for one
year (or for the balance of the term of the Dealer's lease if
that is shorter) commencing within such ninety (90) days at
the Dealer's rental rate (or, if the facilities are owned by
an affiliate of the Dealer at fair rental value, if that is
different),
the Company shall offer either to make monthly payments to the Dealer,
commencing with the ninety-first day, pursuant to subparagraph 22(e) hereof, or
to make a lump sum payment to the Dealer pursuant to said subparagraph 22(e),
or to accept for itself on the ninety-first day such a lease or sale from the
Dealer-owner or such an assignment or sublease from the Dealer-lessee.
For the purpose of this subparagraph 22(c), fair market or fair rental
value shall mean value based on the use of the facilities in the conduct of
DEALERSHIP OPERATIONS. In the event the Dealer and the Company are unable to
agree on the fair market or rental value of any Eligible Facilities, such value
shim be
-35-
determined by an independent real estate appraiser selected by the
Dealer and the Company.
(D) LIMITATIONS ON COMPANY'S OBLIGATION. The Company's obligation with
respect to any Eligible Facilities shall be limited to those expressly set
forth in this paragraph 22. The Company shall be released from all obligations
with respect to any Eligible Facilities if (1) the Dealer fails to give the
Company, within thirty (30) days after the Company shall have sent him a tender
of benefits as provided in paragraph 23, a written request for assistance
pursuant to this paragraph 22, accompanied by a written representation by the
Dealer that the Dealer and each owner named in subparagraph F(i) is, for a
period of at least one (1) year, retiring from the business of selling new and
used passenger cars and trucks in the general area of the DEALER'S LOCALITY,
(2) the Dealer fails to make diligent efforts to obtain from third parties an
offer to purchase, lease, sublease or take an assignment of lease described in
subparagraph 22(c), or refuses, or within a reasonable time fails to accept,
such an offer from a third party; (3) the Dealer does not accept any offer with
respect to Eligible Facilities made by the Company in accordance with
subparagraph 22(c) within thirty (30) days after receiving it, (4) the Dealer
or anyone else occupies such facilities for any purpose for a period of more
than ninety (90) days following the effective date of such termination or
nonrenewal, or (5) the Company arranges a cancellation of the lease of any
leased facilities without cost to the Dealer or the Dealer fails or refuses to
execute an agreement covering such cancellation.
(E) SATISFACTION OF COMPANY'S OBLIGATION. The Company may satisfy all
of its obligations under this paragraph 22 with respect to any Eligible
Facilities by paying to the Dealer (1) if the facilities are owned by the
Dealer, the difference, each month for twelve months (or until facilities are
sold if that is earlier), between any lesser rentals received by the Dealer for
such facilities for such month and the fair rental value of such facilities for
such month, or (2) if the facilities are leased by the Dealer, the difference,
each month for twelve months (or until the expiration of the lease if that is
earlier) between any lesser rentals received by the Dealer for such facilities
for such month and the rental paid by the Dealer (or, if the facilities are
owned by an affiliate of the Dealer, the fair rental value if that is
different) for such facilities for such month, or (3) at the election of the
Company, a lump sum, equal to the total payments contemplated in items (1) or
(2) of this subparagraph 22(e), or such lesser sum as may be agreed upon
between the Dealer and the Company, or by paying any lease cancellation cost
negotiated by the Dealer or the Company not to exceed the total of the
Company's obligations under subparagraphs 22(c) and 22(e).
-36-
23. TERMINATION BENEFITS FULL COMPENSATION; GENERAL RELEASE
In the event of termination or nonrenewal of this agreement by the
Company, the Company, within thirty (30) days after the effective date thereof,
shall submit to the Dealer (1) a written tender of the benefits provided for in
paragraph 21 (and in paragraph 22 where applicable) and (2) a form for the
Dealer to use to elect either to reject all of such benefits or to accept one
or more of them as full and complete compensation for such nonrenewal or
termination. The Dealer shall have thirty (30) days after receipt of such form
to return the same to the Company evidencing his election. If the Dealer fails
to return the form stating such election within such thirty (30) days, the
Dealer shall be deemed to have elected to accept such benefits. Upon the
Dealer's election to accept any of such benefits, or upon the Dealer's demand
of any such benefits upon any termination or nonrenewal by the Dealer, the
Company shall be released from any and an other liability to the Dealer with
respect to all relationships and actions between the Dealer and the Company,
however claimed to arise, except any liability that the Company may have under
subparagraph 19(f) and said paragraphs 21 and 22, and except for such amounts
as the Company may have agreed in writing to pay to the Dealer. Simultaneously
with the receipt of any benefits so elected or demanded, the Dealer shall
execute and deliver to the Company a general release with exceptions, as above
described, satisfactory to the Company.
24. DISPOSITION OF THE DEALER'S ASSETS
(A) COMPANY RIGHT TO APPROVE CHANGE IN OWNERSHIP.
(1) In view of the nature, purposes and objectives of the
Company's Dealer sales and Service Agreements, and the
differences in operating requirements among dealerships of
differing sizes and types of markets, the Company expressly
reserves the right to select the dealers with whom it will
enter into such agreements so as to maintain as high quality
a dealer organization as possible.
(2) In the event this agreement is terminated or not renewed by
either party or if the Dealer plans to terminate or not renew
this agreement, the Company acknowledges that the Dealer has
the right to negotiate for the sale of the assets of the
Dealer as such price as may be agreed upon by the Dealer and
the prospective purchaser. In turn, the Dealer acknowledges
that the Company has the right to approve or decline to
approve any prospective purchaser as to his character,
automotive experience, management, capital and other
qualifications for appointment as an authorized dealer in
COMPANY PRODUCTS for the DEALERSHEP
-37-
OPERATIONS involved. Approval by the Company of the
prospective purchaser shall not, however, be unreasonably
withheld. If, in the opinion of the Company, the price to be
paid for such assets appears, on the basis of the average
operating results of other dealers, to result in an
unsatisfactory return on investment so that such prospective
purchaser (1) may not remain as a dealer, or (2) may be
impelled to sell COMPANY PRODUCTS at high noncompetitive
prices with a probable reduction in sales volume, the Company
may, without liability to the Dealer, counsel with such
prospective purchaser regarding such opinions.
(B) COMPANY RIGHT TO FIRST REFUSAL TO PURCHASE.
(1) In the event the Dealer proposes a change in the ownership of
51 percent or more of the stock or transfer by sale or
otherwise of the dealership business or its principal assets
to any person or entity conditioned upon the Company entering
into a Sales and Service Agreement with that person or
entity, the Company shall have a Right of First Refusal to
Purchase the stock or assets on the same terms and conditions
offered or agreed to with such person, regardless of whether
the proposed buyer is qualified to be a dealer.
(2) To exercise its Right of First Refusal, the Company must
notify the Dealer in writing within thirty days of its
receipt of the completed proposal for the proposed sale or
transfer.
(3) Upon the Company's request the Dealer shall provide all
documents relating to the transfer. The Company shall have
the right to inspect the assets, including real estate,
before exercising its Right of First Refusal.
(4) The Company's Right of First Refusal under this subparagraph
24(b) may be assigned to any third party ("Assignee"). If
there is an assignment, the Company will guarantee full
payment of the purchase price by the Assignee. The Company
shall have the opportunity to discuss the terms of the
buy/sell agreement with any potential Assignee, as long as
such information is treated confidentially.
(5) The Company's rights hereunder are binding on and enforceable
against any successor in interest of the Dealer or purchaser
of the Dealer's assets.
-38-
When the proposed change of ownership involves a transfer by
the Dealer solely to a member or members of his or her
immediate family, or to a qualifying member of Dealer
management, the Company's Right of First Refusal will not
apply. An "immediate family member" shall be the spouse,
child, grandchild, spouse of a child or grandchild, brother,
sister or parent of the Dealer owner or his or her spouse. A
"qualifying member of the Dealer's management" shall be an
individual who has been employed by the Dealer in the
dealership for at least four years and is otherwise qualified
as a dealer operator.
(6) The Company agrees to pay the reasonable expenses, including
attorney's fees which do not exceed the usual, customary, and
reasonable fees charged for similar work done for other
clients, incurred by the proposed new owners and transferee
prior to the Company's exercise of its Right of First Refusal
in negotiating and implementing the contract for the proposed
sale or transfer of the Dealer or Dealer's assets.
(7) Notwithstanding the foregoing, no payment of such expenses
and attorney's fees shall be required if the Dealer has not
submitted or caused to be submitted an accounting of those
expenses within thirty days of the Dealer's receipt of the
Company's written request for such an accounting. Such
accounting may be requested before the exams by the Company
of its Right of First Refusal.
25. NEW AGREEMENT
The termination or nonrenewal of this agreement by the Company in
connection with the offer by the Company of a new sales and service agreement
for one or more COMPANY PRODUCT'S to the Dealer or the Dealer's successor in
interest, shall not give rise to the rights and obligations provided in
paragraphs 19, 21 and 22 with respect to the COMPANY PRODUCTS included in such
new agreement, unless otherwise specified by the Company in writing.
26. ACKNOWLEDGEMENTS
This agreement terminates and supersedes all other agreements
concerning the DEALERSHIP OPERATIONS and constitutes the entire agreement
between the parties with respect to the subject matter hereof. Each party
acknowledges that, except as expressly set forth herein, no representation,
understanding or presumption of law or fact has been made or relied upon (1)
which has induced the execution of this agreement or would in any way modify
any of its provisions, or (2) with respect to the
-39-
effectiveness or duration of this agreement or the sales or profit expectancy
of the DEALERSHIP OPERATIONS. The Dealer further acknowledges that he has
voluntarily entered into this agreement without coercion or intimidation or
threats thereof from the Company, and that each of its provisions is
reasonable, fair and equitable.
27. NO IMPLIED WAIVERS
Except as expressly provided in this agreement, the waiver by either
party, or the failure by either party to claim a breach of any provision of
this agreement, shall not constitute a waiver of any subsequent breach, or
affect in any way the effectiveness of such provision.
28. RELATIONS AFTER TERMINATION NOT A RENEWAL
In the event that, after termination or nonrenewal of this agreement,
either party has any business relations with the other party with respect to
any COMPANY PRODUCT, such relations shall not constitute either a renewal of
this agreement or a waiver of such termination or nonrenewal, but all such
relations shall be governed by terms identical with the provisions of such
agreement unless the parties execute a new and different agreement.
29. LIMITATION OF THE COMPANIES LIABILITY
This agreement contemplates that all investments by or in the Dealer
shall be made, and the Dealer shall purchase and resell COMPANY PRODUCTS, in
conformity with the provisions hereof but otherwise in the discretion of the
Dealer and the Dealer's owners. Except as herein specified, nothing herein
contained shall impose any liability on the Company in connection with the
DEALERSHIP OPERATIONS or otherwise or for any expenditure made or incurred by
the Dealer in preparation for performance or in performance of the Dealers
responsibilities under this agreement.
30. NOTICES
Any notice required or permitted by this agreement, or given in
connection herewith, shall be in writing and shall be given by personal
delivery or by first-class or certified or registered mail, postage prepaid.
Notices to the Company shall be delivered to or addressed to the District Sales
Manager of the area in which the Dealer is located except notices given by the
Dealer either to the Policy Board or pursuant to the Arbitration Plan. Notices
to the Dealer did be delivered to any person designated in paragraph F(ii) of
this agreement or directed to the Dealer at the Dealer's principal place of
business as described herein.
-40-
31. AMENDMENT
Notwithstanding anything in this agreement to the contrary, the
Company shall have the right to amend, modify or change this agreement in case
of legislation, government regulation or changes in circumstances beyond the
control of the Company that might affect materially the relationship between
the Company and the Dealer.
32. MICHIGAN AGREEMENT
This agreement has been signed by the Dealer and sent to the Company
in Michigan for final approval and execution and has there been signed and
delivered on behalf of the Company. The parties intend this agreement to be
executed as a Michigan Agreement and to be construed in accordance with the
laws of the State of Michigan.
33. CONFLICT WITH STATUTE
If performance under this agreement is illegal under a valid law of
any jurisdiction where such performance is to take place, the performance will
be modified to the minimum extent necessary to comply with any such law as was
effective on the date of execution of this agreement.
-41-