Exhibit 10.8
This
DISTRIBUTOR AGREEMENT
("this Agreement")
is made as of
OCTOBER 31ST, 2006
by and between
SMART GMBH,
a limited liability company organized and existing under the laws of the Federal
Republic of Germany, having its principal place of business at Leibnizstrasse 2,
71032 Boblingen, Germany
("SMART GMBH")
and
SMART USA DISTRIBUTOR LLC,
a limited liability company organized and existing under the laws of Delaware,
having its principal place of business at 2555 Telegraph Road, Bloomfield Hills,
Michigan 48302
("DISTRIBUTOR").
smart gmbh and DISTRIBUTOR are referred to Individually as "Party" and
collectively as "Parties".
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TABLE OF CONTENTS
ARTICLE 1 APPOINTMENT OF DISTRIBUTOR AND RIGHTS OF DISTRIBUTION.......... 4
1.1 Appointment of DISTRIBUTOR..................................... 4
1.2 Limitation on Appointment...................................... 4
1.3 Retained Rights................................................ 4
1.4 Related Activities............................................. 5
ARTICLE 2 CONTRACT GOODS ................................................ 5
ARTICLE 3 CONTRACT TERRITORY............................................. 6
3.1 Contract Territory............................................. 6
3.2 Activities Outside of the Contract Territory................... 6
ARTICLE 4 TARGET AGREEMENTS.............................................. 6
4.1 Sales Period................................................... 6
4.2 Objectives..................................................... 6
4.3 Minimum Sales Volume, Minimum Objectives....................... 7
ARTICLE 5 SALES AND SERVICE ACTIVITIES................................... 7
5.1 Sales and Service Organization................................. 7
5.2 smart Dealership Standards..................................... 7
5.3 Authorized Resellers........................................... 8
5.4 Facilities..................................................... 9
5.5 Business Systems............................................... 9
5.6 Management Personnel........................................... 11
5.7 Training....................................................... 11
ARTICLE 6 SERVICE AND WARRANTY........................................... 12
6.1 Service of Contract Goods...................................... 12
6.2 Authorized Reseller's Warranty................................. 12
6.3 Distributor's Warranty......................................... 13
6.4 Alteration and Equipment Installation.......................... 14
6.5 Parts.......................................................... 14
6.6 Technical Publications......................................... 14
ARTICLE 7 PROMOTION, ADVERTISING AND SIGNAGE............................. 14
7.1 Promotion and Advertising...................................... 14
7.2 Signage........................................................ 15
ARTICLE 8 ORDERS, PRICING AND PAYMENT.................................... 16
8.1 Orders......................................................... 16
8.2 Pricing and Payment............................................ 17
ARTICLE 9 LIABILITY AND INDEMNIFICATION.................................. 17
9.1 Limitation of Liability........................................ 17
9.2 Product Liability.............................................. 18
9.3 Force Majeure.................................................. 19
ARTICLE 10 DESIGNATION AND MARKS.......................................... 20
10.1 Designation.................................................... 20
10.2 Use of smart Marks............................................. 20
10.3 Company Name................................................... 20
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10.4 Term of Use.................................................... 21
ARTICLE 11 STATUS AND OWNERSHIP OF DISTRIBUTOR............................ 21
11.1 Status of DISTRIBUTOR.......................................... 21
11.2 DISTRIBUTOR'S Authority and Ownership.......................... 21
ARTICLE 12 FINANCIAL STRUCTURE, BOOKS, RECORDS AND ACCOUNTS, STATEMENTS
AND AUDIT...................................................... 22
12.1 Financial Structure, Books, Records and Accounts and
Statements..................................................... 22
12.1 Audit.......................................................... 22
ARTICLE 13 OTHER OBLIGATIONS OF DISTRIBUTOR............................... 23
13.1 Deal Information and Assistance................................ 23
13.2 Customer Data............................................... 23
13.3 Customer Satisfaction Policies................................. 23
13.4 Other Goods.................................................... 24
13.5 Compliance with Laws........................................... 24
13.6 Execution of Related Agreements................................ 26
13.7 Emissions Credits.............................................. 27
ARTICLE 14 TERM AND TERMINATION........................................... 27
14.1 Term of this Agreement......................................... 27
14.2 Termination with Immediate Effect.............................. 28
14.3 Notification................................................... 30
14.4 Rights and Obligations on Termination.......................... 30
ARTICLE 15 GENERAL PROVISIONS............................................. 32
15.1 Payments to DISTRIBUTOR........................................ 32
15.2 Entire Agreement, Modification, Consent, Waiver, Rights and
Assignment..................................................... 32
15.3 Registration................................................... 33
15.4 Confidential Information....................................... 33
15.5 Counterparts and Photocopies................................... 33
15.6 Interpretation and Discrepancy with Other Documents............ 34
15.7 Severability................................................... 34
ARTICLE 16 NOTICES........................................................ 34
ARTICLE 17 GOVERNING LAW AND DISPUTE RESOLUTION........................... 35
ARTICLE 18 PLACE OF PERFORMANCE........................................... 35
ARTICLE 19 SIGNATURE...................................................... 35
ANNEXES:
Annex 1 Vehicles
Annex 2 Contract Specifications
Annex 3.1 Target Agreement
Annex 3.2 Parts
Annex 4 Format Types, Corporate Identity (CI) and Standards
Annex 5 Distributor's Warranty
Annex 6 Sales Conditions
Annex 7 Trade and Service Marks Licensing Clauses
Annex 8 Allocation of Functions
Annex 9 TREAD Act Information
Annex 10 Field Actions, Service Campaigns and Recalls
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ARTICLE 1 - APPOINTMENT OF DISTRIBUTOR AND RIGHTS OF DISTRIBUTION
1.1 APPOINTMENT OF DISTRIBUTOR
smart gmbh hereby appoints DISTRIBUTOR and DISTRIBUTOR hereby accepts, subject
to the terms and conditions of this Agreement, to be the exclusive distributor
for the sale and service of Contract Goods (as defined below) in the Contract
Territory (as defined below).
1.2 LIMITATION ON APPOINTMENT
(1) DISTRIBUTOR shall sell Contract Goods only to:
(i) its Authorized Resellers (as defined below); and
(ii) end users of Contract Goods,
whose place of residence or business domicile is within the Contract
Territory.
(2) DISTRIBUTOR shall not sell any Contract Goods unless those Contract Goods
are purchased under this Agreement or otherwise with smart gmbh's consent,
nor shall DISTRIBUTOR acquire or assist others in acquiring Contract Goods
from any source other than smart gmbh.
1.3 RETAINED RIGHTS
(1) smart gmbh may be required by certain of its multinational fleet
customers or certain multinational fleet customers of a
DaimlerChrysler Group Company, while smart gmbh is a DaimlerChrysler
Group Company, to enter into agreements with customers [other than a
DaimlerChrysler Group Company). Prior to doing SD, smart gmbh shall
promptly inform DISTRIBUTOR and, thereafter, smart gmbh and
DISTRIBUTOR shall consult to respond, if possible, to the needs of the
customer and agree in advance as to the terms and conditions under
which the customer will acquire the Vehicles from DISTRIBUTOR and its
Authorized Resellers for the customer's operation within the Contract
Territory. If DISTRIBUTOR and smart gmbh fail to agree upon such terms
and conditions, smart gmbh may then require DISTRIBUTOR, and
DISTRIBUTOR is obliged to implement the sale, but only in accordance
with the following conditions:
A. smart gmbh will ensure that DISTRIBUTOR will in any such case
retain a margin of at least *% of Vehicle's MSRP (as defined below)
to cover DISTRIBUTOR'S expenses relating to such meal (for example
customer information, test drives, invoicing, vehicle arrangement, pre
delivery inspection, delivery).
B. smart gmbh shall ensure that DISTRIBUTOR and its Authorized
Reseller receive payment from the fleet customer for the sold Vehicles
or another mutually agreeable solution.
C. The maximum number of Vehicles which smart gmbh may directly or
indirectly offer and sell to multinational fleet customers pursuant to
this Article 1.3 is agreed to be:
Time Frame Volume Limitation
- ---------------------------------- --------------------------------------
January 1,2008 - December 31, 2009 *% on top of the mutually agreed to
annual Vehicle planning volume for the
calendar year
January 1,2010 - December 31, 2021 *% on top of the mutually agreed to
annual Vehicle planning volume for the
calendar year
(2) Prior to any offer of any special condition to any DaimlerChrysler
Group Company's employees, which differ from the market conditions
(the conditions offered to the general public), DISTRIBUTOR shall
obtain smart gmbh's written approval if smart gmbh is at that point in
time a DaimlerChrysler Group Company.
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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(3) Vehicles for the use of a DaimlerChrysler Group Company (e.g. as
Company cars for corporate fleet, with or without registration and as
management cars) should be ordered via DISTRIBUTOR. In that case the
Parties will agree in advance on a processing fee and the applying
conditions during the yearly negotiation process. If the Parties
should not agree, smart gmbh may, if smart gmbh is at that point in
time a DaimlerChrysler Group Company, transfer Vehicles in the
Contract Territory to any DaimlerChrysler Group Company, whereas
DISTRIBUTOR, shall be involved and will be reimbursed for incurred
costs (max. *% basis Vehicle's MSRP as defined in Clause 1.3(1)(A).
1.4 RELATED ACTIVITIES
(1) With respect to financing and leasing of Contract Goods, DISTRIBUTOR and
its Authorized Resellers shall, albeit not exclusively, offer the range of
services provided by any DaimlerChrysler Group Company active in the field
of financing or leasing provided such services can be lawfully offered.
(2) DISTRIBUTOR and its Authorized Resellers shall offer and process service
products provided by any DaimlerChrysler Group Company in accordance with
the relevant guidelines.
ARTICLE 2 - CONTRACT GOODS
(1) Contract Goods are:
(i) completely built-up new motor vehicles (including chassis)
manufactured by or under license of smart gmbh or any DaimlerChrysler
Group Company, as identified in ANNEX 1 ("Vehicles") and in the
versions intended for the Contract Territory, as offered to
DISTRIBUTOR, from time to time, hereunder; and
(ii) new genuine parts, accessories for installation on or attachment to
Vehicles, components, aggregates, assemblies, as well as genuine
remanufactured parts, components, aggregates and assemblies, which are
supplied by smart gmbh, a DaimlerChrysler Group Company or authorized
licensee ("Parts").
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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(2) Successor and supplementary models within existing model series will become
Contract Goods upon their official launching in the Contract Territory with
the consent of smart gmbh.
ARTICLE 3 - CONTRACT TERRITORY
3.1 CONTRACT TERRITORY
The Contract Territory is as set forth in ANNEX 2, under the heading "Contract
Territory".
3.2 ACTIVITIES OUTSIDE OF THE CONTRACT TERRITORY
DISTRIBUTOR and its Authorized Resellers shall not. directly or indirectly,
outside of the Contract Territory:
(i) maintain sales or distribution branches or depots for Contract Goods;
(ii) solicit customers for Contract Goods in any manner and, in particular,
through the internet, it being recognized that prospective customers
located outside of the Contract Territory may access DISTRIBUTOR'S and/or
its Authorized Resellers, Contract Territory-based internet sites and such
accessing shell not be deemed to be a violation of this Article; or
(iii) appoint sub-distributors, dealers, outlets or workshops to sell,
distribute or service Contract Goods.
ARTICLE 4 - TARGET AGREEMENTS
4.1 SALES PERIOD
(1) Prior to each Sales Period, the Parties shall agree upon quantitative
and/or qualitative objectives to be reached by DISTRIBUTOR and its
Authorized Resellers in a Target Agreement. The Target Agreement for the
first Sales Period is set forth in ANNEX 3.1.
(2) "Sales Period" means the calendar year or, for this Agreement's first and
last years, the partial calendar year during which this Agreement is in
effect,
4.2 OBJECTIVES
(1) The quantitative objectives may Include, but are not limited to, the
following:
(i) a minimum or a specific number of Vehicles to be sold by DISTRIBUTOR
and its Authorized Resellers to end users in the Contract Territory;
(ii) a minimum or a specific market share in defined vehicle segments in
the Contract Territory;
(iii) a minimum or a specific turnover of Parts;
(iv) a specific inventory of Contract Goods [although, in any case,
DISTRIBUTOR and its Authorized Resellers shall keep a balanced
inventory of Contract Goods in quantity and assortment sufficient to
meet customer demand in the Contract Territory); and
(v) a specific number of demonstration vehicles (although, in any case,
DISTRIBUTOR and its Authorized Resellers shall keep in stock such
number of demonstration Vehicles appropriate for the volume of
business).
(2) The qualitative objectives may include, but are not limited to, the
following:
(i) measures which ensure the achievement of smart Dealership Standards
(as defined below) by DISTRIBUTOR'S Authorized Resellers as well as
smart gmbh's other requirements; and
(ii) the implementation of organizational structures, new facilities or
processes,
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4.3 MINIMUM SALES VOLUME, MINIMUM OBJECTIVES
(1) DISTRIBUTOR is obliged to take delivery of and pay for the yearly agreed
volume of Contract Goods as set forth in ANNEX 3.1.
(2) The Minimum Sales Volume is, for each category of Contract Goods, as the
case may be, a number of Vehicles that DISTRIBUTOR and its Authorized
Resellers must sell, as a minimum, to end-users in the Contract Territory,
or a turnover of Parts, that DISTRIBUTOR and its Authorized Resellers must
make at a minimum.
ARTICLE 5 - SALES AND SERVICE ACTIVITIES
5.1 SALES AND SERVICE ORGANIZATION
(1) DISTRIBUTOR shall directly and/or through Authorized Resellers develop and
maintain a sales and service network that in terms of quality and capacity
ensures the balanced and thorough distribution of Contract Goods, the
supply of the market demand for Contract Goods and expert service that
enhances the high-quality image, reputation and acceptability of Contract
Goods. smart gmbh assumes that the sales and service network set up by the
DISTRIBUTOR will consist of United Auto Group, Inc. ("UAG") dealers and of
Penske Automotive dealers and others. DISTRIBUTOR shall consult with smart
gmbh prior to establishing or adjusting its sales and service network.
DISTRIBUTOR will ensure an initial investment by each Authorized Reseller
of approximate * US$ for the set up of all sales and service facilities
(including IT systems, tools and all necessary equipment), for the purchase
of corporate identity and signage, and for carrying out initial staff
training (sales, service, management personnel), if a higher investment
becomes necessary the Parties shall agree thereon prior to this investment.
(2) "Authorized Resellers" means all persons appointed by DISTRIBUTOR in
accordance with this Agreement to maintain sales and/or service facilities
in the Contract Territory for any Contract Goods.
5.2 SMART DEALERSHIP STANDARDS
(1) DISTRIBUTOR and its Authorized Resellers shall strive to comply with those
standards as may be from lime to time implemented and amended or updated by
smart gmbh ("smart Dealership Standards"). The current smart Dealership
Standards are set forth in ANNEX 4. The implementation or any amendment or
update of smart Dealership Standards requires one year's notice to
DISTRIBUTOR.
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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(2) In any event, DISTRIBUTOR and its Authorized Resellers are obliged to
comply with those of the smart Dealership Standards that are identified by
smart gmbh to be binding on DISTRIBUTOR and/or its Authorized Resellers
("smart Dealership Must Standards"). The fulfillment of all smart
Dealership Must Standards by DISTRIBUTOR and its Authorized Resellers is a
condition precedent for DISTRIBUTOR's appointment as a distributor of
Contract Goods in the Contract Territory, and their continued fulfillment
is a condition for this Agreement being upheld. Likewise, the fulfillment
of all smart Dealership Must Standards by each of DISTRIBUTOR's Authorized
Resellers must be a condition precedent for the relevant Authorized
Reseller's appointment by DISTRIBUTOR, and their continued fulfillment must
be a condition for the relevant agreement being upheld.
(3) In addition, DISTRIBUTOR and its Authorized Resellers shall comply with
smart gmbh's requirements or such other manuals, guidelines or materials
as may be from time to time implemented and amended or updated by smart
gmbh.
5.3 AUTHORIZED RESELLERS
(1) DISTRIBUTOR's Authorized Resellers must:
(i) be duly organized, validly existing and in good standing under
Applicable Laws, and have, now and forthwith, full authority and all
permits, authorizations and licenses necessary or advisable to enter
into or perform their obligations under the agreement with
DISTRIBUTOR;
(ii) show a sound financial structure with a working capital level and
financing capability that satisfy their operating requirements. In
particular, the working capital level and financing capability must be
sufficient for meeting the smart Dealership Standards and smart
gmbh's requirements, and must be acceptable to smart gmbh;
(iii) not have been subject to any voluntary or involuntary bankruptcy or
insolvency proceedings;
(iv) not engage in or be charged with practices that constitute an offense
under any anti-bribery, export control, competition, tax, stock
exchange or corporate governance legislation or that jeopardize smart
gmbh's good name and goodwill, or act in a manner which substantially
and adversely affects the reputation, distribution and promotion of
smart gmbh's or, for as long as smart gmbh is a DaimlerChrysler Group
Company, any DaimlerChrysler Group Company's goods and services; and
(v) not be charged with or convicted of any offense punishable by
imprisonment for more than one year, or a crime involving dishonesty,
false statement or theft.
(2) Prior to appointing an Authorized Reseller, DISTRIBUTOR shall:
(i) provide to smart gmbh all information relevant to the financial
condition, management, ownership, business practices and corporate
reputation and to such person's qualifications and ability to perform
as an Authorized Reseller;
(ii) obtain the Authorized Reseller's representation that it meets all
conditions set forth in Clause 5.3 (1);
(iii) obtain smart gmbh's confirmation, acting reasonably, as to the
acceptability of such person; and
(iv) obtain smart gmbh's approval of the agreement between DISTRIBUTOR and
the Authorized Reseller including the smart Dealership Standards and
the Authorized Reseller's margin.
smart gmbh may, in its sole discretion, exercised reasonably, reject any
proposed appointment. Final decision of Authorized Reseller appointment is
with DISTRIBUTOR.
(3) DISTRIBUTOR shall have a written agreement with each Authorized Reseller
and such agreement must be consistent with this Agreement. In particular,
such agreement:
(i) must oblige the Authorized Reseller to observe and perform the duties
and obligations set forth in this Agreement (in particular the smart
Dealership Must Standards) as far as any may be applicable to the
Authorized Reseller; and
(ii) must not grant to the Authorized Reseller rights that go beyond those
which smart gmbh has granted to DISTRIBUTOR, thus restricting or
jeopardizing any right or position of smart
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gmbh or excluding or impeding the enforcement of any such right or
position or damaging or jeopardizing the image of smart gmbh or, as
long as smart gmbh is a DaimlerChrysler Group Company, any
DaimlerChrysler Group Company or Contract Goods, unless so required by
Applicable Law.
(4) Upon the appointment of an Authorized Reseller, DISTRIBUTOR shall provide
smart gmbh without delay with a copy of that agreement and, if so requested
by smart gmbh, with a certified translation of that agreement.
(5) Upon smart gmbh's request from time to time, DISTRIBUTOR shall provide
smart gmbh without delay with a copy of all relevant agreements with any or
all of its Authorized Resellers and, if so requested by smart gmbh, with
certified translations thereof, and all information relevant to the
financial condition, management, ownership, business practices and
corporate reputation of any or all of its Authorized Resellers. DISTRIBUTOR
shall at all times promptly comply with smart gmbh's instructions to
modify or alter all or any of the agreements with its Authorized Resellers
in order to comply with Clause 5.2 (3) above, or to enforce any right under
those agreements.
(6) DISTRIBUTOR shall:
(i) provide its Authorized Resellers with appropriate supervision and
training;
(ii) actively monitor the performance by each Authorized Reseller of its
agreements with DISTRIBUTOR and enforce each Authorized Reseller's
obligations under such agreements; and
(iii) use its best efforts to put into place and maintain, and to assist
its Authorized Resellers in putting into place and maintaining,
effective inventory and retail sale financing programs.
5.4 FACILITIES
(1) DISTRIBUTOR shall directly and/or through its Authorized Resellers maintain
offices, sales and service facilities (including vehicle and parts storage
and display facilities) sufficient to represent Contract Goods
appropriately in the Contract Territory consistent with the Parties' Target
Agreement and enhance the image of Contract Goods.
(2) Each retail sales outlet, showroom and service facility must:
(i) be at a location approved by smart gmbh and comply with applicable
smart Dealership Must Standards and smart gmbh's requirements; and
(ii) unless otherwise agreed to by smart gmbh, be continuously used for the
sale or servicing of Contract Goods during the term of the agreement
with the Authorized Reseller.
5.5 BUSINESS SYSTEMS
(1) DISTRIBUTOR and its Authorized Resellers shall maintain accounting, order,
inventory control, and warranty claim processing systems and records in a
manner acceptable to smart gmbh. DISTRIBUTOR and its Authorized Resellers
(through DISTRIBUTOR) shall provide to smart gmbh business management
reports at the times and in the form smart gmbh requests, including but not
limited to sales, service, and warranty claims reports, financial reports
and operating statements, Parts sales and stock reports as well as customer
databases and information. Unless otherwise instructed by smart gmbh.
DISTRIBUTOR and its Authorized Resellers shall retain all books and records
for at least six years or such longer period as may be required under
Applicable Law.
(2) DISTRIBUTOR and its Authorized Resellers shall maintain an electronic data
storage, transmission and communication system ("Systems") in the manner
and form smart gmbh recommends from time to time, smart gmbh may provide
DISTRIBUTOR and its Authorized Resellers with system equipment, hardware
and/or software or may require DISTRIBUTOR and its Authorized Resellers to
purchase or lease such equipment, hardware and/or software. If smart gmbh
provides DISTRIBUTOR and its Authorized Resellers with equipment, hardware
or software, DISTRIBUTOR and its Authorized Resellers shall:
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(i) safeguard such equipment, hardware or software, and will not allow its
use for any purpose other than that authorized by smart gmbh;
(ii) not copy, disassemble, transmit, modify, use or take any action (or
allow any other person to do any of these things) that may violate any
license for the software (or firmware contained in the hardware) that
smart gmbh may have been granted or which smart gmbh may grant to
DISTRIBUTOR and its Authorized Resellers; and
(iii) not transfer or allow the transfer of the equipment, hardware or
software to anyone without the consent of smart gmbh.
(3) DISTRIBUTOR and its Authorized Resellers shall observe the rules, terms and
conditions relating to the use of Systems and related equipment, hardware
and software from time to time implemented by smart gmbh. All
communications, including orders for Contract Goods, claims, and notices
submitted through the Systems using DISTRIBUTOR's numbers, codes and
passwords are valid and legally binding upon DISTRIBUTOR, and all such
orders, notices or communications are valid and legally binding orders,
notices and communications, as the case may be, as if DISTRIBUTOR had
submitted such order, notice or communication to smart gmbh in writing, and
is deemed to be "signed" or "sealed" by DISTRIBUTOR as if in writing and
signed or sealed by or on behalf of DISTRIBUTOR by hand, for purposes of
any law requiring an order for goods or services, notices or communications
to be in writing and to be signed or sealed. All uses of identification
numbers, codes and passwords for the Systems shall be presumed to be
authorized by DISTRIBUTOR until DISTRIBUTOR notifies smart gmbh that the
number, code or password a compromised, smart gmbh will cancel and will
issue a new password to DISTRIBUTOR whenever DISTRIBUTOR indicates the
password is compromised, smart gmbh is not liable for any delays or lack of
access to any System arising from such cancellation.
(4) DISTRIBUTOR shall maintain electronic data and communication systems
necessary for compliance with the Transportation Recall, Enhancement,
Accountability and Documentation (TREAD) Act of 2000 (The "TREAD Act"
(which term shall include any successor Federal statute)) and all
regulations implementing the TREAD Act, DISTRIBUTOR shall establish and
maintain in a manner acceptable to smart gmbh systems capable of
communicating with the electronic data and communication systems maintained
by smart gmbh and with those established by the National Highway Traffic
Safely Administration (or any successor government agency) for submissions
required of DISTRIBUTOR as an importer (and, thus, considered the
manufacturer) or distributor of vehicles in the US, pursuant to the TREAD
Act.
To the extent information necessary for submission under the TREAD Act is
in the exclusive control of smart gmbh or another DaimlerChrysler Group
Company, smart gmbh shall make such information available to DISTRIBUTOR
through smart gmbh's existing electronic data and communication systems.
DISTRIBUTOR shall be responsible for establishing connection to smart
gmbh's electronic data and communication systems through a single smart
gmbh source sufficient to ensure receipt of all information required to be
submitted under the TREAD Act. The systems must be capable of receiving all
communications relating to the information listed in the ANNEX 9.
(5) DISTRIBUTOR shall establish and maintain in a manner acceptable to smart
gmbh systems sufficient to ensure full compliance by DISTRIBUTOR with all
record-keeping and administrative requirements of vehicle safety and
emissions laws and regulations applicable to DISTRIBUTOR as an importer or
distributor of vehicles in the United States, including but not limited to
systems necessary to track warranty claims for emissions and safety
compliance and respond to all inquiries from any government entity that
oversees and/or implements those laws and regulations.
(6) DISTRIBUTOR shall establish and at all times maintain electronic data and
communication systems in a manner acceptable to smart gmbh capable of
receiving information from smart gmbh in any way relating to field actions,
service campaigns or recalls relating to the Contract Goods, as set forth
in ANNEX 10.
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5.6 MANAGEMENT PERSONNEL
(1) DISTRIBUTOR and its Authorized Resellers shall employ qualified personnel,
including a General Manager, a Finance Manager, a Sales Manager, a Parts
Manager and a Service Manager. These positions may be combined with the
prior consent of smart gmbh. Such employees of DISTRIBUTOR and its
Authorized Resellers shall not, without the prior consent of smart gmbh,
engage or participate in operating, selling or servicing, as the case may
be, of any brand of vehicles or parts other than Contract Goods.
(2) DISTRIBUTOR represents and warrants that each individual listed in ANNEX 2,
under the heading "Management and Signatory Authority", holds the position
indicated and has authority to execute agreements and other documents
relating to this Agreement for DISTRIBUTOR, either jointly or severally, as
indicated. DISTRIBUTOR authorizes smart gmbh to rely on any writing signed
by these individuals, either jointly or severally, as indicated.
(3) DISTRIBUTOR represents and warrants that each individual designated as key
personnel in ANNEX 2, under the heading "Key Personnel", will participate
actively, substantially and continuously in DISTRIBUTOR's business
operations relating to this Agreement and that DISTRIBUTOR will notify
smart gmbh immediately if any key personnel stops participating actively,
substantially and continuously in such operations, obtain smart gmbh's
prior approval of any replacement for such key personnel, and appoint a
replacement approved by smart gmbh within reasonable time.
5.7 TRAINING
DISTRIBUTOR shall keep its own personnel and its Authorized Resellers advised of
all information received from smart gmbh. Furthermore, DISTRIBUTOR and its
Authorized Resellers shall participate in sales, service, parts, technical,
business systems and other training courses smart gmbh offers or organizes from
time to time as smart gmbh may direct. DISTRIBUTOR and its Authorized Resellers
shall pay the direct costs of such training as may be assessed by smart gmbh,
and the indirect costs of such training that smart gmbh may reasonably incur
(including travel expenses) for such training.
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ARTICLE 6 - SERVICE AND WARRANTY
6.1 SERVICE OR CONTRACT GOODS
(1) DISTRIBUTOR and its Authorized Resellers shall provide service (servicing,
maintenance and repair work) for all Contract Goods including versions of
equal goods not intended for safe in the Contract Territory. The preceding
sentence shall apply in each case, regardless of whether the goods are in
the Contract Territory temporarily or permanently, or where or by whom the
goods were acquired, or whether they are new or used. All customers and
their Vehicles shall be treated with equal care. The service must conform
to the applicable smart Dealership Must Standards as well as smart gmbh's
requirements and other manuals, guidelines or materials.
(2) DISTRIBUTOR shall establish a Service Coordination Center in conformity
with the requirements of smart gmbh, if so required by smart gmbh. Such
Service Coordination Center will be responsible for coordinating service
related tasks, implementing service related smart Dealership Standards as
well as smart gmbh's requirements and such other tasks as may be from time
to time assigned by smart gmbh.
(3) DISTRIBUTOR and its Authorized Resellers shall acquire and maintain
equipment and tools required for properly servicing Contract Goods as
determined by smart gmbh.
6.2 AUTHORIZED RESELLER'S WARRANTY
(1) DISTRIBUTOR and its Authorized Resellers shall at their respective facility
locations perform warranty work for Contract Goods including versions of
equal goods not intended for sale in the Contract Territory. The preceding
sentence shall apply in each case, regardless of whether the goods are in
the Contract Territory temporarily or permanently, or where or by whom the
goods were acquired.
(2) Warranty operations and processes shall be in accordance with the
DaimlerChrysler Warranty Procedure Manual or other manual established by
smart gmbh ("Warranty Manual") in effect at the time that a warranty case
occurs. The Warranty Manual will be made available for DISTRIBUTOR online.
smart gmbh may at any time, with immediate effect, modify the Warranty
Manual or implement new procedures for approving, verifying, and
controlling the quality of warranty service and for warranty claim
preparation. DISTRIBUTOR and its Authorized Resellers shall allow smart
gmbh access to their respective facilities to observe the performance or
administration of warranty service.
(3) Warranty obligations shall follow the warranty terms provided by smart gmbh
for the Contract Territory. If DISTRIBUTOR or its Authorized Resellers are
obliged by Applicable Law to provide more extensive warranty, they shall
notify smart gmbh. If DISTRIBUTOR or its Authorized Resellers feel that
more extensive warranty should be provided in the Contract Territory for
other reasons, they shall only provide that warranty with smart gmbh's
prior consent. Warranty obligations for equal goods purchased outside the
Contract Territory shall follow the warranty terms that apply in the place
of purchase outside the Contract Territory if DISTRIBUTOR is made aware of
them in writing. In all of the cases referred to in this Clause (3), smart
gmbh (or the DaimlerChrysler Group Company or licensee selling the goods)
shall only be liable for the warranty coverage provided by it to the first
purchaser.
(4) DISTRIBUTOR shall ensure that all warranty claims are settled in accordance
with the Warranty Manual and without delay. Depending on the technical
requirements, warranty work shall consist either of replacement or repair,
without any charge to the customer for labor, parts, freight and customs
duty.
(5) DISTRIBUTOR and its Authorized Resellers shall use only Parts for warranty
work.
(6) smart gmbh (or the DaimlerChrysler Group Company or the smart gmbh approved
licensee selling the Contract Goods to DISTRIBUTOR) will reimburse
DISTRIBUTOR for approved warranty
Page 12 of 86
service required under this Agreement at the rates and time allowances
smart gmbh establishes from time to time as defined in Annex 5.
(7) DISTRIBUTOR shall submit defective parts within warranty or other claims
for reimbursements no later than 30 days after date of repair to smart gmbh
as determined in the process defined by smart gmbh in accordance with the
procedures specified in the Warranty Manual and other materials in effect
at the time of such submission.
(8) The terms of Clauses(1) through (6) above apply with equal force to free
servicing, goodwill repairs and vehicle recall activities paid for by smart
gmbh in whole or In part.
(9) If DISTRIBUTOR or its Authorized Resellers gain knowledge of any defect
that may impair the safety of smart gmbh's products or that may otherwise
be required to be notified by laws applicable to smart gmbh or any
DaimlerChrysler Group Company, they shall immediately inform smart gmbh,
irrespective of whether the defect occurred during or after expiration of
the warranty period. The same shall apply to defects which are frequent or
costly.
(10) DISTRIBUTOR shall implement a system for localization, blocking and
registration of vehicles with definite defects in vehicles with VIN
notified by smart gmbh, and for realization of rework measures.
(11) DISTRIBUTOR and its Authorized Resellers will conduct all field actions,
service campaigns and recalls in a manner consistent with the policies and
procedures established by smart gmbh from time to time, as set forth in
ANNEX 10.
(12) Notwithstanding any other provision of this agreement, smart gmbh will not
reimburse DISTRIBUTOR for any expenses related to field actions or recalls
undertaken to address vehicle deficiencies, including any field actions or
recalls initiated by DISTRIBUTOR to comply with safety or emissions laws
and regulations, unless DISTRIBUTOR provides smart gmbh with prior written
description of the intended action prior to communicating the action to
customers or government agencies or otherwise initiating the field action
or recall.
(13) DISTRIBUTOR and its Authorized Resellers shall not alter or modify any
Contract Good without smart gmbh's prior written approval and then only in
a manner smart gmbh authorizes, unless such authorization or modification
has been ordered by an end user and concerns a particular Vehicle purchased
by that end user, provided, that such alteration or modification shall not
under any circumstances impair the roadworthiness, operating safety, or
emissions compliance of the Vehicle. However, smart gmbh does not warrant
or guarantee any alteration or modifications to, or the effect of such
alterations or modifications on, Contract Goods.
6.3 DISTRIBUTOR'S WARRANTY
In addition to the warranty set forth in Article 6.2 above, DISTRIBUTOR shall
grant to customers a warranty fulfilling, as a minimum, the criteria defined in
ANNEX 5. In addition to the warranty, DISTRIBUTOR plans to offer a 24 hours/ 7
days Roadside Assistance Program to its Authorized Resellers' new Vehicles
retail customers. The terms of this Program will be provided by DISTRIBUTOR to
smart gmbh prior to the commencement of the Program and annually thereafter,
smart gmbh will reimburse DISTRIBUTOR for its accrued coats of the conduct of
the Program for the prior year in total up to a maximum of * US$ multiplied by
the number of Vehicles sold to an end-customer during that same prior year by
DISTRIBUTOR, DISTRIBUTOR's Authorized Resellers and by others as permitted by
Section 1.3 of this Agreement ("Formula Vehicles"). Such reimbursement shall
continue during this Agreement, including for accrued costs of the Program
during the last year of this Agreement. Should the DISTRIBUTOR's accrued costs
of the conduct of the Program for the year which are not reimbursable by smart
gmbh exceed * US$ multiplied by the number of the Formula Vehicles, the Parties
shall discuss and agree upon a new maximum amount during the period March 1st to
May 1st of the year or years following the year that such excess costs were
accrued by DISTRIBUTOR.
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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6.4 ALTERATION AND EQUIPMENT INSTALLATION
DISTRIBUTOR and its Authorized Resellers shall not alter or modify any Contract
Good without smart gmbh's prior written approval and then only in the manner
smart gmbh authorizes, unless such alteration or modification has been ordered
by an end user and concerns a particular Vehicle purchased by that end user,
provided, that such alteration or modification shall not under any circumstances
impair the roadworthiness, emissions compliance, as operating safety of the
Vehicle. However, smart gmbh does not warrant nor guarantee any alteration or
modification to or the effect of such alteration or modification on, Contract
Goods.
6.5 PARTS
DISTRIBUTOR and its Authorized Resellers shall only sell or use Parts in
repairing and maintaining Contract Goods or those approved by smart gmbh.
6.6 TECHNICAL PUBLICATIONS
(1) DISTRIBUTOR and its Authorized Resellers shall each maintain on organized
library of smart gmbh's technical service publications (including, without
limitation, service and diagnostic manuals, service and recall bulletins
and applicable labor time schedules) for Contract Goods as may be from time
to time supplied by smart gmbh. DISTRIBUTOR and its Authorized Resellers
shall at all times utilize all lawful methods to access those of smart
gmbh's databases, electronic media information services and websites that
have been opened for them. DISTRIBUTOR and its Authorized Resellers shall
observe the rules, terms and conditions relating to the use of the Systems
from time to time implemented by smart gmbh.
(2) If DISTRIBUTOR or any of its Authorized Resellers undertakes to translate
any of the publications into any language other than the language of the
publications as provided by smart gmbh, the copyright therein is owned by
smart gmbh (or other appropriate DaimlerChrysler Group Company) in its
entirety. To the extent DISTRIBUTOR and its Authorized Resellers have any
interest in that copyright, whether by means of the work of their employees
in translating such publications or otherwise, DISTRIBUTOR shall (and shall
cause its Authorized Resellers to) transfer to smart gmbh (or other
appropriate DaimlerChrysler Group Company), without charge, fee or cost,
all their respective rights, title and interest relating to any copyright
rights they may acquire in the translation. All those translations must
bear a valid copyright notice designating smart gmbh (or the appropriate
DaimlerChrysler Group Company) as the copyright owner.
(3) DISTRIBUTOR is responsible for ensuring that all publications conform to
Applicable Law. If DISTRIBUTOR believes that any publication may not
conform to Applicable Law, DISTRIBUTOR shall notify smart gmbh of the part
that may not so conform and any proposed revisions. DISTRIBUTOR shall not
make any revisions to any publication without the consent of smart gmbh.
ARTICLE 7- PROMOTION, ADVERTISING AND SIGNAGE
7.1 PROMOTION AND ADVERTISING
(1) DISTRIBUTOR and its Authorized Resellers shall actively market Contract
Goods (as well as used cars and other services) throughout the Contract
Territory through advertising, promotion and other activities in order to
fulfill the potential of the market and to ensure the continued growth,
awareness and positive regard for Contract Goods.
(2) DISTRIBUTOR's and its Authorized Resellers' marketing strategy and
advertising and promotional materials, including their internet activities,
must:
(i) be consistent with the applicable smart Dealership Must Standards as
well as smart gmbh's brand representation and identification standards
and smart gmbh's product claims (including attributes and
performance); and
Page 14 of 86
(ii) comply with smart gmbh's directives, standards and processes as may be
issued by smart gmbh from time to time (including any standards from
time to time set out in marketing standards manuals and product
information bulletins).
(3) Upon smart gmbh's request, DISTRIBUTOR shall submit, at least three months
prior to the commencement of each Sales Period, its comprehensive
advertising and marketing plan for each Sales Period to smart gmbh for its
review and approval. DISTRIBUTOR shall provide smart gmbh with updates as
from time to time requested by smart gmbh.
(4) DISTRIBUTOR and its Authorized Resellers shall neither use, nor allow any
person or entity it controls to use, any advertising or promotional
materials that may injure smart gmbh's or any DaimlerChrysler Group
Company's or a Contract Good's reputation or mislead the public. Upon smart
gmbh's request, DISTRIBUTOR and its Authorized Resellers shall immediately
stop advertising, promotion or other marketing activities - unless
previously approved by smart gmbh - which (In the sole opinion of smart
gmbh) do not comply with smart gmbh's guidelines or standards, are
injurious to smart gmbh's or any DaimlerChrysler Group Company's business,
or are likely to deceive the public, or violate any Applicable Law or
regulation, DISTRIBUTOR and its Authorized Resellers are responsible for
compliance with applicable laws and rules regulating marketing, advertising
and promotional matters.
(5) DISTRIBUTOR shall keep smart gmbh informed of all marketing, advertising
and promotional activities implemented by DISTRIBUTOR and its Authorized
Resellers as well as the results of such activities. DISTRIBUTOR agrees
that smart gmbh may provide to other authorized members of the global
DaimlerChrysler sales and service network, as an exchange of information,
any marketing, advertising or promotional materials used by DISTRIBUTOR or
its Authorized Resellers, subject to any Applicable Law or regulation
governing privacy of consumers, confidentiality of information or other
laws or regulations.
(6) DISTRIBUTOR and its Authorized Resellers, upon smart gmbh's request, shall
continuously coordinate and participate in:
(i) any dealer advertising program or association for any of the Vehicles;
and
(ii) any Parts merchandising programs.
(7) DISTRIBUTOR and its Authorized Resellers shall not distribute or sell
merchandise (other than Contract Goods) or promotional materials bearing or
using in any way any smart Mark or otherwise relating in any way to
Contract Goods or any DaimlerChrysler Group Company except from a physical
dealership or other physical location of DISTRIBUTOR or any Authorized
Reseller within the Contract Territory. The foregoing prohibits, among
other matters, DISTRIBUTOR and any Authorized Reseller from distributing or
selling such merchandise or promotional materials over or using the
internet for such purposes.
7.2 SIGNAGE
(1) On terms approved by smart gmbh and at DISTRIBUTOR's fir its Authorized
Reseller's expense, DISTRIBUTOR and its Authorized Resellers shall display
at all times appropriate signs and fascia to identify its facility as an
authorized facility for Contract Goods. These signs and fascia must comply
with the applicable smart Dealership Must Standards and smart gmbh's
requirements. Smart gmbh reserves the right to approve or disapprove of
each sign's type, design and size.
(2) smart gmbh may implement a signage program under which smart gmbh or a
DaimlerChrysler Group Company designs, acquires and arranges for the
installation of pre-approved signs at DISTRIBUTOR's or its Authorized
Reseller's facilities under signage lease agreements.
(3) Upon smart gmbh's request, DISTRIBUTOR and its Authorized Resellers shall
sell any signage owned by them to smart gmbh or its designee at a price
equal to the residual value of such signage determined by smart gmbh after
allowing for all damage and wear and tear or a nominal price if no residual
value exists.
Page 15 of 86
ARTICLE 8 - ORDERS, PRICING AND PAYMENT
8.1 ORDERS
(1) DISTRIBUTOR shall place orders for Contract Goods through any Systems and
in accordance with any procedures that smart gmbh may require or implement
from time to time. All orders will be subject to terms and conditions
(issued from time to time by smart gmbh) valid at the time of the order.
Copies of the current terms and conditions of smart gmbh are attached
hereto as ANNEX 6. In the event of any conflict, the provisions of this
Agreement prevail over the terms and conditions.
(2) smart gmbh will use its best efforts to fill all orders made by
DISTRIBUTOR, subject to availability and production and logistic
capacities. However, smart gmbh is free, in its sole discretion, to accept
or reject any orders made by DISTRIBUTOR. Particularly, if demand for any
Contract Good exceeds supply, smart gmbh may allocate supply in any manner
it sees fit. This provision is subject to the terms of any other written
agreement among DISTRIBUTOR and smart gmbh regarding orders of Contract
Goods.
(3) smart gmbh may declare any Contract Good obsolete and discontinue its
manufacture, distribution or sale with six months written notice. This will
not affect orders for Contract Goods accepted by smart gmbh, smart gmbh is
not obliged to accept orders for obsolete Contract Goods except for Parts
needed for warranty work or as replacement parts to the extent as required
by Applicable Law. This is not intended to permit a de facto termination of
this Agreement by smart gmbh.
(4) smart gmbh may forward orders received from DISTRIBUTOR to another
DaimlerChrysler Group Company or licensee which will sell the Contract
Goods directly to DISTRIBUTOR. Unless otherwise agreed in writing with
DISTRIBUTOR, those sales (including warranty) will be governed by the terms
and conditions issued from time to time by the DaimlerChrysler Group
Company or licensee selling the Contract Goods, provided such terms will
not differ from the terms and conditions agreed upon by smart gmbh and
DISTRIBUTOR. Those sales will not create any distributor, dealer or service
center relationship between that DaimlerChrysler Group Company or licensee
and DISTRIBUTOR, smart gmbh may process any claim arising from a sale by
that DaimlerChrysler Group Company or licensee as if the sale had been made
directly between smart gmbh and DISTRIBUTOR. DISTRIBUTOR shall process any
right or claim arising from a sale made by that DaimlerChrysler Group
Company or licensee to that DaimlerChrysler Group Company or licensee, and
smart gmbh will not have any obligation, responsibility or liability in
connection with that sale but such procedures shall not cause any higher
IT-costs to DISTRIBUTOR.
Page 16 of 86
8.2 PRICING AND PAYMENT
*
(2) The prices of Parts delivered by smart gmbh to DISTRIBUTOR will be
calculated as defined in ANNEX 3.2.
(3) Commencing 2008, the Parties will yearly, during the period January 1st
to October 31st review and define volumes and prices (MSRP) applicable to
Vehicles and spare parts and accessories ordered and delivered during the
following year. Commencing 2010, the Parties will in addition yearly,
during the period April 1st to October 31st, review and define discounts
applicable to Vehicles and Parts ordered and delivered during the following
year, smart gmbh (or the DaimlerChrysler Group Company or licensee selling
the Contract Goods) may change prices or the charges for Contract Goods
(including packing, handling and delivery charges included in prices) at
any time, and make the changes effective immediately *
(4) Upon smart gmbh's request, DISTRIBUTOR shall inform smart gmbh of
DISTRIBUTOR's prices for Contract Goods to its Authorized Resellers and to
retail customers and modify such prices based on consultations with smart
gmbh subject to any limitations of Applicable Laws. DISTRIBUTOR and its
Authorized Resellers shall comply with any pricing policies as may be from
time to time established by smart gmbh, subject to any limitations of
Applicable Laws.
(5) DISTRIBUTOR shall promptly obtain and continuously maintain any United
States governmental approvals required to effect any payment to smart gmbh.
ARTICLE 9 - LIABILITY AND INDEMNIFICATION
9.1 LIMITATION OR LIABILITY
(1) Except as otherwise provided in this Agreement, either Party's liability
for slight negligence is limited to a breach of duties essential to this
Agreement and to typical damage foreseeable at the time of execution of
this Agreement. This limitation does not apply to damage to life, body or
health. As far as any damage is covered by insurance, either Party is only
liable for costs or losses of the other Party in connection with that
insurance.
(2) Nothing in this Agreement, expressed or implied, is intended to give to any
person other than the Parties any right, remedy or claim under or by reason
of this Agreement. All covenants, stipulations, promises or agreements in
this Agreement shall be for the sole and exclusive benefit of the Parties.
(3) Any personal liability of either Party's legal representatives, directors,
officers, employees and vicarious agents for slight negligence is excluded.
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 17 of 86
9.2 PRODUCT LIABILITY
(1) DISTRIBUTOR shall comply with smart gmbh's rules and procedures as amended
from time to time with respect to the analysis, determination, reporting,
handling, and resolution of customer complaints, alleged defects, product
liability claims, and all other product quality or safety- relevant issues.
(2) smart gmbh shall indemnify DISTRIBUTOR or its Authorized Resellers
(hereinafter "Indemnitees") from all Idemnifiable Costs that the
Indemnitees may incur, become liable for, or that may be asserted or
claimed against the Indemnitees as a result of alleged bodily injury or
property damage claimed in a product liability claim or lawsuit, if and to
the extent that a court of competent jurisdiction determines after trial
and exhaustion of all appeals that:
a) a purported design defect or defect (including in materials or
workmanship) created by the manufacturer (or manufacturer's suppliers,
but not Distributor's supplier (other than smart GmbH or its
affiliates)) in the relevant Vehicle (or its systems or components)
manufacture or assembly allegedly caused the bodily injury or property
damage beyond that to the relevant Vehicle themselves;
b) DISTRIBUTOR or its Authorized Resellers could not reasonably have
discovered the defect during the Vehicle preparation or subsequent
required servicing, maintenance and repair work (including service and
recall action service measures) and could not reasonably have taken
action to effectively remedy the defect; and
c) DISTRIBUTOR or its Authorized Resellers did not negligently fail to
otherwise prevent the occurrence of the alleged bodily injury or
property damage.
(3) "Idemnifiable Costs" means in relation to any particular matter:
(i) all claims, penalties, fines, judgments or administrative actions
made, imposed, rendered or taken against an Indemnitee with respect to
that matter, and all settlements to resolve an Indemnitee's alleged
liability for that matter;
(ii) all reasonable costs and expenses (including the fees and
disbursements of counsel or other advisors} incurred by an Indemnitee
in assessing and defending against any alleged liability which would,
if successfully asserted, be indemnifiable under clause (i); and
(iii) all losses and direct damages incurred by an Indemnitee by reason of
that matter.
(4) To qualify for indemnification, DISTRIBUTOR and its Authorized Resellers
shall assist and provide support to smart gmbh where necessary to resolve
all product liability matters. The assistance and support of DISTRIBUTOR
and its Authorized Resellers shall include, but not be limited to, the
following:
(i) comply with the rules and procedures referenced in section 9.2.1 and
promptly report to smart gmbh any discovered design defect or defect
created by the manufacturer;
(ii) immediately report to smart gmbh any actual or threatened product
liability claim or lawsuit, and provide all information about the
circumstances that gave rise to the claim or lawsuit, including an
identification of the particular Relevant Vehicle at issue;
(iii) secure evidence that is in the possession of, or that can be
reasonably obtained by, DISTRIBUTOR or its Authorized Resellers that
relates to the product liability claim, including a copy of any claim
letter, complaint, court notice or other legal documents relating to
the claim or lawsuit as well as a copy of any police or accident
reports or pertinent photographs;
(iv) notify smart gmbh in writing of its intent to seek indemnification
within 10 business days of service of a complaint, claim letter, or
other document identifying an actual or threatened claim or lawsuit;
Page 18 of 86
(v) refrain from any action or omission that could substantially impair
the defense of the claim or lawsuit and shall fully cooperate with
smart gmbh in defending the claim or lawsuit; and
(vii) provide smart gmbh with any information, requested by smart gmbh,
that is in the possession of DISTRIBUTOR or its Authorized Resellers.
(5) smart gmbh or its designee can assume the defense of or intervene in the
lawsuit at any time, including during appellate proceedings.
(i) In the event that smart gmbh assumes the defense of a claim or lawsuit,
smart gmbh shall maintain control of such defense, including the selection
of legal counsel, the formulation of legal strategy, and any decision as to
settlement. To the extent that Indemnitees incur any attorney's fees or
costs in defending against a claim or lawsuit following smart gmbh's
assumption of the defense of such claim or lawsuit, smart gmbh shall be
under no obligation to reimburse the Indemnitees for such attorney's fees
or costs, smart gmbh shall not be liable for any compromise or settlement
made by one or more Indemnitees without the consent of smart gmbh.
(ii) In agreeing to defend, smart gmbh may make its agreement conditional
on the continued existence of the state of facts as then known to such
parties, and may provide for the withdrawal of such defense at such time as
facts arise which, if known at the time of the original request for a
defense, would have caused smart gmbh to refuse such a request. If smart
gmbh withdraws from its agreement to defend, in whole or in part, It shall
give timely notice of its intent to so withdraw. Such notice shall be in
writing and shall be effective upon receipt.
(6) If DISTRIBUTOR or any of its Authorized Resellers falls to comply with the
requirements specified in this Article 9, then smart gmbh shall have no
obligation to indemnify DISTRIBUTOR or such Authorized Reseller.
9.3 FORCE MAJEURE
(1) A Party's failure or delay in performing any of its obligations under this
Agreement will not be deemed a breach of this Agreement to the extent that
such failure or delay is directly due to any Force Majeure Event.
(2) "Force Majeure Event" means any event:
(i) that is beyond the affected Party's reasonable control;
(ii) the occurrence of which the affected Party could not reasonably be
expected to take into account at the time of entering into this
Agreement; and
(iii) the effects of which the affected Party could not reasonably have
avoided or overcome.
(3) A default or delay by a third party whom the affected Party has engaged to
perform the whole or part Of this Agreement will be deemed a Force Majeure
Event if and to the extent that:
(i) the affected Party establishes the requirements set out in Clause (1);
and
(ii) the affected Party proves that the same requirements apply to the
third party.
(4) In the absence of proof to the contrary and unless otherwise agreed in this
Agreement expressly or impliedly, a Party invoking a Force Majeure Event
shall be presumed to have established the conditions described in Clauses
(2) (i) and (ii) in case of the occurrence of one or more of the following
events:
(i) war (whether declared or not), armed conflict or the serious threat of
same (including but not limited to hostile attack, blockade, military
embargo) hostilities, invasion, act of a foreign enemy, extensive
military mobilization;
(ii) civil war, riot, rebellion and revolution, military or usurped power,
insurrection, civil
Page 19 of 86
commotion or disorder, mob violence, act of civil disobedience;
(iii) act of terrorism, sabotage or piracy;
(iv) act of authority whether lawful or unlawful, compliance with any law
or governmental order, rule, regulation or direction, curfew
restriction, expropriation, compulsory acquisition, seizure of works,
requisition, nationalization;
(v) act of God, plague, epidemic, natural disaster such as but not limited
to violent storm, cyclone, typhoon, hurricane, tornado, blizzard,
earthquake, volcanic activity, landslide, tidal wave, tsunami, flood,
damage or destruction by lightning, drought;
(vi) explosion, fire, destruction of machines, equipment, factories and of
any kind of installation, prolonged break-down of transport,
telecommunication or electric current; and
(vii) general labor disturbance such as but not limited to boycott, strike
and lock-out, go-slow, occupation of factories and premises.
Adverse economic conditions or general financial or operational
constraints are not deemed to be a Force Majeure Event.
(5) The consequences set out in Clause (1) apply from the time at which the
Force Majeure Event causes the failure to perform or the delay, if the
affected Party has given notice thereof without delay, or, if the affected
Party has not given notice thereof without delay, from the time at which
notice thereof reaches the other Party.
(6) Where the effect of the Force Majeure Event is temporary, the consequences
set out under Clause (1) shall apply only to the extent that and as long as
the Force Majeure Event impedes performance by the affected Party of its
contractual duties. Where this Clause applies, the affected Party shall
notify the other Party as soon as the Force Majeure Event ceases to impede
performance of its contractual duties.
(7) The affected Party shall:
(i) consult with the other Party concerning suitable interim arrangements
and exercise due diligence to eliminate or remedy the Force Majeure
Event; and
(ii) continue performance as soon as reasonably possible after such cause
of failure is removed.
ARTICLE 10 - DESIGNATION AND MARKS
10.1 DESIGNATION
DISTRIBUTOR has the right and the duty during the term of and for activities in
connection with this Agreement to style itself in all documents, notices and
advertisements as set forth in ANNEX 2, under the heading "Designation".
10.2 USE OF SMART MARKS
Within the scope of the activities under this Agreement, DISTRIBUTOR and its
Authorized Resellers may use certain marks of smart gmbh in accordance with the
Trade and Service Marks Licensing Clauses set forth in ANNEX 7, which are an
integral part of this Agreement.
10.3 COMPANY NAME
DISTRIBUTOR is permitted to use the smart word Mark in the combination "smart
USA" as an integral part of its company name while distributing the Contract
Goods. All such uses of the smart word Mark shall inure to the benefit of smart
gmbh, DISTRIBUTOR hereby assigns and transfers to smart gmbh any and all rights
arising of such uses except the rights granted by smart gmbh to DISTRIBUTOR
under this Agreement. ANNEX 7 applies accordingly.
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10.4 TERM OF USE
DISTRIBUTOR's right to use the smart word Mark in this way shall automatically
terminate upon the expiration or termination of this Agreement. Notwithstanding,
in case the Contract Goods are, upon termination of the Distributor Agreement,
not resold to smart gmbh, but remain with DISTRIBUTOR according to article 14.4
(viii) and 14.4 (ix) of the Distributor Agreement, it may have a limited right
to use the smart Marks as defined in Annex 7.
ARTICLE 11 - STATUS AND OWNERSHIP OF DISTRIBUTOR
11.1 STATUS OF DISTRIBUTOR
(1) DISTRIBUTOR and its Authorized Resellers are independent contractors and
shall buy and sell Contract Goods under this Agreement as an independent
business for their own account. This Agreement does not make DISTRIBUTOR or
any of its Authorized Resellers a general or special agent, partner, joint
venturer or employee of any DaimlerChrysler Group Company and does not
create any fiduciary relationship or any other relationship of trust or
confidence.
(2) DISTRIBUTOR and its Authorized Resellers have no authority to make binding
obligations for or act on behalf of any DaimlerChrysler Group Company.
DISTRIBUTOR and its Authorized Resellers shall not represent, directly or
by implication, to their customers or other third parties that they have
such authority.
(3) DISTRIBUTOR shall maintain a financial structure and sufficient
capitalization to act as a Vehicle importer and distributor in the United
States, as further described in Article 12.1. As a Vehicle importer and
distributor in the United States, DISTRIBUTOR and its Authorized Resellers
shall comply with all U.S. (i) motor vehicle importation requirements, (ii)
Vehicle Safety Requirements, (iii) Environmental Protection Agency
Requirements, and (iv) the emission requirements for the states of
California, New York, New Jersey, Connecticut, Massachusetts, Maine, Rhode
Island, and Vermont; provided that smart gmbh shall provide DISTRIBUTOR
with Vehicles prior to importation that are in compliance with all
applicable emissions and safety laws.
11.2 DISTRIBUTOR'S AUTHORITY AND OWNERSHIP
(1) DISTRIBUTOR represents, warrants and covenants that:
(i) it is duly organized, validly existing and in good standing under
Applicable Laws, and has and will always have full authority and all
permits, authorizations and licenses necessary or advisable to enter
into or perform its obligations under this Agreement;
(ii) the individuals or entities listed in ANNEX 2, under the heading
"Ownership Interests", own all of DISTRIBUTOR's voting securities or
other ownership interests in the percentages shown in ANNEX 2; and
(iii) the individuals and entities listed in Annex 2, under the headings
"Ownership Interests" and "Key Personnel", have not been subject to
any voluntary or involuntary bankruptcy or insolvency proceedings, or
engage in or are charged with practices that constitute an offense
under any anti-bribery, anti-corruption, export control, competition,
tax, stock exchange or corporate governance legislation or that
jeopardize smart gmbh's good name and goodwill, or act in a manner
which substantially and adversely affects the reputation, distribution
and promotion of smart gmbh's or any DaimlerChrysler Group Company's
goods and services, and those individuals are, in addition, not
charged with or convicted of any offense punishable by imprisonment
for more than one year, or a crime involving dishonesty, false
statement or theft.
(2) DISTRIBUTOR shall notify and request the approval of smart gmbh at least
sixty days prior to any proposed change in:
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(i) the senior management of DISTRIBUTOR or the legal or beneficial
ownership of any of DISTRIBUTOR's voting securities or other ownership
interests;
(ii) the name or form of DISTRIBUTOR's legal entity; or
(iii) the location of DISTRIBUTOR's principle place of business.
(3) No such changes may be made without smart gmbh's prior consent. DISTRIBUTOR
shall provide smart gmbh complete and accurate information as to any voting
trusts, shareholders' agreements or other agreements or undertakings
affecting the voting of DISTRIBUTOR's voting securities or other ownership
interests and their beneficial ownership.
(4) If DISTRIBUTOR has owners other than natural persons. DISTRIBUTOR shall
promptly provide smart gmbh complete and accurate information as to such
owners, including their ownership percentages and ultimate controlling
parties. If any ultimate controlling party is a publicly-traded
corporation, DISTRIBUTOR shall also promptly provide any information
disseminated publicly to its or such controlling party's shareholders, or
disclosed to governmental regulatory agencies, as smart gmbh may from time
to time request.
ARTICLE 12 - FINANCIAL STRUCTURE, BOOKS, RECORDS AND ACCOUNTS, STATEMENTS AND
AUDIT
12.1 FINANCIAL STRUCTURE, BOOKS, RECORDS AND ACCOUNTS, AND STATEMENTS
(1) DISTRIBUTOR and its Authorized Resellers shall maintain a sound financial
structure with a working capital level and financing capability that
satisfy the operating requirements of DISTRIBUTOR or its Authorized
Resellers, as the case may be. In particular, the working capital level and
financing capability must be sufficient for meeting the smart Dealership
Standards, smart gmbh's requirements as well as any Minimum Sales Volumes
and other targets as per the Target Agreements under this Agreement, and
must be acceptable to smart gmbh. At no time may DISTRIBUTOR's working
capital dedicated to its operations related to Contract Goods be less than
the amount specified by smart gmbh from time to time.
(2) DISTRIBUTOR represents, warrants and covenants that it will not create,
grant or issue any security, charge or rights over or affecting any
substantial part or the whole of the business, assets or undertakings of
DISTRIBUTOR (other than liens in the nature of "floor plan" or inventory
financing liens and others in the ordinary course of business) without or
in violation of the terms of smart gmbh's prior consent. DISTRIBUTOR shall
notify smart gmbh of its intent to take any such measure at least thirty
(30) days prior to the intended date of that measure.
(3) DISTRIBUTOR and its Authorized Resellers shall maintain books, records and
accounts which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of their assets.
(4) DISTRIBUTOR shall send to smart gmbh a balance sheet and profit and loss
statement for its operations relating to the sale, distribution and service
of Contract Goods within ninety days after each fiscal year-end. These
statements shall be prepared in accordance with international accounting
standards applicable to the DISTRIBUTOR in the United States of America
(US-GAAP) and, if requested by smart gmbh, certified by a public auditor
retained by DISTRIBUTOR. If requested by smart gmbh, DISTRIBUTOR shall
submit an unaudited interim balance sheet and profit and loss statement for
each fiscal quarter or such other period as smart gmbh may specify within
thirty days in preliminary version and within sixty days in final version
after each quarter or such period, as appropriate. If requested by smart
gmbh, DISTRIBUTOR shall provide the same financial reporting for any entity
or group of entities that, directly or indirectly, owns 50% or more of
DISTRIBUTOR's voting securities or other ownership interests.
12.2 AUDIT
(1) DISTRIBUTOR and its Authorized Resellers shall permit smart gmbh and its
representatives during normal office hours to examine and make copies of
DISTRIBUTOR's and its Authorized Resellers' books and records relating to
the purchase, sale, distribution and servicing of Contract
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Goods (including, warranty services or claims and sales and incentive
programs), to verify compliance by DISTRIBUTOR and its Authorized Resellers
with the terms of this Agreement and the smart Dealership Standards as well
as smart gmbh's requirement, and to assess DISTRIBUTOR's and its Authorized
Resellers' rating in any customer satisfaction program.
(2) DISTRIBUTOR and its Authorized Resellers shall assist smart gmbh and its
representatives in every way to carry out their tasks, in particular by
promptly providing all information and materials and by permitting
unhindered access and inspection of the books and records. If duplicating
facilities are not available on DISTRIBUTOR's or its Authorized Resellers'
premises, smart gmbh or its representatives may remove the books and
records from the premises for purposes of making copies.
(3) All payments made by smart gmbh to DISTRIBUTOR or its Authorized Resellers
deriving from warranty, sales incentive or other claims are subject to the
results of possible audits that may be performed at any time by or at the
request of smart gmbh. Any discrepancies between the information provided
by DISTRIBUTOR or its Authorized Resellers and the results of any such
audit may result in non-payment or chargeback of the claims, smart gmbh
may chargeback DISTRIBUTOR on any credit account DISTRIBUTOR may have at
smart gmbh or by direct billing for all or any part of the payments
deriving from warranty, sales incentive and or any sums that may be
otherwise due and owing to smart gmbh related to smart gmbh's programs or
other claims that have been paid by smart gmbh and for which the required
evidence is lacking. In addition, smart gmbh may take other action either
under this Agreement or otherwise as it deems appropriate in the event that
it reasonably believes that DISTRIBUTOR or its Authorized Resellers have
failed to comply with the procedures required to make claims for payment
under smart gmbh's programs, including set-off against any amounts that may
be owed by smart gmbh. If there will be a set-off, smart gmbh will document
the reasons for the set-off prior to taking such action and provide such
documentation to DISTRIBUTOR or its Authorized Reseller prior to the
set-off.
ARTICLE 13 - OTHER OBLIGATIONS OF DISTRIBUTOR
13.1 DEAL INFORMATION AND ASSISTANCE
(1) DISTRIBUTOR and its Authorized Resellers (through DISTRIBUTOR) shall
promptly notify smart gmbh of any potential offer to sell or sale of
Contract Goods that they, for any reasons whatsoever, are unable to make.
(2) DISTRIBUTOR shall provide such general information, cooperation and
assistance as may be from time to time requested by smart gmbh in
connection with the business of distribution of Contract Goods (including,
but not limited to, direct offers or sales by smart gmbh in the Contract
Territory) and any vehicle homologation and related issues, subject to the
provision of Clause 1.3.
13.2 CUSTOMER DATA
DISTRIBUTOR and its Authorized Resellers shall collect all customer data suited
for identifying existing and potential customers of Contract Goods and for
developing marketing concepts and such other customer information as required by
smart gmbh. DISTRIBUTOR and its Authorized Resellers shall provide any and all
of this date and information to smart gmbh in a form and manner as requested by
smart gmbh from time to time. Collection of customer data by DISTRIBUTOR and
its Authorized Resellers, and use by smart gmbh, shall comply with applicable
legal requirements.
13.3 CUSTOMER SATISFACTION POLICIES
DISTRIBUTOR end its Authorized Resellers, upon smart gmbh's request, shall
continuously participate in any program and rating scheme with regard to
customer satisfaction policies smart gmbh may institute with regard to all
aspects of DISTRIBUTOR's and/or its Authorized Resellers' business in the
Contract
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Territory from time to time.
13.4 OTHER GOODS
DISTRIBUTOR and its Authorized Resellers shall not, without smart gmbh's prior
consent, directly or indirectly through subsidiaries:
(i) manufacture motor vehicles, chassis or parts thereof;
(ii) sell or offer or arrange for sale of any new vehicles of a brand other than
the Vehicles except the vehicles specified in ANNEX 2, under the heading
"Other Goods";
(iii) sell or offer or arrange for the sale of any parts, including, without
limitation, counterfeit parts that bear marks confusingly similar to smart
Marks or that may otherwise mislead the public and/or injure the reputation
of any DaimlerChrysler Group Company or any of its products; or
(iv) conclude with third parties agreements on the distribution and/or servicing
of motor vehicles or chassis other than Vehicles, including Vehicles that
have been modified technically or visually as well as parts kits offered by
third parties for this purpose unless prior agreed with smart gmbh.
13.5 COMPLIANCE WITH LAWS
(1) DISTRIBUTOR, for itself and on behalf of its Affiliated Persons,
represents, warrants and covenants that:
(i) DISTRIBUTOR and its Affiliated Persons are solely responsible for
complying, have to their best knowledge complied, and will comply,
with Applicable Laws and have to their best knowledge not taken and
will not take or fail to take any action, which act or omission would
subject smart gmbh or any DaimlerChrysler Group Company to liability
under Applicable Laws;
(ii) neither DISTRIBUTOR nor any of its Affiliated Persons has, to its or
their best knowledge, offered, paid, given or loaned or promised to'
pay, give or loan, or will offer, pay, give or loan or promise to pay,
give or loan, directly or indirectly, money or any other thing of
value to or for the benefit of any Government Official, for the
purposes of corruptly (a) influencing any act or decision of such
Government Official in his official capacity, (b) inducing such
Government Official to do or omit to do any act in violation of his
lawful duty, (c) securing any improper advantage or (d) inducing such
Government Official to use his influence with a Government Entity to
affect or influence any act or decision of that Government Entity, in
each instance to direct business to DISTRIBUTOR, its Authorized
Resellers, smart gmbh or any DaimlerChrysler Group Company; and
(iii) neither DISTRIBUTOR nor any of its Affiliated Persons is or will
become a Government Entity or a Government Official whose official
duties include decisions to direct business to DISTRIBUTOR, its
Authorized Resellers, smart gmbh or any DaimlerChrysler Group Company
or to supervise, or otherwise control or direct the actions of,
Government Officials who are in a position to direct business to
DISTRIBUTOR, its Authorized Resellers, smart gmbh or any
DaimlerChrysler Group Company.
(2) DISTRIBUTOR is obliged to inform smart gmbh about state and local laws and
regulations and federal laws and regulations of the United States of
America that smart gmbh, as "manufacturer" of Vehicles, shall be required
to comply with. It is of high relevance to smart gmbh to obtain information
about potential and actual modifications and/ or additions to theses
regulations as early as possible. DISTRIBUTOR shall, and shall cause its
Authorized Resellers to, assist and cooperate fully with the efforts of
smart gmbh and any DeimierChrysler Group Company to comply with Applicable
Laws, including providing smart gmbh with all necessary information about
warranty defects and field defects with emissions and/or safety related
component involved, in order to allow smart gmbh to carry out all relevant
defect reporting tasks as provided by applicable law in this matter, and
vice versa.
(3) smart gmbh for itself and on behalf of its Affiliated Persons, represents,
warrants and covenants that smart gmbh and its Affiliated Persons are
solely responsible for complying, and will comply with Applicable Laws, and
will not take or fail to take any action, which act or omission would
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subject DISTRIBUTOR and its Authorized Resellers and its Affiliated Persons
to liability under Applicable Law.
(4) In no event will a party be obligated to another under or in connection
with this Agreement to act or refrain from acting if that party believes
that such act or omission would cause it to be in violation of Applicable
Laws. In no event will a party be liable to the other for any act or
omission which the party believes is necessary to comply with Applicable
Laws.
(5) If a party or any of its Affiliated Persons breaches any of the
representations, warranties or covenants in this Article 13.5, each of
which is deemed to be material and continuously made throughout the term of
this Agreement, then, in addition to any other rights the other may have
under this Agreement, the other may:
(i) declare a forfeit of any unpaid amounts owing to the party and will be
entitled to repayment of any amounts paid or credited to the party, in
each case, which are prohibited by Applicable Laws; and
(ii) withhold delivery of Contract Goods to the party without liability to
the party for any claims, losses or damages related to such decision.
(6) DISTRIBUTOR shall comply with smart gmbh's rules and procedures with
respect to the implementation of all product recalls or field measures
internationally and in the United States of America (Annex 10), consistent
with the laws and regulations of the United States of America. Upon smart
gmbh's request, DISTRIBUTOR shall implement a recall or field measure, in
the manner set out in the recall or field measure plan as determined by
smart gmbh, smart gmbh shall provide necessary assistance to DISTRIBUTOR
for the conduct of such recall or field measure. The costs of such recall
or field measure shall be borne by either smart gmbh or DISTRIBUTOR or both
Parties jointly, depending on which Party is responsible for the product
issue giving rise to the recall or field measure under the terms of this
Agreement. In the event the Parties cannot agree on the degree of
responsibility of each Party for such defect, either Party may demand a
final and binding decision by an arbitrator in accordance with Article 17.2
of this Agreement.
(7) From the date DISTRIBUTOR becomes subject to the reporting requirements
under the laws and regulations of the United States of America, including
the Transportation Recall Enhancement Accountability And Documentation
(TREAD) Act of 2000 (the "TREAD Act", which term shall include any
successor federal statute), DISTRIBUTOR shall comply with DISTRIBUTOR's
reporting requirements.
(8) Prior to releasing to a governmental authority any documents relating to
the relevant Vehicles, including reports needed to comply with
DISTRIBUTOR's reporting requirements under the laws of the United States of
America, DISTRIBUTOR shall consult with smart gmbh, DISTRIBUTOR shall
provide such documents sufficiently in advance of such release to permit
smart gmbh an adequate amount of time to review such documents and consult
with DISTRIBUTOR regarding such documents. Prior to and subsequent to the
release of such documents, DISTRIBUTOR shall cooperate with smart gmbh at
all times with respect to such documents, smart gmbh shall timely respond
to DISTRIBUTOR to enable DISTRIBUTOR to comply with the governmental
requirements. Distributor will ask far time extensions or other
administrative relief from the applicable government agencies, as requested
by smart gmbh. The failure by smart gmbh to timely respond to DISTRIBUTOR
shall not prevent DISTRIBUTOR from complying with DISTRIBUTOR's reporting
requirements under the laws of the United States of America.
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(6) For purposes of this Article 13.5, the following terms have the meanings
set forth below:
(i) "Applicable Laws" means the U.S. Foreign Corrupt Practices Act and
German anti- corruption laws, without regard to their jurisdictional
limitations, U.S. and German export control laws to the extent
applicable to Contract Goods, and all other laws, regulations, rules,
orders, decrees or other directives carrying the force of law
applicable to any activities engaged in by a party or any of its
Affiliated Persons in connection with this Agreement or any other
business matters involving a party or any of its Affiliated Persons,
in each case as the same may be amended from time to time;
(ii) "Affiliated Persons" means the party's officers, directors, employees,
or agents, or any of its stockholders, principals or owners acting on
its behalf or in its interests;
(iii) "Government Entity" means a government or any department, agency or
instrumentality thereof (including any company or other entity
controlled by a government), a political party or a public
international organization; and
(iv) "Government Official" means any officeholder, employee or other
official (including any immediate family member thereof) of a
Government Entity, any person acting in an official capacity for a
Government Entity or any candidate for political office.
13.6 EXECUTION OF RELATED AGREEMENTS
(1) Upon smart gmbh's request from time to time, DISTRIBUTOR and its Authorized
Resellers shall execute any agreement relating to the Allocation of
Functions is use of smart Marks or Systems or any other matter related to
this Agreement in the form from time to time adopted by smart gmbh;
provided, that the terms and conditions of such agreements do not impose an
unreasonable burden on DISTRIBUTOR or its Authorized Resellers or are
inconsistent with this Agreement or change the relationship of the Parties
set forth in this Agreement. The final version of the Allocations of
Functions will be attached by the Parties as Annex 8 by December 31st,
2006.
(2) DISTRIBUTOR shall comply with all laws and regulations applicable to motor
vehicle importers, of Contract Goods in the United States including without
limitation all safety and/or emissions related laws and regulations;
provided that smart gmbh shall provide DISTRIBUTOR with (i) Contract Goods
prior to importation that are in compliance with all applicable laws, (ii)
all information within the control of smart gmbh necessary for the Monroney
label, (iii) cooperation necessary to enable DISTRIBUTOR to file all
necessary reports and documentation with US and state regulatory agencies,
(iv) field retrofits and/or other modifications to the Contract Goods to
remain in compliance. DISTRIBUTOR represents that it shall within 10 day of
signing this agreement make all filings with United States government
agencies necessary to be registered as the importer of record for the
Contract Goods.
(3) DISTRIBUTOR shall be solely and exclusively responsible for compliance with
all U.S. safety and/or emissions laws and regulations, including without
limitation all submissions required by the TREAD Act, Title II of the Clean
Air Act, Title 13 of the California Code of Regulations and the provisions
therein adopted by the states of New York, New Jersey, Connecticut, Rhode
Island, Massachusetts, Maine, and Vermont provided that smart gmbh shall
provide DISTRIBUTOR with (i) Contract Goods prior to importation that are
in compliance with all applicable laws, (ii) all information within the
control of smart gmbh necessary for the Monroney label, (iii) cooperation
necessary to enable DISTRIBUTOR to file all necessary reports and
documentation with US and state regulatory agencies, (iv) field retrofits
and/or other modifications to the Contract Goods to remain in compliance.
DISTRIBUTOR shall file on its own behalf all reports relating to recalls,
service campaigns or field actions relating to the Contract Goods, or any
submission in response to formal or informal inquiries from the National
Highway Traffic Safety Administration (NHTSA), the Environmental Protection
Agency (EPA), or the California Air Resources Board and the equivalent
agencies in states adopting California standards pursuant to other
statutory authorities. DISTRIBUTOR shall immediately inform smart gmbh
about any formal or informal government inquiry relating to the safety
and/or emissions of the Contract Goods and smart gmbh will immediately
inform DISTRIBUTOR of any formal or informal government inquiry relating to
the safety and/or emissions of the Contract Goods (in the versions intended
for the Contract Territory, as offered to DISTRIBUTOR).
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(4) The Contract Goods shall be accounted for and included within
DAIMLERCHRYSLER Group's vehicle fleet for purposes of compliance with the
Corporate Average Fuel Economy program pursuant to 49 U.S.C. Chapter 329.
DISTRIBUTOR shall promptly execute a separate CAFE agreement implementing
the aforesaid, smart gmbh will submit such CAFE agreement to the National
Highway Traffic Safety Administration, as required by regulation, in order
to effectuate this intention.
(5) The Contract Goods shall be accounted for and included within
DAIMLERCHRYSLER Group's vehicle fleet for purposes of compliance with all
regulatory phase-in requirements relating to federal motor vehicle safety
standards promulgated under 49 U.S.C. Chapter 301. smart gmbh will submit
this contract to the National Highway Traffic Safety Administration, as
required by regulation, in order to effectuate this intention.
(6) smart gmbh agrees that the Contract Goods shall meet the specifications,
technical publications, manuals, bulletins or written official
representations made by smart gmbh.
13.7 EMISSIONS CREDITS
The Parties agree that all emissions credits generated in connection with the
manufacture, certification, distribution, and sale of Vehicles are the property
of smart gmbh and DaimlerChrysler AG, 'Emissions credits' include, but are not
limited to, zero emission vehicle credits, partial zero emissions credits, and
non-methane organic gas credits, NOx Credits. If and to the extent DISTRIBUTOR
has any rights, DISTRIBUTOR promptly will take all actions necessary to ensure
that smart gmbh and DaimlerChrysler AG obtain the full benefit of all such
emission credits, at smart GmbH's expense, if any gmbh and DaimlerChrysler AG
will not pay any compensation to DISTRIBUTOR in connection with the emissions
credits. DISTRIBUTOR makes no representation that DISTRIBUTOR has any rights in
such credits to begin with or that credits can be assigned / transferred. The
Parties understand that such credits already accrue for the benefit of smart
GmbH / DaimlerChrysler AG based on DaimlerChrysler AG certifying the Vehicles.
If and to the extent DISTRIBUTOR has any rights and as permitted by applicable
law, emission credits received by DISTRIBUTOR as result of this Agreement shall
be transferred / assigned to smart GmbH and DaimlerChrysler AG by DISTRIBUTOR
without recourse to DISTRIBUTOR.
ARTICLE 14 - TERM AND TERMINATION
14.1 TERM OF THIS AGREEMENT
(1) This Agreement will become effective on the date set out in ANNEX 2, under
the heading "Effective Date".
(2) This Agreement has a term until December 31st, 2021. DISTRIBUTOR or its
Authorized Resellers will not have any claims of compensation against smart
gmbh as a result of the expiration of the Distributor Agreement on this
date.
(3) A termination of production of Vehicles for the USA before end of 2011 (at
sole discretion of smart gmbh) or smart gmbh's decision to not pursue this
business intention before end of 2011 or smart gmbh's decision to not
develop a successor model for the USA of Vehicles or to not commercialize
this successor model in the USA shall constitute a good cause for
termination of the business relationship (except for the continued supply
of spare parts and accessories as required by Applicable Law and this
Agreement) and respectively this Agreement, upon proper notice six months
prior to the termination of production of Vehicles for the USA or upon
notice in writing from smart gmbh to DISTRIBUTOR by December 31st, 2012
effective December 31st 2014 if the decision is not to develop a successor
model for the USA of Vehicles or not commercialize this successor model in
the USA.
In case smart gmbh decides to not pursue this business intention before the
retail sales activities have been started by DISTRIBUTOR (i.e. first
Authorized Reseller has opened and is selling
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Vehicles) or in case of a termination of production of Vehicles for the USA
after start of retail activities but before end of 2011, smart gmbh shall
pay the following to DISTRIBUTOR or UAG, as applicable:
(i) no compensation but only refund of the not yet depreciated investment
of DISTRIBUTOR, originally amounting to no more than * US$ based upon
current envisioned strategy and
(ii) cancellation/termination costs incurred by UAG or DISTRIBUTOR,
including payments of damages owed under Applicable Law to terminated
Authorized Resellers of DISTRIBUTORS, in any and all cases * according
to Clause 5.1 (1), 2nd paragraph, if not been depreciated yet and
under the condition that the number of Authorized Resellers has been
agreed by the Parties before execution of the investments. It is
estimated that a maximum of 70 Authorized Resellers will be appointed
by 2010.
DISTRIBUTOR is obliged to provide evidence of its and Authorized
Reseller's investments, depreciation and profits already generated and
costs being incurred. Before the DISTRIBUTOR makes material additional
investments in excess of * DISTRIBUTOR will agree these plans with
smart gmbh.
In case smart gmbh decides to terminate production of Vehicles for the
USA after start of retail sales activities from beginning 2012 onward
compensation and reimbursement shall be paid by smart gmbh to UAG and
DISTRIBUTOR as applicable, as provided in the previous paragraphs.
In case smart gmbh decides to not develop a successor model for the
USA of Vehicles and/or decides to not commercialize this successor
model in USA, no compensation nor cost refund shall be paid by smart
gmbh to UAG nor to DISTRIBUTOR because of those reasons if the
termination of this Agreement by smart gmbh for those reasons is
effective December 31st, 2014. By December 31st, 2012 smart gmbh shall
inform DISTRIBUTOR whether they will develop a successor model or not
or if so whether it will be commercialized or not.
In the event of such a termination of production of Vehicles for the
USA, smart gmbh may exercise its option to purchase all of the
outstanding voting rights of the DISTRIBUTOR in accordance with the
methodology specified in the "Option Agreement".
14.2 TERMINATION WITH IMMEDIATE EFFECT
(1) Either Party may terminate this Agreement by notice to the other Party with
immediate effect for good cause.
(2) Good cause exists, without limitation and as examples only, in the events
expressly set forth in this Agreement or if:
(i) a Party is in breach of an obligation under this Agreement despite
having been given due warning by the other Party and despite having
had sufficient opportunity and time to remedy that breach. No warning
is necessary if the violation of material obligations under this
Agreement is so grave that the other Party cannot reasonably be
expected to continue the contractual relationship any longer,
(ii) a Party is in breach of any representations or warranties expressly
set forth in this Agreement;
(iii) a Party makes any fraudulent statement or submission, or any material
misrepresentation to the other;
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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(iv) a Party or any of its officers, employees, agents or representatives
has misrepresented any material facts which were relied upon by the
other Party in entering into this Agreement and that other Party would
not have entered into this Agreement, had it known of that
misrepresentation;
(v) voluntary or involuntary proceedings are filed by or against a Party
under bankruptcy or insolvency laws or under laws for arrangement,
composition, judicial management, liquidation, dissolution,
receivership or similar procedures, or either Party seeks or consents
to similar relief or remedies without proceedings and, in the case of
involuntary proceedings, they are not dismissed within forty-five
days;
(vi) a court, arbitral tribunal or government authority having jurisdiction
declares invalid or refuses to enforce any provision of this
Agreement, that provision is a material term of this Agreement to the
terminating Party and the Parties cannot reach an agreement in good
faith on a replacement provision for the void or non-enforceable
provision;
(vii) a Force Majeure Event prevents a Party from performing its
obligations under this Agreement for more than one hundred eighty
(180) days and such failure to perform is continuing when notice of
termination is given; or
(viii) any existing or future agreement between DISTRIBUTOR or UAG and
smart gmbh or a DaimlerChrysler Group Company (for as long as smart
gmbh is a subsidiary of DaimlerChrysler AG) is terminated for reasons
equal or similar to those set forth in Clause (2) and (3) which have
an impact on the contractual relationship under this Agreement; or
(ix) a Party, for any reason whatsoever, cannot reasonably be expected to
continue the contractual relationship until ordinary termination
becomes effective.
(3) In addition to the events described in Clause (2) above and anywhere else
in this Agreement, either party may terminate this Agreement by notice to
the other party with immediate effect upon the occurrence of the following
events:
(i)
a. As to smart gmbh, if DISTRIBUTOR fails to pay smart gmbh or any
DaimlerChrysler Group Company or licensee any amount due under
this Agreement or any sales agreement for Contract Goods when
due, if such payment default is not cured within thirty (30) days
of the date the amount in question became due and payable to
smart gmbh; and
b. As to DISTRIBUTOR, if smart gmbh or any DaimlerChrysler Group
Company fails to pay DISTRIBUTOR any amount due under this
Agreement or any sales agreement For Contract Goods when due, if
such payment default is not cured within thirty (30) days of the
date the amount in question became due and payable to
DISTRIBUTOR;
(ii) DISTRIBUTOR substantially ends its sales and service activities under
this Agreement;
(iii) DISTRIBUTOR is merged into another entity, dissolved, expropriated,
sequestered or nationalized, or DISTRIBUTOR's legal existence is
suspended or revoked;
(iv) DISTRIBUTOR has not notified and requested the approval of smart gmbh
at least sixty days prior to any proposed change in management control
of DISTRIBUTOR or the legal or beneficial ownership of any of
DISTRIBUTOR's voting securities or other ownership interests, the name
or form of DISTRIBUTOR's legal entity, or the location of
DISTRIBUTOR's place of business;
(v) an individual named in ANNEX 2, under the heading "key Personnel",
stops participating actively, substantially and continuously in
DISTRIBUTOR's business operations under this Agreement and either a
replacement is appointed without smart gmbh's prior consent or a
replacement acceptable to smart gmbh is not appointed within a
reasonable time;
(vi) DISTRIBUTOR's legal and/or beneficial shareholders or owners or its or
their officers or managers, or any individual or entity named in ANNEX
2, under the headings "Management and Signatory Authority", "Key
Personnel' and "Ownership Interests', are in repeated disagreement
among each other and those disagreements seriously endanger the
fulfillment Of this Agreement; or
(vii) DISTRIBUTOR or any of its Authorized Resellers is in breach Of its
obligations under the Trade and Service Marks Licensing Clauses as per
ANNEX 7.
(4) In addition to the events described in Clauses (2) and (3)above and
anywhere else in this Agreement, smart gmbh or DaimlerChrysler AG may
terminate this Agreement by notice to
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DISTRIBUTOR with immediate effect if DISTRIBUTOR is in breach of its
obligations under the Option Agreement Clauses.
14.3 NOTIFICATION
Either Party shall notify the other Party immediately, if any event entitling
the other Party to terminate this Agreement occurs.
14.4 RIGHTS AND OBLIGATIONS ON TERMINATION
Upon this Agreement's termination:
(i) DISTRIBUTOR or its Authorized Resellers will not have any claims of
compensation for loss of clientele against smart gmbh except as provided
for in Clause 14.1 (3).
(ii) smart gmbh will not be obliged to compensate DISTRIBUTOR or its Authorized
Resellers for any other kind of goodwill created by DISTRIBUTOR or its
Authorized Resellers.
(iii) Except as provided for in Clause 14.1 (3) and in any other agreement in
writing signed by DISTRIBUTOR and smart gmbh, smart gmbh will not be liable
to DISTRIBUTOR or to its Authorized Resellers for any other damages by
reason of smart gmbh exercising any of its rights hereunder, including the
termination of this Agreement, including statutory or other indemnities,
irrespective whether the damages result from loss of commitments on leases
or Other obligations, from loss of investment or present or prospective
profits, from severance or termination payments to employees or others,
from inability to meet obligations, or from any other cause.
(iv) DISTRIBUTOR shall immediately, following the effective date of termination,
stop holding itself out as an authorized distributor of smart gmbh. With
respect to the use of smart Marks, the regulations of the Trade and Service
Marks Licensing Clauses as per ANNEX 7 apply.
(v) As to a termination by smart gmbh under Clause 14.2 DISTRIBUTOR's unfilled
orders are automatically canceled, unless payment has been made before
effectiveness of termination or unless smart gmbh specifies otherwise. In
any case of smart gmbh's termination under Clause 14.2, orders made
during the last four months of this Agreement will only be accepted upon
payment of the total order volume in advance. If smart gmbh accepts orders
or transacts other business with DISTRIBUTOR after termination, the terms
and conditions of this Agreement will govern such purchases, but smart
gmbh's acceptance of orders or other business will not renew the Agreement
or waive its termination, and smart gmbh may at any time after
effectiveness of termination stop that business with immediate effect.
Termination does not modify either Party's payment obligations.
(vi) All amounts owed by either Party to the other will be immediately due and
payable without need for notice, other formality or court order.
(vii) DISTRIBUTOR and its Authorized Resellers shall return to smart gmbh, at
DISTRIBUTOR's expense to a location mutually agreed upon reasonably
convenient to both parties, all property and other materials or equipment
owned by smart gmbh immediately upon termination of this Agreement,
including any copyrighted materials. In any case DISTRIBUTOR and its
Authorized Resellers shall grant access to smart gmbh or any of smart
gmbh's subcontractors to remove without delay all such property and other
materials or equipment owned by smart gmbh.
(viii) DISTRIBUTOR shall resell to smart gmbh, if so requested by smart gmbh,
some or all of the Vehicles delivered to DISTRIBUTOR, regardless of the
circumstances of termination of this Agreement. The repurchase price for
those Vehicles will their landed cost to DISTRIBUTOR (smart gmbh's invoice
price plus unrebated duties, taxes and inland transportation costs) less an
adjustment to reflect any damage other diminution in value not normal for
new Vehicles being offered for sale at retail at the date of the
repurchase. In addition, DISTRIBUTOR shall represent and warrant that the
Vehicles are in its property and that DISTRIBUTOR has all ownership rights
Page 30 of 86
without any restrictions or limitations, smart gmbh is entitled to inspect
the Vehicles at its discretion. In case of any dispute on the condition or
the price of any Vehicle, smart gmbh is entitled to call an independent
expert in order to determine the condition of the Vehicle and, if
necessary, any damage or diminution of its value. The expert's fees shall
be borne by smart gmbh and DISTRIBUTOR equally.
(ix) smart gmbh shall repurchase from DISTRIBUTOR, if so requested by
DISTRIBUTOR in writing within a reasonable period, however not later than
six months after termination of this Agreement, all Parts delivered by
smart gmbh to DISTRIBUTOR, provided that smart gmbh will not be obliged to
repurchase Parts from DISTRIBUTOR in case smart gmbh has terminated this
Agreement in accordance with Article 14.2. smart gmbh will only be obliged
to repurchase Parts that are unsold, undamaged, unused, in their original
packaging and stored in a state of the art manner, and appear on smart
gmbh's then-current Parts' listing. The repurchase price for such Parts
will be their landed cost to DISTRIBUTOR (smart gmbh's invoice price plus
unrelated duties, taxes and inland transportation (including transportation
and insurance) costs) less *% of such cost and less an adjustment to
reflect any damage or other diminution in value not normal for current
Parts being offered for sale at retail at the date of the repurchase.
Together with the request to smart gmbh to repurchase Parts, DISTRIBUTOR
shall provide a complete list of Parts to be repurchased. The list shall
contain the relevant Parts number, the invoice number, the dale of invoice
and the amount of invoice for each of the Parts to be repurchased. In
addition, DISTRIBUTOR shall represent and warrant that the Parts are in its
property and that DISTRIBUTOR has all ownership rights without any
restrictions or limitations, smart gmbh is entitled to inspect the Parts at
its discretion. In case of any dispute on the condition or the price of any
Part, smart gmbh shall call an independent expert in order to determine the
condition of the Part and, if necessary, any damage or diminution of its
value. The expert's fees shall be borne by smart gmbh and DISTRIBUTOR
equally.
(x) smart gmbh may purchase (in which event, DISTRIBUTOR shall sell to smart
gmbh) some or all of DISTRIBUTOR's special tools and equipment for repair
or service of Contract Goods and smart gmbh signage owned by DISTRIBUTOR at
the fair market value of such special tools, equipment and signage.
(xi) DISTRIBUTOR and its Authorized Resellers shall remove all registrations or
filings of this Agreement and related documents in any public or
governmental record and must cancel or assign to smart gmbh or its
designee, as smart gmbh requests, to the extent it can do so by Applicable
Law, any governmental licenses, permits or authorizations for importation,
sale or servicing of Contract Goods. DISTRIBUTOR also grants smart gmbh an
irrevocable power of attorney to take these actions on DISTRIBUTOR's behalf
if DISTRIBUTOR wrongfully refuses to do so and shall, to the extent it can
do so by Applicable Law, do any and all things and acts which may be deemed
necessary or appropriate by smart gmbh in such actions, including
executing, or making available to smart gmbh, as the case may be, any and
all relevant documents, instruments, materials or certificates.
(xii) DISTRIBUTOR has no right of retention against any claim of smart gmbh
under this Article 14, unless the claim on which the right of retention is
based is uncontested or established by final judgment or arbitral award.
(xiii) In case of termination of this Agreement by smart gmbh, DISTRIBUTOR or
its Authorized Resellers will not have any claims of compensation against
smart gmbh except as provided for in this Agreement.
(xiv) The following provisions of this Agreement shall survive termination of
all or part of this Agreement, and shall continue to be enforceable
obligations: Articles 1,2 (2), 1.3,3.2, 5.3 (3) (ii), 5.3 (4), 5.5 (2)
(i), (ii) and (iii), 5.5 (3), 6.2 (9), 6.3, 6.4, 6.6 (2), 6.6 (3), 7.1
(4), 7.2 (3), 8,2 (4), 9, 11.1, 12.2,13,4 (for a period of five years after
effectiveness of termination), 13.5,14,15, 16,17, as well as Clauses
1.1,1.2, 6.1 and 8 of the Trade and Service Marks Licensing Clauses as per
ANNEX 7. The termination of this Agreement will not affect any rights of
smart gmbh or any DaimlerChrysler Group Company under any other agreement
between DISTRIBUTOR and smart gmbh or any DaimlerChrysler Group Company or
vice versa, except in accordance with the terms
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 31 of 86
of such agreement.
ARTICLE 15-GENERAL PROVISIONS
15.1 PAYMENTS TO DISTRIBUTOR
Any payment to DISTRIBUTOR under this Agreement will be made by wire
transfer to DISTRIBUTOR's bank account (confirmed in writing by the
relevant bank) in the Contract Territory;
(1) In addition, payment will only be made under the condition and to the
extent that, in the sole discretion of smart gmbh;
(i) smart gmbh, at its option, has issued a credit note or has received
from DISTRIBUTOR a complete, accurate and comprehensible invoice;
(ii) DISTRIBUTOR has furnished sufficient proof That all preconditions for
payment have been met;
(iii) payment is due and legally and practically possible; and
(iv) DISTRIBUTOR's representations end warranties under Article 13.5 have
been fulfilled.
(2) Partial payments will not be made, smart gmbh may combine several payments
into one single payment.
15.2 ENTIRE AGREEMENT, MODIFICATION, CONSENT, WAIVER, RIGHTS AND ASSIGNMENT
(1) This Agreement constitutes the Parties' entire agreement for selling and
servicing Contract Goods in the Contract Territory. It supersedes all prior
negotiations, understandings and agreements, written or oral, relating to
its subject matter among DISTRIBUTOR and smart gmbh. Each Party
acknowledges that no representations or statements other than those
expressly set forth herein were made by the other or any of its officers,
employees, agents or representatives, or were relied upon by either Party
in entering into this Agreement.
(2) Any modification or supplement to or extension of this Agreement must be in
writing and signed by authorized officers or representatives of both
Parties.
(3) When the consent or approval of a Party is required under this Agreement,
that consent or approval may be based on such factors, considerations or
economic interests deemed by that Party to be relevant, regardless of any
prior exercise of that Party's discretion in similar circumstances, and
without any duty to justify its exercise of discretion in giving or
withholding its consent or approval, or in subjecting its consent or
approval to particular conditions.
(4) No waiver of a default or other nonperformance or consent will be valid
unless set forth in writing signed by authorized officers or
representatives of the Party making the waiver or giving the consent. Any
such waiver will be applicable solely to that particular default and will
not be a continuing waiver nor will it excuse any later default, and any
such consent will be applicable solely to the particular situation for
which the consent was granted. No failure or delay by any Party in
exercising any right under this Agreement will operate as or be deemed to
be a waiver of or limitation on any such right or an implied consent, and
no single or partial exercise of any such right will preclude any other or
further exercise of that right or the exercise of any other right.
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(5) Every right and remedy granted by this Agreement is cumulative and in
addition to every other right and remedy under this Agreement or available
under any applicable addition to every other right and remedy under this
Agreement under any Applicable Law.
(6) Neither Party may assign this Agreement or any of their rights or
obligations without or in violation of the terms of the other's prior
consent, and unless the consent states otherwise the assigning Party will
remain legally obliged, jointly and severally, with its assignee for the
performance of this Agreement, in the event of any breach of this Clause by
either Party, the other Party may terminate this Agreement in accordance
with Article 14.2,
(7) As an exception to Clause (6) above, smart gmbh may assign this Agreement
or any other of its rights or obligations and may delegate its performance
to any DaimlerChrysler Group Company and each Party may assign any of its
rights to payments due under this Agreement to any entity providing
factoring or other financing related services. In the event that smart gmbh
assigns any of its rights or obligations or delegates their performance to
any DaimlerChrysler Group Company, smart gmbh and such DaimlerChrysler
Group Company may invoice DISTRIBUTOR separately for Contract Goods and
related services but smart gmbh shall also remain liable hereunder.
15.3 REGISTRATION
Other than as absolutely required by Applicable Law, DISTRIBUTOR will not
register or file this Agreement or any related documents in any public or
governmental record without the prior consent of smart gmbh.
15.4 CONFIDENTIAL INFORMATION
(1) Other than as absolutely required by Applicable Law or as consented to by
smart gmbh in writing, DISTRIBUTOR and its Authorized Resellers, and their
respective officers, employees and agents shall keep confidential all
non-public business or technical information relating to smart gmbh, any
DaimlerChrysler Group Company or any of their respective suppliers or
customers of which they become aware in connection with this Agreement and
shall not disclose it except to DISTRIBUTOR's professional advisors.
(2) smart gmbh will treat as confidential all non-public information concerning
DISTRIBUTOR which is obtained under this Agreement and will not disclose
such information to third parties, other than smart gmbh's professional
advisors.
(3) This confidentiality obligation under Clauses 15.4 (1) and 15.4 (2),
however, will not apply to:
(i) information that is lawfully known to the other at the time of
disclosure;
(ii) Information that is or becomes available in the public domain through
no fault of the non-disclosing person;
(iii) information that is or becomes available to the non-disclosing person
from any third party who was not in breech of any confidentiality
obligation to the disclosing person or of whose breach of any
confidentiality obligation to the disclosing person the non-disclosing
person was not aware; or
(iv) information that a person is required to disclose by law or court or
governmental order or request from regulatory authorities.
(4) Should DISTRIBUTOR receive a request from any person other than an
authorized service center, dealer or distributor of smart gmbh for
technical information relating to the repair and maintenance of Contract
Goods, such request shall be forwarded to smart gmbh for consideration. No
such information may be disclosed without the prior consent of smart gmbh
except as required by Applicable Law.
15.5 COUNTERPARTS AND PHOTOCOPIES
This Agreement may be executed in counterparts, each of which will be deemed to
be an original of this Agreement with the same force and effect. A facsimile or
photocopy of a fully executed counterpart of
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this Agreement, or of a set of identical versions separately executed by the
Parties, will be valid evidence of the existence and the terms of this
Agreement.
15.6 INTERPRETATION AND DISCREPANCY WITH OTHER DOCUMENTS
(1) In interpreting this Agreement, the following rules of interpretation will
apply unless the context requires otherwise:
(i) The singular includes the plural, and conversely;
(ii) A reference to a person includes a company, an unincorporated body or
other legal entity, and conversely;
(iii) A reference to a Party to this Agreement or any other agreement or
document includes that Party's successors and permitted assigns (if
any);
(iv) A reference to this Agreement or any other agreement or document is to
that agreement or document be amended, novated, supplemented, varied
or replaced from time to time, except to the extent prohibited by this
Agreement or by that other agreement or document; and
(v) "Includes", "including", "in particular" and similar expressions are
intended to signify examples, and not an exclusive listing, in each
case as if the words "but not limited to" were part of that
expression.
(2) This Agreement was negotiated and concluded in the English language, and
the English text of this Agreement will be controlling in all events. Both
Parties have had the opportunity to consult with legal counsel in the
negotiation of this Agreement, and the fact that smart gmbh prepared the
initial draft of this Agreement shall not be taken into account in
interpreting its provisions.
(3) In the event of any discrepancy or conflict between the terms of this
Agreement and the terms of any Annex hereto or any document referred to in
this Agreement or in any Annex hereto, the terms of this Agreement shall
prevail.
15.7 SEVERABILITY
If a court, arbitral tribunal or government authority having jurisdiction
declares invalid or unenforceable any provision of this Agreement, this
Agreement will be considered divisible as to that provision, and that provision
will be deemed deleted from this Agreement or to be inapplicable, and the
remainder of this Agreement will be valid and binding as if that provision were
not included herein or as if it were included herein only with respect to those
parts of the Contract Territory, if any, where that provision is not invalid or
unenforceable.
ARTICLE 16 -NOTICES
(1) All notices, applications, requests, approvals, consents, confirmations and
waivers given under or in connection with this Agreement shall be in
English, in writing and will be deemed properly given if hand delivered or
delivered by:
(i) prepaid registered or certified mail, return receipt requested;
(ii) by commercial courier or messenger service; or
(iii) by facsimile.
(2) Notices will be deemed given on the first to occur of the following:
(i) when actually delivered;
(ii) if sent by facsimile, when the sender receives an electronic
confirmation of receipt if promptly followed by a confirmation copy
given by another permitted method, unless the recipient acknowledges
receipt of the facsimile; or
(iii) if sent by mail, five business days after mailing, unless the
declaration is of particular relevance and unless the addressee proves
that it has not received the notice.
(3) Notices shall be delivered to the addresses or facsimile numbers (or to any
other address or
Pages 34 of 86
facsimile number that either Party may designate, at any time, to the other
by notice given in accordance with this Article 16) as set out in ANNEX 2
under the heading "Notices".
ARTICLE 17 - GOVERNING LAW AND DISPUTE RESOLUTION
(1) This Agreement is made in and will be construed and governed in all
respects in accordance with the laws of Germany and without regard to any
conflicts of law doctrines or principles of German law. If the English
legal meaning of any term or stipulation in this Agreement or its Annexes
differs from the German legal meaning, the German legal meaning will
prevail.
[2) All disputes, controversies or claims arising from the interpretation,
performance or non - performance of this Agreement or any and all
transactions related to this Agreement (including, but not limited to, the
validity, scope and enforceability of this provision, or disputes under
rights granted pursuant to law) shall be finally and completely resolved by
arbitration in accordance with the Rules of Arbitration of the
International Chamber of Commerce in force at the time of commencement of
the arbitration. The place of arbitration is Zurich, Switzerland. The
language to be used in the arbitral proceedings is English.
ARTICLE 18 - PLACE OF PERFORMANCE
With respect to smart gmbh and any other DaimlerChrysler Group Company, place of
performance (as well as place of delivery and place of origination of payment by
smart gmbh) for any and all obligations under this Agreement is Stuttgart,
Germany or Hambach, France.
ARTICLE 19-SIGNATURE
This Agreement has been signed by authorized representatives of smart gmbh and
DISTRIBUTOR effective as of the Effective Date set forth in ANNEX 2 to this
Agreement, under the heading "Effective Date".
SMART GMBH SMART USA DISTRIBUTOR LLC
/s/ Ulrich Walker /s/ Roger S. Penske
- ------------------------------------- ---------------------------------------
Ulrich Walker, President & CEO Roger S. Penske, Chairman of the Board
/s/ Anders S. Jensen /s/ David Schembri
- ------------------------------------- ---------------------------------------
Anders S. Jensen, David Schembri, President
Vice President Marketing & Sales
Page 35 of 86
ANNEX 1
VEHICLES
smart fortwo coupe (C451)
smart fortwo cabrio (A451)
Successor and supplementary models within existing model series will become
Contract Goods upon their official launching in the Contract Territory with the
consent of smart gmbh.
Page 36 of 86
ANNEX 2
CONTRACT SPECIFICATIONS
I. CONTRACT TERRITORY
United States of America and Puerto Rico.
II. MANAGEMENT AND SIGNATORY AUTHORITY
NAME POSITION JOINT/SEVERAL AUTHORITY
---- --------- -----------------------
Roger Penske Chairman Several Authority
David Schembri President Several Authority
III. KEY PERSONNEL
Roger Penske and David Schembri.
IV. DESIGNATION
Distributor for smart gmbh of smart Vehicles in USA and Puerto Rico.
V. OWNERSHIP INTERESTS
NAME PERCENT OWNERSHIP
---- -----------------
United Auto Group Inc. 100%
VI. OTHER GOODS
VII. EFFECTIVE DATE
October 31st, 2006.
VIII. NOTICES
If to smart gmbh: with duplicate copy to:
smart gmbh DaimlerChrysler AG
HPC H100 L/DS
P.O. Box 20 60 HPC 096/0431
71010 Boblingen 70546 Stuttgart
Germany Germany
Attention: Vice President Marketing Attention: International Counsel USA
& Sales
Facsimile: * Facsimile: *
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 37 of 86
If to DISTRIBUTOR: with a duplicate copy to:
smart USA Distributor LLC United Auto Group, Inc.
2555 Telegraph Road 2555 Telegraph Road
Bloomfield Hills, Michigan 48302 Bloomfield Hills, Michigan 48302
Attention: President Attention: General Counsel
Facsimile: * Facsimile: *
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 38 of 86
ANNEX 3.1
TARGET AGREEMENT
In accordance with the Distributor Agreement between smart gmbh ("smart gmbh")
and smart USA Distributor LLC ("DISTRIBUTOR") dated October 31st, 2006,
DISTRIBUTOR undertakes to and agrees with smart gmbh to achieve the following
targets during the Sales Period beginning on January 1st, 2008 and ending on
December 31st, 2008 (the "Sales Period"):
*
Any other targets mutually agreed for example, among others, CSI targets, market
share targets, number of outlets.
SMART GMBH SMART USA DISTRIBUTOR LLC
/s/ Ulrich Walker /s/ Roger S. Penske
- ------------------------------------- ----------------------------------------
Dated: October 31st, 2006
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 39 of 86
ANNEX 3.2
PARTS
The discount for Parts is subject to the discount class ("RG") applicable for
the relevant Part, as designated by DAIMLERCHRYSLER. Currently, the following
discounts apply for the following discount classes;
General Parts
Discountgroup * *
Discountgroup * *
Assemblies
Discountgroup * *
Special Parts
Discountgroup * *
Accessories
Discountgroup * *
Special Tools
Discountgroup * *
Discounts are based on the German Wholesales list prices of the DaimlerChrysler
AG valid on the day of delivery.
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 40 of 86
ANNEX 4
FORMAT TYPES, CORPORATE IDENTITY (CI) END STANDARDS
smart gmbh and United Auto Group, Inc, agree to the following matters pertaining
to Format Types, Corporate Identity and Standards, based on Article 5.2 (1) of
the Distributor Agreement made as of October 31st, 2006 by and between smart
gmbh and United Auto Group, Inc.
*
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Pps 41 to 50 of 86
ANNEX 5
DISTRIBUTOR'S WARRANTY
(SMART LOGO)
- MINIMUM WARRANTY CONDITIONS-
Vehicle warranty: 24 months, 24000 miles
Parts & accessories warranty: 24 months, 24000 miles
Corrosion perforation warranty: 48 months. 50000 miles
Any other warranty required by
Applicable Law: the warranty terms required Applicable Law
1. DISTRIBUTOR guarantees the fault-free functioning of the motor vehicle for
each motor vehicle type produced by smart gmbh, as set out in the following
conditions. The warranty covers any malfunction of the vehicle due to production
or material faults and for which warranty coverage is not excluded according to
these conditions.
2. The warranty entitles the customer to have the malfunction corrected and the
resulting damage caused to other parts of the vehicle either repaired or
replaced free of charge. Warranty claims can only be asserted at a smart
authorised repairer and must be reported there, accompanied by presentation of
the service booklet. The smart authorised repairer shall decide whether to
repair or replace. Any parts acknowledged as faulty and replaced become the
property of DISTRIBUTOR.
3. DISTRIBUTOR provides warranty on the vehicle as well as on smart replacement
parts and original accessories for a period of 24, months or 24000 miles
(whichever comes first). The criteria for the start of the warranty period are
the delivery date or the date of initial licensing of the vehicle (whichever is
the earlier), and in the case of replacement parts and original accessories, the
date of purchase, smart gmbh additionally grants a 48 months or 50000 miles
(whichever comes first) warranty against corrosion perforation of bodywork from
the inside out.
4. Natural wear and tear, non-warranty adjustment work and normal servicing and
maintenance are excluded from the warranty. Warranty claims also cannot be made
without regard to the contributory causes for malfunctions and damage caused by:
a) influences acting on the vehicle from outside, e.g. of a mechanical or
chemical nature (such as damage to paintwork, synthetics or bodywork caused by
flying stones, fly ash, industrial emissions, bird droppings) or other external
occurrences, including accidents, malicious or willful actions by third parties,
in particular theft and unauthorized use,
Page 51 of 86
b) improper handling or overloading of the vehicle, including non-standard
conditions of use such as off-road driving, racing, overloading, excessive roof,
trailer or axle loads,
c) alteration of the original construction of the vehicle (e.g. tuning),
conversions or alterations of parts, installation of accessories or units from
other manufacturers, the use of which has not been approved by smart gmbh,
d) use of unsuitable lubrication and fuels, or
e) improper storage or damage during transport.
5. A warranty claim only exists if the servicing and maintenance works
prescribed and recommended by DISTRIBUTOR and/or smart gmbh have been carried
out on the vehicle at a smart authorized repairer or by another company
expressly authorized by DISTRIBUTOR to perform such tasks.
6. The warranty does not cover malfunctions and damage which have arisen
because:
a) the vehicle has previously, been serviced, maintained or attended in a garage
other than a smart authorized repairer or an operation authorized by
DISTRIBUTOR, or by a third party that has not been authorized by DISTRIBUTOR for
the specialist and professional maintenance, servicing or upkeep of the vehicle,
b) the operating instructions of the vehicle have not been observed, or
c) a malfunction or damage has not been immediately reported and the vehicle has
not been immediately brought in for repair.
7. The repair of indirect and consequential damage is not covered insofar as it
is not listed under clause 2 above.
8. This warranty does not constitute a basis for claims for cancellation
(annulment of the purchase contract) or reduction (reduction the purchase price)
against DISTRIBUTOR.
9. This warranty is valid exclusively for the territory in which smart gmbh
maintains a distribution network with smart authorized repairers at the date of
the occurrence of the warranty event. If the vehicle is still under warranty and
is in need of repair outside of the DISTRIBUTOR's Contract Territory the
warranty will be the warranty under this Annex 5 and not the warranty generally
applicable outside of the DISTRIBUTOR's Contract Territory.
10. All claims arising from the warranty are barred by the statute of
limitations 6 months after receipt of the damage report at the smart authorized
repairer in accordance with clause 2 above, but at the latest 30 months (in the
case of the corrosion perforation warranty, 54 months} after delivery of the
vehicle to the customer.
11. The customer has the right, if necessary, to make contractual and legal
warranty claims against the seller of the vehicle, irrespective of and in
addition to claims under this warranty.
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ANNEX 6
SALES CONDITIONS
(SMART LOGO)
TERMS AND CONDITIONS FOR THE SALE OF BRAND-NEW VEHICLES ABROAD
Exclusively applicable to sales by smart gmbh to foreign business persons who in
concluding the contract of sale are acting in a commercial or independent
professional capacity, and to public authorities abroad.
I. SCOPE OF CONDITIONS
1. The contract of sale shall be governed exclusively by these Terms and
Conditions of Sale. Conflicting terms of the Buyer shall not apply.
2. These terms and conditions of sale apply to the sale of brand new vehicles
of the smart brand to business persons domiciled outside the Federal
Republic of Germany, who in concluding the contract of sale are acting in a
commercial or independent professional capacity, and to foreign public
authorities and foreign publicly-owned legal entities.
II. CONCLUSION OF THE CONTRACT, AMENDMENTS TO THE CONTRACT AND ASSIGNMENT
1. Offers of the Seller are not binding.
2. The Buyer shall be bound by the order for a period not exceeding six
weeks, in the case of vehicles which are in stock at the Seller's, for up
to two weeks. The contract of sale is concluded when within this period the
Seller confirms in writing or by electronic mail the acceptance of the
order for the objects of sale described in more detail or, if the order is
to be processed in an electronic data processing system (EDP system), at
the time when the Buyer can see in the EDP system that the Seller has begun
processing the order (e.g. Progress Code 15 in smart EDP system). In any
event, the contract of sale shall be concluded when delivery has been made.
The Seller shall be obliged to inform the Buyer without delay if it does
not accept the order.
3. Amendments or addenda to the contract and oral statements must be in
writing or by electronic mail or, if the order is being processed in an EDP
system, the Seller must have taken, them into account in a way that is
apparent to the Buyer.
4. During the delivery period, the manufacturer's right to make design or
shape modifications, to deviate from the color shade and make changes to
the scope of delivery is reserved, provided that the Buyer can reasonably
be expected to accept such changes or deviations, taking the interests of
the Seller into account.
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The Buyer cannot derive any rights from any marks or numbering used by the
Seller or the manufacturer to identify the order or the objects of sale
ordered. Only the order number used by the Seller is relevant for any
correspondence between the parties.
5. The rights and duties of the Buyer arising from the contract of sale may
not be transferred without the Seller's consent in writing or by electronic
mail.
III. DELIVERY AND PRICES
1. Delivery shall be made "CIF USA port", smart gmbh will cover the costs for
transportation to USA VPC within, a maximum of 100 miles distance from the
respective sea port, provided DISTRIBUTOR uses a VPC for Vehicles within
those 100 miles distance.
2. Partial deliveries are permitted, insofar as the Buyer can be reasonably
expected to accept them.
3. The Seller does not accept a no-fault procurement risk for the objects of
sale.
4. In cases where an object of sale cannot be delivered on the scheduled
delivery date due to the discontinuation of series production, both parties
shall be released from the obligations under the contract of sale insofar
as this object of sale is concerned. In such a case the Seller shall inform
the Buyer without delay and reimburse any counter - performance received
without delay. In such a case the Seller shall not be obliged either to
deliver the originally ordered object of sale or to pay damages.
5. Prices are understood, unless any other stipulations have been made, ex
works net plus cost for logistics, transportation and insurance.
6. Shipment within the European Economic Area shall be made d.d.u. [.....].
All other shipment shall be made f.o.b. Baltic Sea Port, Federal Republic
of Germany, or c.i.f, (port of entry), at the Seller's choice.
IV. PAYMENT, DELAY IN PAYMENT AND OFFSETTING
1. The purchase price and prices for incidental services shall be payable less
any agreed discounts upon delivery of the objects of sale and submission of
the invoice or other means of rendering account. On a monthly basis smart
gmbh will reimburse DISTRIBUTOR for the difference between DISTRIBUTOR
paying smart gmbh for Vehicles based upon 'net 15 days ex works' credit
terms and DISTRIBUTOR paying smart gmbh for those Vehicles based upon
delivery at USA VPC if USA VPC is used and is within 100 miles distance
from USA port or, if not used, the USA port or another mutually agreed
method.
2. Payment must be made in the currency specified on the invoice and in such a
way that the Seller does not incur any costs.
Page 54 of 86
3. Should the Buyer default on payment, including with respect to individual
invoices, the Seller shall be entitled to demand payment in advance for
consignments in transit and subsequent deliveries from all ongoing
contracts.
4. The Buyer may offset claims of the Seller only if the Buyer's counterclaim
is uncontested or has been confirmed by a non-appealable court decision. A
right of retention may only be exercised insofar as it relates to claims
arising from the contract of sale.
V. DELIVERY TIME, DELAY IN DELIVERY AND FORCE MAJEURE
1. Delivery dates and delivery periods which may be agreed as either binding
or non-binding are to be stated in writing or by electronic mail. Where
orders are being processed in an EDP system, a delivery date or a delivery
period shall be deemed to have been agreed if the Seller has taken it into
account in a way that is apparent to the Buyer. Delivery periods shall
commence upon conclusion of the contract.
2. The Buyer may demand delivery six weeks after a non-binding delivery date
or a non-binding delivery period has been exceeded. The Seller is in delay
from the time that it receives this demand. If the Buyer wishes to
withdraw from the contract and/or claim damages in lieu of performance, it
must set for the Seller a reasonable period within which to effect delivery
after the end of the six-week period pursuant to sentence 1. The Buyer
shall not be entitled to seek damages in the event of slight negligence on
the part of the Seller.
If performance becomes impossible for the Seller by coincidence while it is
in delay, the Seller shall be liable within the scope of the limitations on
liability agreed above. The Seller shall not be liable if the damage would
have been incurred even if the delivery had been made on time.
3. If a binding delivery date or binding delivery period is exceeded, the
Seller is in delay as soon as the delivery date or delivery period is
exceeded. The rights of the Buyer shall then be determined by clause 2
sentences 3 to 6 of this section.
4. In the event that the Seller is temporarily prevented from delivering at
the agreed time or within the agreed period through no fault of its own,
due to force majeure. or operational disruptions occurring at the Seller's
or its suppliers', the dates and periods referred, to in clauses 1 to 3
shall be extended by the duration of the impairment of performance. The
same shall apply if not all permits have been granted or not all documents,
payments, securities, transport containers and means of transport to be
provided by the Buyer have been received by the Seller on time. If
disruptions pursuant to sentence 1 result in performance being postponed by
more than four months, both Seller and Buyer shall be entitled to withdraw
from the contract. This shall not prejudice other rights to withdraw from
the contract.
VI. ACCEPTANCE AND DELAY OF THE BUYER
Page 55 of 86
1. The Buyer is obliged to accept the objects of sale within 30 days of
receiving notice of readiness for delivery or, where orders are being
processed in an EDP system, within 30 days of the time at which the Buyer
can see in the EDP system that the objects of sale are ready for delivery.
In the absence of either a notice of readiness for delivery or a processing
of the orders in an EDP system, the Buyer is obliged to accept the objects
of sale within 30 days following the end of the month for which delivery
was agreed upon, unless the Seller is in delay of delivery.
2. Should the Buyer fail to accept the objects of sale, the Seller may
exercise its statutory rights. The same applies if the Seller is unable to
deliver because the Buyer has failed to supply the permits, documentation,
payments, securities, transport containers or means of transport which it
is required to provide or it does not assume transportation for which it is
responsible. In the event of non-acceptance, the Seller is also entitled to
send the items to the Buyer at the latter's expense and risk.
3. Should the Seller seek damages, such damages shall amount to *% of the
agreed purchase price. This amount may be increased if the Seller is able
to prove greater damage or reduced if the Buyer can prove that the damage
was lower.
VII. RESERVATION OF TITLE
1. The objects of sale shall remain the property of the Seller until such
time as the claims accruing to the Seller by virtue of the contract of
sale have been settled. The reservation of title also applies to claims
acquired by the Seller against the Buyer arising from the ongoing business
relationship until such time as the claims of the Seller in connection with
the sale have been settled.
2. Any processing or modification of the reserved-title goods by the Buyer or
a third party or the combination of such goods with other goods shall be
for the Seller. The Seller shall acquire co-ownership of the newly created
products which are deemed to be reserved-title goods within the meaning of
this Section VII, such that its share of the new products corresponds to
the value of the originally supplied objects of sale.
3. The Seller consents to the resale of the reserved-title goods by the Buyer
within the scope of its ordinary course of business; such consent being
revocable and subject to the provisions of clause B. The Buyer may not
pledge the reserved-title goods or assign them by way of security. To
secure all claims arising from the ongoing business relationship, the Buyer
assigns to the Seller its claims from the resale of the reserved-title
goods in the amount of the Seller's claim to the purchase price.
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 56 of 86
Until its authorization is revoked, the Buyer is entitled and obliged to
collect the debts assigned to the Seller. Should the Buyer suspend payments
generally, this collection authorisation shall end without the need for
explicit revocation.
4. At the request of the Buyer, the Seller shall release the security provided
in accordance with the foregoing provisions - at its discretion - insofar
as the realizable value of this security exceeds the claims to be secured
arising from the ongoing business relationship by *%.
5. The Buyer is obliged to carefully look after the reserved-title goods for
the Seller, to keep them in perfect technical condition and to have any
necessary repairs carried out without delay. The reserved-title goods are
to be serviced and repaired in workshops expressly approved by the
manufacturer for the servicing of the objects of sale, except in cases of
emergency.
6. As long as reservation of title remains in force, the Buyer shall be
required at the demand of the Seller to insure the reserved-title goods
with all-risk cover at their value as new or in the amount of the
outstanding claim, with the proviso that the rights arising from the
insurance accrue to the Seller. The Seller shall be entitled to demand the
insurance certificate.
7. In the event of attachment or of other impediments to the owner's
interests, the Buyer shall inform the Seller without delay.
8. Should the Buyer fail to meet its payment and insurance obligations or
other obligations arising from the reservation of title including the
assignment of debts, or suspend payments in general, or should insolvency
proceedings be instituted in respect of its assets or, as a result of the
conduct of the Buyer, notification from the insurer provided for in the
insurance certificate is sent to the Seller, the full outstanding balance
shall fall due immediately, even if bills of exchange with later maturity
dates are running, and any right of the Buyer to dispose of the
reserved-title goods pursuant to clause 3 shall lapse. If the full
outstanding balance is not paid immediately, the right of the Buyer to use
the reserved-title goods shall lapse. The Seller shall be entitled after
the expiration of a 14-day period of grace granted by it, or, in the event
of the Buyer suspending payments in general or insolvency proceedings being
instituted, immediately, to demand the restitution of the reserved-title
goods excluding any right of retention, and to collect them from the Buyer.
Such action shall not require cancellation of the contract; the demand for
restitution and collection of the reserved-title goods shall not constitute
a withdrawal from the contract.
The repossession by the Seller of reserved-title goods in which third
parties have co-ownership rights shall also constitute repossession for the
co-owners. The Buyer shall be liable for all costs incurred in connection
with repossession and realization of the value of the reserved-title goods.
Notwithstanding the payment obligation of the Buyer, the Seller is entitled
- where applicable by agreement with the co-owners -
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 57 of 86
to realize the value of the repossessed reserved-title goods and
accessories at the beat price through sale on the open market or by public
auction. The proceeds after deduction of costs will, insofar as they are
not owed to the Seller or a third party to cover existing claims, be paid
to the Buyer.
9. If the country in whose territory the objects of sale are located does not
permit reservation of title, but does permit the Seller to reserve other
rights to the objects of sale, the Seller may exercise all such rights. The
Buyer is obliged to take at its own expense all steps which are necessary
to enable the reservation of title or other substitute right over the
objects of sale to take effect and to be maintained.
VIII. DEFECTS
1. Claims of the Buyer on grounds of defects in passenger cars shall become
time-barred as provided by statutory provisions after two years from the
date when the object of sale concerned was first registered or brought into
service, depending an which came first, but no later than 30 months after
delivery of the object of sale concerned unless otherwise agreed in the
clauses below.
2. In the event of malicious non-disclosure of defects or of a guarantee given
for quality, claims over and above those set forth in clause 1 remain
unaffected.
3. The end purchaser may assert its claims for rectification of defects
against the party which sold the object of sale concerned to it or against
other workshops approved by the manufacturer for the servicing of the
objects of sale. The Buyer must notify the Seller in each event as soon as
it becomes aware of such claims being asserted. The Buyer shall have no
recourse against the Seller in respect of claims far subsequent performance
and withdrawal from the contract. Instead, the Seller shall reimburse the
Buyer in respect of the costs necessitated by the subsequent performance or
the damage incurred through exclusion of the right of withdrawal, less any
expenses saved and income received in connection with any other use of or
benefit obtained from the object of sale concerned.
4. If a defect renders an object of sale unusable, the nearest available
workshop to the unusable object of sale which has been approved by the
manufacturer for the servicing of the objects of sale shall be informed.
5. Replaced objects of sale or parts thereof shall be kept for the purpose of
inspection by the Seller at a place specified by the Seller and returned to
it upon request. Should the claims for defects prove to be justified, the
items shall become the property of the Seller and the Seller shall bear the
costs of their return.
6. Claims for defects relating to the parts used to remedy defects may be
asserted on the basis of the contract of sale until the end of the
limitation period for the object of sale concerned.
Page 58 of 86
7. A change in ownership of the objects of sale will not affect claims for the
rectification of defects.
X. LIABILITY
1. If the Seller is to be held responsible under the statutory provisions in
accordance with these terms and conditions for damage caused by slight
negligence, the liability of the Seller shall be limited as follows:
The Seller shall be liable only for the breach of obligations essential to
the contract and its liability shall be limited to the typical damage which
was foreseeable at the time the contract was concluded. This limitation
shall not apply in the event of injury to life, limb or health. So far as
the damage is covered by insurance taken out by the Buyer for the
respective damaging event (excluding fixed-sum insurance), the Seller shall
only he liable for any associated disadvantage suffered by the Buyer e.g.
increased insurance premiums or the cost of interest until such time as the
claim is settled by the insurer.
The Seller shall not be held liable for damage caused by slight negligence
through a defect in an object of sale.
2. Regardless of the issue of fault, this shall not prejudice the liability of
the Seller in the event of malicious non-disclosure of a defect, or if the
Seller has provided a guarantee or accepted a procurement risk, or under
the terms of the German Product Liability Act.
3. Liability in the event of delay in delivery is governed conclusively by the
provisions of Section V.
4. The legal representatives, vicarious agents and employees of the Seller
shall bear no personal liability for damage caused by slight negligence on
their part.
XI. PLACE OF PERFORMANCE, JURISDICTION AND APPLICABLE LAW
1. The place of performance for delivery of the objects of sale shall be the
manufacturing plant.
2. Should any provision of these terms end conditions and of the other
agreements made be or become invalid, this shall not affect the validity of
the contract in any other respect. The parties to the contract undertake to
replace the invalid provision with a provision that accords most closely in
terms of its commercial effects.
3. The courts of Stuttgart shall have exclusive jurisdiction over all present
and future claims arising from the business relationship between the Seller
and the Buyer, including claims based on bills of exchange or checks. The
Seller is also entitled to sue at the domicile of the Buyer.
4. The contract is governed by German law. INCOTERMS 2000 shall apply. The
United Nations Convention on the International Sale of Goods dated April
11, 1980 shall not apply.
Page 59 of 86
(SMART LOGO)
TERMS AND CONDITIONS OF SALE FOR PARTS, COMPONENTS AND ACCESSORIES ABROAD
Exclusively applicable to sales by or on behalf of smart gmbh to foreign
business persons who in concluding the contract of sale are acting in a
commercial or independent professional capacity, and to public authorities
abroad.
I. SCOPE OF APPLICATION
1. The contract of sale shall be governed exclusively by these Terms and
Conditions of Sale. Conflicting terms of the Buyer shall not apply.
2. These terms and conditions of sale apply to the sale of new and
reconditioned original smart parts and components, and vehicle accessories
to business persons domiciled outside the Federal Republic of Germany who,
in concluding the contract of sale, are acting in a commercial or
independent professional capacity, and to foreign public authorities and
foreign publicly-owned legal entities.
II. CONCLUSION OF THE CONTRACT, AMENDMENTS TO THE CONTRACT AND ASSIGNMENT
1. Offers of the Seller are not binding.
2. The Buyer shall be bound by the order for a period not exceeding four
weeks. The contract of sale is concluded when within this period the Seller
confirms in writing or by electronic mail the acceptance of the order for
the objects of sale described in more detail or, if the order is to be
processed in an electronic data processing system (EDP system), at the
time when the Buyer can see in the EDP system that the Seller has begun
processing the order. In any event, the contract of sale shall be concluded
when delivery has been made. The Seller shall be obliged to inform the
Buyer without delay if it does not accept the order.
3. Amendments or addenda to the contract and oral statements must be in
writing or by electronic mail, or, if the order is being processed in an
EDP system, the Seller must have taken them into account in a way that is
apparent to the Buyer.
4. During the delivery period, the manufacturer's right to make design or
shape modifications, to deviate from the color shade and make changes to
the scope of delivery is reserved, provided that the Buyer can reasonably
be expected to accept such changes or deviations, taking the interests of
the Seller into account.
The Buyer cannot derive any rights from any marks or numbering used by the
Seller or the manufacturer to identify the order or the objects of sale
ordered.
5. The rights and duties of the Buyer arising from the contract of sale may
not be transferred without the Seller's consent in writing or by electronic
mail.
Page 60 of 86
III. DELIVERY AND PRICES
1. Delivery shall be made "exw factory delivery store".
2. Partial deliveries are permitted, insofar as the Buyer can be reasonably
expected to accept them.
3. The Seller does not accept a no-fault procurement risk for the objects of
sale.
4. In cases where any objects of sale cannot be delivered on the scheduled
delivery date due to the discontinuation of series production, both
parties shall be released from the obligations under the contract of sale
insofar as these objects of sale are concerned. In such a case the Seller
shall inform the Buyer without delay and reimburse any counter-performance
received without delay. In such a case, the Seller shall not be obliged
either to deliver the originally ordered objects of sale or to pay damages.
5. The purchase price comprises the export list price valid on the delivery
date plus any value-added tax applicable on the delivery data.
IV. PAYMENT, DELAY IN PAYMENT AND OFFSETTING
1. The purchase price and prices for incidental services shall be payable less
any agreed discounts upon delivery of the objects of sale and submission of
the invoice or other means of rendering account. Payments for parts shall
be mutually agreed upon based upon the principal that smart gmbh shall not
be conducting business in the United States.
2. Payment must be made in the currency specified on the invoice and in such a
way that the Seller does not incur any costs.
3. Should the Buyer default on payment, including with respect to individual
invoices, the Seller shall be entitled to demand payment in advance for the
consignments in transit and subsequent deliveries from all ongoing
contracts.
4. The Buyer may offset claims of the Seller only if the Buyer's counterclaim
is uncontested or has been confirmed by a non- appealable court decision. A
right of retention may only be exercised insofar as it relates to claims
arising from the contract of sale.
V. DELIVERY TIME, DELAY IN DELIVERY AND FORCE MAJEURE
1. Delivery dates and delivery periods which may be agreed as either binding
or non-binding are to be stated in writing or by electronic mail. Where
orders are being processed in an EDP system, a delivery date or a delivery
period shall be deemed to have been agreed if the Seller has taken it into
account in a way that is apparent to the Buyer. Delivery periods shall
commence upon conclusion of the contract.
Page 61 of 86
2. The Buyer may demand delivery six weeks after a non-binding delivery date
or a non-binding delivery period has been exceeded. The Seller is in delay
from the time that it receives this demand. If the Buyer wishes to withdraw
from the contract and/or claim damages in lieu of performance, it must set
for the Seller a reasonable period within which to effect delivery after
the end of the six-week period pursuant to Sentence 1. The Buyer shall not
be entitled to seek damages in the event of slight negligence on the part
of the Seller.
If performance becomes impossible for the Seller by coincidence while it is
in delay, the Seller shall be liable within the scope of the limitations
on liability agreed above. The Seller shall not be liable if the damage
would have been incurred even if delivery had been made on time.
3. If a binding delivery date or binding delivery period is exceeded, the
Seller is in delay as soon as the delivery date or delivery period is
exceeded. The rights of the Buyer shall then be determined by clause 2
sentences 3 to 6 of this section.
4. In the event that the Seller is temporarily prevented from delivering at
the agreed time or within the agreed period through no fault of its own,
due to force majeure or operational disruptions occurring at the Seller's
or its suppliers', the dates and periods referred to in clauses 1 to 3
shall be extended by the duration of the impairment of performance. The
same shall apply if not all permits have been granted or not all
documents, payments, securities, transport containers and means of
transport to be provided by the Buyer have been received by the Seller on
time. If disruptions pursuant to sentence 1 result in performance being
postponed by more than four months, both Seller and Buyer shall be
entitled to withdraw from the contract. This shall not prejudice other
rights to withdraw from the contract.
VI. ACCEPTANCE AND DELAY OF THE BUYER
1. The Buyer is obliged to accept the objects of sale without delay upon
receiving notice of readiness for delivery or, where orders are being
processed in an EDP system, without delay from the time when the Buyer can
See in the EDP system that the objects of sale are ready for delivery. In
the absence of either a notice of readiness for delivery or a processing of
the orders in an EDP system, the Buyer shall accept the objects of sale
without delay from the date upon which delivery was agreed, unless the
Seller is in delay of delivery.
2. Should the Buyer fail to accept the objects of sale, the Seller may
exercise its statutory rights. The same applies if the Seller is unable to
deliver because the Buyer has failed to supply the permits, documentation,
payments, securities, transport containers or means of transport which it
is required to provide or it does not assume transportation for which it is
responsible. In the event of non-acceptance, the Seller is also entitled to
send the objects of sale to the Buyer at the latter's expense and risk.
Page 62 of 86
3. Should the Seller seek damages, such damages shall amount to *% of the
agreed purchase price. This amount may be increased if the Seller is able
to prove greater damage, or reduced if the Buyer can prove that the damage
was lower.
VII. RESERVATION OF TITLE
1. The objects of sale shall remain the property of the Seller until such time
as the claims accruing to the Seller by virtue of the contract of sale have
been settled. The reservation of title also applies to claims acquired by
the Seller against the Buyer arising from the ongoing business relationship
until such time as the claims of the Seller in connection with the sale
have been settled.
2. Any processing or modification of the reserved-title goods by the Buyer or
a third party or the combination of such goods with other goods shall be
for the Seller. The Seller shall acquire co-ownership of the newly created
products which are deemed to be reserved-title goods within the meaning of
this Section VII, such that its share of the new products corresponds to
the value of the objects of sale.
3. The Seller consents to the resale by the Buyer of the goods in which title
is reserved within the scope of its ordinary course of business; such
consent being revocable and subject to the provisions of clause 8. The
Buyer may not pledge the reserved- title goods or assign them by way of
security. To secure all claims arising from the ongoing business
relationship, the Buyer assigns to the Seller its claims from the resale of
the reserved-title goods in the amount of the Seller's claim to the
purchase price.
Until its authorization is revoked, the Buyer is entitled and obliged to
collect the debts assigned to the Seller. Should the Buyer suspend
payments generally, this collection authorization shall end without the
need for explicit revocation.
4. At the request of the Buyer, the Seller shall release the security
provided in accordance with the foregoing provisions - at its discretion -
insofar as the realizable value of this security exceeds the claims to be
secured arising from the ongoing business relationship by *%.
5. The Buyer is obliged to carefully look after the reserved-title goods for
the Seller, to keep them in perfect technical condition and to have any
necessary repairs carried out without delay. The reserved-title goods are
to be serviced and repaired in workshops expressly approved by the
manufacturer for the servicing of the objects of sale, except in cases of
emergency.
6. AS long as reservation of title remains in force, the Buyer shall be
required at the demand of the Seller to insure the reserved-title goods
with all-risk cover at their value as new or in the amount of the
outstanding claim, with the proviso that the rights arising from the
insurance accrue to the Seller. The Seller shall be entitled to demand the
insurance certificate.
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 63 of 86
7. In the event of attachment or of other impediments to the owner's
interests, the Buyer shall inform the Seller without delay.
8. Should the Buyer fail to meet its payment and insurance obligations or
other obligations arising from the reservation of title including the
assignment of debts, or suspend payments in general or should insolvency
proceedings be instituted in respect of its assets or, as a result of the
conduct of the Buyer, notification from the insurer provided for in the
insurance certificate is sent to the Seller, the full outstanding balance
shall fall due immediately, even if bills of exchange with later maturity
dates are running, and any right of the Buyer to dispose of the
reserved-title goods pursuant to clause 3 shall lapse. If the full
outstanding balance is not paid immediately, the right of the Buyer to use
the reserved-title goods shall lapse. The Seller shall be entitled after
the expiration of a 14-day period of grace granted by it, or, in the event
of the Buyer suspending payments in general or insolvency proceedings being
instituted, immediately, to demand the restitution of the reserved-title
goods excluding any right of retention and to collect them from the Buyer.
Such action shall not require cancellation of the contract; the demand for
restitution and collection of the goods in which title is reserved shall
not constitute a withdrawal from the contract.
The repossession by the Seller of reserved-title goods in which third
parties have co-ownership rights shall also constitute repossession for the
co-owners. The Buyer shall be liable for all costs incurred in connection
with the repossession and realization of the value of the reserved-title
goods. Notwithstanding the payment obligation of the Buyer, the Seller is
entitled - where applicable by agreement with the co-owners - to realize
the value of the repossessed reserved-title goods and accessories at the
best price through sale on the open market or by public auction. The
proceeds after deduction of costs will, insofar as they are not owed to the
Seller or a third party to cover existing claims, be paid to the Buyer.
9. If the country in whose territory the objects of sale are located does not
permit reservation of title, but does permit the Seller to reserve other
rights to the objects of sale, the Seller may exercise all such rights. The
Buyer is obliged to take at its own expense all steps which are necessary
to permit the reservation of title or other substitute right over the
objects of sale to take effect and to be maintained.
VIII. INSTALLATION
Any installation of the objects of sale undertaken by the Buyer shall be on the
Buyer's own responsibility. The Buyer must ensure compliance with the
installation instructions and guidelines for storage of the objects of sale.
IX. DEFECTS
1. Claims of the Buyer on grounds of defects in parts, components or
accessories intended to be installed in passenger cars shall
Page 64 of 86
expire as provided by statutory provisions after two years from the date of
delivery of the object of sale concerned unless otherwise agreed in the
clauses below.
2. In the event of malicious non-disclosure of defects or of a guarantee given
for quality, claims over and above those set forth in clause 1 remain
unaffected.
3. The end purchaser may assert its claims for rectification of defects
against the party which sold the object of sale concerned to it or against
other workshops approved by the manufacturer for the servicing of the
objects of sale. The Buyer must notify the Seller in each event as soon as
it becomes aware of such claims being asserted. The Buyer shall have
no recourse against the Seller with respect to claims for subsequent
performance and withdrawal from the contract. Instead, the Seller shall
reimburse the Buyer with respect to the costs necessitated by subsequent
performance or the damage incurred through exclusion of the right of
withdrawal, less any expenses saved and income received in connection with
any other use of or benefit obtained from the object of sale concerned.
4. Replaced objects of sale or parts thereof shall be kept for the purpose of
inspection by the Seller at a place specified by the Seller, and returned
to it upon its request. Should the claims for defects prove to be
justified, such parts shall become the property of the Seller and the
Seller shall bear the costs of their return.
5. Claims for defects relating to the parts used to remedy defects may be
asserted on the basis of the contract of sale until the end of the
limitation period for the object of sale concerned.
6. A change in ownership of the objects of sale will not affect claims for the
rectification of defects.
X. LIABILITY
1. If the Seller is to be held responsible under the statutory provisions in
accordance with these terms and conditions for damage caused by slight
negligence, the liability of the Seller shall be limited as follows:
The Seller shall be liable only for the breach of obligations essential to
the contract and its liability shall be limited to the typical damage which
is foreseeable at the time the contract was concluded. This limitation
shall not apply in the event of injury to life, limb or health. Insofar as
the damage is covered by insurance taken out by the Buyer for the
respective damaging event (excluding fixed-sum insurance), the Seller shall
only be liable for any associated disadvantage suffered by the Buyer e.g,
increased insurance premiums or the coat of interest until such time as the
claim is settled by the insurer.
The Seller shall not be held liable for damage caused by slight negligence
through a defect in an object of sale.
Page 65 of 86
2. Regardless of the issue of fault, this shall not prejudice the liability of
the Seller in the event of malicious non-disclosure of a defect, or if the
Seller has provided a guarantee or accepted a procurement risk or under the
terms of the German Product Liability Act.
3. Liability in the event of delay in delivery is governed, conclusively by
the provisions of Section V.
4. The legal representatives, vicarious agents and employees of the Seller
shall bear no personal liability for damage caused by slight negligence on
their part.
XI. GENERAL
1. Place of performance for the delivery of the objects of sale shall be the
Seller's store.
2. Should any provision of these terms and conditions and of the other
agreements made be or become invalid, this shall not affect the validity of
the contract in any other respect. The parties to the contract undertake to
replace the invalid provision with a provision that accords most closely in
terms of its commercial effects.
3. The courts of Stuttgart shall have exclusive jurisdiction over all present
and future claims arising from the business relationship between the Seller
and the Buyer, including claims based on bills of exchange or checks. The
Seller is also entitled to sue at the domicile of the Buyer.
4. The contract is governed by German law. INCOTERMS 2000 shall apply. The
United Nations convention on the International Sale of Goods dated April
11, 1980 shall not apply.
Page 66 of 86
ANNEX 7
TRADE AND SERVICES MARKS LICENSING CLAUSE
1. SMART MARKS
1.1 Smart gmbh is the proprietor of the following trade and service marks in
the Contract Territory ("smart Marks") and their applications and
registrations:
Serial No. 74/734869 SMART (word mark) in international class 12
Registration No. 2837584 SMART (word mark) in international class 37
Registration No. 2927097 (smart-ring device) in international classes 12
and 37
(LOGO)
1.2 The smart Marks are and remain the property of smart gmbh. This property
right shall neither be prejudiced by these Trade and Service Marks
Licensing Clauses, nor by the Distributor Agreement, nor by any other
agreement between the Parties.
1.3 The smart Marts are subject of these Trade and Service Marks Licensing
Clauses, unless their protection period in the Contract Territory has
expired, smart gmbh does not accept any liability for the validity of the
smart Marks or the right to use the smart Marks, other than the use of the
smart Marks on Contract Goods.
1.4 If smart gmbh adds, modifies, replaces or amends marks used by its
distribution partners, Annex 8 will be amended accordingly.
2. RIGHT OF USE OF SMART MARKS FOR CONTRACT GOODS
2.1 smart gmbh hereby grants to DISTRIBUTOR the right of non-exclusive use of
the smart Marks for sales and services in relation to Contract Goods in the
Contract Territory. During the duration of the Distributor Agreement smart
gmbh warrants not to grant any third party any right to use the smart Marks
in the context of sale and service of Contract Goods in the Contract
Territory according to the Distributor Agreement.
2.2 DISTRIBUTOR is obliged to use the smart Marks on all documents,
CI-elements, stationary and advertisements relating to Contract Goods.
2.3 The use of The smart Marks by DISTRIBUTOR shall be made only in the
positions and in the form and manner determined by smart gmbh. Other marks
or designations must not be used by DISTRIBUTOR in connection with Contract
Goods.
2.4 If DISTRIBUTOR intends to perform other services than those set forth in
the Distributor Agreement, the prior written approval of smart gmbh for the
use of the smart Marks is required. The granting of such approval shall be
in smart gmbh's sole discretion.
2.5 DISTRIBUTOR is permitted to use the word mark "smart" in the combination
"smart USA" as an integral part of its company name. All such uses of the
word Mark "smart" shall inure to the benefit of smart gmbh. DISTRIBUTOR
hereby assigns and transfers to smart gmbh any and all rights arising of
such uses except the rights granted by smart gmbh to DISTRIBUTOR under the
Distributor Agreement.
Page 67 of 86
2.6 The right to use the smart Marks extends to the use of the domain
www.smartusa.com. All such use shall inure to the benefit of smart gmbh.
DISTRIBUTOR hereby assigns and transfers to smart gmbh any and all rights
arising of such uses except the rights granted by smart gmbh to DISTRIBUTOR
under the Distributor Agreement.
3. RIGHT OF USE FOR OTHER PURPOSES
3.1 The use of the smart Marks in the distribution, presentation and in any
type of advertising practiced by DISTRIBUTOR, such as prospectus, newspaper
and magazine advertising or advertising by way of posters and any other
outdoor advertising, must be in compliance with smart gmbh's corporate
identity guidelines and is subject to regular consultations with smart
gmbh. Any products with regard to the CI-elements must be procured from
suppliers that have been recommended by smart gmbh.
3.2 The use of the smart Marks on or in connection with advertising gifts or
any other general advertising and publicity, including advertising by
expressly authorized business representatives of DISTRIBUTOR in the
Contractual Territory, requires the prior written approval of smart gmbh.
The granting of such consent shall be in smart gmbh's sole discretion.
3.3 The lay-out of any stationery, invoices, or other correspondence depicting
the smart Marks rust be approved by smart gmbh.
4. SCOPE OF USE
The use of smart Marks is restricted to the Contract Territory. In case smart
gmbh permits the distribution of Contract Goods into countries outside of the
Contract Territory, the Parties will conclude a separate prior agreement on the
use of the smart Marks in the export country.
5. FEES AND DEFENSE OF SMART MARKS
5.1 The consideration for the use of the smart Marks is included in the
purchase prices of Contract Goods and covered by the joint effort of the
Parties to defend the smart Marks against any violations by third parties
in the Contract Territory.
5.2 DISTRIBUTOR shall therefore monitor the market with regard to any
infringements of the smart Marks by third parties and will immediately
notify smart gmbh of any unlawful use. DISTRIBUTOR will assist smart gmbh
to the best of its ability in the defense of the smart Marks. No litigation
or controversy involving the smart Marks shall be initiated or settled
Without the prior written approval of smart gmbh. All costs of litigation,
negotiation or settlements concerning collisions of the smart Marks in and
in relation with the Contract Territory which occur following the execution
of the Distributor Agreement shall be borne, up to a maximum amount of EUR
* per calendar year (i.e. EUR * for each Party), equally by the Parties.
All costs Of litigation, negotiation or settlements concerning collisions
of the smart Marks which have started before the execution of the
Distribution Agreement shall he borne by smart gmbh.
If costs of litigation, negotiation or settlements concerning collisions of
the smart Marks in and in relation with the Contract Territory exceed EUR *
per calendar year (i.e. EUR * for both DISTRIBUTOR and smart gmbh each),
smart gmbh will bear those exceeding costs alone. DISTRIBUTOR shall have no
rights and/or claims against smart gmbh, should the latter decide not to
proceed against the breaches.
6. NON-ASSIGNMENT OF RIGHTS TO THIRD PARTIES
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 68 of 86
6.1 DISTRIBUTOR shall not be entitled to assign or transfer to any third
parties any of the rights to use any of the smart Marks.
6.2 As an exception to Clause 6.1 above, DISTRIBUTOR shall with the prior
written approval of smart gmbh in each single case authorize its Authorized
Resellers to use the smart Marks in the due course of their business and in
accordance with the rules and regulations laid down in these Trade and
Service Marks Licensing Clauses. This right shall be effective during the
term of the Distributor Agreement only and must be revocable at any time if
the smart Marks are not used in accordance with the terms of the Trade and
Service Marks Licensing Clauses.
6.3 DISTRIBUTOR shall include in all subcontracts provisions which will grant
smart gmbh full protection as is provided for under these Trade and Service
Marks Licensing Clauses and which will entitle smart gmbh to exercise all
rights directly against such third parties to the extent that smart gmbh
deems necessary. Upon third failure of DISTRIBUTOR to abide by the above
regulations may be construed by smart gmbh as a gross breach of contract.
7. TERMINATION
7.1 smart gmbh shall have the right to terminate DISTRIBUTOR'S right to use the
smart Marks upon serving a written notice without need for any further
legal or judicial action:
(a) if any smart Mark is used by DISTRIBUTOR in a manner contrary to these
Trade and Service Marks Licensing Clauses and if DISTRIBUTOR does not
discontinue such unauthorized use within thirty (30) days from receipt
of a request from smart gmbh demanding discontinuation;
(b) if any smart Mark is used by any Authorized Reseller of DISTRIBUTOR in
a manner contrary to this Agreement and/or the Authorized Reseller's
agreement with DISTRIBUTOR if DISTRIBUTOR does not take action to stop
such unauthorized use, where it is legally permitted to do so by
Applicable Laws, within thirty (30) days from receipt of a request
from smart gmbh demanding discontinuation; or
(c) if any situation happens that entitles smart gmbh to terminate the
Distributor Agreement; or
(d) if smart gmbh is prohibited by a court of a competent jurisdiction to
use the smart Marks in the Contract Territory.
7.2 DISTRIBUTOR'S right to use the smart Marks shall automatically terminate
upon the expiration or termination of the Distributor Agreement. In
particular, DISTRIBUTOR'S right to use the word Mark "smart" as an integral
part of its company name or domain name shall automatically terminate upon
termination of the Distributor Agreement. Notwithstanding, in case the
Contract Goods are, upon termination of the Distributor Agreement, not
resold to smart gmbh, but remain With DISTRIBUTOR according to Article 14.4
(viii) and 14.4 (iv) of the Distributor Agreement, DISTRIBUTOR may have a
limited right to use the smart Marks within a period not exceeding twelve
(12) months and only in the context of the Contract Products.
8. OBLIGATIONS UPON TERMINATION
8.1 Subject to the Distributor Agreement in the event of permission of
DISTRIBUTOR'S right to use the smart Marks for any reason, DISTRIBUTOR
shall cease to utilize the smart Marks for any purpose at any time after
such termination and shall remove or have removed the smart Marks
immediately from wherever they have been affixed by or on behalf of
DISTRIBUTOR.
8.2 DISTRIBUTOR shall ensure that its Authorized Resellers and agents also
adhere to the provisions of Clause 8.1 above.
Page 69 of 86
ANNEX 8
ALLOCATIONS OF FUNCTIONS
Draft Version, final version to be mutually agreed upon and added to the
Agreement by December 31, 2006
ALLOCATION OF WHOLESALE FUNCTIONS
*
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Pps 70 to 84 of 86
ANNEX 9
TREAD Act Information
*
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 85 of 86
ANNEX 10
Field Actions, Service Campaigns and Recalls
*
* Confidential portions omitted and filed separately with the Securities and
Exchange Commission pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
Page 86 of 86