EXHIBIT 10.2.6
[BMW LOGO]
BMW OF NORTH AMERICA, INC.
SAV CENTER AGREEMENT
BMW OF NORTH AMERICA, INC.
SAV CENTER AGREEMENT
This CENTER AGREEMENT is effective as of the 1st day of December, 1999, by and
between BMW of North America, Inc. ("BMW NA"), a Delaware corporation, having
its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, and
CENTER NAME: ___________________________________________________________________
CENTER LOCATION: __________________________________________________________ , a
BUSINESS TYPE: _______________________________________________________________
(if a corporation or partnership) organized or incorporated under the laws of
the
STATE OF: __________________________________________________________________ and
DOING BUSINESS AS: _____________________________________________________________
having its principal place of business at
ADDRESS: _______________________________________________________________, in
CITY/TOWN: ___________________________________________________________, in the
COUNTY OF: ___________________________________________________________, in the
STATE OF: ____________________________________________________ ,(as "Center").
PURPOSE OF AGREEMENT
The purpose of this Agreement is to authorize Center to operate an approved BMW
SAV Center and to set forth the responsibilities of both BMW NA and Center in
providing BMW Products and services to the consuming public.
The United States automotive market requires a fluid relationship between BMW NA
and authorized BMW SAV Centers which represent BMW Products. Mutual compliance
with the terms of this Agreement will promote the interests of both BMW NA and
Center, by providing each party an opportunity to earn a reasonable return on
its investment through developing and retaining satisfied customers, and by
building a spirit of cooperation between BMW NA and authorized BMW SAV Centers
which will increase the value and customer perception of BMW trademarks and the
BMW brand.
BMW NA and Center have entered into this Agreement with confidence in each
other's integrity, ability, and expressed intention to deal fairly with the
other party and the consuming public. Center is relying upon BMW NA's commitment
to distribute quality BMW Products which meet the needs and expectations of the
BMW customers in Center's Primary Market Area and to provide Center with a broad
range of support activities to assist Center in its retail operations. BMW NA is
relying upon Center's commitment to perform and carry out the responsibilities
of an authorized BMW Center, as set forth in this Agreement. Each party
recognizes that among other things it must rely upon the efforts of the other
party in performing successfully under this Agreement.
IN CONSIDERATION OF the foregoing and the mutual covenants herein contained, the
parties hereto agree as follows:
2
ARTICLE A
APPOINTMENT OF SAV CENTER
Subject to the terms of this Agreement, BMW NA appoints Center as a dealer of
BMW Products and grants Center the non-exclusive right to buy and/or sell and/or
service BMW Products. Center accepts such appointment and agrees to be bound by
this Agreement.
While Center recognizes that its performance will be primarily measured based
upon its activities in its Primary Market Area, Center agrees that this
appointment does not confer upon it the exclusive right to deal in BMW Products
in any specific geographic area within the United States, nor does it limit the
persons within the United States to whom Center may sell BMW Products for use
therein.
Center agrees that it will not sell BMW Products for resale in the United States
or for resale or use outside the United States. In addition, Center agrees to
abide by BMW NA's Export Policy and all amendments and modifications thereto.
Center acknowledges that BMW NA reserves the right to appoint additional BMW SAV
Centers, whether located near Center's location or elsewhere, as BMW NA in its
sole discretion deems necessary or appropriate. BMW NA agrees that it will not
appoint additional representation without first conferring individually with the
BMW SAV Center(s) surrounding the proposed location to determine whether other
alternatives to additional representation are satisfactory to BMW NA. If a
decision is made to proceed with establishment of additional representation, BMW
NA will provide such BMW SAV Center(s) no less than thirty (30) days written
notice of such decision.
3
ARTICLE B
STANDARD PROVISIONS AND SAV CENTER
OPERATING REQUIREMENTS
The accompanying SAV Center Agreement Standard Provisions, Center Operating
Requirements, and all currently effective Addenda and all Addenda to be issued
to Center by BMW NA, all of which may be amended, canceled, or superseded from
time to time, are hereby fully incorporated into this Center Agreement
("Incorporated Documents"). Unless the context otherwise indicates, the term
"Agreement" shall mean this document, the Incorporated Documents, and the
documents referred to therein, including, but not limited to, policies,
procedures, programs, and guidelines issued from time to time by BMW NA. The
terms used in this Agreement are defined in Paragraph 1 of the Standard
Provisions. Center hereby acknowledges receipt of this Agreement and agrees to
become familiar with its terms.
Center is required to comply with the BMW NA Center Operating System and agrees
to conform its operations to the BMW NA Center Operating System to the greatest
degree possible.
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ARTICLE C
SAV CENTER OWNERSHIP AND MANAGEMENT
This is a PERSONAL SERVICES AGREEMENT. BMW NA is entering into this Agreement in
reliance upon the qualifications, abilities, and integrity of the Center
Operator and upon the representation of the Center's Owners that the Center
Operator will have full managerial authority for the operations and activities
of Center. In order to induce BMW NA to enter into this Agreement, Center states
that:
(1) CENTER'S OWNERS. The beneficial owners, record owners, and partners, if any,
of Center are (include record owners if different from beneficial):
NAME % RECORD OR BENEFICIAL
Additional Names Attached / /
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C. SAV CENTER OWNERSHIP AND MANAGEMENT - CONTINUED
(2) CENTER'S OFFICERS. The following persons are Center's Officers:
NAME TITLE
(3) CENTER'S CORPORATE DIRECTORS. If Center is a corporation, the following are
its Corporate Directors:
NAME TITLE
(4) CENTER OPERATOR. The following person shall be in complete charge of
Center's BMW SAV Operations with authority to make all operating decisions on
behalf of Center with respect to Center's BMW SAV Operations and is the person
upon whom BMW NA can rely to act on Center's behalf:
NAME TITLE
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C. SAV CENTER OWNERSHIP AND MANAGEMENT - CONTINUED
(5) GENERAL MANAGER. The following is Center's General Manager (if none, enter
"NONE"):
NAME TITLE
(6) SUCCESSOR(s). The Center's Owners have nominated the following individual(s)
as proposed Center Owners of a Successor Center to be established if this
Agreement is terminated because of the death or permanent disability of any of
the Center's Owners (if none, enter "NONE"):
NAME TITLE
Because of the importance that BMW places on the statements and representations
of the Center's Owners and the qualifications of the Center Operator, Center
agrees that there will be no change in the: (a) identity of the Center's Owners
((1) above); (b) the Center Operator ((4) above); (c) the Successor(s) ((6)
above); or (d) Center's name, identity, business organization or structure,
without the prior written consent of BMW NA.
To enable BMW NA to maintain effectively the BMW Center network, Center further
agrees to provide BMW NA with forty-five (45) days prior written notice of any
proposed change in the ownership of Center, which would change the interests in,
or control of, Center, or of any proposed disposition of Center's BMW assets.
Any such change in ownership or disposition of Center's BMW assets shall not be
effective without the prior written consent of BMW NA, which consent will not be
unreasonably withheld. Center acknowledges and agrees that all proposed owners
of all or a portion of the Center shall be required to meet BMW NA's appointment
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C. SAV CENTER OWNERSHIP AND MANAGEMENT - CONTINUED
criteria and comply with BMW NA's ownership policies, procedures, and
limitations. BMW NA shall respond to Center's notification within forty-five
(45) days after Center has furnished to BMW NA all completed applications and
information reasonably requested to evaluate the proposal.
Without limiting other considerations in determining whether BMW NA will provide
consent, this Agreement may not be transferred, assigned, or assumed until all
indebtedness of Center to BMW NA, its subsidiaries, or affiliates has been fully
satisfied and unless the transferee, assignee, or party assuming this Agreement
agrees and commits to fulfill and complete all of the obligations under this
Agreement and the Improvement Addendum (if applicable) and fully comply with all
BMW NA policies, procedures, programs, and guidelines. Furthermore, this
Agreement may not be transferred, assigned, or assumed independent of the BMW
Dealer Agreement covering BMW cars or a successor agreement covering BMW cars.
Center recognizes that BMW NA has a vital interest in ensuring that qualified
personnel are employed by BMW centers. Therefore, Center agrees to employ
personnel who meet the qualifications for each position within the Center. BMW
NA agrees that Center has the right to decide reasonably all matters concerning
management and personnel.
Center has designated herein certain individuals as officers, directors,
managers and/or individuals with responsibility for Center's BMW SAV Operations.
Center agrees to notify BMW NA in writing of any change in the designated
individuals (2, 3, and 5 above) and recognizes that such designation shall not
relieve Center of its responsibility for performance under this Agreement.
Center agrees that BMW NA may rely upon the Center Operator and General Manager
(if applicable) to act on Center's behalf on any and all matters and that such
reliance shall not alter Center's responsibilities under this Agreement.
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ARTICLE D
CENTER FACILITIES
Center agrees that Center Facilities shall satisfy all applicable provisions of
this Agreement, including reasonable space, facility, and BMW Corporate
Identification requirements in the Center Operating Requirements Addendum and/or
Center Facilities Guidelines. BMW NA recognizes the investment Center has in its
facilities and hereby approves the location of the following Center Facilities
for the exclusive purpose of:
(1) A showroom and sales facility for BMW Vehicles at:
Address: _______________________________________________________________________
(2) Service and parts facilities for BMW Vehicles at:
Address: _______________________________________________________________________
(3) Facilities for the display and sale of certified pre-owned BMW Vehicles at:
Address: _______________________________________________________________________
(4) Facilities for the display and sale of pre-owned BMW Vehicles at:
Address: _______________________________________________________________________
(5) Satellite(s) authorized pursuant to Paragraph 16 of the Standard Provisions
of the Agreement at:
Address: _______________________________________________________________________
(6) Other facilities (indicate the nature of the facility, e.g., storage
facility):
Address: _______________________________________________________________________
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D. CENTER FACILITIES - CONTINUED
Unless otherwise provided herein, Center shall conduct Center's BMW SAV
Operations and keep BMW Products exclusively at the Center Facilities designated
above.
In the event that Center desires to: (a) change its principal place of business
from that first set forth in this Agreement; (b) change any location of the
Center Facilities; (c) establish any additional locations for either operating
its business or storage of BMW Products; (d) make any major structural or
design change in the Center Facilities; or (e) change the usage or function of
any locations or facility approved herein or otherwise utilize such locations or
facilities for any functions other than the approved functions, Center must
obtain the prior written approval of BMW NA for any such change or
establishment.
In the event that Center desires to establish or add any additional franchise,
line, make, or dealership at the Center Facilities simultaneously with Center's
BMW SAV Operations, Center agrees to provide BMW NA thirty (30) days prior
written notice of such establishment or addition. At the time notice is
provided, Center shall demonstrate in writing to BMW NA that Center will
continue to comply with the Center Operating Requirements Addendum and will not
adversely impact the representation or sale of BMW Products. If Center is unable
to comply, Center shall not pursue such establishment or addition, but may
submit a detailed plan of compliance with the Center Operating Requirements and
Center Operating Requirements Addendum to BMW NA. If BMW NA approves the
detailed plan of compliance, Center may proceed with the establishment or
addition. Center understands that BMW NA may, at its sole option, reject the
plan or require issuance or modification of an Improvement Addendum in the event
the plan is approved. Such approval shall not be unreasonably withheld.
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ARTICLE E
BMW FORUM
BMW NA and Center agree that it is in their mutual interest to have an
independent group of BMW center representatives with BMW SAV Operations serve on
the BMW Forum. The membership of the BMW Forum may include owners of BMW SAV
Centers and BMW car centers and/or owners of BMW car centers only. Those members
with BMW SAV Operations will be members of a subcommittee of the BMW Forum. The
subcommittee will represent BMW SAV Centers and will communicate the position of
BMW SAV Centers to BMW NA on various common issues. BMW NA and the BMW Forum
shall establish a mechanism to ▇▇▇▇▇▇ open and frequent communication on
substantive issues affecting BMW NA and BMW centers.
Each BMW center is entitled and encouraged to serve on the BMW Forum or on a
committee of the BMW Forum pursuant to its by-laws. Each BMW center is expected
to support and participate in the BMW Forum and each BMW SAV Center is expected
to support and participate in the BMW Forum's SAV subcommittee.
The BMW Forum shall adopt by-laws as BMW centers deem reasonable and necessary.
The BMW Forum may establish committees to study various aspects of the retail
environment and the BMW NA - BMW centers' relationship.
Before any material change may be made to this Agreement, BMW NA agrees to
notify the SAV subcommittee of the BMW Forum and consider BMW SAV Centers'
position regarding the proposed change.
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ARTICLE F
RIGHT OF FIRST REFUSAL
BMW NA recognizes the investment which Center has committed to operate a BMW
Center. Center recognizes the importance to BMW NA of continuing dealership
operations from approved locations to provide for the effective sale and service
of BMW Products. Accordingly, whenever Center intends to dispose of Center's BMW
assets, change control of the Center, or change majority ownership from that
listed in Article C (1), BMW NA shall have the first right to purchase Center's
BMW assets or ownership interests pursuant to this Article. Center agrees to
disclose to the prospective buyer that any sale or disposition shall be subject
to the terms of this Agreement and any other information provided to Center
which impacts the BMW Center Operations or the market in which the Center
operates.
BMW NA will advise Center if it will exercise the right of first refusal within
forty-five (45) days after Center has furnished to BMW NA all completed
applications and information in accordance with Article C. If BMW NA exercises
the right, BMW NA will assume the proposed buyer's rights and obligations under
the written agreement the proposed buyer negotiated with Center (the "Buy/Sell
Agreement"). The purchase price shall be that set forth in the Buy/Sell
Agreement.
BMW NA shall have the right to perform due diligence in connection with
Article F while BMW NA decides whether to exercise its right of first refusal.
If BMW NA exercises its right, BMW NA's right to conduct due diligence shall
continue. Center agrees to fully cooperate with BMW NA in connection with its
due diligence.
In the event BMW NA exercises its right of first refusal, BMW NA may assign the
Buy/Sell Agreement to any party. BMW NA shall remain responsible to guarantee
the purchase price to be paid by the assignee.
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F. RIGHT OF FIRST REFUSAL - CONTINUED
Center shall transfer the assets and any applicable real estate free and clear
of all liens and encumbrances. Any property shall be transferred by Warranty
Deed, where possible, conveying marketable title. Deeds will be in the proper
form for recording. Possession will be deemed transferred when the deed is
delivered. Center shall furnish copies of, and will assign where required, all
agreements, licenses, easements, permits or other documents necessary for the
conduct of Center's BMW SAV Operations.
Subject to the limitation set forth below, if BMW NA exercises its right under
this Article, BMW NA will reimburse Center for all reasonable and acceptable
expenses, excluding brokerage commissions, incurred by Center in connection with
the development of the Buy/Sell Agreement prior to BMW NA's exercise of its
right. Center shall supply BMW NA with reasonable documentation to support all
those expenses and all copies of materials generated during the negotiation and
development of the Buy/Sell Agreement in anticipation of the sale (including
environmental reports, accounting reviews, among others). Center agrees that the
expenses BMW NA will pay to Center pursuant to Article F shall not exceed the
lesser of actual expenses or an aggregate of Fifty Thousand Dollars
($50,000.00). Any dispute regarding reimbursement shall be presented for review
under Article G.
This Article shall not apply in the event that Center proposes to change
majority ownership, dispose of its assets, or otherwise enter into a proposed
Buy/Sell Agreement with: 1) an immediate family member (spouse, child, brother,
sister, parent, grandchild, or spouse of child) of a Center Owner; 2) an
individual who is listed on the Successor Addendum; 3) an individual who is
currently employed by Center and has been actively employed by Center for at
least three consecutive years in the Center's BMW SAV Operations and is
otherwise qualified as a Center Operator; or 4) an individual who is currently
listed as a Center's Owner in Article C and has been so listed for the past
three consecutive years and is otherwise qualified as a Center Operator.
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ARTICLE G
ALTERNATE DISPUTE RESOLUTION
BMW NA and Center agree to minimize disputes between them. However, in the event
that disputes arise, BMW NA and Center agree that they will attempt to resolve
all matters between them before any formal action is taken to seek any
administrative or judicial adjudication or governmental review.
A BMW BOARD ("BOARD") will act as the Administrator of all disputes between BMW
NA and Center arising out of this Agreement. The BOARD will consist of two
representatives who will be selected by BMW NA and two representatives of BMW
centers who will be selected by the BMW Forum. The BOARD will determine
eligibility requirements, develop procedures to ensure a fair and equitable
decision ("ADR PROCEDURES"), and select individuals to participate in a DISPUTE
RESOLUTION PANEL ("PANEL") to hear an eligible dispute. The PANEL shall consist
of at least one BMW NA employee, one SAV Center representative, and one
independent person, selected by the BOARD, or a designated facilitator company
chosen by the BOARD.
The BOARD shall also monitor the dispute resolution process, periodically report
to BMW NA and the BMW Forum on the effectiveness of this process and, when
required, make recommendations for changes in this process.
BMW NA and Center agree that the process outlined in this Article G and
developed by the BOARD in the ADR PROCEDURES shall be mandatory. The PANEL's
recommendation will be non-binding, unless prior to appearing before the PANEL
the parties agree to be bound by the decision of the PANEL. The purpose of the
PANEL will be to recommend a resolution and work with the parties to reach a
fair and equitable solution to their dispute in a cost-effective, efficient
manner, and to avoid formal adjudication or government intervention.
If either party to this Agreement fails to refer a matter subject to Article G
to the dispute resolution process or initiates any action in court or an
administrative agency prior to issuance of a PANEL recommendation on a dispute,
that party shall pay all costs, fees and expenses, including attorneys fees, of
the other party which arise out of the enforcement of this Article G.
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ARTICLE H
TERM
This Agreement shall continue in full force and effect and shall govern all
relations and transactions between the parties commencing on the effective date
hereof and continuing as follows:
- If Center has fulfilled all of its obligations hereunder and no Improvement
Addendum is currently in force: 1) this Agreement shall expire five (5)
years from the effective date hereof and BMW NA will renew the Agreement
unless it is terminated earlier in accordance with the applicable
provisions of this Agreement; or 2) in the event that the BMW FORUM or a
subcommittee thereof reviews a superseding Agreement, and BMW NA offers
Center an opportunity to enter into that Agreement, Center shall enter into
the superseding Agreement.
- If Center has outstanding obligations as of the effective date of this
Agreement and/or an Improvement Addendum is in force, this Agreement shall
expire on the earlier of three years from the effective date hereof or
sixty (60) days following the earliest "Compliance Date" specified in said
Addendum, unless otherwise terminated in accordance with the applicable
provisions of this Agreement.
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ARTICLE I
CUSTOMER SATISFACTION
BMW NA and Center agree to conduct their respective businesses to promote and
support the image and reputation of BMW, BMW NA, BMW Products, and BMW centers.
BMW Products must be perceived as the finest available. BMW NA and BMW centers
must be recognized as providing the best customer service in the industry.
Center, as the direct link to the BMW customer, is responsible for satisfying
customers in all matters, except those directly related to product design and
manufacturing. Center will take all reasonable steps to ensure that each
customer is satisfied with BMW Products and with the services and the practices
of Center. Center will recommend to BMW NA methods of reasonably satisfying
customers. BMW NA will support Center's customer satisfaction efforts through
counseling, training opportunities, and providing survey results.
When requested by BMW NA, Center shall submit a plan detailing its customer
satisfaction programs. That plan shall include continuous reinforcement to all
Center personnel of the importance of customer satisfaction, necessary training
for Center personnel, and methods of conveying to customers that Center is
committed to their satisfaction.
Following consultation with and notice from BMW NA or its authorized
representative, Center shall remedy, to the satisfaction of BMW NA, any practice
or method of operation which would have a detrimental effect upon customer
satisfaction or would impair the reputation or image of BMW, BMW NA, BMW
Products, or the Center.
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ARTICLE J
EXECUTION OF AGREEMENT
This Agreement shall not become effective until signed by a duly authorized
officer of Center, if a corporation; or by one of the general partners of
Center, if a partnership; or by the named individual, if a sole proprietorship;
and countersigned by two authorized BMW NA representatives.
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ARTICLE K
MODIFICATION OF AGREEMENT
No representative of BMW NA shall have the authority to waive any of the
provisions of this Agreement or make any amendment or modification of or any
other change in, addition to, or deletion of any portion of this Agreement or to
make any other agreement which imposes any obligation on either BMW NA or Center
which is not specifically imposed by this Agreement or which renews or extends
this Agreement; unless such waiver, amendment, modification, change, addition,
deletion, or agreement is reduced to writing and signed by two authorized
representatives of BMW NA and by the authorized representative of Center
specified in Article J of this Agreement.
BMW OF NORTH AMERICA, INC. CORPORATE AND DBA NAME
BY: _____________________________________ BY: ______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
TITLE: General Manager TITLE:
Southern Region
FEDERAL TAX ID #:
BY: _____________________________________ ATTEST: (If Center is a Corporation)
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
TITLE: Center Development and Vehicle ___________________________________________
Process Manager Secretary
WITNESS (If Partnership or Proprietorship)
___________________________________________
Name
___________________________________________
Address
___________________________________________
18
Address
19
BMW OF NORTH AMERICA, INC.
SAV CENTER AGREEMENT
PRIMARY MARKET AREA ADDENDUM
____________________________________________________________________________
Attached are the Zip Codes which comprise the Center's Primary Market Area:
To be supplied during the fourth quarter of 1999.
[BMW LOGO]
BMW OF NORTH AMERICA, INC.
SAV CENTER AGREEMENT
STANDARD PROVISIONS
BMW OF NORTH AMERICA, LLC
SAV CENTER AGREEMENT
STANDARD PROVISIONS
TABLE OF CONTENTS
Paragraph 1 - Definitions
(a) BMW 5
(b) BMW Car Operations 5
(c) BMW Center SAV Operations 5
(d) BMW Forum 5
(e) BMW NA 5
(f) BMW NA SAV Center Agreement 5
(g) BMW SAV Centers 6
(h) BMW Products 6
(i) BMW Vehicle(s) 6
(j) Center 6
(k) Center Facility 6
(l) Center Operating Requirements 6
(m) Center Operating Requirements Addendum 7
(n) Center Operating System 7
(o) Center Operator 7
(p) Center's Officers 7
(q) Center's Owners 7
(r) Dealer and Dealership 7
(s) General Manager 8
(t) Improvement Addendum 8
(u) Net Purchase Price 8
(v) Original BMW Parts 8
(w) Primary Market Area 8
(x) Sports Activity Vehicles 9
(y) United States 9
Paragraph 2 - Basic Obligations Of BMW NA
(a) Supply of BMW Products to Center 10
(b) Assistance to Center 10
(c) Allocation of Vehicles 10
Paragraph 3 - Basic Obligations Of Center
(a) BMW Sales, Service, and Parts Supply 12
(b) Conduct of Business 12
(c) Compliance with Center Operating Requirements and Standards for
BMW Centers 12
(d) Issuance of Improvement Addendum 12
Paragraph 4 - General Requirements For Center's SAV Operations
(a) Center Operator 14
(b) Business Hours 14
(c) Signs and ▇▇▇▇▇▇ ▇▇
(▇) Center's Corporate and Trade Name 14
(e) Exclusive Ownership of BMW Trademarks 14
(f) Use of BMW Trademarks by Center 15
(g) Center Web Sites and Internet Use 16
(h) Sales of Certified Pre-Owned and Other Pre-Owned BMW Vehicles 17
(i) Insurance 17
(j) Training 17
(k) Advertising 17
(l) Center Submissions to BMW NA 18
(m) Compliance with Laws 18
(n) Compliance with this Agreement and BMW NA Policies, Procedures,
Programs, and Guidelines 18
Paragraph 5 - Center's Sales Of BMW Vehicles
(a) Sales Promotion 19
(b) Sales Performance 19
(c) Sales Leads 19
(d) Demonstrators 19
(e) Strategic Business Plan 19
(f) Primary Market Area 20
(g) Performance Evaluation 20
(h) Down Payments and Trade-Ins 21
(i) Consumer Disclosures 21
Paragraph 6 - Customer Service
(a) Scope and Quality 22
(b) Disclosure and Use of Original BMW Parts 22
(c) Pre-Delivery Inspection 23
(d) BMW Service and Warranty Information Booklet and BMW Owner's
Manual 23
(e) Compliance with Consumer Protection Statutes, Policies,
Procedures, and Guidelines 23
Paragraph 7 - Center's Records And Reports And Access To Center's
Premises
(a) Financial Records 24
(b) Management Information Systems Requirements 24
(c) Financial Statements 24
(d) Additional Reports 24
(e) Access to Center's Premises and Records 25
(f) Confidentiality 25
2
Paragraph 8 - Center's Purchases Of BMW Vehicles
(a) Center's Purchase Price 26
(b) Payment 26
(c) Line of Wholesale Credit 26
(d) Shipment to Center 26
(e) Claims Processing 26
(f) Passing of Risk 27
(g) Repair and Sale of Damaged BMW Vehicles 27
(h) Option to Repurchase Damaged Vehicles 28
Paragraph 9 - Center's Inventory And Purchase Of Original BMW Parts
(a) Minimum Inventory of Original BMW Parts 29
(b) Center's Purchase Price 29
(c) Payment 29
(d) Delivery 30
(e) Claims for Incomplete Delivery 30
(f) Return of Defective Original BMW Parts 30
(g) Right to Return Original BMW Parts 30
(h) Non-Returnable Materials, Parts, and Assemblies 31
Paragraph 10 - Additional Provisions Governing Center's Purchase
Of BMW Products And Center's Inventories
(a) Taxes 32
(b) BMW NA's Purchase Money Security Interest 33
(c) Return or Diversion of BMW Vehicles on Center's Failure to
Accept 35
(d) Failure of or Delay in Delivery 35
(e) Changes in Specifications 35
(f) Changes by Center on BMW Products and Compliance with Safety,
Air Pollution, Noise Control and Consumer Warranty Requirements 36
(g) Inventories ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ - ▇▇▇▇▇▇▇▇ To Customers
(a) BMW Warranties 38
(b) Incorporation of BMW Warranties in Center's Sales 38
(c) Exclusion of ▇▇▇▇▇▇▇▇▇▇ ▇▇
(▇) ▇▇▇▇▇▇▇▇ Policies and Procedures 39
Paragraph 12 - Termination Prior To Expiration Date And Succession
(a) Termination by Center 41
(b) Immediate Termination by BMW NA for Cause 41
(c) Termination by BMW NA on Sixty (60) Days Notice 43
(d) Termination Upon Offering to Enter into a New or Amended
BMW SAV Center Agreement 46
(e) Termination for Failure of BMW NA to be Licensed 46
(f) No Waiver by Failure to Terminate 46
(g) Termination upon Death or Permanent Disability 46
(h) Successor in Event of Death or Permanent Disability 46
(i) Successor Nominee 47
3
Paragraph 13 - Continuation Of Business Relations
(a) Continuation of Business Relations After Expiration or Prior
Termination 49
Paragraph 14 - Rights and Liabilities Upon Expiration Or Prior
Termination
(a) Cancellation of Pending Orders and Post Expiration and Termination
Obligations 50
(b) Purchase of Center's Inventory of BMW Products by BMW NA 51
Paragraph 15 - Ownership Changes And Transfers Of Agreement
(a) Transfer, Sale, or Assignment of Agreement by Center 54
(b) Ownership Policies and Procedures 55
(c) Ownership Limitations 55
Paragraph 16 - Facilities And Satellites
(a) Facility and Satellite Authorization 56
(b) Approved Locations for Center Facilities 56
(c) Facilities Compliance 56
(d) Consent 56
Paragraph 17 - Indemnification
(a) Indemnification by BMW NA 57
(b) Indemnification by Center 58
(c) Notification 60
(d) Allegations Involving Both BMW NA and Center 61
Paragraph 18 - Miscellaneous Provisions
(a) Approval or Consent by BMW NA 62
(b) Divisibility 62
(c) Termination of Prior Agreements 62
(d) Notices 62
(e) No Implied Waivers 62
(f) Center is Not an Agent and Disclaimer of Further Liability by BMW NA
and BMW 63
(g) Accounts Payable 63
(h) BMW NA's Continuing Security Interests 63
(i) Assignment of BMW NA's Security Interests 64
(j) Limitations Re Center Stock and Assets 64
(k) BMW NA's Right to Specific Performance 64
(l) Reservation of Rights 64
(m) Headings 64
(n) Entire Agreement and Representations 65
(o) New Jersey Law 65
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PARAGRAPH 1 - DEFINITIONS
The following definitions shall be used in the
SAV Center Agreement and have the following
meanings:
BMW (a) "BMW shall mean Bayerische Motoren Werke
AG, a company organized and existing under and
by virtue of the laws of Germany, having its
principal place of business in Munich, Germany.
BMW Car Operations (b) "BMW Car Operations" and "Car Operations"
shall mean the sales and service activities for
BMW cars which are being operated by the Center
under the separate and distinct BMW Dealer
Agreement for cars or a successor agreement for
cars.
BMW Center SAV (c) "BMW Center SAV Operations", "BMW Center
Operations Operations", "BMW SAV Operations", or "SAV
Operations" shall mean all activities of the
Center relating to the promotion and sale of
BMW Products, the supply of Original BMW
Parts, customer service for BMW Products,
and/or all other operations of Center governed
by this Agreement, such as sales of certified
pre-owned BMW Vehicles.
BMW Forum (d) "BMW Forum" or "Dealer Forum" shall mean
the elected representatives of the BMW centers
which perform the responsibilities set forth in
Article E of this Center Agreement.
BMW NA (e) "BMW NA" shall mean BMW of North America,
LLC, a company organized under the laws of the
State of Delaware, the exclusive importer and
distributor of BMW Products in the United
States.
BMW NA SAV Center (f) "BMW NA SAV Center Agreement", "BMW SAV
Agreement Center Agreement", "BMW SAV Dealer Agreement",
"SAV Center Agreement", "Center Agreement", or
"Agreement" shall have the same meaning as set
forth in Article B of this Agreement.
5
BMW SAV Centers (g) "BMW SAV Centers", "BMW Centers", "SAV
Centers", or "Centers" shall mean all of the
authorized BMW centers which are signatories
to a BMW SAV Center Agreement with BMW NA.
BMW Products (h) "BMW Products" shall mean BMW Vehicles and
Original BMW Parts.
BMW Vehicle(s) (i) "BMW Vehicle(s)" shall mean new light
trucks manufactured by BMW or one of its
manufacturing subsidiaries, sold by BMW NA and
bearing the trademarks of BMW. The only new
vehicles authorized to be sold or serviced
under this agreement are BMW light trucks/
Sports Activity Vehicles. BMW cars are not
authorized to be sold or serviced under this
Agreement and are not included in the
definition of BMW Vehicle(s) hereunder. BMW
cars are only authorized to be sold and
serviced under a distinct and separate
agreement.
Center (j) "Center" or "BMW Center" shall mean a
dealer authorized to sell and service BMW
Products as appointed by BMW NA pursuant to
this Agreement. The term "center" or "BMW
center", without a capital "C", shall mean all
BMW dealerships (other than BMW motorcycle
dealerships) whether or not they are
authorized to sell and service BMW Products
under this Agreement.
Center Facility (k) "Center Facility", including its plural and
possessive forms, shall mean the land and
building(s) which constitute the authorized
location established in accordance with the
provisions of Article D of the Center Agreement
for the conduct of the BMW Center SAV
Operations.
Center Operating (1) "Center Operating Requirements" shall mean
Requirements the BMW Product, Center Facility, Corporate
Identity, Personnel, Training, Financial,
Equipment, Special Tool, Certified Pre-Owned
Vehicle, Parts, and Demonstrator Requirements
for a Center's SAV Operations and Car
Operations published by BMW NA, as amended,
canceled, or superseded from time to time by
BMW NA following review by the
6
BMW Forum.
Center Operating (m) "Center Operating Requirements Addendum"
Requirements and "Operating Requirements Addendum" shall
Addendum mean the BMW Product, Center Facility,
Corporate Identity, Personnel, Training,
Financial, Equipment, Special Tool, Certified
Pre-Owned Vehicle, Parts, and Demonstrator
Requirements applicable to Center, as issued,
amended, canceled, or superseded from time to
time by BMW NA following review with Center.
Center Operating (n) "Center Operating System" shall mean
System guidelines and recommendations published by
BMW NA to assist Center in complying with
Center Operating Requirements.
Center Operator (o) "Center Operator" shall mean the person
named in Article C of the Center Agreement as
the person in charge of the BMW Center
Operations with authority to make all operating
decisions on behalf of the Center with respect
to the BMW Center Operations and is the person
upon whom BMW NA is relying to represent BMW
Products and to act on the Center's behalf, as
well as any person who succeeds to such
position in accordance with this Agreement.
Center's Officers (p) "Center's Officers" or "Center Officers"
shall mean all the persons named in Article C
of the Center Agreement as officers of Center,
as well as any other person who succeeds to any
such executive and/or managerial position in
the Center in accordance with the Agreement.
Center's Owners (q) "Center's Owners" or "Center Owners" shall
mean all the persons named in Article C of the
Center Agreement as the beneficial and record
owners of the Center, as well as any other
person who acquires or succeeds to any
beneficial interest or record ownership of the
Center in accordance with the Agreement.
Dealer and Dealership (r) "Dealer" and "Dealership" shall mean
Center.
7
General Manager (s) "General Manager" shall mean the person
named in Article C of the Center Agreement as
the person in charge of its BMW SAV Operations
in the absence of the Center Operator, as well
as any person who succeeds to such position in
accordance with this Agreement.
Improvement (t) "Improvement Addendum" shall mean the
Addendum Addendum to this Center Agreement which lists
the outstanding obligations of the Center which
must be met to ensure the continuation of this
Agreement under Article H of this Agreement.
Net Purchase Price (u) "Net Purchase Price" shall mean the actual
price at which Center purchased the certain BMW
Product from BMW NA, which price shall include
the addition or deduction of any and all
rebates, refunds, credit allowances, discounts,
and other payments or adjustments made by BMW
NA relative to such BMW Product. "Net Purchase
Price" shall not include payments or
adjustments in connection with Center
advertising association activities.
Original BMW Parts (v) "Original BMW Parts" shall mean (i) any
genuine parts, accessories, and equipment for
BMW Vehicles manufactured by or on behalf of
and/or sold by BMW and/or BMW NA and/or bearing
the authorized trademarks of BMW, which parts,
accessories and equipment usually are described
as "Original" in packaging; and (ii) any
equipment designed for use in BMW Center
Operations (including special BMW tools) and
any non-automotive accessories and other
equipment, including aftersales, lifestyle, and
gift items bearing the trademarks of BMW, which
are supplied to Center by or on behalf of BMW
NA.
Primary Market Area (w) "Primary Market Area" shall mean the area
designated by BMW NA in which the Center is
expected to focus its activities under this
Center Agreement. Evaluation of the Center's
performance shall be primarily based upon the
Center's activities in its Primary Market Area.
8
Sports Activity Vehicles (x) "Sports Activity Vehicles", "Sports
Activity Vehicle", "SAVs", or "SAV" shall mean
BMW light trucks.
United States (y) "United States" shall mean the ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, the District of Columbia, and the
Commonwealth of Puerto Rico.
9
PARAGRAPH 2 - BASIC OBLIGATIONS OF BMW NA
Supply of BMW (a) BMW NA agrees to sell and deliver BMW
Products to Center Products to Center in accordance with this
Agreement and the ability of the Center to
store, display, sell, and service BMW Products,
as reflected in its Center Operating
Requirements Addendum. BMW NA shall have no
obligation to supply and Center shall not be
entitled to receive BMW Products which exceed
the Center's ability to store, display, sell,
or service BMW Products as evidenced by its
Center Operating Requirements Addendum.
Assistance to Center (b) BMW NA will assist Center in Center's BMW
SAV Operations through such means and upon such
terms and conditions as BMW NA considers
necessary and appropriate, including, among
other things:
(1) Sales, technical, and process training,
delivered in person or electronically,
prior to introduction of new BMW Vehicles
or on an ongoing basis;
(2) Sales, service, and parts literature and
other printed materials relating to BMW
Products;
(3) National advertising campaigns for BMW
Vehicles;
(4) Periodic suggestions and evaluations to
assist Center in the conduct of its BMW
Operations; and
(5) Technical Assistance Hotline and Parts
Telephone Support.
Allocation of Vehicle (c) BMW NA agrees to sell and deliver BMW
Products to Center in accordance with the
provisions of this Agreement:
(1) In making such sales and deliveries, BMW
NA will consider Center's preferences, as
well as its compliance with the resale
and use restrictions of the Center
Agreement, and will endeavor to make a
fair and equitable allocation and
distribution of the BMW Products
available to it among its BMW Centers.
BMW NA reserves the right to reduce
allocation of BMW Vehicles to Centers
which do not comply with the terms and
conditions of the Center Agreement or the
Center Operating Requirements
10
Addendum;
(2) Center recognizes the possibility that
from time to time BMW Products may not be
available in sufficient quantities. In
such event, Center agrees that BMW NA, in
the exercise of its business judgment,
may determine the method and manner of
the allocation of BMW Products between
Center and BMW NA'S other Centers. Upon
Center's written request, BMW NA agrees
to provide Center with an explanation of
the method used to distribute such BMW
Products; and
(3) Center recognizes that when introducing
new BMW Products, BMW NA may require
certain prerequisites be in place at the
BMW Center, i.e., training, equipment,
tools, parts, displays, and customer
information, prior to BMW NA distributing
such BMW Products to the Center. Such
prerequisites shall help ensure customer
satisfaction and product acceptance in
the market. Center agrees that its
failure to meet the prerequisites will
delay the distribution of new BMW
Products to Center until the
prerequisites are met.
11
PARAGRAPH 3 - BASIC OBLIGATIONS OF CENTER
BMW Sales Service, (a) Center assumes the responsibility for the
and Parts Supply promotion and sale of BMW Products, the supply
of Original BMW Parts, and customer service for
BMW Products.
Conduct of Business (b) In the conduct of its business, Center
will:
(1) Safeguard and promote the reputation of
BMW Products, the trademarks of BMW, and
the BMW brand;
(2) Refrain from negligent or willful conduct
which may be harmful to the reputation or
to the marketing of BMW Products or
inconsistent with the public interest;
(3) Refrain from all deceptive, misleading,
or unethical practices; and
(4) Comply with all applicable local, state,
and federal laws.
Compliance with Center (c) Center, recognizing that its
Operating responsibilities under this Agreement demand
Requirements and the most effective use of its available
Standards for BMW facilities, capital, and personnel, agrees to
Centers comply with its Center Operating Requirements
Addendum. Center shall review said Addendum
with BMW NA representatives at the Retail
Business Plan Review, satisfy outstanding
obligations under its Improvement Addendum, if
applicable, and comply with all reasonable
standards established by BMW NA from time to
time relating to Center's BMW SAV Operations.
Issuance of (d) BMW NA will notify Center in writing if
Improvement Center fails to comply with any obligation,
Addendum responsibility, or requirement under the Center
Agreement or the Center Operating Requirements
Addendum ("Deficiency").
(1) If Center fails to remedy the Deficiency
following notice, BMW NA will issue to
Center an Improvement Addendum or amend
an existing Improvement Addendum, listing
the Deficiency(s) and providing Center a
reasonable date by which the Center must
12
satisfy the Deficiency(s).
(2) Should Center reasonably request an
extension of time in writing to comply
with an Improvement Addendum, a justified
request for extension will not be
unreasonably withheld; however, under no
circumstances is BMW NA obligated to
grant more than two extensions.
(3) Center's failure to satisfy the
Deficiency(s) will jeopardize the
Center's ability to renew the Center
Agreement and could subject Center to
early termination of this Agreement.
(4) An Improvement Addendum will be canceled
once Center remedies the Deficiency(s).
(5) An Improvement Addendum may be superseded
by BMW NA at any time to reflect a
Center's progress toward satisfaction of
a Center's Deficiency(s).
13
PARAGRAPH 4 - GENERAL REQUIREMENTS FOR
CENTER'S SAV OPERATIONS
Center Operator (a) Center agrees that the Center Operator
hereunder shall be the same person as the
Dealer Operator under the Center's BMW Dealer
Agreement for cars or a successor agreement for
cars.
Business Hours (b) Throughout the term of this Agreement, the
Center Facility shall be operated during, and
for not less than, the customary business hours
of the trade in the community or locality in
which Center is located. When necessary to
accommodate customers' needs, however, Center
shall extend its regular business hours.
Signs and Pylons (c) Subject to local requirements, Center
agrees to display conspicuously at and around
the Center Facility such BMW approved signs and
pylons as BMW NA shall reasonably require.
Center's Corporate and (d) Center agrees that its corporate name and
Trade Name its trade name (also known as the Center's
dba) for its BMW Center SAV Operations shall
be the same as for its BMW Car Operations and
must comply with all applicable BMW NA
policies, procedures, programs, and guidelines
related thereto.
Exclusive Ownership of (e) Center acknowledges BMW's exclusive
BMW Trademarks ownership, and the validity, of the BMW
trademarks (including, without limitation, the
BMW logo), both registered and at common law,
and shall not contest the same during the term
of the Agreement or at any time thereafter.
Center further acknowledges that the BMW
trademarks are famous and highly distinctive
throughout the United States and the world, and
that the BMW trademarks have achieved the
highest degree of recognition within the
automotive industry and other related
industries throughout the United States and the
world. Center and BMW NA agree to cooperate
with each other in preventing any acts of
trademark infringement, dilution, or unfair
competition with respect to any BMW trademark,
but BMW (or BMW NA, as BMW's agent with respect
to trademark matters) shall have
14
sole control over all actions and legal
proceedings to suppress infringement, dilution,
or any act of unfair competition with respect
to any BMW trademark. Center acknowledges, and
shall not contest, BMW NA's right and authority
to bring any action for infringement, dilution,
or unfair competition with respect to any BMW
trademark.
Use of BMW (f) BMW NA grants Center a non-exclusive
Trademarks by Center license to use the BMW trademarks subject to
the terms and conditions of this Agreement,
including, but not limited to, BMW and BMW NA
trademark policies and guidelines. Center
agrees that it will use the trademarks solely
in connection with the promotion and sale of
BMW Products and consumer service for BMW
Products only in such manner, at such location,
to such extent, and for such purposes as BMW NA
may specify from time to time. No BMW trademark
may be used except in the color, size, form,
and style approved by BMW NA. Moreover, without
the express prior written consent of BMW NA,
Center shall not use any BMW trademark
(including the letters "BMW") as part of its
corporate business name. Center shall promptly
change or discontinue its use of any BMW
trademark upon BMW NA's request. Center agrees
that the sole source and origin of BMW Products
is BMW NA and BMW. Center shall not use the BMW
trademarks in any manner which may tend to
cause a likelihood of confusion concerning the
source or origin of BMW Products. Center shall
not use the BMW trademarks in any manner which
is likely to cause confusion among the public,
deceive or mislead the public, or impair the
goodwill of BMW NA or BMW Products. Without BMW
NA's prior written consent, Center shall not
use BMW trademarks in connection with, or
associated with, any other trademark or brand.
In the event Center desires to utilize the BMW
trademarks in any material, including signage
or advertisements, which also contains
reference to another line or automotive make,
Center agrees to provide BMW NA with thirty
(30) days prior written notice of such use. BMW
NA shall have the sole discretion to grant or
deny approval for such use of the BMW
trademarks. Center acknowledges that BMW NA
shall be irreparably harmed by any breach by
Center of any provision of this Agreement
concerning the use of the BMW trademarks.
Center acknowledges that BMW or BMW NA may, at
their discretion, terminate this license or BMW
NA
15
may terminate this Agreement for any violation
of BMW or BMW NA trademark policies or
guidelines or the breach of this provision or
other related provisions in this Agreement.
Center agrees to pay all costs, fees, and
expenses, including attorneys fees, of BMW NA
or BMW associated with or arising from any
legal claim or proceeding for the enforcement
of any provision of this Agreement concerning
the use of the BMW trademarks or the BMW brand.
Center Web Sites and (g) Among other purposes, BMW NA will use its
Internet Use Internet web sites to provide sales leads to
facilitate Centers, to facilitate sales, and to
the flow of BMW Product and sales information
among BMW NA, BMW Centers, and consumers.
Center may maintain a world wide web site or
otherwise maintain a presence or advertise on
the Internet or any other public computer
network in connection with the Center's
business; provided, however, that any such
activities are in compliance with the law and
any applicable BMW NA Internet or web site
policies that exist or are subsequently
developed. Center shall not use any BMW
trademarks on the site in a manner inconsistent
with Paragraph 4 of this Agreement or without
BMW NA's prior written authorization or in a
manner that is not acceptable to BMW NA.
Furthermore, Center may not post BMW or BMW NA
proprietary, confidential, or copyrighted
material or information on its web site without
BMW's or BMW NA's prior written approval.
Center also agrees to include on its web site
information BMW NA requires in the manner and
form selected by BMW NA. Center further agrees
to list a link on its web site to
▇▇▇▇://▇▇▇.▇▇▇▇▇▇.▇▇▇. If Center is requested
to provide a link to additional web sites by
BMW NA in writing, Center shall add such links
to its web site. In addition, Center agrees to
obtain BMW NA's prior written approval for any
Internet domain name Center may use or intend
to use and/or home page address. Finally,
Center agrees that it shall be responsible for
the activities and actions it undertakes on the
Internet and at its web site.
16
Sales of Certified Pre- (h) Center shall not use any BMW trademark in
Owned and Other Pre- connection with the sale of certified or
Owned BMW Vehicles non-certified pre-owned BMWs unless the Center
fully complies with all requirements of BMW NA
as to the standards, practices, and facilities
for the sale of pre-owned BMWs under the BMW
trademarks. Center agrees to adhere to the
terms and conditions associated with the sales
and service activities for certified pre-owned
BMWs and to all policies, procedures, programs,
and guidelines established and updated from
time to time by BMW NA for certified pre-owned
BMWs. Furthermore, Center shall not certify any
BMWs which do not meet the requirements for
certification and shall not submit claims,
information, or reports to BMW NA identifying
as certified, vehicles that do not meet
certification requirements or vehicles that
have not been certified.
Insurance (i) Center shall maintain comprehensive and
excess liability insurance policies in an
amount sufficient to meet all reasonably
anticipated contingencies, including legal
judgments entered against Center. In no event
shall the aggregate value of the policies be
less than Five Million Dollars ($5,000,000.00).
The policies must be issued by an insurance
company with an "A-" or better rating by A.M.
Best or a similar rating agency acceptable to
BMW NA. Center must provide BMW NA with copies
of such policies upon request and a certificate
of insurance each time the policies are
renewed.
Training (j) Center agrees that its personnel will be
trained in such special training courses as may
be offered from time to time by BMW NA. Center
shall require its personnel to meet with BMW NA
personnel in the dealership or at other
appropriate locations for the purposes of
training and to use training materials as may
be suggested from time to time by BMW NA.
Advertising (k) Center agrees to advertise BMW Products and
customer service for BMW Products in accordance
with the standards set forth in Paragraph 3(b)
and such other reasonable policies, standards,
and guidelines as BMW NA may establish from
time to time. Such
17
advertising shall include, among other things,
listings in approved web sites and local
classified telephone directories identifying
Center as an authorized dealer in BMW Products.
Both BMW NA and Center recognize the need of
maintaining uniformly high standards of ethical
advertising of a quality and dignity consistent
with the reputation of BMW Products in order to
maintain public confidence and respect in
Center, BMW NA, and BMW Products. Accordingly,
Center agrees not to publish or cause to be
published any advertising in any media
whatsoever relating to BMW Products and
customer service for BMW Products which is
likely to deceive and/or mislead the public or
to impair the goodwill of BMW NA or BMW
Products. BMW NA reserves the right to require
Center to cease any advertising inconsistent
with this provision including the right to
prohibit Center from using BMW trademarks in
advertising.
Center Submissions to (1) Center shall not submit false or fraudulent
BMW NA claims, reports, statements, or information to
BMW NA.
Compliance with Laws (m) Center shall comply with all applicable
local, state, and federal laws and regulations,
including, but not limited to, laws and
regulations requiring licensing and/or
registration. Center agrees to disclose
information as BMW NA may reasonably request
with respect to the foregoing.
Compliance with this (n) Center shall comply with the terms and
Agreement and BMW conditions of this Agreement and all existing
NA Policies, and subsequently developed or amended BMW NA
Procedures, Programs, policies, procedures, programs, and guidelines.
And Guideline
18
PARAGRAPH 5 - CENTER'S SALES OF BMW VEHICLES
Sales Promotion (a) Center shall actively and effectively
promote the sale of the full line of authorized
BMW Vehicles and shall promote and sell such
BMW Vehicles primarily in its Primary Market
Area in accordance with the terms and
conditions of this Agreement and through such
means as reasonably may be required by BMW NA
from time to time.
Sales Performance (b) Within the limitations, if any, resulting
from the quantity of BMW Vehicles made
available to Center by BMW NA, Center shall
achieve the best possible sales performance
obtainable for BMW Vehicles. Such sales
performance shall be evaluated on the basis of
such reasonable and equitable criteria as may
be determined from time to time by BMW NA.
Sales Leads (c) Center shall follow up all sales leads
provided to Center by BMW NA (or any of its
subsidiaries, affiliated companies, or
vendors), whether obtained through BMW NA's web
site or otherwise, promptly and courteously
within the time periods set forth by BMW NA in
writing to Centers or in the Center's Operating
Requirements Addendum. Center acknowledges that
BMW NA may divert any sales leads not followed
up on by a Center within the time periods set
forth by BMW NA, in writing to Centers or in
the Center's Operating Requirements Addendum,
to other Centers.
Demonstrators (d) For purposes of demonstration, Center shall
have available at all times such number of the
most current model BMW Vehicles as required
pursuant to the Center's Operating Requirements
Addendum. Center shall maintain such BMW
Vehicles in first-class operating condition at
all times.
Strategic Business Plan (e) Each Center shall develop a strategic
business plan with objectives for the following
year. The annual strategic business plan will
be discussed with and presented to the BMW NA
representatives at an annual strategic business
plan review. The
19
final strategic business plan, as accepted by
BMW NA, shall represent the goals and
objectives of Center and contain the action
plans developed by Center to achieve those
goals and objectives and, in the case of an
Improvement Addendum, address the means of
complying with the terms and conditions of this
Agreement.
Primary Market Area (f) BMW NA will assign to Center in writing a
geographic area consisting of a collection of
zip code areas or census tracts, which shall be
the Center's Primary Market Area. The Center's
Primary Market Area is the area in which a
Center will primarily promote and sell BMW
Vehicles. The Center's Primary Market Area will
be used to evaluate the Center's performance
obligations and objectives under this
Agreement. BMW NA may adjust a Center's Primary
Market Area at any time and will provide
written notice to the Center of any adjustment.
Center agrees that it has no right or interest
in any Primary Market Area. In assigning or
changing the Center's Primary Market Area, BMW
NA will exercise its best business judgment
based on the facts and circumstances at the
time that any assignment or change is made.
Performance Evaluation (g) Center and BMW NA agree that their primary
purpose is to satisfy customers by properly
servicing and promoting the sale of BMW
Products within Center's Primary Market Area.
Center and BMW NA will work together to achieve
this purpose.
(1) Center's compliance with the retail
business plan and Center's sales,
service, and customer satisfaction
performance will be regularly reviewed
and evaluated. BMW NA will provide to
Center, in writing, its evaluation of
Center's performance. Any written
comments submitted by Center to BMW NA
shall become part of a performance
evaluation report.
(2) BMW NA shall evaluate Center's
performance based on, but not limited to:
(i) Center's sales of BMW Products in
Center's Primary Market Area;
(ii) Registrations attributable to
Center in its Primary Market
20
Area;
(iii) The sales and registrations of
competitive light trucks in
Center's Primary Market Area;
(iv) Feedback from Center's customers
measured by the results of the
customer satisfaction surveys
provided to Center by BMW NA;
(v) The trend of Center's performance
over a reasonable period of time;
(vi) Significant local conditions that
may have affected Center's
performance;
(vii) The general vehicle purchasing
trends of the public; and
(viii) Center's compliance with its
Center Operating Requirements
Addendum, its retail business
plan objectives, and Best
Practices.
Down Payments and (h) Payments received from customers, whether
Trade-In in money or in kind, which are to be applied
towards the subsequent purchase of a new BMW
Vehicle, shall be held for such customers in
accordance with applicable law until such time
as the transaction with respect to which such
payments were received is consummated or
terminated.
Consumer Disclosures (i) Center shall deliver to purchasers of BMW
Vehicles an itemized invoice and disclose any
other information or give any notice provided
by BMW NA intended for consumers or required by
law.
21
PARAGRAPH 6 - CUSTOMER SERVICE
Scope and Quality (a) Center shall provide the best possible
customer service for all owners of BMW Vehicles
whether or not the BMW Vehicle was sold by
Center and shall promote its customer service
and the sale of Original BMW Parts. Center
shall not engage in any service practice with
respect to any BMW Products if BMW NA has
reasonably objected to the nature or quality of
such practice or the practice is detrimental to
customers or inconsistent with the purposes of
this Agreement.
Disclosure and Use of (b)(1) Center shall not use any parts other
Original BMW Parts than Original BMW or parts expressly approved
(e.g., authorized remanufactured parts) by BMW
NA in the performance of warranty service in
connection with the BMW New SAV Limited
Warranty, parts warranties, and/or other BMW
warranties.
(2) Center recognizes that its customers have a
right to expect that any product that they
purchase from Center meets the high quality
standards associated with BMW Products. In
order to avoid confusion and minimize potential
customer dissatisfaction, in any case where
Center sells for use in the repair of any BMW
Product any parts which are not Original BMW
Parts or parts approved by BMW or BMW NA,
Center shall disclose to the customer that such
parts are not Original BMW Parts or parts
approved by BMW or BMW NA, and, consequently,
that such parts are not warranted by BMW NA.
Such disclosure shall be in writing,
conspicuous, and set forth on the parts
invoice, service, or repair order. Center will
also, by appropriate written notice, advise the
customer of the source of such parts and the
extent of any warranty given by the supplier or
manufacturer of such parts.
(3) Center shall not represent in any manner,
sell or offer for sale as new, Original BMW
Parts or parts approved (e.g., authorized
remanufactured parts) by BMW or BMW NA, any
parts which are not in fact new, Original BMW
Parts or parts approved by BMW or BMW NA.
22
Pre-Delivery Inspection (c) Before delivery to the customer, Center
shall inspect, prepare, and condition each new
BMW Vehicle in accordance with quality
certification and other pre-delivery
inspection procedures furnished from time to
time by BMW NA to Center. Evidence of
satisfactory completion will be determined at
the discretion of BMW NA, through customer
responses to surveys or inspection documents
maintained in the Center's vehicle history
file.
BMW Service and (d) Upon delivery to a customer of a new BMW
Warranty Information Vehicle, Center will also deliver to the
Booklet and BMW customer the BMW Service and Warranty
Owner's Manual Information booklet supplied by BMW NA for such
BMW Vehicle, properly completed and stamped
with Center's corporate or business name, the
customer warranty information, including
notification of any laws, rules, or regulations
addressed in subparagraph (e) below when
required by applicable state law, and the
appropriate BMW Owner's Manual. In addition,
Center shall have copies of applicable warranty
information on display and ready for customer
use.
Compliance with (e) Center acknowledges the existence and
Consumer Protection applicability of various "repair or replace"
Statutes, Policies, laws, damage disclosure laws, other consumer
Procedures, and protection laws, rules, and regulations, and
Guidelines BMW NA disclosure policies, procedures, and
guidelines. Center agrees to comply fully with
the requirements of such laws, rules,
regulations, policies, procedures, and
guidelines, including, but not limited to,
delivering all required disclosures, booklets,
and manuals to consumers, and Center shall take
no action which adversely affects BMW NA's
rights and duties under these laws, rules, and
regulations.
Moreover, Center agrees to use its best efforts
to notify BMW NA promptly in writing of all
situations in which "repair or replace" laws
are or may be applicable. Center further agrees
to take such other action as BMW NA may
reasonably require.
23
PARAGRAPH 7 - CENTER'S RECORDS AND REPORTS
AND ACCESS TO CENTER'S PREMISES
Financial Records (a) Center shall keep accurate and current
books of account in accordance with accounting
practices reasonably satisfactory to BMW NA so
as to enable BMW NA to develop comparative data
in order, among other things, to furnish to
Center, for Center's benefit, business
management assistance.
Management (b) To facilitate the efficient operation of
Information Systems the BMW SAV dealer network and the accurate and
Requirements prompt disclosure to BMW NA of dealership
operations and financial information, Center
agrees to install and maintain management
information system facilities which are
compatible with the computer systems, hardware,
and software used by BMW NA and comply with the
terms of the BMW Information Management Manual.
Financial Statements (c) Center shall deliver or mail to BMW NA the
following:
(1) On or before the tenth (10th) day of each
calendar month, on such forms as BMW NA
reasonably may require, a financial and
operating statement reflecting Center's
BMW SAV Operations for the preceding
month and Center's total BMW SAV
Operations from the beginning of the
calendar year to the end of the preceding
month (the statements referenced in this
Paragraph shall also reflect the
financial and operating results for the
Center's BMW Car Operations); and
(2) Within three and one-half (3-1/2) months
after the end of the calendar year, a
financial and operating statement for
such year. In the event BMW NA so
requests in writing, such statement shall
be reviewed by a certified public
accountant.
Additional Reports (d) Center will furnish to BMW NA, on such
forms and at such times as BMW NA reasonably
may require, complete and accurate reports of
Center's sales and inventories of new BMW
Vehicles, of certified pre-owned BMW Vehicles,
of other pre-owned vehicles, and of Original
BMW Parts. Center will also furnish to BMW NA
such other
24
reports as BMW NA reasonably may require from
time to time. Center shall maintain such
records for at least five (5) years.
Access to Center's (e) Until the expiration or prior termination
Premises and Records of this Agreement and thereafter until
consummation of all the transactions referred
to in Paragraph 14 hereof, BMW NA, through its
representatives, employees, and other
designees, shall have the right, at all
reasonable times during regular business hours,
to inspect Center's BMW SAV Operations,
including the Center's Facility and records and
accounts of Center relating to Center's BMW SAV
Operations. Center shall cooperate fully with,
and take all actions necessary to facilitate,
such inspections.
Confidentiality (f) BMW NA will not furnish any financial data
submitted to it by Center to any third party
unless: 1) authorized by Center; 2) required by
law, regulation, order, or judicial, alternate
dispute resolution, or administrative process;
3) pertinent to judicial, alternate dispute
resolution, or administrative proceedings; or
4) required to generate composite or
comparative data for analytical purposes.
Center agrees to keep confidential and not
disclose, directly or indirectly, information
that BMW NA designates as confidential and
provides to Center.
25
PARAGRAPH 8 - CENTER'S PURCHASES OF BMW
VEHICLES
Center's Purchase (a) BMW NA will sell BMW Vehicles to Center at
Price such prices and upon terms as may be
established from time to time by BMW NA. Center
shall be responsible for payment of any and all
sales taxes, use taxes, excise taxes, and other
governmental or municipal charges imposed or
levied or based upon the sale of BMW Vehicles
by BMW NA to or through Center.
Payment (b) Payment for each BMW Vehicle purchased by
Center shall be made in cash at the time of
delivery unless the invoice provides otherwise,
in which event the terms of the invoice shall
govern. Receipt of any check, draft, or other
commercial paper shall not constitute payment
until BMW NA has received cash in the full
amount thereof. In the event of non-payment,
Center shall pay all of BMW NA's collection
charges, including attorneys fees and costs.
Line of Wholesale (c) During the term of this Agreement, Center
Credit shall maintain exclusively for BMW Vehicles an
unrestricted line or lines of wholesale credit
with a financing institution or institutions
satisfactory to BMW NA in amounts as specified
in the Center Operating Requirements Addendum.
Shipment to Center (d) BMW NA will endeavor, whenever practicable,
to follow Center's requests with regard to
route and method of shipment of BMW Vehicles
but BMW NA reserves the right to ship BMW
Vehicles purchased by Center hereunder by
whatever mode of transportation, by whatever
route, and from whatever point BMW NA may
select. All shipping charges for BMW Vehicles
will be borne by Center.
Claims Processing (e) In order to facilitate the processing of
claims for damage against the carrier or
carrier's insurer, Center hereby authorizes BMW
NA to process, and BMW NA agrees that it will
so process at its own cost and expense, all
such claims in BMW NA's name, but for Center's
account, in such manner and on such basis as
BMW NA may
26
reasonably determine. BMW NA shall not,
however, be obliged to retain counsel or
commence legal proceedings against carrier or
carrier's insurer with respect to any such
claims. Center also authorizes BMW NA to
settle or compromise any such claims for less
than the full amount thereof as BMW NA may in
its sole judgment determine without the prior
approval of Center.
Immediately upon delivery of any BMW Products
to Center, Center shall make a careful
inspection of such products and shall note any
damage in the BMW Products so delivered on the
appropriate carrier delivery forms, which shall
be signed by both the representatives of the
carrier and the representatives of the Center.
Center shall also follow any other pertinent
procedures that may be established from time to
time by BMW NA and will cooperate with BMW NA
in processing any claims. Failure by Center to
note any deficiency or damage upon delivery to
Center and failure to follow any other
pertinent procedures established by BMW NA
shall constitute a waiver by Center of BMW NA's
obligation to process any claim and Center
shall be solely responsible for asserting and
processing any such claims against the carrier.
Passing of Risk (f) All BMW Vehicles sold to Center shall be at
Center's risk and peril from the time of
delivery at BMW NA's established place of
delivery whether to Center, Center's agent, or
a common carrier and during all subsequent
transportation. It shall be the obligation of
Center to insure against such risks for its
benefit and at its expense.
Repair and Sale of (g) In the event that any BMW Vehicle sold by
Damaged BMW BMW NA to Center should become damaged prior to
Vehicles its delivery by Center to a customer, Center
shall, applying BMW or BMW NA approved repair
practices and procedures, repair fully such
damage so that such BMW Vehicle shall be placed
in first-class salable condition prior to
delivery. Center shall not market any BMW
Vehicle if the quality or condition thereof has
been reasonably objected to by BMW NA. Center
shall comply with all state laws applicable to
such sales and shall disclose to the customer
all damage and repairs in accordance with
applicable state law. Center will also disclose
all damage when
27
processing wholesale or retail trades of BMW
Vehicles.
Option to Repurchase (h) In order to protect the integrity of BMW
Damaged Vehicles Vehicles, Center's and BMW NA's reputation in
the marketplace, Center agrees to notify BMW NA
whenever any of Center's new and unused BMW
Vehicles are substantially damaged. For the
period of ten (10) business days from BMW NA's
receipt of notice from a Center, BMW NA shall
have the first option to repurchase from Center
such damaged BMW Vehicles at a price equal to
the Net Purchase Price originally paid by
Center to BMW NA less any monies or other
consideration received by Center in connection
with or relating to such damaged BMW Vehicles.
Center agrees to assign its rights under any
insurance contract with respect to such BMW
Vehicles to BMW NA. In the event BMW NA
exercises its option to repurchase as granted
above, BMW NA reserves the right to make any
payment hereunder directly to any party having
a security interest in the BMW Vehicle being
repurchased. BMW NA shall not be liable for any
interest expense under this Paragraph 8 on
returned vehicles, unless repurchased under
this subparagraph (h).
28
PARAGRAPH 9 - CENTER'S INVENTORY AND PURCHASE OF
ORIGINAL BMW PARTS
Minimum Inventory of (a) Center shall acquire and at all times
Original BMW parts maintain at least a minimum inventory of
available Original BMW Parts necessary to
satisfy adequately the needs of the market.
Center's Purchase (b) BMW NA shall sell Original BMW Parts to
Price Center at such prices and upon such terms as
may be established from time to time by BMW NA.
Center is responsible for any and all sales
taxes, excise taxes, use taxes, and other
governmental or municipal charges imposed or
levied or based upon the sale of Original BMW
Parts by BMW NA to Center, except federal
excise taxes which may be included in the
purchase price of BMW NA to Center. In the
event of any increase in the prices established
by BMW NA for Original BMW Parts, Center will
have the right to cancel all orders for
Original BMW Parts affected by the increase
which are pending and unfilled at the time
Center obtains notice of the increase, provided
that BMW NA is notified in writing of such
cancellation within ten (10) days from the time
Center obtains notice of the increase.
Payment (c) Center's orders for Original BMW Parts will
be filled on the basis of payment terms
established from time to time by BMW NA for
Center's account. Such terms may provide for
open account, limited open account, C.O.D., or
cash. Center will be invoiced at the time of
shipment through the electronic Dealer
Communications System. Center shall receive a
month-end statement. Center shall render
payment for the total amount of the monthly
statement in accordance with the terms stated
therein. Unless otherwise indicated in writing,
full payment is due upon receipt of said
statement. In the event of non-payment, Center
shall pay all of BMW NA's collection charges,
including attorneys fees and costs.
29
Delivery (d) Delivery of Original BMW Parts ordered by
Center shall be made by common carrier, U.S.
mail, or express mail, and if practical, in
accordance with Center's specific request. If
freight charges are to be paid by BMW NA, the
most economical transportation will be
selected.
Claims for Incomplete (e) All claims for incomplete delivery of
Delivery Original BMW Parts must be made by Center in
writing immediately upon Center's receipt of
shipment.
Return of Defective (f) Center shall not sell, offer for sale, or
Original BMW Parts install any Original BMW Parts if the nature or
quality thereof has been reasonably objected to
by BMW NA. Center may, after receipt of written
authorization from BMW NA, return defective
Original BMW Parts to BMW NA for credit,
together with the original invoice indicating
Center's purchase price of such Original BMW
Parts. Such Original BMW Parts shall be
shipped, shipping charges prepaid, to the
destination specified by BMW NA. Center will be
reimbursed for shipping charges prepaid by it
on authorized returns of defective Original BMW
Parts based on the lowest applicable rate of
transportation by common carrier.
Right to Return Original (g) Center will notify BMW NA of any Original
BMW Parts BMW Parts ordered by Center in error within
sixty (60) days after receipt of shipment.
Center may return such Original BMW Parts, no
later than sixty (60) days after Center's
receipt of specific authorization from BMW NA,
for credit, which credit shall be applied to
Center's account based on the invoiced price of
the returned Original BMW Parts. Such Original
BMW Parts shall be returned, shipping charges
prepaid, to the destination specified by BMW
NA.
Center may also return, after receipt of
written authorization from BMW NA, Original BMW
Parts shipped to Center due to BMW NA shipping
error. Such Original BMW Parts shall be
shipped, shipping charges prepaid, to the
destination specified by BMW NA and Center
shall be credited for such prepaid shipping
charges as well
30
as for the invoiced prices of the returned
Original BMW Parts.
Non-Returnable (h) Center will not be entitled to return: (1)
Materials, Parts, and any materials which have been acquired or
Assemblies specially fabricated by BMW NA upon Center's
order; (2) unlisted Original BMW Parts or
assemblies; or (3) any Original BMW Parts or
assemblies not purchased by Center from BMW NA.
31
PARAGRAPH 10 - ADDITIONAL PROVISIONS
GOVERNING CENTER'S PURCHASE OF BMW
PRODUCTS AND CENTER'S INVENTORIES
Taxes (a) Center shall provide BMW NA with all of
its tax identification numbers. With regard to
each purchase of BMW Products, Center
represents and warrants that:
(1) Such BMW Products are being purchased
from BMW NA by Center for resale in the
ordinary course of Center's business;
(2) Center has complied with all of the
applicable provisions of local and state
laws required for the collection and
payment by Center of all sales, use, and
excise taxes and other governmental or
municipal charges applicable to all such
resale transactions; and
(3) Center has furnished to BMW NA all resale
certificates or similar documents
required to perfect an exemption from any
applicable sales and use taxes.
Center shall be responsible for payment of any
and all taxes and other governmental or
municipal charges imposed or levied in
connection with the sale to Center by BMW NA of
BMW Products or equipment supplied to Center by
BMW NA.
In the event that any BMW Products are put to a
taxable use by Center or are in fact purchased
by Center for purposes other than resale in the
ordinary course of Center's business, Center
shall make timely return and payment to the
appropriate taxing authorities, as required by
Paragraph 8(a), with respect to BMW Vehicles,
and Paragraph 9(b), with respect to Original
BMW Parts, of all applicable sales, use, and
excise taxes, and other governmental or
municipal charges imposed or levied or based
upon the sale of such BMW Products by BMW NA to
Center, and Center shall hold BMW NA harmless
from any and all claims and demands which may
be made by such taxing authorities against BMW
NA with respect thereto.
32
BMW NA's Purchase (b) In order to assure its prompt and
Money Security Interest unconditional payment to BMW NA upon the terms
and as and when due of any and all indebtedness,
obligations, or liabilities of Center to BMW NA
for the purchase of BMW Products
("Obligations"), Center hereby grants, assigns,
and transfers to BMW NA a continuing first and
senior lien on and security interest in all
such BMW Products sold on credit, open account,
or limited open account to Center by BMW NA,
all accessions and additions thereto, and all
proceeds and products of such BMW Products,
whether now owned or hereafter acquired as well
as a security interest in cash incentives,
holdbacks, bonuses, or other BMW NA payables
(the "Collateral"). In furtherance thereof and
in recognition of BMW NA's status as a secured
party having all the rights and remedies of a
secured party under Article 9 of the Uniform
Commercial Code:
(1) In the event Center is in default of any
Obligations or any of the events described
in Paragraph 12(b) and (c) of this
Agreement shall occur, and at any time
thereafter, BMW NA may declare Center in
default and may exercise the following
rights and remedies, in addition to all
other rights and remedies it has as a
secured party under the Uniform Commercial
Code:
(i) To declare all Obligations of
Center to BMW NA immediately due
and payable; and
(ii) To require Center to assemble the
Collateral and make it available
to BMW NA for possession at a
place designated by BMW NA which
is reasonably convenient to both
parties.
(2) With respect to all proceeds of the
Collateral, including, without limitation,
payments received by Center from a
customer upon delivery of any BMW
Product constituting Collateral and cash
deposits received from a customer in
anticipation of a future delivery of a BMW
Product constituting Collateral to such
customer, Center grants to BMW NA an
irrevocable power of attorney to endorse
all cash and non-cash proceeds of the
Collateral to effect collection thereof,
it being understood and
33
intended by Center that such power of
attorney is coupled With an interest; and
Center shall:
(i) Upon demand by BMW NA, whether or
not Center is in default of
any Obligations, deposit not later
than the business day following
receipt, all proceeds of the
Collateral or any portion thereof,
in a separate bank account
designated for that purpose and
under the sole control of BMW NA;
(ii) Not commingle any proceeds of the
Collateral to which BMW NA is
entitled with other funds or
property of Center until delivery
of such proceeds to BMW NA has
been completed, it being agreed
and understood that the proceeds
to which BMW NA is entitled shall
be that portion of the proceeds
upon sale of a BMW Product
constituting Collateral which
equals the Obligations with
respect to such BMW Product; and
(iii) Hold any proceeds of the
Collateral to which BMW NA is
entitled under Paragraph 10(b)(2)
hereof separate and apart and upon
express trust for BMW NA until
such delivery or deposit.
(3) Center shall hold in trust each deposit of
cash received from a customer in
anticipation of a future delivery of a BMW
Product constituting Collateral to such
customer until such delivery is
consummated.
(4) Center shall not sell, pledge, assign,
transfer, lease, resell, or otherwise
dispose of any type of Collateral herein
described or any interest in Collateral
except in the ordinary course of Center's
business or as may be authorized in
writing by BMW NA.
(5) Center shall execute and deliver promptly
to BMW NA one or more financing statements
pursuant to the Uniform Commercial Code in
the form suitable for filing to perfect a
purchase money security interest in the
Collateral and which are otherwise
satisfactory to BMW NA. Center irrevocably
appoints BMW NA
34
as its attorney in fact, to sign and file,
in Center's name, financing statements at
any time with respect to the Collateral
and the proceeds thereof, it being
understood and intended by Center that
such power of attorney is coupled with an
interest.
(6) The remedies provided in this Paragraph
10(b) shall be in addition to any other
rights and remedies provided for in this
Agreement or under applicable law.
Return or Diversion of (c) In the event Center should fail or refuse
BMW Vehicles on for any reason (other than an error by BMW NA)
Center's Failure to to accept any BMW Vehicle delivered to Center's
Accept Facility, Center will reimburse BMW NA for all
expenses incurred by BMW NA in returning such
BMW Vehicle to the original point or in
diverting it to another destination, as the
case may be; but in no event shall Center be
required to pay BMW NA an amount in excess
of the expense of returning such BMW Vehicle
to its original point of delivery to Center.
Center forfeits any further rights it may
have with respect to such rejected BMW
Vehicle(s).
Failure of or Delay in (d) BMW NA will not be under any liability to
Delivery Center for failure to deliver or for delay in
making delivery if such failure or delay results
from any event brought by causes other than
willful or grossly negligent conduct of BMW
NA, such as, for example, any event in the
nature of force majeure, acts of God, acts of
any government, foreign or civil wars, riots,
interruptions of navigation, shipwrecks,
strikes, lockouts, other labor troubles,
embargoes, blockades, fires, explosions,
sabotage, failures of BMW or of any other
supplier of BMW NA to deliver, or delay of BMW
or of any other supplier of BMW NA in making
delivery.
Changes in (e) BMW Products will be delivered by BMW NA to
Specifications Center in accordance with standards applicable
at the time of their manufacture. BMW NA and
Center recognize and agree that BMW and/or BMW
NA shall have the right, without limitation, at
any time and from time to time, to make changes
or modifications in the design specifications of
BMW Products without notice. BMW NA shall have
no obligation to Center to make such change or
modification with respect to BMW Products
previously delivered to
35
or ordered by Center or to make any refund or
other adjustment for any BMW Products
previously purchased by Center or being
imported, manufactured, or sold, whether or not
the price of such BMW Products is affected
thereby. No change shall be considered a model
year change unless so specified by BMW.
Changes by Center on (f) Center agrees not to make any modifications
BMW Products and or alterations to BMW Vehicles which alters the
Compliance with original engineering and/or operating
Safety, Air Pollution, specifications of the vehicle. BMW NA may
Noise Control, and request Center to make such changes or refrain
Consumer Warranty from making such changes on BMW Products as may
Requirements be prescribed from time to time by BMW, and
Center agrees to comply promptly with such
requests. Center also agrees to take such steps
and render such reports in connection with the
National Traffic and Motor Vehicle Safety Act
of 1966, the Consumer Product Safety Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, or any other
legislation or regulation pertaining to safety,
air pollution, noise control, or warranties to
consumers, as may be required of motor vehicle
dealers, distributors, or manufacturers or as
BMW or BMW NA may request from time to time,
and to comply with all such legislation and
regulations in conducting Center's BMW SAV
Operations. BMW NA will reimburse Center for
the reasonable cost of any Original BMW Parts,
and labor in accordance with current warranty
rates and procedures, which may be used by
Center in making changes on BMW Products
requested by BMW NA and/or BMW. Center agrees
to indemnify and hold harmless BMW and BMW NA
from and against any and all claims and
liabilities arising from Center's failure or
alleged failure to comply, in whole or in part,
with any obligation assumed by Center pursuant
to this Paragraph. Center will communicate to
BMW NA all suggestions with respect to
improvements in BMW Products it may have or
develop as a result of its experience.
Inventories (g) Center agrees that, in addition to
maintaining at least the minimum inventory of
Original BMW Parts required under Paragraph
9(a), Center will acquire, and at all times
maintain, such inventory of available BMW
Products as is necessary in accordance with the
current and reasonably foreseeable volume of
Center's business and to further Center's sales
activities and to assure satisfactory
36
customer service and supply of Original BMW
Parts.
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ - ▇▇▇▇▇▇▇▇ TO CUSTOMERS
BMW Warranties (a) Each BMW Vehicle supplied by BMW NA will be
warranted to the customer by BMW NA in
accordance with the New SAV Limited Warranty,
the Limited Emissions Warranties, and the
Limited Warranty against Rust Perforation. Each
Original BMW Part supplied by BMW NA will be
warranted to the customer by BMW NA in
accordance with the Limited Warranty on
Original BMW Parts or the Limited Warranty on
Original BMW Parts Purchased Over the Counter,
as the case may be.
Incorporation of BMW (b) Center agrees to make all sales of BMW
Warranties in Center's Vehicles and Original BMW Parts in such a way
Sales that its customers acquire all rights in
accordance with the New SAV Limited Warranty,
the Limited Emissions Warranties, the Limited
Warranty against Rust Perforation, the Limited
Warranty on Original BMW Parts, or the Limited
Warranty on Original BMW Parts Purchased Over
the Counter, as the case may be. Center will
supply consumers with a copy of such warranties
in such fashion as may from time to time be
required by BMW NA or by applicable law.
Exclusion of Warranties (c) TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EXCEPT AS SPECIFICALLY PROVIDED FOR IN THE NEW
SAV LIMITED WARRANTY, THE LIMITED EMISSIONS
WARRANTIES, THE LIMITED WARRANTY AGAINST RUST
PERFORATION, THE LIMITED WARRANTY ON ORIGINAL
BMW PARTS, AND THE LIMITED WARRANTY ON ORIGINAL
BMW PARTS SOLD OVER THE COUNTER, ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT
NOT LIMITED TO, IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, ARE EXCLUDED AND BMW NA MAKES NO OTHER
WARRANTIES, EXPRESS OR IMPLIED, TO CONSUMERS.
THE EXCLUSION ALSO APPLIES TO INCIDENTAL,
CONSEQUENTIAL, SPECIAL, OR INDIRECT DAMAGES FOR
ANY BREACH OF EXPRESS OR IMPLIED WARRANTY,
INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND/OR FITNESS, IF ANY,
APPLICABLE TO
38
BMW PRODUCTS.
Warranty Policies and (d) Center agrees to comply with the provisions
Procedure of the Warranty Policies and Procedures Manual
supplied by BMW NA to Center and any future
versions of the Warranty Policies and
Procedures Manual applicable to a warranty
claim. All such manuals and documents referred
to therein are fully incorporated into this
Agreement. Center further agrees to follow the
procedures established from time to time by BMW
NA for the processing and disposition of
warranty claims and the return and disposition
of Original BMW Parts claimed to be defective.
Center will also comply with all requests of
BMW NA for the performance of service in
response to warranty claims and will maintain
detailed records of time and parts consumption
as prescribed by BMW NA. Upon complying with
such procedures and requests and maintaining
such records, Center will be entitled to
reimbursement for warranty claims in the
amounts for reimbursement specified in the
applicable Warranty Policies and Procedures
Manual for warranty claims provided that Center
has the necessary equipment and qualified
service personnel, as specified by BMW NA, to
effect necessary warranty repairs. Center must
also have documentation in support of its
claims and Center acknowledges and agrees that
BMW NA may request Center to provide
documentation to BMW NA at any time in
connection with such claims.
Strict adherence to the procedures established
for processing warranty claims is necessary in
order for BMW NA to process such claims fairly
and expeditiously. BMW NA will be under no
obligation with respect to warranty claims not
made strictly in accordance with such procedures
and in a timely manner. Center's obligation
hereunder extends to all BMW Vehicles and BMW
Products under warranty presented to Center by a
customer, regardless of whether Center sold the
BMW Vehicle or BMW Product to such customer.
Center is not authorized to assume or incur any
other or additional warranty obligations or
liabilities on behalf of either BMW OR BMW NA.
Any such other or additional obligations
assumed or incurred by
39
Center shall be solely the responsibility of
Center, including the disclosure of the
identity of the supplier or warrantor, the
existence of a warranty, and the specific terms
and conditions of such warranty to the
consumer.
40
PARAGRAPH 12 - TERMINATION PRIOR TO
EXPIRATION DATE AND SUCCESSION
Termination by Center (a) Center shall have the right to terminate
this Agreement at any time by sending notice of
such termination to BMW NA, by certified mail,
return receipt requested, telegram, or
overnight mail service sixty (60) days in
advance of the effective date thereof.
Immediate Termination (b) Except to the extent a greater notice period
by BMW NA for Cause is required by any applicable statute, in which
case the minimum notice period shall be deemed
to be the minimum period required by such law,
BMW NA shall have the right to terminate this
Agreement for cause, with immediate effect, by
sending notice of such termination to Center by
certified mail return receipt requested,
telegram, or overnight mail service, if any of
the following events should occur:
(1) Any material misrepresentation by any of
the persons listed in Article C of the
Center Agreement as to any fact relied
upon by BMW NA in entering into this
Agreement or approving such persons;
(2) Conviction of Center or of any of the
persons listed in Article C of the Center
Agreement, or pleading guilty or pleading
nolo contendre by any of the foregoing,
of any felony or for any material
violation of law if BMW NA has reason to
believe that such conviction or plea
may adversely affect the conduct of
Center's BMW SAV Operations or would
tend to be harmful to BMW, BMW NA, the
reputation of BMW Products, or the
marketing of BMW Products;
(3) Submission by Center to BMW NA of false or
fraudulent reports, statements, or
information, or false or fraudulent claims
for reimbursement, refunds, or credits,
such as, for example, false or fraudulent
warranty claims;
(4) Grossly negligent or willful conduct on
the part of Center or of any of the
persons listed in Article C of the Center
Agreement that BMW NA determines, in the
reasonable exercise of its
41
discretion, to be harmful to the goodwill
of BMW or BMW NA, the reputation of BMW
Products, or the marketing of BMW
Products;
(5) Closure or cessation of Center's BMW SAV
Operations for a period of six (6)
consecutive business days, unless such
closure or cessation of operation is
caused by some event beyond the control of
the Center, such as strikes, civil war,
riots, fires, floods, earthquakes, or
other acts of God, and Center does not
immediately resume its customary
operations after the cause of the closure
or cessation of operations is removed;
(6) Dissolution or liquidation of Center, if a
partnership or corporation;
(7) Insolvency or business failure of Center,
Center's inability to pay its debts as
such debts become due, appointment of a
receiver or custodian for all or any part
of the property of Center, assignment for
the benefit of creditors by Center, the
commencement of a case or proceeding under
any bankruptcy or insolvency laws by or
against Center or any person or entity
owning or holding, beneficially or
otherwise, a majority or controlling
interest in Center, or the subjection of
all or any BMW Products to execution or
other judicial process;
(8) Termination of BMW NA's authorization as a
BMW importer;
(9) The conduct, directly or indirectly, of
any dealership operation at any location,
other than that specifically approved
herein for such operation, without the
prior written approval of BMW NA;
(10) Any attempted or actual sale, transfer, or
assignment by Center of the Center's
assets, any ownership interest in the
Center, this Agreement, or any of the
rights granted to Center hereunder, or any
attempted or actual transfer, assignment,
or delegation by Center of any of the
responsibilities assumed by it under this
Agreement, without the prior written
consent and approval of BMW NA, including,
but not limited to, any attempted or
actual sale, transfer, or assignment of
Center's assets or any ownership interest
in the Center relating to the
42
conduct of BMW SAV Operations hereunder:
a) separate and apart from the assets or
ownership interests relating to the
conduct of BMW Car Operations under the
BMW Dealer Agreement for cars or a
successor agreement for cars; b) to a
person, partnership, trust, corporation,
or other entity that does not own or
operate BMW Car Operations; or c) to a
person or entity that does not meet BMW
NA's appointment criteria for a BMW SAV
Center Agreement;
(11) Any attempted or actual sale, transfer, or
assignment of Center assets or stock that
does not comply with the ownership
limitations set forth in this Agreement or
BMW NA's ownership policies or procedures;
(12) Any change of a Center's executive
management without BMW NA's prior written
consent and approval;
(13) Any attempted or actual pledging of Center
stock or this Agreement as security for an
obligation;
(14) The termination of, or any conduct that
warrants the termination of, the Dealer
Agreement for cars or a successor
agreement for cars;
(15) The loss of licenses, permits, or
authorization necessary for Center to
perform its obligations under this
Agreement; and
(16) Any dilution or attempt to dilute the BMW
brand or trademarks, the infringement of
BMW trademarks, or the violation of the
trademark provisions in this Agreement or
BMW or BMW NA trademark policies or
guidelines.
Termination by BMW (c) Except to the extent a greater notice period
NA on Sixty (60) Days is required by any applicable statute, in which
Notice case the notice period shall be deemed to be the
period required by such statute, BMW NA shall
have the right to terminate this Agreement, on
sixty (60) days notice, if any of the following
situations exist and BMW NA has previously sent
a written notice to Center with respect thereto:
43
(1) Any disagreement or personal difficulties
between or among any of the persons listed
in Article C of the Center Agreement
which BMW NA has a reasonable basis to
believe would have a materially adverse
effect on the conduct of Center's BMW SAV
Operations or the presence in the
management of Center of any person who BMW
NA has a reasonable basis to believe does
not have the requisite qualifications for
the position;
(2) Impairment of the reputation or financial
standing of Center or any of the persons
listed in Article C of the Center
Agreement or ascertainment by BMW NA of
any facts existing at or prior to the time
of execution of this Agreement which tend
to impair such reputation or financial
standing;
(3) Any reduction in value of Center's BMW
Products or any act on the part of the
Center, including without limitation, the
existence of any liens or encumbrances
upon BMW Products, which to any degree
imperils the prospect of full performance
or satisfaction of the Obligations of
Center to BMW NA; or any change in the
financial or other condition of Center
which BMW NA has reason to believe
unreasonably impairs BMW NA's security or
increases its risk hereunder. By way of
example, such impairments might include
failure to pay for BMW Products in
accordance with the terms and conditions
of sales and failure to establish and/or
maintain for the duration of the
Agreement, net working capital and/or
adequate exclusive unrestricted wholesale
lines of credit;
(4) The importation, exportation,
distribution, or sale of: (a) BMW vehicles
which are not originally manufactured or
designed for use in the United States ; or
(b) BMW Products: (i) for resale in the
United States; (ii) for resale or use
outside the United States; or (iii) in
violation of BMW NA's Export Policy.
(5) Refusal to permit BMW NA to examine or
audit Center's accounts and records as
provided herein upon receipt by Center
from BMW NA of written notice requesting
such permission or information;
44
(6) Failure of Center to furnish accurate
sales or financial information and failure
to submit the information and related
supporting data in a timely fashion;
(7) Subject to provisions contained herein
with regard to any change in ownership
occurring by reason of the death or
permanent disability of Center's Owner(s),
any change in Center's Owners holding a
majority or controlling ownership interest
in Center, or any change, whether
voluntary or by operation of law, in the
ownership of beneficial interests in
Center, or any appointment of Center
Operator, without the prior written
consent of BMW NA;
(8) Center's failure to take any actions
pursuant to the National Highway Traffic
Safety Administration and Motor Vehicle
Safety Act of 1966, the Consumer Product
Safety Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty
Act, damage disclosure statutes, or any
other law, statute, or regulation
pertaining to safety, air pollution, noise
control, or warranties to consumers which
may be required of motor vehicle dealers
or which BMW NA may request in
implementing any action undertaken by BMW
NA or BMW; or
(9) Any breach or violation of any material
obligation contained in this Agreement or
in connection with any transaction between
BMW NA and Center, or the failure of
Center to satisfy any deficiency(s)
contained in the Improvement Addendum, or
any material failure by Center to comply
with a requirement established by BMW NA
and communicated to Center in accordance
with this Agreement.
During the period such a situation as defined in
this Paragraph 12 continues to exist, BMW NA may
modify its terms of payment with respect to
Center to such extent as BMW NA may consider
appropriate, irrespective of Center's credit
standing or payment record.
45
Termination upon (d) BMW NA may terminate this Agreement at any
Offering to Enter into a time by providing Center with ninety (90) days
New or Amended BMW prior notice thereof and offering to enter into
SAV Center Agreement a new or amended form of BMW SAV Center
Agreement with Center in a form being generally
offered to eligible or qualified BMW
SAV Centers in accordance with Article H.
Termination for Failure (e) If BMW NA fails to obtain or maintain any
of BMW NA to be license, permit, or authorization necessary for
Licensed BMW NA's performance of its obligations under
this Agreement or if any such license, permit,
or authorization is suspended or revoked, and
such suspension or revocation continues for a
period of six (6) consecutive business days,
either party may terminate this Agreement by
providing written notice to the other party.
No Waiver by Failure to (f) In the event BMW NA shall be entitled to
Terminate terminate this Agreement pursuant to the
provisions of Paragraph 12 (b) or (c), but shall
fail to do so, such failure shall not be
considered a waiver of the rights of BMW NA to
so terminate the Agreement.
Termination upon Death (g) Death or permanent disability of any of
or Permanent Disability Center's Owners holding a majority or
controlling ownership interest in Center or the
permanent disability of Center Operator may, at
BMW NA's option, result in the termination of
this Agreement, upon written notice by BMW NA
to Center. BMW NA shall provide such notice
within a reasonable time after such death or
permanent disability. Termination hereunder
shall be effective sixty (60) days from the
date of such notice.
Successor in Event of (h) Notwithstanding the provisions in Paragraph
Death or Permanent 12 (g), in the event of the death or permanent
Disability disability of any of the Center's Owners, if
the beneficial interest in Center passes
directly to the surviving spouse and children,
or to any of them, and if:
(1) Either or both of the persons included in
Article C(4) and (5) of the BMW SAV Center
Agreement remain(s) unchanged; or
46
(2) Within ninety (90) days after the death
or permanent disability of such Center
Owners, arrangements are completed for the
assumption of the management of Center by
persons acknowledged in writing by BMW NA
to be satisfactory to it;
then BMW NA will not terminate the Agreement by
reason of such death or permanent disability
before the end of twelve (12) months after the
death or permanent disability of such Center
Owners and, if the Agreement expires sooner
than twelve (12) months after the death or
permanent disability of such Center Owners, BMW
NA will offer to enter into a new Agreement
with Center for an extension period equal to
the difference between twelve (12) months and
the number of days between the date of death or
permanent disability of such Center Owners and
the expiration date of this Agreement. Such new
Agreement will be in substantially the same
form as the Agreement then currently offered by
BMW NA to its Centers. Prior to the expiration
of such extension period and after completion
of BMW NA's evaluation of the performance of
Center's management during such period, BMW NA
will review with Center the changes, if any, in
the management or equity interests of Center
required by BMW NA as a condition to renewing
or extending the aforementioned new Agreement
with Center.
Successor Nominee (i) Center may amend the Center Agreement to
nominate a Successor, designating proposed
Center Owners of a Successor Center to be
established if this Agreement is terminated
because of death or permanent disability. A
Successor Nominee, however, must be an
individual and shall not be a trust,
partnership, corporation, or any other entity.
Center may also cancel a Successor Nominee by
providing notice to BMW NA that it intends to
amend the Center Agreement to delete and/or
substitute a new Successor Nominee. The request
to amend the Center Agreement or to cancel a
Successor Nominee must be executed by all of
Center's Owners and be received by BMW NA prior
to such death or permanent disability. In the
case of the nomination of a Successor, any
proposed Center Owners must be acceptable to
BMW NA. If a Successor Nominee is not
acceptable to BMW NA, Center and BMW NA will
create a developmental plan which, if
successfully
47
accomplished, will qualify the Successor
Nominee to eventually become a Center Owner.
In the case of cancellation of a Successor
Nominee, BMW NA agrees to delete the name of
the party listed in Article C(6) upon receipt
of that notice. If, due to changed
circumstances, BMW NA believes or has a
reasonable basis to believe the Successor
Nominee is or should be disqualified, BMW NA
will notify Center that the proposed owner is
no longer acceptable. A subsequent Successor
Nominee will be designated or a developmental
plan will be created by mutual agreement
between BMW NA and Center.
If BMW NA has notified Center Owners in writing
before the death or permanent disability of
such owners that BMW NA does not plan to
continue to have a center at Center's location,
BMW NA shall accept a Successor Nominee upon
the Successor's written commitment to relocate
Center's BMW SAV Operations within a reasonable
time to a mutually acceptable location.
48
PARAGRAPH 13 - CONTINUATION OF BUSINESS
RELATIONS
Continuation of (a) This Agreement can be extended or renewed
Business Relations only through an express written instrument to
After Expiration or Prior that effect executed in accordance with Article
Termination K of the Center Agreement. Any business
relations of any nature whatsoever between BMW
NA and Center after the expiration of the
Agreement, or after its prior termination
pursuant to Paragraph 12, without such written
instrument shall not operate as an extension or
renewal of the Agreement. Nevertheless, all
such business relations, so long as they are
continued, shall be governed by terms identical
with the provisions of this Agreement.
49
PARAGRAPH 14 - RIGHTS AND LIABILITIES UPON
EXPIRATION OR PRIOR TERMINATION
Cancellation of Pending (a) Upon the expiration or prior termination of
Orders and Post this Agreement all pending orders of Center for
Expiration and BMW Products previously accepted by BMW NA will
Termination Obligations be considered canceled and Center shall
immediately do the following:
(1) BMW Signs - Center shall remove, at its
own expense, all BMW signs displayed at
Center's Facility and sell and deliver
the same to BMW NA at Center's Facility
in suitable condition and packing for
transportation. Promptly following such
delivery, BMW NA will pay to Center,
Center's purchase price for such signs
reduced by straight-line depreciation on
the basis of a seven-year useful life;
(2) Discontinuance of Use of BMW Trademarks -
Center acknowledges that the license and
right to the use of the BMW trademarks
ceases upon Center's voluntary
resignation or termination as a Center,
or upon the expiration of this Agreement,
whichever occurs first. In such event,
Center shall immediately cease holding
itself out as a BMW dealer and refrain
from using BMW trademarks and trade names
in any fashion whatsoever. Moreover,
Center agrees not to use any similar
trademarks or trade names and shall
refrain from any other activity which
states or implies that it is authorized
to deal in or service BMW Products. If
Center shall refuse or neglect to comply
with the provisions of Paragraph 14(a)(1)
and (2), Center agrees that BMW and BMW
NA shall suffer irreparable harm from the
unauthorized use of BMW trademarks and/or
trade names. Furthermore, Center shall
reimburse BMW NA for all costs and
expenses (including attorneys fees)
incurred by BMW NA in connection with
legal proceedings to require Center's
compliance;
(3) Orders and Files - Center shall transfer
to BMW NA, or BMW NA's designee or
designees, all orders for sale by Center
of BMW Vehicles and Original BMW Parts
then pending with
50
Center, all deposits made thereon,
whether in cash or in kind, and all of
its warranty files and files of
prospective customers for BMW Products,
or complete copies of all such files;
(4) Customer Lists - Center shall provide BMW
NA with the correct names, addresses, and
telephone numbers of all customers who
purchased BMW Vehicles from Center and
the service records of all current and
active service customers. To the extent
they are available for such customers,
Center will provide BMW NA with correct
facsimile numbers and e-mail addresses
for the customers; and
(5) Literature - Center shall deliver to BMW
NA at BMW NA's place of business, or to
BMW NA's designee or designees, free of
charge, any and all technical or service
literature, advertising, other printed
material, compact discs, diskettes, and
any other technological medium relating
to BMW Products then in Center's
possession which were acquired or
obtained by Center from BMW NA, such as,
for example, sales instruction manuals
and promotional materials.
Purchase of Center's (b) Within ninety (90) days of the expiration
Inventory of BMW or prior termination of this Agreement and
Products by BMW NA provided further that all of Center's
Obligations to BMW NA have been paid or
satisfied in full, BMW NA, upon Center's
compliance with the provisions hereinafter set
forth, will purchase from Center and Center
will sell and deliver to BMW NA, the following:
(1) New BMW Vehicle Inventory - BMW NA will
purchase all new, unused, undamaged, and
unmodified BMW Vehicles then unsold in
Center's inventory which are in
first-class salable condition and of the
then current model year or the
immediately preceding model year,
provided that such BMW Vehicles were
purchased by Center from BMW NA (or in
the ordinary course of business, from
other Centers). The price for such BMW
Vehicles shall be the Net Purchase Price
at which they were originally purchased
from BMW NA;
(2) New Original BMW Parts Inventory - BMW NA
will purchase all new, unused, and
undamaged Original BMW Parts (other than
51
the special BMW tools specifically
covered in Paragraph 14(b)(3) below), in
original packaging not classified as
obsolete or "special" by BMW NA, and
listed in the then current BMW Parts
Price List, then unsold in Center's
inventory which are in first-class,
salable condition; provided such Original
BMW Parts were purchased by Center from
BMW NA. The price at which BMW NA will
purchase such Original BMW Parts shall be
the price last established by BMW NA
under the BMW NA standard parts order for
the sale of identical Original BMW Parts
to centers, less a 15% handling and
restocking charge; and
(3) Special BMW Tools - BMW NA will purchase
all required special BMW tools applicable
to BMW Vehicles including electronic
testing equipment and computer hardware
and software, if any, provided that such
tools were purchased by Center from BMW
NA, and provided any sets of such tools
are complete and no parts or components
are missing or otherwise unusable. The
price at which BMW NA will purchase such
special BMW tools shall be reasonably
determined by BMW NA, but in no event
will such price be less than Center's
purchase price for such tools reduced by
straight-line depreciation on the basis
of a three-year useful life.
ny and all items to be sold by Center to BMW NA
pursuant to the provisions of Paragraph
14(b)(2) and (3) shall be delivered by Center
to BMW NA at Center's Facilities in suitable
condition and boxed and/or packed for
transportation, which transportation shall be
at BMW NA's expense. In the event Center fails
to so box and pack any Original BMW Parts or
special BMW tools to be sold hereunder, BMW NA
may do so and deduct the expenses of such
boxing and packing from the applicable price
thereof.
s a condition precedent to the obligations of
BMW NA under Paragraph 14(b) to repurchase any
BMW Vehicles, Original BMW Parts, or special
BMW tools, Center shall permit BMW NA and BMW
NA's designee or designees, at such time and
for such periods of time as BMW NA reasonably
shall determine, to enter Center's Facility for
the purpose of inspection and/or taking an
inventory of all or any part of Center's stock
of BMW Vehicles,
52
Original BMW Parts, and special BMW tools. At
the request of BMW NA, Center shall comply in
all respects with the provisions of all
applicable bulk sales acts or similar statutes
protecting a transferee of personal property
with respect to liabilities of the transferor.
making payments in accordance with Paragraph
14(b), BMW NA reserves the right to do the
following:
(i) To pay any financial institution
retaining a security interest in
any of the items to be
repurchased by BMW NA such sums
as are necessary to obtain good,
unencumbered, and marketable
title to such items;
(ii) To pay any claimant, in
accordance with any applicable
statute, such sums as may be
necessary to acquire good,
unencumbered, and marketable
title, free of any interest,
right or claim of such claimant,
to the items being repurchased by
BMW NA; and
(iii) To set off the amount due Center
including, without limitation,
amounts due Center from BMW NA
for the repurchase of BMW
Products hereunder against any
amount which may be due BMW NA
from Center, including, without
limitation, reimbursement of
expenses incurred by BMW NA
pursuant to (i) or (ii) above.
Notwithstanding anything to the contrary
contained in Paragraph 14, in no event will BMW
NA be required to purchase any item from Center
unless Center is able to convey title to such
item free and clear of all liens, claims,
encumbrances, and security interests.
53
PARAGRAPH 15 - OWNERSHIP CHANGES AND
TRANSFERS OF AGREEMENT
Transfer, Sale, or (a) (1) In view of the nature, purposes, and
Assignment of objectives of BMW NA and this Agreement, and
Agreement by Center the differences in operating requirements among
dealerships of differing sizes and types of
markets, BMW NA expressly reserves the right to
select the centers with whom it will enter into
such agreements so as to maintain a high
quality network of centers. Furthermore, Center
agrees that BMW NA has the right to approve or
decline to approve any prospective purchaser
based on his, her, or its character,
reputation, automotive experience, performance
(including, but not limited to, customer
satisfaction, market penetration, and
profitability), potential impact on the BMW
brand, management, compliance with BMW NA's
ownership policies, procedures, and
limitations, compliance with the law and
agreements, capital, financial qualifications,
or other qualifications for appointment as an
owner of a center.
(2) Center shall not transfer, sell, or assign,
or attempt to transfer, sell, or assign, the
Center's assets, any ownership interest in the
Center, or this Agreement, or sell or transfer
any right or delegate any duty, obligation, or
responsibility of Center under this Agreement,
without the prior written consent and approval
of BMW NA. If a transfer, sale, or assignment
of a Center's stock or assets is approved by
BMW NA, then BMW NA shall offer the transferee
or assignee of Center the right to enter into a
new Agreement in substantially the same form as
the Agreement then currently offered by BMW NA
to its Centers.
(3) Center agrees that it shall not sell or
transfer Center's assets or any ownership
interest in its BMW SAV Operations hereunder
separate and apart from the assets or ownership
interests in its BMW Car Operations, which are
operating under the Center's BMW Dealer
Agreement for cars or a successor agreement for
cars.
54
Ownership Policies and (b) BMW NA fully incorporates by reference its
Procedures ownership policies and procedures into this
Agreement.
Ownership Limitations (c) (1) The combined SPG of all the BMW
centers owned directly or indirectly by any
individual, partnership, trust, corporation, or
other entity cannot exceed 5% of the SPG of
all BMW centers in the United States at any
time. BMW NA can withhold its consent to any
change of ownership that would take any
individual's partnership's, trust's
corporation's or other entity's direct or
indirect ownership interest above 5%. Center
acknowledges and agrees that BMW NA's 5%
ownership limit is fair and reasonable.
(2) In any metropolitan area defined by BMW NA
as a multiple point market no individual,
partnership, trust, corporation, or any other
entity can directly or indirectly own an
interest in more than 50% of the BMW centers in
the market. BMW NA can withhold its consent to
any change of ownership that would violate this
Paragraph. Center acknowledges and agrees that
the ownership limit described in this Paragraph
is fair and reasonable.
55
PARAGRAPH 16 - FACILITIES AND SATELLITES
Facility and Satellite (a) Center shall operate its BMW SAV Operations
Authorization only at the authorized locations listed in
Article D of the Agreement. Any proposed change
in the Center's authorized locations, including
the establishment or relocation of satellite
locations, requires BMW NA's prior written
consent. To the extent that a proposed change
is approved and involves the establishment or
relocation of a satellite of the Center
authorized to operate under this Agreement, the
location of the satellite shall be listed in
Article D of the Agreement and shall be
identified as a satellite. Accordingly, such a
listing and identification constitutes
authorization to operate a satellite under this
Agreement and a new Center Agreement shall not
be issued. Center agrees that satellite
locations are not necessarily permanent and
that Center shall discontinue operations at a
satellite upon receipt of sixty (60) days
written notice from BMW NA. Center further
agrees that the termination or withdrawal of
approval of a satellite does not constitute the
termination or failure to renew this Agreement.
Approved Locations for (b) At all times hereunder, Center shall
Center Facilities conduct its BMW Center Operations hereunder in
conjunction with, and at the approved locations
and center facilities for, its BMW Car
Operations.
Facilities Compliance (c) Recognizing that Center's Facilities affect
Center's ability to discharge properly its
responsibilities under this Agreement and the
Center Operating Requirements Addendum, Center
will ensure that Center's Facilities comply
with the applicable provisions of this
Agreement, including such reasonable
requirements and standards as BMW NA may
prescribe from time to time.
Consent (d) Center must obtain BMW NA's prior written
approval for all locations and facilities from
which pre-owned BMWs are sold, including
certified pre-owned BMWs. BMW NA's approval of
such locations will not be unreasonably
withheld.
56
PARAGRAPH 17 - INDEMNIFICATION
Indemnification by (a) Subject to the provisions of Paragraph 17,
BMW NA BMW NA shall indemnify and hold Center harmless
against any judgment which may be rendered
against Center, plus reasonable attorneys fees
and court costs, resulting from lawsuits
seeking monetary damages commenced against
Center by third parties concerning:
(1) Bodily injury or property damage
(including damage to BMW Products)
claimed to have been caused by an alleged
defect in the design, manufacture, or
assembly of BMW Products; provided,
however, that any claimed defect in
manufacture or assembly was not such as
should have been detected by Center in a
reasonable inspection of the BMW
Products, whether in the performance of
the Center's pre-delivery inspection and
conditioning, during the course of repair
and/or maintenance, or otherwise;
(2) Failure of BMW Products to conform,
because of changes in standard equipment
or material component parts, to any
description thereof set forth in
advertisements or product brochures made
available to Center by BMW NA and
allegedly relied on by the first retail
purchaser thereof, unless Center shall
have received written notice of such
changes from BMW NA prior to the date of
delivery of the affected BMW Product to
such purchaser; or
(3) Any damage to BMW Products repaired by
BMW NA prior to the time any affected BMW
Product is delivered to the Center,
unless Center shall have received notice
of such damage and repair from BMW NA
prior to the date of delivery of the
affected BMW Product to the first retail
purchaser thereof.
In the event that any lawsuit making
allegations as set forth in (1) through (3)
above is brought naming Center as a defendant,
BMW NA will, following receipt of notice as
provided in subparagraph (c) of
57
this Paragraph, undertake at its sole expense
and through counsel selected or approved by BMW
NA, the defense of said action on behalf of
Center.
BMW NA is specifically authorized by Center to
settle or to continue to defend any such
lawsuit brought against Center, provided that
BMW NA shall be solely liable for the payment
of the amount of any settlement which it
effects or judgment that is rendered.
Should BMW NA for any reason refuse to
undertake the defense of Center when it is
otherwise obligated to do so under this
subparagraph, Center may conduct its own
defense and, in that event, BMW NA's liability
shall be limited solely to the costs of such
defense, including reasonable attorneys fees,
court costs, and the amount of any judgment or
final settlement paid by Center (provided,
however, that Center shall notify BMW NA in
writing within twenty (20) days of such
judgment or settlement).
BMW NA shall have the right to decline to
accept Center's defense or, after accepting the
defense but prior to trial, to tender the
defense back to Center, and Center shall accept
such tender if BMW NA reasonably concludes that
the allegations or claims being pursued are no
longer those set forth in (1) through (3)
above.
Indemnification by (b) Subject to the provisions of ▇▇▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ shall indemnify and hold BMW NA harmless
against any judgment which may be rendered
against BMW NA, plus reasonable attorneys fees
and court costs, resulting from lawsuits
seeking monetary damages commenced against BMW
NA by third parties concerning:
(1) Center's alleged failure to perform or
negligent or willfully malfeasant
performance of: (i) the service
obligations assumed by it pursuant to
Paragraph 6 of this Agreement; or (ii) any
maintenance or repair service on BMW
Products or such other motor vehicles or
products as may be sold or serviced by
58
Center;
(2) Center's alleged breach of any contract
between Center and Center's customer;
provided, however, that the breach was
not caused by any act or omission on the
part of BMW NA which BMW NA unreasonably
failed to notify Center of prior to the
date of Center entering into the contract
with its customer; or
(3) Center's alleged independent warranties,
misleading statements,
misrepresentations, or unfair or
deceptive acts or practices, whether
through advertisements or otherwise,
affecting any individual or entity;
provided, however, that the alleged
warranties, statements, representations,
deceptive acts or practices or
advertisements are not based on
information or material produced or
supplied by BMW NA and are not
subsequently superseded or withdrawn by
BMW NA upon notification to Center.
In the event that any lawsuit making
allegations as set forth in (1) through (3)
above is brought naming BMW NA as a defendant,
Center will, following receipt of notice as
provided in Paragraph 17(c), undertake at its
sole expense and through counsel selected by
Center and approved by BMW NA, the defense of
said action on behalf of BMW NA. Center is
specifically authorized by BMW NA to settle or
to continue to defend any such lawsuit brought
against BMW NA, provided that Center shall be
solely liable for the payment of the amount of
any settlement which it effects or judgment
that is rendered.
Should Center for any reason refuse to
undertake the defense on behalf of BMW NA when
it is otherwise obligated to do so under this
subparagraph, BMW NA may conduct its own
defense and, in that event, Center's liability
shall be limited solely to the costs of such
defense including reasonable attorneys fees,
court costs, and the amount of any judgment or
final settlement paid by BMW NA (provided,
however, that BMW NA shall notify Center in
writing within
59
twenty (20) days of such judgment or
settlement).
Center shall have the right to decline to
accept BMW NA'S defense or, after accepting the
defense but prior to trial, to tender the
defense back to BMW NA, and BMW NA shall accept
such tender, if Center reasonably concludes
that the allegations being pursued are no
longer those set forth in (1) through (3)
above.
Notification (c) Whenever a lawsuit is commenced against
either BMW NA or Center or both of them, and
either party seeks indemnification from the
other, each shall, within fifteen (15) days
after service of the complaint notify the other
in writing of any request to assume its defense
and to indemnify it, and shall provide at the
time copies of any pleadings or other court
papers which have been served upon the party
giving notice, as well as all information then
available regarding the first customer, the
plaintiff, and the circumstances giving rise to
the suit.
IN THE EVENT THIS PROVISION IS FOR ANY REASON
NOT COMPLIED WITH, SUBPARAGRAPHS (a) AND (b) OF
PARAGRAPH 17 SHALL NOT APPLY FOR PURPOSES OF
THAT LAWSUIT OR WITH RESPECT TO ANY CLAIM OR
LAWSUIT ARISING OUT OF ALLEGATIONS OR
TRANSACTIONS ANTEDATING THE FIRST CLAIM OR
LAWSUIT INVOLVING THE AFFECTED BMW PRODUCT.
The request to assume the defense and to
indemnify shall be accepted or rejected, in
writing, by the party to whom it is delivered
within thirty (30) days following its receipt.
Prior to receipt of a response to its request,
each party agrees to take all reasonable steps
to ensure that the defense to the action is in
no way prejudiced, whether by action or
inaction. If the request is accepted, the party
making the request shall cooperate fully in the
defense of the suit in such manner and to such
extent as the party assuming the defense may
reasonably require; provided, however, that
subparagraphs (a) and (b) of Paragraph 17 shall
be applicable commencing with the date on which
the request is accepted and any expenses or
other obligations incurred prior to such
acceptance
60
by the party making the request shall be borne
solely by such party.
Allegations Involving (d) If at any time in a lawsuit it is alleged
Both BMW NA and that there is liability on the part of both BMW
Center NA (on any or all of the bases set forth in
Paragraph 17(a)) and Center (on any or all of
the bases set forth in Paragraph 17(b)), each
party shall be responsible for its own defense,
including costs and attorneys fees, unless at
any time after the commencement of such suit
one party offers to undertake the total defense
and the other party agrees thereto in writing,
in which event the provisions of subparagraphs
(a) and (b) hereof shall be controlling, as
appropriate to the circumstances of such
agreement.
The responsibility of BMW NA or Center for its
own defense pursuant to this subparagraph (d),
or pursuant to any other circumstances not
within the scope of Paragraph 17, shall in no
way affect or alter the legal rights, if any,
either may have to indemnification or
contribution from the other.
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PARAGRAPH 18 - MISCELLANEOUS PROVISIONS
Approval or Consent by (a) Any approval or consent given by BMW NA
BMW must be in writing and signed by duly
authorized representatives of BMW NA.
Divisibility (b) If any provision of this Agreement
contravenes or is prohibited by the laws of any
state or other jurisdiction which are held to
be applicable to this Agreement, such provision
shall be limited to the extent necessary so
that it will not render this Agreement invalid,
unlawful or unenforceable, in whole or part,
under such laws, but all other provisions of
this Agreement shall remain in full force and
effect.
Termination of Prior (c) This Agreement terminates and supersedes
Agreements all prior written or oral agreements, if any,
between BMW NA and Center relating to the
subject matter hereof, except with respect to
any trade indebtedness which may be owing by
either BMW NA or Center to the other and except
that this Agreement shall not operate to cancel
any of Center's unfilled orders with BMW NA for
any BMW Products placed with BMW NA pursuant to
the provisions of any agreement terminated or
superseded by this Agreement.
Notices (d) Any notices under or pursuant to the
provisions of this Agreement shall be directed
to the respective addresses of the parties as
stated in the Center Agreement or, if either of
the parties shall have specified another
address by notice to the other party in
writing, to the address last specified. The
parties shall advise each other promptly, in
writing, of any change of address.
No Implied Waivers (a) Except as otherwise provided in this
Agreement, the failure of either party at any
time to require performance by the other party
of any provision hereof shall in no way affect
the full right to require such performance at
any time thereafter, nor shall the waiver by
either party of a breach of any provision
hereof constitute a waiver of any succeeding
breach of the same or any other provision or
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constitute a waiver of the provision itself.
Center Not an Agent (f) Center is not an agent of BMW NA, and BMW
and Disclaimer of NA owes no fiduciary duty to Center. Center
Further Liability by will conduct its BMW SAV Operations on its own
BMW NA and BMW behalf and for its own account. Center has no
power or authority to act for or to bind BMW NA
and/or BMW and shall not represent directly,
indirectly, or by implication that the Center
has any such power or authority. Furthermore,
except as expressly provided in this Agreement,
BMW NA will not be liable for any expenditure
made or incurred by Center in connection with
Center's performance of its obligations
pursuant to the Agreement.
Center agrees that it has no rights, without
limitation, arising from or in connection with
any agreement between BMW NA and any other BMW
center and that Center is not a third party
beneficiary of any such agreement. In addition,
nothing herein grants Center any rights to
enforce any such agreement. Center also agrees
that no third party shall have any enforceable
rights under this Agreement.
Accounts Payable (g) All monies or accounts due Center shall be
net of Center's indebtedness to BMW NA, its
subsidiaries, and affiliates. BMW NA may: (1)
deduct any amounts due or to become due from
Center to BMW NA, its subsidiaries, and
affiliates; and/or (2) set-off and/or recoup
any amounts due from Center from any amounts in
the possession of, or being held by, BMW NA,
its subsidiaries, and affiliates, relating to
this Agreement or any other agreement between
Center and any of those parties.
BMW NA's Continuing (h) Except as specifically provided by any
Security Interests other provision of this Agreement, the security
interests granted to BMW NA hereunder shall not
be affected by any provision in any other
instrument, including, but not limited to,
invoices, purchase orders, purchase order
acknowledgments, and other forms; and the terms
of this Agreement relating to such security
interests may only be modified, amended, or
changed by a writing signed by both parties
specifically referring to this Agreement.
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Assignment of BMW (i) BMW NA may assign the security interests
NA's Security Interests granted to it under this Agreement or any part
thereof, including its security interests in
particular items of Collateral and, upon
notifying the Center, the assignee shall be
entitled to the full performance of the
covenants, rights, and remedies contained in
Paragraph 10 of the Agreement in so far as they
apply to the Collateral assigned. Center will
not assert any claims, defenses, offsets, or
recoupments against the assignee that it may
have against BMW NA.
Limitations Re Center (j) Center agrees that it shall not pledge its
Stock and Assets stock as security for any obligations to
individuals or entities, including, but not
limited to, corporations, partnerships, trusts,
and financial institutions. Center, however,
may pledge its assets, subject to the security
interests provided for in this Agreement, as
security to individuals or entities, including,
but not limited to, corporations, partnerships,
trusts, and financial institutions (the term
assets as used herein excludes stock). Center
further agrees that this Agreement is not an
asset of the Center and may not be pledged as
security for any obligation.
BMW NA's Right to (k) Since Center's performance of its
Specific Performance obligations under this Agreement is of such a
nature that it is impossible to measure, in
money, the damages which will be suffered by
BMW NA in the event Center should fail to
perform any of its obligations, Center agrees
that, in the event of any such failures or
performance on its part, BMW NA shall be
entitled to maintain an action or proceeding to
compel the specific performance by Center of
these obligations and Center agrees not to urge
in any such action or proceedings the claim or
defense that BMW NA has an adequate remedy at
law.
Reservation of Rights (l) BMW NA reserves any and all rights not
expressly set forth in this Agreement.
Headings (m) The headings contained in this Agreement
have been inserted for convenient reference
only and shall not in any way affect the
construction, interpretation, or meaning of the
text.
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Entire Agreement and (n) This Agreement contains the entire
Representations agreement between BMW NA and Center. Center
acknowledges that no representation or
statement has been made to it on behalf of BMW,
BMW NA and/or any agents, representatives, or
employees of either BMW or BMW NA that in any
way tend to change or modify any of the terms
or provisions of the Agreement or that in any
manner prevents this Agreement from becoming
effective. Center further acknowledges that
there is no other agreement or understanding,
except those specifically provided for in this
Agreement, either oral or written, between
Center and BMW and/or BMW NA affecting this
Agreement or relating to the subject matter
hereof.
New Jersey Law (o) This Agreement shall be deemed to have been
entered into in the State of New Jersey and
shall be construed and interpreted in
accordance with New Jersey law. Furthermore,
any questions as to the validity of this
Agreement, the performance of any of its terms
and conditions, or of any contractual rights or
obligations of the parties to this Agreement,
shall be governed by and resolved in accordance
with New Jersey law.
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