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EXHIBIT 10.46
FORD PUBLIC COMPANY AGREEMENT
Supplemental Terms and Conditions
This Agreement is made this _______ day of ___________, 1998 by and between
Ford Motor the Company, a Delaware corporation with its principal place of
business at The American Road, Dearborn, Michigan (hereinafter called "Ford"),
and ________, a ____________ corporation with its principal place of business at
______________(hereinafter called the "the Company").
AGREEMENT
1. Definitions. For purposes hereof, the following definitions shall apply:
a. "Agreement" shall mean the Ford, Lincoln or Mercury Sales and Service
Agreement.
b. "General Manager" shall mean the person designated by the Company
pursuant to paragraph F (ii) of the Agreement with full day to day management
authority and approved by Ford in writing.
c. "Securities Act" shall mean the Securities Act of 1933, as amended.
d. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
e. "SEC" shall mean the Securities and Exchange Commission.
f. "Dealership" shall mean each Ford, Mercury or Lincoln authorized
Dealership owned or controlled directly or indirectly by the Company.
g. "Delegation Certificate" shall be the instrument executed by an
authorized officer of the Company granting full day to day operational and
management control of the Dealership to the General Manager.
h. "CSI" shall mean the Customer Satisfaction Index used by Ford to measure
customer satisfaction in terms of the selling process as well as after sales
service, as such may be modified from time to time by Ford.
i. "Supplemental Terms" shall mean these Supplemental Terms and Conditions.
2. Scope. The Company has indicated that it will seek to acquire or to
apply for Ford, Mercury and Lincoln authorized Dealerships. In order to simplify
future discussions and to avoid any misunderstanding, these Supplemental Terms
are intended to apply to those situations where Ford is willing to approve the
Company (or its designated wholly-owned or controlled direct or indirect
subsidiary) as the purchaser of the capital stock or assets of a Ford, Mercury
or Lincoln authorized Dealership or where it is willing to enter into an
Agreement with the Company with respect to a new Dealership location. In each
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situation where Ford is willing to enter into an Agreement, the Company will
cause the Dealership to execute an Agreement and will cause such Dealership to
be bound by these Supplemental Terms.
3. Sole Ownership. To maintain financial and operational autonomy and
accountability, each Dealership will be a separate corporation with the Ford,
Mercury and/or Lincoln Dealership operation being its sole business unless
otherwise agreed in writing by Ford; provided, however, that if, at the time of
acquisition of any Dealership, such Dealership is not a separate corporation,
the Company will use reasonable efforts to cause the Dealership to be held as a
separate corporation as soon as practicable. The Company shall furnish to Ford a
copy of the certificate of incorporation and bylaws of each Dealership. As is
required of all Ford authorized Dealerships, each Dealership shall submit
monthly, financial and operating performance data to Ford.
4. Capitalization. Each Dealership will be separately and fully capitalized
to ensure the maintenance of net cash, working capital and operating investment
in accordance with Ford guidelines. Other than through dividends permitted by
the law of the state of incorporation of each Dealership, the effect of which
shall not impair the ability of the Dealership to meet the above mentioned Ford
capitalization guidelines, or through arms-length transactions, all cash and
other assets generated by each Dealership will remain within the Dealership and
none of the assets of any Dealership owned or controlled by the Company shall be
used directly or indirectly to secure the debt or liability of the Company or
any other Dealership or other business owned or controlled by the Company.
5. General Manager. The Company shall delegate in writing the complete day
to day management control of each Dealership to the General Manager of such
Dealership whose appointment shall be subject to Ford's prior written approval
which shall not be unreasonably withheld. The General Manager shall be
designated in paragraph F (ii) of the Agreement and shall have full managerial
authority and accountability for operating the Dealership in accordance with the
terms of the Agreement and the Supplemental Terms. Each person nominated by the
Company as a General Manager must have substantial, successful retail automotive
experience and must meet Ford's high standards for moral and ethical behavior.
Upon the appointment of a General Manager, a copy of the Delegation Certificate
shall be submitted to Ford. All proposed changes to the Delegation Certificate
shall be in writing, submitted to Ford and subject to Ford's prior written
approval. The Company will notify Ford and obtain Ford's prior written
approval of any proposed change to the General Manager, such approval not to be
unreasonably withheld. The Company shall have the right to appoint an interim
General Manager as a temporary replacement for any General Manager who is
terminated for cause or who voluntarily resigns, in each case without the prior
written approval of Ford. In the event that an interim General Manager is
appointed, the Company shall work with Ford to appoint a permanent General
Manager within 90 days after the appointment of the interim General Manager. In
addition to meeting the criteria Ford customarily applies to new dealer
candidates, the General Manager will be assigned to the Dealership for a
sufficient time (being a minimum of 3 years unless otherwise agreed by Ford in
writing) to allow the General Manager to develop and maintain ties to the local
community evidenced by involvement in community civic and charitable
organizations. The General Manager must reside in the Dealer Locality as
required by the Agreement.
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6. Compensation Plans. The Company will cause each Dealership to provide to
its General Manager and other key employees of the Dealership, as deemed
appropriate, as part of their compensation, incentive programs that will provide
specific financial rewards to the General Manager and such other employees that
are payable to them at least annually and are based upon the achievement and
maintenance by the Dealership of the long term and short term operating
performance objectives described in paragraph 7 hereof.
7. Performance Criteria. Should any Dealership fail to meet reasonable
performance criteria established by Ford relating to such matters as sales
performance, CSI and such other performance criteria that Ford may reasonably
apply to all its authorized dealers, Ford will have the right to implement the
following procedure. Ford shall notify the Company and the General Manager in
writing of such failure and shall grant the Company and the General Manager 90
days to either cure the failure in total or, with respect to sales performance
and CSI only, to present to Ford evidence of progress to cure the failure
indicating in Ford's reasonable judgment that the failure will be cured within
one year of Ford's notice. Should the failure not be cured within the above
period, persons delegated with authority from the Company immediately shall meet
with authorized personnel from Ford to arrange for the orderly and expeditious
replacement of the General Manager. Should agreement not be reached upon the
identity of an appropriate replacement General Manager within 90 days of the end
of the cure period, Ford may terminate the Agreement with immediate effect.
Requirements that each Dealership consistently meet or exceed Ford's regional
average retail car and truck market share and comparable dealer group average
customer satisfaction ratings, as measured by CSI or other criteria established
by Ford, shall be considered reasonable performance requirements. Ford will not
unreasonably withhold its consent to the appointment of an appropriate
replacement General Manager.
8. Additional Appointments. The Company may not acquire more than two Ford
and two Lincoln Mercury Dealerships during the first twelve-month period after
execution of this agreement. Thereafter, the Company will not seek or apply for
additional Ford or Lincoln Mercury Dealerships unless and until the Company's
Dealerships are meeting Ford's performance criteria. Ford will provide each
Dealership a monthly report, summarizing its performance for the preceding month
and for the calendar year-to-date period. Ford's performance criteria include
retail car market share at or above regional average, retail truck market share
at or above regional average, satisfactory customer handling/customer
satisfaction performance as established by Ford, and capitalization meeting or
exceeding established guides.
The Company also shall not seek or apply for an additional Dealership if,
once owning such Dealership, the Company would own or control, directly or
indirectly, that number of authorized Dealerships with total retail sales of new
vehicles in the immediately preceding calendar year of more than 2% of the total
Ford or Lincoln Mercury retail sales volume sold in the United States. The
Company also shall not seek or apply for an additional Dealership if, once
owning such Dealership, the Company would own or control more than 2% of the
total Ford or Lincoln Mercury retail sales volume sold in any state.
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At its discretion, Ford will consider increasing the 2% limitations to
permit the acquisition of additional Dealerships provided the Company
demonstrates that its existing Dealerships are in compliance with Ford's
performance criteria and capitalization requirements. In no event, however, will
the Company seek or apply for additional Ford or Lincoln Mercury Dealerships if
the Company will own or control more than 5% of Ford or Lincoln Mercury's
national or state retail sales volumes. The national and state limitations are
intended to apply separately to Ford and Lincoln Mercury retail sales volumes.
The Company also shall not seek or apply for a Dealership in any market
area, as defined from time to time by Ford for its Dealership network that would
result in the Company owning or controlling, directly or indirectly, more than
one Ford authorized Dealership in those market areas having 3 or less Ford
authorized Dealerships in them, or in the Company owning or controlling,
directly or indirectly, more than 25% of the Ford authorized Dealerships in
market areas, as defined from time to time by Ford for its Dealership network,
having 4 or more authorized Ford Dealerships in them, it being understood that
this provision is intended to apply separately to Ford and to Lincoln Mercury
Dealerships. Should the above limitations be exceeded and, notwithstanding the
above limitations, if the Company seeks or applies for Ford's approval to
acquire additional Dealerships, Ford's refusal to approve such an acquisition
shall be deemed to be a reasonable action by Ford.
9. Major Changes. The Company shall submit to Ford copies of all effective
registration statements and periodic reports (including those on Form 10-K, 10-Q
and 8-K), proxy and information statements it files with the SEC pursuant to
the Securities Act or the Exchange Act within five (5) business days of filing
with the SEC. The Company shall submit to Ford all filings submitted to the SEC
by third parties that are required to disclose significant holdings or
substantial acquisitions of, or changes in, the ownership of the voting
securities (or other securities convertible into voting securities) of the
Company including, without limitation, Schedules 13D or 13G. Should any SEC
filing disclose that (a) a person, entity or group has a binding agreement to
acquire, or has acquired, voting securities (or other securities convertible
into voting securities) of the Company that would result in such person, entity
or group owning or controlling securities having 50% or more of the total voting
power of all the outstanding capital of the Company, or (b) a person or entity
that owns or controls securities (or other securities convertible into voting
securities) having 50% or more of the total voting power of all the outstanding
capital stock of the Company intends or may intend to acquire additional voting
securities (or other securities convertible into voting securities) of the
Company, or (c) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries
is planned or anticipated that after consummation thereof would require the
filing of a Current Report on Form 8-K with the SEC, or (d) a sale or transfer
of a material amount of assets of the Company, or any of its subsidiaries, is
planned or anticipated, or (e) a change has been made or is planned to be made
of more than 50% of the composition of the Board of Directors or management of
the Company or (f) any other material change in the Company's business or
corporate structure or (g) any action similar to those noted above, the Company
shall provide 30 days prior written notice to Ford describing the matter
disclosed in such filing in detail. If any such action is believed by Ford in
its reasonable judgment to have a material and adverse effect on its reputation
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the market place with respect to an action described in (e), (f), or (g) or with
respect to the other actions should Ford reasonably conclude that such action
will not be compatible with the interests of Ford, the Company agrees that
within 90 days of Ford's notice thereof, the Company shall sell or cause to be
sold one or more of the Dealerships, as specified in the notice, to Ford or its
designee at fair market value, determined in accordance with Attachment A or
resign the Agreements, or provide evidence to Ford that the proposed action
which gave rise to the issuance of Ford's notice will not take place. Should the
Company enter into an agreement to transfer the assets or capital stock of any
Dealership to a third party, Ford's right of first refusal provided in paragraph
24(b) of the Agreement shall apply.
10. Exclusive Dealership Facilities. Each Dealership shall operate as an
exclusive fully-dedicated Ford and/or Mercury and/or Lincoln Dealership, as the
case may be, and the Company will not accept a sales and service agreement with
any other automobile manufacturer or importer or allow the merchandising,
display, sale or service of new vehicles other than Ford, Mercury or Lincoln
vehicles at the facilities and locations approved by Ford and used by any
Dealership for the conduct of its business ("Ford Approved Facilities"). Unless
otherwise agreed in writing, should the Company acquire a Dealership having a
sales and service agreement with a competitive automobile manufacturer or
importer and related sales and service operations at the Ford Approved
Facilities, it shall cause the Dealership to relocate such competitive sales and
service operations from the Ford Approved Facilities within one year of
acquisition; provided, however, that Ford shall grant the Company additional
time to effect such relocation if Ford believes the Company is making reasonable
progress in so doing. No Dealership will merchandise, display or sell new Ford,
Mercury or Lincoln vehicles at any unauthorized location including those owned
or controlled by the Company. In conducting its advertising programs each
Dealership shall portray the products it is authorized to sell and service under
the Agreement in a distinctive manner taking care not to mingle such advertising
with advertising of competitive make new vehicles or used vehicles.
11. Advertising. The Company recognizes the benefit of local cooperative
advertising and has indicated that it will cause each Dealership to become a
fully participating member of the local Ford, Lincoln or Mercury dealer
advertising group (FDAF/LMDA).
12. Auctions. Used vehicle purchases from Ford sponsored auctions will be
governed by a separate "Sponsored Auction Agreement" which will be executed by
each Dealership.
13. Dealership Name. The trade name and corporate name of each Dealership
will be subject to Ford's approval and will not include any reference to any
non-Ford, Mercury or Lincoln make vehicle.
14. Site Control. Any existing agreement covering a Dealership or its
assets relating to site control will be assumed by the Company and shall remain
in full force and effect.
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15. Dispute Settlement. Any dispute concerning the Agreement or the
Supplemental Terms shall be resolved using the arbitration plan described in
paragraph 18 of the Agreement; provided, however, that notwithstanding anything
in the Agreement to the contrary, the use of such Plan shall be mandatory and
not optional and; provided, further, that no dispute need be brought before the
Ford Dealer Policy Board.
16. Agreement Supplemental Terms. The Company confirms
that the provisions of these Supplemental Terms are material to its relationship
with Ford and that a failure by the Company to fully comply with any material
term hereof, after having been given a reasonable opportunity to cure such
failure, will constitute good and just cause for Ford, in its discretion, to
terminate the Agreement and these Supplemental Terms with immediate effect.
17. Binding Effect. These Supplemental Terms are intended to modify certain
provisions of the Agreement and to be incorporated as a part of the Agreement.
Should there be an inconsistency between the terms of these Supplemental Terms
and any provision of the Agreement, the terms of these Supplemental Terms shall
apply.
18. Parent-Subsidiary. The Company shall cause each Dealership to carry
out the actions and to assume the responsibilities provided herein.
19. Confidentiality. Except as otherwise required by law, the Company shall
maintain the confidentiality of all provisions of the Supplemental Terms, and
will not disclose the Supplemental Terms or any provisions herein to any person,
corporation partnership on other entity of any kind without Ford's written
consent. In the event that disclosure of the Supplemental Terms may be required
in response to a subpoena, discovery request or court order, the Company shall
give Ford as much advance notice as possible to allow intervention and
protection of Ford's interests.
IN WITNESS WHEREOF, the Company and Ford, through their authorized officers,
have set there hands on the day and year above written.
Ford Motor Company The Company
By By:
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Its Its
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ATTACHMENT A
The Fair Market Value shall be determined as follows:
(a) Within 10 days after Ford has given notice to the Company of its
intention to cause the Company to sell one or more Dealerships (herein called
the "Valuation Date"), Ford and the Company each shall designate a nationally
recognized investment banking firm ("Investment Banker"). If either Ford or the
Company shall fail to designate an Investment Banker within such 10-day period,
the Investment Banker designated by the other party shall determine the Fair
Market Value, and such determination shall be binding on the parties.
(b) Within 30 days after the Valuation Date, each Investment Banker shall
submit to Ford and the Company its written determination of the Fair Market
Value of the Dealership or group of Dealerships. If only one Investment Banker
submits a written determination within such 30-day period, the Fair Market Value
shall be deemed to be the value stated in such determination.
(c) If the two values established by the first two Investment Bankers are
within ten percent (10%) of one another (as measured from the lower valuer, the
average of the two values shall be deemed to be the Fair Market Value. If the
two values established by the Investment Bankers differ by more than ten percent
(10%) (measured from the lower value), the first two Investment Bankers shall,
within 10 days of the Valuation Date, jointly select a third Investment Banker
meeting the criteria specified in paragraph (a) who shall submit to Ford and the
Company a written determination of the Fair Market Value of the Dealership or
group of Dealerships within 30 days of its appointment. If the first two
Investment Bankers fail to appoint the third Investment Banker within the period
specified, such appointment shall be made by the American Arbitration
Association. The average of the two valuations that are closer in value shall be
deemed to be the Fair Market Value of the Dealership or group of Dealerships.
(d) Ford and the Company each shall bear the expense of the Investment
Banker hired by it and shall share equally in the expense of the third
Investment Banker.