EXHIBIT 10.4
TOYOTA DEALER AGREEMENT
This is an Agreement between Toyota Motor Sales, U.S.A., Inc. (DISTRIBUTOR), and
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FAA Poway T, Inc. (DEALER), a(n) [_] individual, [_] partnership, [X]
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corporation. If a corporation, DEALER is duly incorporated in the State of
California and doing business as Poway Toyota.
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PURPOSES AND OBJECTIVES OF THIS AGREEMENT
DISTRIBUTOR sells Toyota Products which are manufactured or approved by Toyota
Motor Corporation (FACTORY) and imported and/or sold to DISTRIBUTOR by Toyota
Motor Sales, U.S.A., Inc. (IMPORTER). It is of vital importance to DISTRIBUTOR
that Toyota Products are sold and serviced in a manner which promotes consumer
confidence and satisfaction and leads to increased product acceptance.
Accordingly, DISTRIBUTOR has established a network of authorized Toyota dealers,
operating at approved locations and pursuant to certain standards, to sell and
service Toyota Products. DEALER desires to become one of DISTRIBUTOR's
authorized dealers. Based upon the representations and promises of DEALER, set
forth herein, DISTRIBUTOR agrees to appoint DEALER as an authorized Toyota
dealer and welcomes DEALER to DISTRIBUTOR's network of authorized dealers of
Toyota Products.
This Agreement sets forth the rights and responsibilities of DISTRIBUTOR as
seller and DEALER as buyer of Toyota Products. DISTRIBUTOR enters into this
Agreement in reliance upon DEALER's integrity, ability, assurance of personal
services, expressed intention to deal fairly with the consuming public and with
DISTRIBUTOR, and promise to adhere to the terms and conditions herein. Likewise,
DEALER enters into this Agreement in reliance upon DISTRIBUTOR's promise to
adhere to the terms and conditions herein. DISTRIBUTOR and DEALER shall refrain
from conduct which may be detrimental to or adversely reflect upon the
reputation of the FACTORY; IMPORTER, DISTRIBUTOR, DEALER or Toyota Products in
general. The parties acknowledge that the success of the relationship between
DISTRIBUTOR and DEALER depends upon the mutual understanding and cooperation of
both DISTRIBUTOR and DEALER.
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I. RIGHTS GRANTED TO THE DEALER
Subject to the terms of this Agreement, DISTRIBUTOR hereby grants DEALER
the non-exclusive right:
A. To buy and resell the Toyota Products identified in the Toyota Product
Addendum hereto which may be periodically revised by IMPORTER;
B. To identify itself as an authorized Toyota dealer utilizing approved
signage at the location(s) approved herein;
C. To use the name Toyota and the Toyota Marks in the advertising,
promotion, sale and servicing of Toyota Products in the manner herein
provided.
DISTRIBUTOR reserves the unrestricted right to sell Toyota Products and to
grant the privilege of using the name Toyota or the Toyota Marks to other
dealers or entities, wherever they may be located.
II. RESPONSIBILITIES ACCEPTED BY THE DEALER
DEALER accepts its appointment as an authorized Toyota dealer and agrees
to:
A. Sell and promote Toyota Products subject to the terms and conditions of
this Agreement;
B. Service Toyota Products subject to the terms and conditions of this
Agreement;
C. Establish and maintain satisfactory dealership facilities at the
location(s) set forth herein; and
D. Make all payments to DISTRIBUTOR when due.
III. TERM OF AGREEMENT
This Agreement is effective this 9th day of May, 1997, and shall continue
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for a period of Two (2) Years, and shall expire on May 8, 1999 unless ended
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earlier by mutual agreement or terminated as provided herein. This
Agreement may not be continued beyond its expiration date except by written
consent of DISTRIBUTOR and IMPORTER.
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IV. OWNERSHIP OF DEALERSHIP
This Agreement is a personal service Agreement and has been entered into by
DISTRIBUTOR in reliance upon and in consideration of DEALER's
representation that only the following named persons are the Owners of
DEALER, that such persons will serve in the capacities indicated, and that
such persons are committed to achieving the purposes, goals and commitments
of this Agreement:
OWNERS' PERCENT OF
NAMES TITLE OWNERSHIP
FirstAmerica Automotive, Inc. 100%
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_____________________________ ______________________ ____________________
_____________________________ ______________________ ____________________
_____________________________ ______________________ ____________________
_____________________________ ______________________ ____________________
_____________________________ ______________________ ____________________
V. MANAGEMENT OF DEALERSHIP
DISTRIBUTOR and DEALER agree that the retention of qualified management is
of critical importance to satisfy the commitments made by DEALER in this
Agreement. DISTRIBUTOR, therefore, enters into this Agreement in reliance
upon DEALER's representation that H. Xxxxxxx Xxxxxx; and no other person,
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will exercise the function of General Manager, be in complete charge of
DEALER's operations, and will have authority to make all decisions on
behalf of DEALER with respect to DEALER's operations. DEALER further agrees
that the General Manager shall devote his or her full efforts to DEALER's
operations.
VI. CHANGE IN MANAGEMENT OR OWNERSHIP
This is a personal service contract. DISTRIBUTOR has entered into this
Agreement because DEALER has represented to DISTRIBUTOR that the Owners and
General Manager of DEALER identified herein possess the personal
qualifications, skill and commitment necessary to ensure that DEALER will
promote, sell and service Toyota Products in the most effective manner,
enhance the Toyota image and increase market acceptance of Toyota Products.
Because DISTRIBUTOR has entered into this Agreement in reliance upon these
representations and DEALER's assurances of the active involvement of such
persons in DEALER operations, any change in ownership, no matter what the
share or relationship between parties, or any changes in General Manager
from the person specified herein, requires the prior written consent of
DISTRIBUTOR, which DISTRIBUTOR shall not unreasonably withhold.
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DEALER agrees that factors which would make DISTRIBUTOR's withholding of
consent reasonable would include, without limitation, the failure of a new
Owner or General Manager to meet DISTRIBUTOR'S standards with regard to
financial capability, experience and success in the automobile dealership
business.
VII. APPROVED DEALER LOCATIONS
In order that DISTRIBUTOR may establish and maintain an effective network
of authorized Toyota dealers, DEALER agrees that it shall conduct its
Toyota operation only and exclusively in facilities and at locations
herein designated and approved by DISTRIBUTOR. DISTRIBUTOR hereby
designates and approves the following facilities as the exclusive
location(s) for the sale and servicing of Toyota Products and the display
of Toyota Marks:
New Vehicle Sales and Showroom Used Vehicle Display and Sales
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00000 Xxxxx Xxxx 00000 Xxxxx Xxxx
Xxxxx, XX Xxxxx, XX
Sales and General Office Body and Paint
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00000 Xxxxx Xxxx
Xxxxx, XX
Parts Service
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00000 Xxxxx Xxxx 00000 Xxxxx Xxxx
Xxxxx, XX Xxxxx, XX
Other Facilities
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DEALER may not, either directly or indirectly, display Toyota Marks or
establish or conduct any dealership operations contemplated by this
Agreement, including the display, sale and servicing of Toyota Products,
at any location or facility other than those approved herein without the
prior written consent of DISTRIBUTOR DEALER may not modify or change the
usage or function of any location or facility approved herein or otherwise
utilize such locations or facilities for any functions other than the
approved function(s) without the prior written consent of DISTRIBUTOR.
VIII. PRIMARY MARKET AREA
DISTRIBUTOR will assign DEALER a geographic area called a Primary Market
Area ("PMA"). The PMA is used by DISTRIBUTOR to evaluate DEALER's
performance of its obligations,
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among other things. DEALER agrees that it has no exclusive right to any
such PMA. DISTRIBUTOR may add new dealers, relocate dealers, or adjust
DEALER's PMA as it reason-ably determines is necessary. DEALER's PMA is
set forth on the PMA Addendum hereto.
Nothing contained in this Agreement, with the exception of Section XIV(B),
shall limit or be construed to limit the geographical area in which, or
the persons to whom, DEALER may sell or promote the sale of Toyota
products.
IX. STANDARD PROVISIONS
The "Toyota Dealer Agreement Standard Provisions" are incorporated herein
and made part of this Agreement as if fully set forth herein.
X. ADDITIONAL PROVISIONS
In consideration of DISTRIBUTOR's agreement to appoint DEALER as an
authorized Toyota dealer, DEALER further agrees:
I. DEALER AGREES THAT THIS AGREEMENT INCORPORATES, HERE BY THIS REFERENCE,
THE TERMS OF THE ADDENDUM TO SECTION X - ADDITIONAL PROVISIONS DATED MAY
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9, 1997.
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XI. EXECUTION OF AGREEMENT
Notwithstanding any other provision herein, the parties to this Agreement,
DISTRIBUTOR and DEALER, agree that this Agreement shall be valid and
binding only if it is signed:
A. On behalf of DEALER by a duly authorized person;
B. On behalf of DISTRIBUTOR by the President and/or an authorized General
Manager, if any, of DISTRIBUTOR; and
C. On behalf of IMPORTER, solely in connection with its limited
undertaking herein, by President of IMPORTER.
XII. CERTIFICATION
By their signatures hereto, the parties agree that they have read and
understand this Agreement, including the Standard Provisions incorporated
herein, are committed to its purposes and objectives and agree to abide by
all of its terms and conditions.
FAA Poway T, Inc. dba Poway Toyota DEALER
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(Dealer Entity Name)
Date: 4/24/97 By: /s/ President
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Signature Title
Date:___________________ By:______________________ ___________________
Signature Title
Date:___________________ By:______________________ ___________________
Signature Title
Toyota Motor Sales. U.S.A.. Inc. DISTRIBUTOR
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(Distributor Name)
Date:__________________ By: /s/ X. Xxxxx Regional General Manager
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X. Xxxxx Signature Title
Date:__________________ By:_____________________ _______________________
Signature Title
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Undertaking by IMPORTER: In the event of termination of this Agreement by virtue
of termination or expiration of DISTRIBUTOR's contract with IMPORTER, IMPORTER,
through its designee, will offer DEALER a new agreement of no less than one
year's duration and containing the terms of the Toyota Dealer Agreement then
prescribed by IMPORTER.
TOYOTA MOTOR SALES, U.S.A., INC.
Date: MAY 09 1997 By: /s/ X. Xxxxxxxx President
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X. Xxxxxxxx Signature Title
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ADDENDUM TO SECTION X
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These Additional Provisions to Toyota Dealer Agreement ("Additional
Provisions") are entered into as of May 9,1997, among DISTRIBUTOR, DEALER, and
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FIRSTAMERICA AUTOMOTIVE, INC., a Nevada corporation (hereinafter "FAA"), and
form a part of and are incorporated into the Dealer Agreement.
RECITALS
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1. DISTRIBUTOR and DEALER have entered into a Toyota Dealer Agreement
(the "Dealer Agreement") dated as of May 9, 1997.
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2. FAA is the 100% shareholder of DEALER.
3. FAA and DEALER are hereinafter collectively referred to as the "Dealer
Parties". DISTRIBUTOR and the Dealer Parties are hereinafter collectively
referred to as the "Parties".
4. The Parties wish to enter into these Additional Provisions for the
purposes of agreeing to be bound by the terms of these Additional Provisions,
which are a part of and are incorporated into the Dealer Agreement.
5. The ownership of FAA shall be as follows:
Xxxxxx X. Price: 41%
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Xxxxxx X. Xxxxxxx: 11%
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TCW/Crescent Mezzanine Partners, L.P: 19%
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Others: 29%
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NOW THEREFORE, in consideration for the mutual agreements contained herein
and in the Dealer Agreement, the Parties agree as follows:
A. General
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1. DISTRIBUTOR and FAA have entered into an Agreement dated May 2,
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1997 (the "Agreement") relating, among other matters, to the number of Toyota
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and Lexus dealerships which may be acquired by FAA and its affiliates and to
certain aspects of the management of Toyota and Lexus dealerships owned by FAA.
The Dealer Parties agree that the Agreement is incorporated into and forms a
part of the Dealer Agreement and these Additional Provisions. To the extent that
any provision of the Agreement is inconsistent with the Dealer Agreement or
these Additional Provisions, the provisions of the Agreement shall be
controlling.
2. The Dealer Parties acknowledge and agree that if any provision of
these Additional Provisions is violated in any material respect by any of the
Dealer Parties, DISTRIBUTOR will have the right to terminate the Dealer
Agreement on sixty (60) days' written notice to Dealer if Dealer fails to cure
such violation prior to the expiration of such sixty (60) days.
B. Provisions Relating to the Structure of DEALER
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1. Single Purpose Entity. DEALER will be maintained as a separate
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legal entity, and will not engage in any business other than operation of a
Toyota dealership and activities related thereto.
2. No Merger, Consolidation, Etc. DEALER will not be merged with or
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into, or be consolidated with, or acquire substantially all of the assets of,
any other entity, without the prior written consent of DISTRIBUTOR, in its sole
discretion.
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C. Provisions Relating to Management
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1. Role of the Responsible Executive. Pursuant to Section 8 of the
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Agreement, Xxxxxx X. Price is hereby designated as the FAA executive who will
have responsibility and authority with respect to all matters concerning DEALER
and the relationship between DEALER and DISTRIBUTOR (the "FAA Executive"). The
FAA Executive will be actively involved in the management of all aspects of the
operations of DEALER.
(a) The FAA Executive will be an officer of DEALER. The FAA
Executive, in consultation with management of FAA, will have complete control
over all day-to-day management decisions of DEALER or relating to DEALER.
(b) The General Manager will report directly to and be
responsible to the FAA Executive.
(c) DISTRIBUTOR may rely on oral or written communications and
agreements from the FAA Executive as being the binding agreements of DEALER,
without any duty of DISTRIBUTOR to confirm that any such communication or
agreement has been duly authorized by the Board of Directors of DEALER, FAA, or
any other individual or entity.
2. Successors to the FAA Executive. In the event that the FAA
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Executive wishes to discontinue his role in the management of DEALER as set
forth in Section C.1., such action may be taken only with the prior written
consent of DISTRIBUTOR. Such consent of DISTRIBUTOR may be conditioned on
transfer of the FAA Executive's management responsibilities to an individual or
individuals approved by DISTRIBUTOR, taking into account such factors as
DISTRIBUTOR reasonably deems to be relevant and are consistent with applicable
laws.
3. Role of the General Manager.
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(a) H. Xxxxxxx Xxxxxx or any subsequent General Manager of
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DEALER approved by DISTRIBUTOR, will serve exclusively as General Manager of
DEALER on a full time basis and will not have any management responsibilities
with respect to any other dealership or other business or appear as the General
Manager on any automobile dealership franchise agreement other than that of
DEALER.
(b) The General Manager will have responsibility for and
authority with respect to the day-to-day operations of DEALER in the ordinary
course of business, under the supervision of the FAA Executive, and the General
Manager will have the following authority, without the need for obtaining the
prior approval of any other individual or entity:
(i) the authority to hire or terminate any employee of DEALER;
(ii) the authority to order vehicles and other products;
(iii) the authority to place advertising;
(iv) the authority to communicate with DISTRIBUTOR with respect to
all aspects of the business of DEALER;
(v) the authority to approve expenditures by DEALER in the ordinary
course of business in amounts of less than $50,000 per item;
(vi) the authority to approve capital improvements or modifications
to the DEALER'S facilities in amounts not to exceed $100,000
with respect to any expenditure.
4. Membership of Executive Committee. There shall be no change in
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the membership of the Executive Committee, Board of Directors or other governing
body of DEALER without the prior written approval of DISTRIBUTOR.
5. FAA Directors. FAA shall provide a list of all current members
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of its Board of Directors, and resumes for each member, to DISTRIBUTOR, and
provide such information for each new member of the Board of Directors of FAA.
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D. Provisions Relating to Capitalization and Accounting
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1. No distributions will be made by DEALER to FAA if such
distributions would cause DEALER to fail to meet any of DISTRIBUTOR'S
capitalization guidelines, including but not limited to net working capital
requirements.
2. The operations and financial results of DEALER will be reported
to DISTRIBUTOR separately from those of any other entity, business or activity,
including but not limited to any of the Dealer Parties and any other dealerships
directly or indirectly owned or controlled by any of the Dealer Parties.
3. DEALER will maintain complete and separate departments for new
and used vehicle sales, service, parts sales, leasing and finance and insurance,
and will provide separate identifiable areas for each department. DEALER will
maintain a separate and permanent personnel staff and separate retail operations
from other dealerships directly or indirectly owned by any of the Dealer
Parties. DEALER shall not combine its used car operation with that of any other
entity, including any other dealerships directly or indirectly owned by any of
the Dealer Parties.
E. Provisions Relating to Ownership
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1. Successors and Assigns. In the event that any interest in DEALER
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is transferred in accordance with the provisions of the Dealer Agreement, the
Agreement and these Additional Provisions, as a condition to such transfer the
transferee must agree in writing to be bound by all of the terms and provisions
of the Dealer Agreement, the Agreement and these Additional Provisions, such
agreement to be in form and substance reasonably acceptable to DISTRIBUTOR.
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2. Competitors. In no event may any interest in DEALER be
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transferred to an entity which is directly or indirectly engaged in the business
of manufacturing and/or distributing automobiles, or an affiliate thereof, and
no such entity may acquire an ownership interest FAA as described in Section
1 of the Agreement.
F. Provisions Relating to Performance
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1. Dealer agrees to achieve within nine (9) months of the
effective date of this Agreement and to thereafter maintain throughout the
duration of this Agreement, a satisfactory customer satisfaction performance, as
measured by all applicable standards established by Toyota Motor Sales, U.S.A.,
Inc., and which are modified from time to time.
2. Dealer agrees to achieve within nine (9) months of the
effective date of this Agreement and to thereafter maintain throughout the
duration of this Agreement, Toyota truck penetration in its Primary Market Area
that is at least equal to the Region's penetration rate.
3. Dealer agrees to achieve 100% car and truck sales efficiency
within nine (9) of the effective date of this Agreement and to thereafter
maintain 100% car and truck sales efficiency throughout the duration of this
Agreement.
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IN WITNESS WHEREOF, the Parties have executed these Additional Provisions
as of the date first above written.
TOYOTA MOTOR SALES, USA, INC. TOYOTA MOTOR SALES, U.S.A., INC.
LOS ANGELES REGION
By: /s/ X. Xxxxxxxx By: /s/ X. Xxxxx
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Title: President Title: GENERAL MANAGER
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FIRSTAMERICA AUTOMOTIVE, INC. FAA POWAY T., INC.
dba: POWAY TOYOTA
By: /s/ By: /s/
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Title: President Title: President
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