NISSAN
DEALER TERM SALES AND SERVICE AGREEMENT
THIS AGREEMENT is entered into effective the day last set forth below by and
between the Nissan Division of NISSAN MOTOR CORPORATION IN U.S.A., a
California corporation, hereinafter called "Seller," and the natural persons
and entities identified in the Final Article of this Agreement.
INTRODUCTION
The purpose of this Agreement is to establish Dealer as an authorized dealer
of Nissan Products and to provide for the sale and servicing of Nissan
Products in a manner that will best serve owners, potential owners and
purchasers of Nissan Products as well as the interests of Seller, Dealer and
other Authorized Nissan Dealers. This Agreement sets forth: the rights which
Dealer will enjoy as an Authorized Nissan Dealer; the responsibilities which
Dealer assumes in consideration of its receipt of these rights; and the
respective conditions, rights and obligations of Seller and Dealer that apply
to Seller's grant to Dealer of such rights and Dealer's assumption of such
responsibilities. It is understood that Dealer wishes an opportunity to
qualify for a regular Nissan Dealer Sales and Service Agreement for Nissan
Products and understands that for that purpose Dealer first must fulfill all
of Dealer's undertakings hereinafter described.
This is a personal services Agreement In entering into this Agreement and
appointing Dealer as provided below, Seller is relying, among other things,
upon the personal qualifications, expertise, reputation, integrity,
experience, ability and representations of the individuals named in the Final
Article of this Agreement as Dealer Principal (the "Dealer Principal") and
the individual named in the Final Article of this Agreement as Executive
Manager and the representations of Cross-Continent Auto Retailers, Inc
("CCAR") and the Dealer. In addition to Dealer, Seller intends to look to
CCAR, and the Dealer Principal and the Executive Manager for the performance
of Dealer's obligations hereunder.
Nissan Products are intended for discriminate owners with the expectation
that such owners will be loyal and proud, but also demanding toward Seller
and Dealer with respect to Nissan Products and the manner in which they are
sold and serviced. Owners, potential owners and purchasers of Nissan Products
are expected to want, and are entitled to do business with, dealers who enjoy
the highest reputation in their communities and have well located, attractive
and efficient places of business, courteous personnel and outstanding service
and parts facilities. Nissan Products must be sold by enthusiastic dealers
who are not interested in short term results only but are willing to look
toward long term goals and who are devoted to creating and maintaining a
positive total ownership experience for owners of Nissan Products. Seller's
standard of excellence for Nissan Products must be matched by the dealers who
sell them to the public and who service them during their operative lives.
Achievement of the purposes of this Agreement is premised upon mutual
understanding and cooperation between Seller and Dealer. Dealer has entered
into this Agreement in reliance upon Seller's integrity and expressed
intention to deal fairly with Dealer and the consuming public. Seller has
entered into this Agreement in reliance upon the integrity and ability of the
Dealer Principal and Executive Manager and their expressed intention to deal
fairly with the consuming public and Seller.
1
It is the responsibility of Seller to market Nissan Products throughout the
Territory. it is the responsibility of Dealer to actively promote the retail
sale of Nissan Products and to provide courteous and efficient service of
Nissan Products. The success of both Seller and Dealer will depend on how
well they each fulfill their respective responsibilities under this
Agreement. It is recognized that: Seller will endeavor to provide motor
vehicles of excellent quality and workmanship and to establish a network of
Authorized Nissan Dealers that can provide an outstanding sales and service
effort at the retail level; and Dealer will endeavor to fulfill its
responsibilities through aggressive, sound, ethical selling practices and
through conscientious regard for customer service in all aspects of its
Nissan Dealership Operations.
Seller and Dealer shall refrain from engaging in conduct or activities which
might be detrimental to or reflect adversely upon the reputation of Seller,
Dealer or Nissan Products and shall engage in no discourteous, deceptive,
misleading or unethical practices or activities.
For consistency and clarity, terms which are used frequently in this
Agreement have been deemed in Section l of the Standard Provisions. All terms
used herein which are deemed in the Standard Provisions shall have the
meaning stated in said Standard Provisions. These definitions should be read
carefully for a proper understanding of the provisions in which they appear.
To achieve the purposes referred to above, Seller, CCAR, Xxxxxxxxx, Dealer,
Dealer Principal and the Executive Manager agree as follows:
ARTICLE FIRST: Appointment of Dealer
Subject to the conditions and provisions of this Agreement, Seller:
(a) appoints Dealer as an Authorized Nissan Dealer and grants Dealer
the non-exclusive right to buy from Seller those Nissan Products specified in
Dealer's current Product Addendum hereto, for resale, rental or lease at or
from the Dealership Locations established and described in accordance with
Section 2 of the Standard Provisions; and
(b) grants Dealer a non-exclusive right, subject to and in accordance
with Section 6.K of the Standard Provisions, to identify itself as an
Authorized Nissan Dealer, to display the Nissan Marks in the conduct of its
Dealership Operations and to use the Nissan Marks in the advertising,
promotion and sale of Nissan Products in the manner provided in this
Agreement.
ARTICLE SECOND: Assumption of Responsibilities by Dealer
Dealer hereby accepts from Seller its appointment as an Authorized
Nissan Dealer and, in consideration of its appointment and subject to the
other conditions and provisions of this Agreement, hereby assumes the
responsibility for:
(a) establishing and maintaining at the Dealership Location the
Dealership Facilities in accordance with Section 2 of the Standard Provisions;
(b) actively and effectively promoting the sale at retail (and, if
Dealer elects, the leasing and rental) of Nissan Vehicles within Dealer's
Primary Market Area in accordance with Section 3 of the Standard Provisions;
(c) servicing Nissan Vehicles and for selling and servicing Nissan Parts
and
2
Accessories in accordance with Section 5 of the Standard Provisions;
(d) biding and maintaining consumer confidence in Dealer and in Nissan
Products in accordance with Section 5 of the Standard Provisions; and
(e) performance of the additional responsibilities set forth in this
Agreement, including those specified in Section 6 of the Standard Provisions.
ARTICLE THIRD: Ownership
(a) OWNERS. This Agreement has been entered into by Seller in reliance
upon, and in consideration of, among other things, the personal
qualifications, expertise, reputation, integrity, experience, ability and
representations with respect thereto of the Dealer Principal and Executive
Manager named in the Final Article of this Agreement, and in reliance upon
the representations and agreements of Dealer and CCAR as follows:
(i) CCAR will at all times own 100% of the capital stock of Dealer and
Dealer will at all times be maintained as a separate corporate entity.
(ii) The Executive Committee of Dealer shall consist of Xxxx X.
Xxxxxxxxx ("Xxxxxxxxx") and Xxxxxx X. Xxxx, Xx. ("Xxxx").
(iii) The officers of Dealer are as follows:
Xxxxxx X. Xxxx, Xx. President
Xxxxxxx Xxxxxxx Vice-President
(iv) Dealer is a wholly-owned subsidiary of CCAR, which is a public
corporation involved in an initial public offering ("IPO"), the ownership of
which, prior to the PO, is set forth in Exhibit "A".
(b) CHANGES IN OWNERSHIP. In view of the fact that this is a personal
services agreement with the Dealer Principal and Executive Manager and in
view of its objectives and purposes, this Agreement and the rights and
privileges conferred on Dealer hereunder are not assignable, transferable or
salable by CCAR, and no property right or interest is or shall be deemed to
be sold, conveyed or transferred to Dealer or CCAR under this Agreement
Dealer, CCAR, the Dealer Principal and the Executive Manager agree that any
change in the ownership of Dealer, or CCAR specified herein requires the
prior written consent of Seller IF DEALER DESIRES TO REMAIN AN AUTHORIZED
NISSAN DEALER and that without the prior written consent of Seller:
(i) no sale, pledge, hypothecation or other transfer of any of the
currently outstanding capital stock of Dealer will be made and no additional
shares of capital stock, or securities convertible into shares of capital
stock, of Dealer will be issued or sold.
(ii) no ownership interest is acquired in CCAR by a person or entity
which notifies CCAR via Schedule 13D filed with the Securities and Exchange
Commission,(Dealer shall advise Seller in writing, and attached a copy of
that Schedule), that results in a person or entity acquiring an ownership
interest in or controlling a twenty percent (20%) of CCAR that intends to or
may intend to engage in activities, including acquisitions, mergers,
reorganizations, liquidation, sale or transfer of assets, changes in
management of CCAR and material changes in
3
business or corporate structure, which Seller reasonably concludes are not
compatible with the interests of Seller, or is not otherwise qualified to
have an ownership interest in a Nissan dealership. In the event of the
foregoing, Dealer and CCAR agree that within 90 days of receipt of written
notice from Seller of this fact, they will voluntarily terminate this
Agreement. Nothing in this Agreement, however, is intended to prevent CCAR
from reapplying for a Nissan dealership , notwithstanding the new ownership
structure. (iii) neither Dealer or CCAR will be merged with or into, or
consolidate with, any other entity and none of the principal assets necessary
for the performance of Dealer's obligations under this Agreement will be
sold, transferred or assigned.
(iv) CCAR will not enter into any transaction, including, without
limitation, any sale, pledge, hypothecation or other transfer of any of the
currently outstanding capital stock of CCAR, the issuance or sale of
additional shares of capital stock or securities convertible into shares of
capital stock of CCAR, or the merger of CCAR with or into, or the
consolidation of CCAR, with any other entity, if as a result of such
transaction, the CCAR will cease to own at least 100% of the capital stock of
Dealer. Furthermore, Xxxxxxxxx agrees that any transfer of his ownership
interest in CCAR, or other action (such as dilution due to an acquisition),
which would decrease his overall ownership in CCAR to less than 20%, also
requires the prior written consent from Seller, which will not be
unreasonably withheld.
Any transaction involving the capital stock of CCAR which does not
violate subparagraph (ii). (iii) and (iv) above may be effected without
obtaining the prior written consent of Seller and without triggering a
termination event under Section 12.A.(2) of the Standard Provisions.
Dealer shall give Seller prior notice of any proposed change in said
ownership requiring the consent of Seller and immediate notice of the death
or incapacity of any Dealer Principal or Executive Manager. No such change,
and no assignment of this Agreement or of any right or interest herein, shall
be effective against Seller unless and until embodied in an appropriate
amendment to or assignment of this Agreement, as the case may be, duly
executed and delivered by Seller and by Dealer. Seller shall not, however,
unreasonably withhold its consent to any such change, subject to Seller's
rights of First refusal set forth in Article Tenth of this Agreement.
Seller shall have no obligation to transact business with any person who
is not named either as a Dealer Principal or Executive Manager of Dealer
hereunder or otherwise to give effect to any proposed sale or transfer of the
ownership of Dealer or CCAR or management of Dealer or CCAR (other than
changes in the ownership of CCAR which are permitted by this Article Third)
prior to having concluded the evaluation of such a proposal as provided in
Section 15 of the Standard Provisions. Dealer acknowledges Seller's right to
require consent to any change in the ownership of Dealer and agrees that any
change or transfer without such consent from Seller is void, and of no force
and effect, and grounds for termination. Dealer and CCAR further agree that
either will not challenge, contest, dispute, or litigate:
(i) any action taken by Seller (including, without limitation,
termination of this Agreement) in response to an attempt to transfer
ownership of Dealer or CCAR ( which is expressly not permitted by this
Article Third) without Seller's consent; or
4
(ii) any decisions by Seller to withhold consent to a proposed change in
ownership of Dealer or CCAR (which is expressly not permitted by this Article
Third).
The stock certificates representing the stock of Dealer will have
legends which notify a potential purchaser of such stock of the limitations
on transfer set forth in this Article Third. Dealer and CCAR represent and
agree that none of Dealer will register their capital stock, or securities
convertible into their capital stock for sale or resale to the public under
any state or federal securities laws. CCAR agrees that no capital stock, or
securities convertible into capital stock, of Dealer will be issued, sold or
otherwise transferred by Dealer or CCAR, directly or indirectly, to any
automobile manufacturer or distributor or any affiliate thereof or to any
person who has an interest, direct or indirect, in any automobile
manufacturer, distributor or dealership or anyone who could reasonably be
considered a competitor or potential competitor of Seller.
ARTICLE FOURTH: Management
(a) This Agreement has been entered into by Seller in reliance upon,
and in consideration of, among other things, the personal qualifications,
expertise, reputation, integrity, experience, ability and representations
with respect thereto of the person named as Dealer Principal in the Final
Article of this Agreement and in reliance on the following representations
and agreements of Dealer and CCAR that:
(i) Rice and the officers listed herein will, subject to any other
obligations set forth in this Agreement, devote 100% of their time to the
business and day-to-day operations of the entity for which they are
responsible.
(ii) Xxxxxxx will devote 100% of his time to the affairs of Dealer.
(b) DEALER. Seller and Dealer agree that the retention by Dealer of
qualified management is of critical importance to the successful operation of
Dealer and to the achievement of the purposes and objectives of this
Agreement. This Agreement has been entered into by Seller in reliance upon,
and in consideration of, among other things, the personal qualifications,
expertise, reputation, integrity, experience, ability and representations
with respect thereto of the persons named as Dealer Principal and Executive
Manager in the Final Article of this Agreement and in reliance on the
following representations and agreements of Dealer, and CCAR that:
(i) Xxxxxxx is currently employed as the Executive Manager of Dealer.
As long as Rice is employed by CCAR and Xxxxxxx is employed by Dealer, they
will have full and complete control over the Dealership Operations, subject
only to the powers of the Board of Directors of Dealer to manage the business
and affairs of Dealer, and they will at all times be members of the Board of
Directors of Dealer. In addition, any replacements for Rice and Xxxxxxx will,
so long as such replacements are employed by CCAR and Dealer, have full and
complete control over the Dealership Operations, subject only to the powers
of the Board of Directors of Dealer to manage the business and affairs of
Dealer, and such replacements will at all times be members of the Board of
Directors of Dealer.
(ii) the Board of Directors of Dealer shall delegate the management of
the Dealership Operations to Rice and Xxxxxxx and Dealer will not amend its
Certificate of Incorporation or By-laws to provide that its Board of
Directors is entitled to exercise any extraordinary powers or interfere
unduly in the Dealership Operations.
5
(iii) Xxxxxxx will, subject to any other obligations set forth in this
Agreement, continually provide his personal services in operating the
dealership and will be physically present at the Dealership Facilities on a
full-time basis.
(c) CHANGES IN MANAGEMENT. In view of the fact that this is a personal
services Agreement with the Dealer Principal and Executive Manager and in
view of its objectives and purposes, Dealer and CCAR agree that any change in
the Dealer Principal or Executive Manager from that specified in the Final
Article of this Agreement requires the prior written consent of Seller. In
addition, CCAR agrees that no chief executive officer, or person performing
services and having responsibilities similar to a chief executive officer, of
CCAR will be appointed, directly or indirectly, without the prior written
consent of Seller. Dealer shall give Seller prior notice of any proposed
change in Dealer Principal or Executive Manager or the appointment of any
chief executive or similar officer of CCAR and immediate notice of the death
or incapacity of any Dealer Principal or Executive Manager. No change in
Dealer Principal or Executive Manager and no appointment of a chief executive
or similar officer of CCAR shall be effective unless and until embodied in an
appropriate amendment to this Agreement duly executed and delivered by all of
the parties hereto. Subject to the foregoing, Dealer and CCAR shall make
their own, independent decisions concerning the hiring and Erring of its
employees, including, without limitation, the Dealer Principal and Executive
Manager.
Dealer shall give Seller prior written notice of any proposed
change in Dealer Principal or Executive Manager and immediate notice of the
death or incapacity of Dealer Principal or Executive Manager. No change in
Dealer Principal or Executive Manager shall be effective unless and until
embodied in an appropriate amendment to this Agreement duly executed and
delivered by all of the parties hereto. Dealer acknowledges Seller's right
(as set forth herein and in the Standard Provisions) to require consent to
any change in the management of Dealer and Dealer and CCAR agree that a
change without such consent from Seller is void, of no force and effect, and
grounds for termination. Dealer and CCAR further agree that either will not
challenge, contest, dispute, or litigate:
(i) any action taken by Seller (including, without limitation,
termination of this Agreement) in response to an attempt to change the
management of Dealer without Seller's consent; or
(ii) any decision by Seller to withhold consent to a proposed change in
management of Dealer; or
(iii) any decision by Seller to withhold approval of a proposed
management candidate.
To enable Seller to evaluate and respond to Dealer concerning any
proposed change in Dealer Principal or Executive Manager or the appointment
of any chief executive or similar officer of CCAR, Dealer and CCAR agree to
provide, in the form requested by Seller and in a timely manner, all
applications and information customarily requested by Seller to evaluate the
proposed change. while Seller shall not unreasonably withhold its consent to
any such change, it is agreed that any successor Dealer Principal, Executive
Manager or chief executive or similar officer of CCAR must possess personal
qualifications, expertise, reputation, integrity, experience and ability
which are, in the opinion of Seller, satisfactory. Seller will determine
whether, in its opinion, the proposed change or appointment is likely to
result in a successful
6
dealership operation with capable management that will satisfactorily perform
Dealer's obligations under this Agreement. Seller shall have no obligation to
transact business with any person who is not named as a Dealer Principal or
Executive Manager of Dealer hereunder prior to having concluded its
evaluation of such person.
Any successor Dealer Principal or Executive Manager and any chief
executive or similar officer of CCAR must meet the following minimum
requirements in order to be submitted to Seller for approval:
(i) At least three years of experience as a general manager of an
automobile dealer in a major metropolitan area or similar position involving
all aspects of the day-to-day operations of such an automobile dealership
(including, without limitation, new and used vehicle sales, service, parts
and administration); and
(ii) A demonstrated track record of success in his/her prior automobile
dealership activities as measured by the dealerships' performance under
his/her management. The dealership(s) shall have consistently demonstrated
at least the following:
1. An above average level of sales performance when measured
against regional or zone averages and as measured against sales performance
objectives established by the manufacturer; and
2. An above average level of customer satisfaction when
measured against regional or zone averages for the make; and
3. A history of cooperation and good relations with
manufacturer(s) and/or distributor(s).
(d) EVALUATION OF MANAGEMENT. Dealer and Seller understand and
acknowledge that the personal qualifications, expertise, reputation,
integrity, experience and ability of the Dealer Principal and Executive
Manager and their ability to effectively manage Dealer's day-to-day
Dealership Operations is critical to the success of Dealer in performing its
obligations under this Agreement. Seller may from time to time develop
standards and/or procedures for evaluating the performance of the Dealer
Principal and Executive Manager and of Dealer's personnel generally. Seller
may, from time to time, evaluate the performance of the Dealer Principal and
Executive Manager and will advise Dealer, the Dealer Principal and the
Executive Manager of the results of such evaluations and the way in which any
deficiencies affect Dealer's performance of its obligations under this
Agreement
(e) COMPENSATION OF EXECUTIVE MANAGER. Xxxxxxx will have a substantial
portion of his compensation tied to Dealer's overall performance with respect
to objectives for sales, market penetration and customer service which will
be established at quarterly intervals.
ARTICLE FIFTH: Additional Provisions
The additional provisions set forth in the attached "Nissan Dealer Sales
and Service Agreement Standard Provisions," bearing form number NDA-4S/9-88,
as amended in Article Thirteenth of this Agreement, and excepting only the
provisions contained in Sections 4, 14 and 16, are hereby incorporated in and
made a part of this Agreement The Notice of Primary Market Area, Dealership
Facilities Addendum, Product Addendum, Dealership Identification Addendum,
Holding Company Addendum, if applicable, and all Guides and Standards
referred
7
to in this Agreement (including references contained in the Standard
Provisions referred to above) are hereby incorporated in and made a part of
this Agreement. Dealer further agrees to be bound by and comply with: the
Warranty Manual; Seller's Manuals or Instructions heretofore or hereafter
issued by Seller to Dealer; any amendment, revision or supplement to any of
the foregoing; and any other manuals heretofore or hereafter issued by Seller
to Dealer.
ARTICLE SIXTH: Termination of Prior Agreements
This Agreement cancels, supersedes and annuls all prior contracts,
agreements and understandings except as stated herein, all negotiations,
representations and understandings being merged herein. No waiver,
modification or change of any of the terms of this Agreement or change or
erasure of any printed part of this Agreement or addition to it (except
Filling of blank spaces and lines) will be valid or binding on Seller unless
approved in writing by the President or an authorized Vice President of
Seller.
ARTICLE SEVENTH: Term
This Agreement shall have a term commencing on the effective date hereof
and, subject to its earlier termination in accordance with the provisions of
this Agreement, expiring on the expiration date indicated in the Final
Article of this Agreement Subject to other applicable provisions hereof, this
Agreement shall automatically terminate at the end of such stipulated term
without any action by Dealer, Seller or any of the other parties hereto.
ARTICLE EIGHTH: License of Dealer
If Dealer is required to secure or maintain a license for the conduct of
its business as contemplated by this Agreement in any state or jurisdiction
where any of its Dealership Operations are to be conducted or any of its
Dealership Facilities are located, this Agreement shall not be valid until
and unless Dealer shall have furnished Seller with written notice specifying
the date and number, if any, of such license or licenses issued to Dealer,
Dealer shall notify Seller immediately in writing if Dealer shall fall to
secure or maintain any and all such licenses or renewal thereof or, if such
license or licenses are suspended or revoked, specifying the effective date
of any such suspension or revocation.
ARTICLE NINTH: Additional Representations and Warranties
(a) All of the representations and covenants made to Seller by the
other parties to this Agreement have been made jointly and severally by each
of the parties hereto which has made any such representation or covenant
(b) In addition to the representations set forth elsewhere in this
Agreement, Dealer and CCAR jointly and severally, represent to Seller that:
(i) all of the documents and correspondence provided to Seller by
Dealer, CCAR, or any of their agents in connection with the solicitation of
Seller's consent to this Agreement are true and correct copies of such
documents.
(c) In addition to the covenants set forth elsewhere in this Agreement,
Dealer, CCAR, jointly and severally, agree with Seller that:
8
(i) Dealer will at all times be involved in the operation of the Nissan
dealership currently operated by it and Dealer will not conduct any other
type of business.
(ii) no distributions will be made to the stockholders of Dealer or CCAR
if such distributions would cause Dealer to fail to meet any of the Guides
and Standards relating to the capitalization of Dealer. In particular, CCAR
will not be permitted to voluntarily redeem any of its preferred stock, if
prior to and after giving effect to such redemption Dealer fails to meet any
&f the Guides and Standards relating to capitalization of Dealer.
(iii) CCAR and Dealer hereby, jointly and severally, indemnify and hold
harmless, Seller, its officers, directors, affiliates and agents, and each
person who controls Seller within the meaning of the Securities Act of 1933,
as amended (the "Act"), from and against any and all losses, claims, damages
or liabilities, to which they or any of them may become subject under the
Act, the Securities Exchange Act of 1934, as amended, or any other federal or
state securities law, rule or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities arise out of the sale by the
CCAR or Dealer of any securities. The indemnification provided for in this
paragraph shall be exclusive of, and in addition to, any indemnification
pursuant to Section 10 of the Standard Provisions, any indemnification
provided by law and the indemnification agreement executed by CCAR and
Xxxxxxxxx attached as Exhibit "B".
(iv) One of the conditions to the effectiveness of this Agreement by
Seller is that all of the parties hereto (other than Seller) shall have been
advised by their counsel that this Agreement has been duly executed and
delivered by each of such parties thereto (other than Seller) and is the
legal, valid and binding obligation of each of such parties.
ARTICLE TENTH:
A. Seller's Right of First Refusal
In addition to its rights under this Agreement, in the event that CCAR
or Dealer should desire to enter into a transaction, which if not approved by
Seller, would result in a breach of the covenants set forth in Article Third,
Sections (a)(i), (a)(ii), (a) (iii), (a) (iv) or (b) of this Agreement or in
the event that any of the covenants set forth in the fourth full paragraph of
Article Third, Section (b), Article Fourth, Section (a)(vii) or Article
Ninth, Section (c)(ii) of this Agreement are breached, Seller shall have the
additional right and option to purchase the dealership assets or ownership
interests pursuant to this Article Tenth.
(a) If Seller chooses to exercise its right of First refusal, it must
do so in its written refusal to consent to the proposed sale or transfer
pursuant to Section 15 of the Standard Provisions or, if Section 15 of the
Standard Provisions does not apply, within sixty (60) days of receipt of
notification that a event triggering Seller's right of First refusal
hereunder has occurred. Dealer agrees not to complete any proposed change or
sale prior to the expiration of the period for exercise of Seller's right of
First refusal and without Seller's prior written consent. Such exercise shall
be null and void if Dealer withdraws its proposal within thirty (30) days
following Dealer's receipt of Seller's notice exercising its rights of First
refusal.
(b) After being exercised, Seller's right to purchase may be assigned
to any party, and Seller hereby agrees to guarantee the full payment of the
purchase price by such assignee. Seller's rights under this Article Tenth
shall be binding on and enforceable against any assignee or successor in
interest of Dealer or purchaser of Dealer's assets. Seller shall have no
obligation to exercise its rights hereunder.
9
(c) If Dealer has entered into a bona fide written buy/sell agreement
respecting its Nissan dealership, Seller's right under this Article Tenth
shall be a right of first refusal, enabling Seller to assume the prospective
purchaser's purchase rights and obligations under such buy/sell agreement.
The purchase price and other terms of sale shall be those set forth in such
agreement and any related documents. Seller may request and Dealer agrees to
provide all other documents relating to Dealer and the proposed transfer,
including, but not limited to, those reflecting any other agreements or
understandings between the parties to the buy/sell agreement. If Dealer
refuses either to provide such documentation or to state in writing that no
such document exists, it shall be presumed that the agreement is not bona
fide.
(d) If Seller determines pursuant to paragraph (c) above that the
buy/sell agreement is not bona fide, Seller will so notify Dealer. Dealer
shall have ten (10) days from its receipt of such notice within which to
withdraw its proposal. Seller's exercise of its rights hereunder shall be
null and void if Dealer withdraws its proposal within such time period. If
the proposal is not withdrawn, Seller shall have the option, but no
obligation, under this Article Tenth to purchase the principal assets of
Dealer utilized in the Dealership Operations, including real estate an)
leasehold interest or to purchase the ownership interests of Dealer, and to
terminate this Agreement and all rights granted Dealer hereunder. If the
Dealership Facilities are leased by Dealer from an affiliated company, the
right to purchase the principal assets, or the ownership interests, of
Dealer, shall include the right to lease the Dealership Facilities. The
purchase price shall be at the then fair market value as determined by an
independent appraiser selected by Seller and reasonably acceptable to CCAR
and the other terms of sale shall be those agreed by Seller, Dealer and CCAR.
(e) Dealer shall transfer the affected property with marketable title
free and clear of liens, claims, encumbrances.
(f) In addition to any other rights Seller may have at law, in equity
or hereunder, any conveyance of the dealership in violation of this right of
first refusal shall be voidable by Seller.
(g) In the event that Seller elects not to exercise its right to
purchase the dealership assets or the ownership interests of the Dealer, CCAR
agrees that it will. offer to sell such assets or interests to the Dealer's
then current management team or to some other entity or persons acceptable to
Seller. If such individuals are not interested in such a transaction and no
other entity or individuals acceptable to Seller can be found then this
Agreement will be terminable at Seller's option, by deliver of written notice
to Dealer.
B. Right of First Refusal on Sale or Lease of Property to a Third Party.
a) In addition to its rights under Articles Third and Fourth and
Section 15 of the Standard Provisions, Dealer agrees that should Dealer seek
to sell or lease all or substantially all of the Approved Site to a third
party for use as a Nissan New Motor Vehicle Dealership, Seller shall have the
additional right and option, but not the obligation, to purchase or lease the
Approved Site pursuant to this Article Thirteenth. A sale or lease for use
other than a Nissan New Motor Vehicle Dealership is void.
b) If Seller chooses to exercise its right of first refusal, it
must do so by written notice delivered to Dealer within 60 days of Seller's
receipt of notice of the proposed sale
10
or lease by Dealer. Dealer agrees not to complete any proposed sale or lease
prior to the expiration of the period for exercise of Seller's right of first
refusal and without Seller's prior written consent, and agrees to allow
Seller to perform an environmental study of the property. Such exercise shall
be null and void if Dealer withdraws its sale or lease proposal within thirty
(30) days following Dealer's receipt of Seller's notice exercising its right
of first refusal.
c) After being exercised, Seller's right to purchase or lease may
be assigned to any party, and Seller hereby agrees to guarantee the full
payment of the purchase price or the rental payment by such assignee.
Seller's rights under this Article Thirteenth shall be binding on and
enforceable against any assignee or successor in interest of Dealer or
purchaser of Dealer's assets. Seller shall have no obligation to exercise its
rights hereunder, and Seller may rescind its offer if the property is
determined to be contaminated pursuant to an environmental study. Such
contamination shall be deemed a breach of this agreement by dealer.
d) Should Seller actually purchase or lease the facility, Dealer
shall also furnish to Seller copies of any easements, licenses, environmental
studies or other documents affecting the property.
e) Dealer shall transfer the affected property by deed conveying
marketable title free and clear of liens, claims, mortgages, encumbrances,
tenancies and occupancies, or, if applicable, by an assignment of any
existing lease. The Warranty Deed shall be in proper form for recording.
Dealer shall deliver complete possession of the property at the time of
delivery of the Deed or lease assignment. Dealer shall also furnish to
Seller copies of any easements, licenses, or other documents affecting the
property and shall assign any permits or licenses which are necessary for the
conduct of the Dealership Operations.
f) In addition to any other rights Seller may have at law, in
equity or hereunder, any sale or lease of the Approved Site in violation of
this right of first refusal shall be voidable by Seller.
C. Exclusivity Provisions.
In order for Dealer to maintain competitive Dealership Facilities to
effectively market Nissan Products, Dealer hereby agrees to abide by and
never challenge the following provisions (hereinafter "Exclusivity
Provisions"). These Exclusivity Provisions shall be effective on or before
the execution of the Agreement, and continue in effect thereafter so long as
Dealer (or its principals) are authorized Nissan dealers and these provisions
shall be binding on any successors-in-interest, assigns or purchasers of
Dealer:
a) The only line-make of new, unused motor vehicles which Dealer
shall display and sell at the Approved Site shall be the Nissan line and make
of motor vehicles. Dealer shall not conduct any dealership operations for any
other make or line of vehicles from the Approved Site.
11
b) Dealer shall sell and maintain a full line of Genuine Nissan
Parts and Accessories at the Approved Site and shall provide a full range of
automotive servicing for Nissan vehicles at the Approved Site pursuant to
Section 5 of the Standard Provisions to the Agreement. Nothing contained
herein, however, shall preclude Dealer from offering parts, accessories or
servicing for vehicles of other lines or makes so long as such products or
services are incidental to Dealer's Nissan Dealership Operations;
c) Dealer shall not advertise or promote any make or line of new,
unused vehicles from the Approved Site other than the Nissan line; and
d) Dealer shall not install or maintain any sign at or near the
Approved Site which would tend to lead the public into believing that any
line or make of vehicles other than the Nissan line is sold at the Approved
Site.
ARTICLE ELEVENTH: Breach By Dealer
In the event (i) that any of the representations and warranties of
Dealer, CCAR, Rice or Xxxxxxx contained in this Agreement shall prove not to
have been true and correct when made or (ii) of any breach of violation of
any of the covenants made by Dealer, CCAR, Rice or Xxxxxxx in Articles Third,
Fourth and Ninth of this Agreement or upon the occurrence of any of the
events warranting termination of this Agreement as set forth in Section 12.A
of the Standard Provisions, Seller may terminate this Agreement, prior to the
expiration date hereof, by giving Dealer written notice thereof, such
termination to be effective upon the date specified in such notice, or such
latter date as may be required by any applicable statute with the effect set
forth in Section 13 of the Standard Provisions.
ARTICLE TWELFTH: Execution of Agreement
This Agreement, and any Addendum or amendment or notice with respect
thereto, shall be valid and binding on Seller only when it bears the
signature of either the President or an authorized Vice President of Seller
and, when such signature is a facsimile, the manual countersignature of an
authorized employee of Seller at the Director level and a duplicate original
thereof is delivered personally or by mail to the Dealership Location. This
Agreement shall bind Dealer and the other parties hereto only when it is
signed by: a duly authorized officer or executive of Dealer or such party if
a corporation; one of the general partners of Dealer or such party if a
partnership; or Dealer or such party if an individual.
ARTICLE THIRTEENTH: Amendments to Standard Provisions
(a) Section 1.0 of the Standard Provisions is hereby amended to read as
follows:
"O. 'Principal Owners(s)' shall mean the persons named as Dealer Principal
in the Final Article of this Agreement upon whose personal qualifications,
expertise, integrity, experience, ability and representations Seller has relied
in entering into this Agreement."
(b) Section 6.1 of the Standard Provisions is hereby amended to read as
follows:
"Seller shall have the right, at all reasonable times during regular
business hours, to inspect the Dealership Facilities and to examine, audit and
make and take copies of all records,
12
accounts and supporting data relating to the sale, sales reporting, service
and repair of Nissan Products by Dealer. whenever possible, Seller shall
attempt to provide Dealer with advance notice of an audit or examination of
Dealer's operations. Seller shall also have the right, at all reasonable
times during regular business hours and upon advance notice, to examine,
audit and make and take copies of all records, accounts and supporting data
of CCAR relating to the business, ownership or operations of Dealer."
(c) Section 12.A.(1) of the Standard Provisions is hereby amended to read
as follows:
"(1) Any actual or attempted sale, transfer, assignment or delegation,
whether by operation of law or otherwise, by Dealer or CCAR of any interest
in or right, privilege or obligation under this Agreement, or of the
principal assets necessary for the performance of Dealer's responsibilities
under this Agreement, without, in either case, the prior written consent of
Seller having been obtained, which consent shall not be unreasonably
withheld;"
(d) Section 12.A.(3) of the Standard Provisions is hereby amended to read
as follows:
"(3) Removal, resignation, withdrawal or elimination from Dealer for any
reason of the Executive Manager, or removal, resignation, withdrawal or
elimination from Dealer of Xxxxxxxxx as Chairman, or removal, resignation,
withdrawal or elimination from Dealer of Xxxxxxx as President or Executive
Manager; provided, however, in each case, Seller shall give Dealer a
reasonable period of time within which to replace such person with a
individual satisfactory to Dealer as the case may be, and Seller in
accordance with Article Fourth of this Agreement; or the failure of Dealer to
retain an Executive Manager who, in accordance with Article Fourth of this
Agreement, in Seller's reasonable opinion, is competent, possesses the
requisite qualifications for the position, and who will act in a manner
consistent with the continued interests of both Seller and Dealer."
(e) Section 12.B.(2)(i) of the Standard Provisions is hereby amended
to read as follows:
"(i) any dispute, disagreement or controversy between or among Dealer,
CCAR or and any third party or between the owners and management personnel of
Dealer relating to the management or ownership of Dealer, CCAR develops or
exists which, in the reasonable judgment of Seller, tends to adversely affect
the conduct of the Dealership Operations or the interests of Dealer or
Seller; or"
(f) Section 12.B.(2)(ii) of the Standard Provisions is hereby amended to
read as follows:
"(ii) any other act or activity of Dealer, CCAR or, or any of their
owners or management occurs, which substantially impairs the reputation or
financial standing of Dealer or any of its management subsequent to the
execution of this Agreement:"
(g) Section 3.B.I. of the Standard Provisions is hereby amended to read
as follows:
"1. Achievement of reasonable sales objectives which may be established
from time to time by Seller for Dealer as standards for performance, which,
because Dealer has indicated that the public structure of ownership of
Dealer's parent, CCAR, will not impair Dealer's operations and may, even
enhance Dealer's operations and performance, will include the requirement
that Dealer achieve at least regional average for sales penetration, Nissan
Purchase Index ("NPI") and Nissan Service Index ("NSI") and must maintain at
least regional average sales penetration, NPI and NSI at all times
thereafter. CCAR and Dealer understand and agree, in addition to
13
Seller's right to terminate under Section 12 of this Agreement, that Seller
will not consider any application for additional Nissan dealerships until
there is compliance with this provision.
FINAL ARTICLE
The Dealer is Performance Nissan, Inc., a corporation formed under the laws
of the State of Oklahoma. Dealer is located in Midwest City, OK.
The other parties to this Agreement are Cross-Continent Auto Retailers, Inc.,
a corporation incorporated under the laws of the state of Delaware ("CCAR),
Xxxx X. Xxxxxxxxx ("Xxxxxxxxx"), Xxxxxx X. Xxxx, Xx. ("Xxxx") and Xxxxxxx
Xxxxxxx ("Xxxxxxx").
The Dealer Principal is Xxxxxx X. Xxxx, Xx.
The Executive Manager of Dealer is Xxxxxxx Xxxxxxx.
Expiration Date: October 1, 1999
Working Capital Guide Requirement: $ 382,706
Net Worth Guide Requirement: $ 507,820
Flooring Line: $ 1,212,841
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
triplicate effective as of the 23rd day of September, 1996 at Carson,
California.
SELLER:
NISSAN DIVISION
NISSAN MOTOR DIVISION CORPORATION IN USA
By: /s/ NAME ILLEGIBLE By: /s/ X.X. XXXXXXX
---------------------------------- --------------------------------
Its: Vice President Nissan Division Its: Regional Vice President
PERFORMANCE NISSAN, INC.
By: /s/ XXXX X. XXXXXXXXX
--------------------------------
Its: President
--------------------------------
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ XXXX X. XXXXXXXXX
--------------------------------
Its: Chairman & CEO
--------------------------------
/s/ XXXXXX X. XXXX, XX.
-------------------------------------
XXXXXX X. XXXX, XX.
/s/ XXXXXXX XXXXXXX
-------------------------------------
XXXXXXX XXXXXXX
/s/ XXXX X. XXXXXXXXX
-------------------------------------
XXXX X. XXXXXXXXX
15
Exhibit B
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT ("Agreement"), made this 23rd day of September
1996 between Cross-Continent Auto Retailers, Inc., a Delaware corporation the
address of which is 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000
("C-Car"), XXXX X. XXXXXXXXX, an individual with an address at 0000 Xxxxx
Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000, ("Xxxxxxxxx") (C-Car and Xxxxxxxxx are
hereinafter referred to as the "Indemnitors") and Nissan Motor Corporation in
U.S.A., a corporation the address of which is 00000 Xxxxx Xxxxxxxx Xxxxxx,
X.X. Xxx 000, Xxxxxxx, XX 00000-0000 ("Nissan").
WITNESSETH
WHEREAS, C-Car was formed in May, 1996 and in June 1996 acquired all of
the capital stock of various automobile dealerships, including Quality
Nissan, Inc. of Amarillo Texas ("Quality Nissan") and Performance Nissan,
Inc. of Midwest City, Oklahoma ("Performance Nissan') (Quality Nissan and
Performance Nissan will be collectively referred to in this Agreement as "the
Dealerships").
WHEREAS, C-Car intends to offer and sell approximately 3,675,000 shares
of C-Car (the "Shares") in a public offering pursuant to the Securities Act
of 1933, as amended (the "Act");
WHEREAS, C-Car intends to use a portion of the proceeds from the public
offering to acquire, among other things, a Dodge automobile dealership, repay
debt and provide cash for working capital and general corporate purposes;
WHEREAS, prior to the formation of and acquisitions by C-Car, Xxxxxxxxx
controlled the Dealerships, Xxxxxxxxx will remain the principal stockholder
of C-Car immediately following the public offering;
WHEREAS, Nissan has consented to the transfer of the Dealerships, and
has agreed to enter into a Nissan Dealer Sales and Service Agreement (the
"Sales and Service Agreement")
-1-
with C-Car, Xxxxxxxxx and the Dealerships whereby Xxxxxxxxx and Xxxxxx Xxxx
Xx. will serve as Dealer Principals for Quality Nissan and Performance Nissan
respectively and for which Xxxxxxx Xxxxxx and Xxxxxx Xxxx Xx. will serve as
Executive Manager for Quality Nissan and Performance 'Nissan respectively;
WHEREAS, Nissan is not involved in the public offering of the Shares and
has no control over C-Car's activities in connection with that offering or
the sale of the Shares; and
WHEREAS, in recognition of Nissan's desire for complete protection
against liability and potential legal action and in order to obtain Nissan's
consent to the transfer of the Dealerships and the execution of the Sales and
Service Agreement, the Indemnitors wish to provide in this Agreement for the
indemnification of and the advancing of expenses to Nissan as set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises made herein and
for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
1. INDEMNITY OF NISSAN
The Indemnitors hereby agree to indemnify and hold harmless Nissan from
and against any and all losses, liabilities, judgments, amounts paid in
settlement, claims, damages and expenses whatsoever (collectively a "Claim"),
including, but not limited to, any and all expenses whatsoever incurred
investigating, preparing or defending against any litigation, commenced or
threatened, to which Nissan may become subject under the Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the securities laws of
any state (the "Blue Sky Laws"), any other statute or at common law or
otherwise under the laws of any foreign country, arising in connection with
the offer and sale of the Shares, including any claim based upon the
allegation that Nissan is a "controlling person" within the meaning of 15 of
the Act or 20(a) of the Exchange Act. In addition, the Indemnitors hereby
agree to indemnify and hold harmless Nissan from any and all claims of the
shareholders of C-Car with respect to any matter, PROVIDED, that if it is
ultimately determined, based upon a final decision of a court, arbitrator or
other authorized panel or a settlement entered into by the parties to the
dispute and consented to by Nissan that Nissan
-2-
was liable for such Claim in whole or in part, the indemnification set forth
herein shall be of no force or effect, and Nissan shall immediately reimburse
the Indemnitors for any expenses advanced by the Indemnitors pursuant to
paragraph 3 of this Agreement.
2. NOTIFICATION AND DEFENSE OF CLAIM
(a) If any claim is made or any litigation is commenced against Nissan
in respect of which indemnity may be sought pursuant to this Agreement,
Nissan shall promptly notify the Indemnitors in writing of the claim or the
commencement of any such litigation, and the Indemnitors shall then assume
the defense of any such litigation, including the employment and fees of
counsel (reasonably satisfactory to Nissan) and the payment of all such
expenses.
(b) Nissan shall have the right to employ its own counsel in any such
case to oversee the litigation on behalf of Nissan, to consult with the
attorneys engaged by the Indemnitors as to the proper handling of the
litigation and to take such actions in connection with the litigation as are
reasonably necessary to protect Nissan's interests. The Indemnitors shall pay
the reasonable fees and expenses of not more than one additional Firm of
attorneys for Nissan.
(c) The Indemnitors agree promptly to notify Nissan of the commencement of
any litigation against C-Car in connection with the issue and sale of the
Shares. C-Car and Nissan agree to cooperate with each other in the defense of
any litigation.
(d) The Indemnitors shall not be obligated to indemnify or reimburse
Nissan under this Agreement for any amounts paid in settlement of any
litigation effected without the Indemnitors' prior written consent. The
Indemnitors shall not, in the defense of any such litigation, except with
Nissan's prior written consent, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to Nissan of a release from all
liability in respect to such litigation. Neither the Indemnitors nor Nissan
shall unreasonably withhold its consent to any proposed settlement.
3. ADVANCEMENT OF EXPENSES
The Indemnitors agree that they will pay any and all expenses incurred
by Nissan in defending any claim, civil or criminal action, suit or
proceeding against Nissan in advance of the
-3-
time such expenses are due. With respect to legal fees and disbursements of
Nissan's attorneys, the Indemnitors will pay such attorneys an advance
retainer of up to $20,000 and will pay additional fees and expenses of such
attorneys in increments of not more than $20,000 periodically in advance of
the dates that such fees and expenses are incurred.
4. ENFORCEMENT
(a) The Indemnitors expressly confirm and agree that they have entered
into this Agreement and assume the obligations imposed on them in order to
induce Nissan to consent to the transfer of the Dealerships and to execute
the Sales and Service Agreement and acknowledge that Nissan is relying upon
this Agreement, and other promises, to grant such consent. (b) In the event
Nissan is required to bring any action to enforce rights or to collect moneys
due under this Agreement and is successful in such action, the Indemnitors
shall reimburse Nissan for all of Nissan's reasonable fees and expenses in
bringing and pursuing such action.
5. SUBROGATION
(a) In the event of payment under this Agreement, the Indemnitors shall
be subrogated to the extent of such payment to all of the rights of recovery
of Nissan, which shall execute all papers required and shall do everything
that may be necessary to secure such rights, including the execution of such
documents necessary to enable the Indemnitors effectively to bring suit to
enforce such rights.
(b) The Indemnitors shall not be liable under this Agreement to make
any payment in connection with any Claim or litigation made against Nissan to
the extent Nissan has otherwise actually received payment (under any
insurance policy or otherwise) of the amounts otherwise indemnifiable
hereunder, provided, that nothing contained in this Agreement shall be deemed
to require Nissan to notify its insurance carriers with respect to any Claim
or litigation or to seek payments from such carriers with respect to such
Claim or litigation.
6. MISCELLANEOUS
(a) This Agreement shall be interpreted and construed in accordance
with the laws of the State of New York, without giving effect to the conflict
of law rules.
-4-
(b) This Agreement shall be binding upon and inure to the benefit of
C-Car, Xxxxxxxxx and Nissan and their respective legal representatives,
successors and assigns.
(c) No amendment, modification or termination of this Agreement shall be
effective unless in writing and signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date First above written.
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ XXXX X. XXXXXXXXX
------------------------------------
its Chairman & CEO
By:
------------------------------------
Vice President & CEO
/s/ XXXX X. XXXXXXXXX
------------------------------------
XXXX X. XXXXXXXXX, Individually
NISSAN MOTOR CORPORATION U.S.A.
By: NAME ILLEGIBLE
-----------------------------------
Title: Vice President, Nissan Division
By: /s/ X.X. XXXXXXX
------------------------------------
Title: Regional Vice President
