The Last Four Digits of The Debtor's Federal Tax Identification Number Are (8739) - The Debtor's Address Is: 3251 East Imperial Highway, Brea, CA 92821

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P ACHULSKI S TANG Z IEHL & J ONES LLP
Richard M. Pachulski (CA Bar No. 90073) James I. Stang (CA Bar No. 94435) Dean A. Ziehl (CA Bar No. 84529) Linda F. Cantor (CA Bar No. 153762) Debra I. Grassgreen (CA Bar No. 169978) PACHULSKI STANG ZIEHL & JONES LLP 10100 Santa Monica Blvd., Suite 1300 Los Angeles, CA 90067-4114 Telephone: 310/277-6910 Facsimile: 310/201-0760 E-mail: rpachulski@pszjlaw.com jstang@pszjlaw.com dziehl@pszjlaw.com lcantor@pszjlaw.com dgrassgreen@pszjlaw.com Proposed Attorneys for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re: American Suzuki Motor Corporation,1 Debtor. Case No.: 12-_____ (___) Chapter 11 NOTICE OF EMERGENCY MOTION AND EMERGENCY MOTION FOR ORDER (I) AUTHORIZING DEBTOR TO ENTER INTO SERVICE AND PARTS AGREEMENTS WITH AUTOMOBILE DEALERS; (II) APPROVING UNIFORM PROCEDURES FOR CONSENSUAL REJECTION OF PREPETITION AGREEMENTS AND RESOLUTION OF CLAIMS AND (III) GRANTING RELATED RELIEF [Declaration of M. Freddie Reiss, Proposed Chief Restructuring Officer, in Support of Emergency First Day Motions Filed Concurrently Herewith]
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TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE, THE DEBTORS PREPETITION AND POSTPETITION SECURED LENDER, THE CREDITORS APPEARING ON THE LIST FILED IN ACCORDANCE WITH RULE 1007(D) OF THE
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The last four digits of the Debtors federal tax identification number are (8739). The Debtors address is: 3251 East Imperial Highway, Brea, CA 92821.
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FEDERAL RULES OF BANKRUPTCY PROCEDURE, PARTIES REQUESTING SPECIAL NOTICE, THE DEBTORS AUTOMOBILE DEALERS, STATE MOTOR VEHICLE DISTRIBUTOR/DEALER LICENSING AUTHORITIES AND THE OFFICE OF THE UNITED STATES TRUSTEE: PLEASE TAKE NOTICE that American Suzuki Motor Corporation, the above-captioned debtor and debtor in possession (the Debtor), hereby moves this Court, on an emergency basis, for entry of an order, pursuant to sections 105(a), 363(b), 365(a), 502(b) of title 11 of the United States Code (the Bankruptcy Code), Rules 3007 and 9019 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules) and Local Bankruptcy Rule 2081-1(a)(12): (i) authorizing the Debtor to enter into the postpetition Service and Parts Agreements with existing automobile dealers to ensure continuity of service and warranty repair work and sales of remaining automobile inventory; (ii) approving uniform procedures for the consensual rejection of automobile dealer agreements and all ancillary agreements related thereto (the Automobile Dealer Agreements) and the allowance of dealers claims (excluding prepetition claims for warranty services, Incentive Programs2 and holdbacks) (the Dealer Settlement Procedures) and (iii) granting related relief as described herein and in the Memorandum of Points and Authorities in support of this Emergency Motion. PLEASE TAKE FURTHER NOTICE that this Emergency Motion is based on this Notice and Emergency Motion, the Notice of Emergency Motions that will be filed and served after obtaining a hearing date for the Debtors First Day Motions, the annexed Memorandum of Points and Authorities and, the Declaration of M. Freddie Reiss, Proposed Chief Restructuring Officer, in Support of Emergency First Day Motions (the Reiss Declaration), the arguments of counsel, and other admissible evidence properly brought before the Court at or prior to the hearing on this Emergency Motion. PLEASE TAKE FURTHER NOTICE that pursuant to Local Bankruptcy Rule 20811(a)(12), this Emergency Motion may be heard on less than two days notice. The Debtor requests that the relief sought herein be granted on an emergency basis for multiple reasons, including (i) the
Incentive Programs are promotional, sales and incentive programs more fully described in the Debtors Emergency Motion For Order Authorizing The Debtor To Honor Certain Prepetition Obligations For The Benefit Of Its Dealers And Other Customers And To Otherwise Continue Customer Programs And Practices Including Warranty Programs In The Ordinary Course.
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Service and Parts Agreements will provide for continuity of critical warranty and service repair work for the benefit of owners of Suzuki automobiles and automobile dealers, (ii) Settling Auto Dealers (as defined below) will be able to liquidate claims, including those arising from the rejection of Automobile Dealer Agreements on a cost effective basis and avoid time consuming and expensive claims litigation, subject to a reasonable notice and objection period, (iii) Settling Auto Dealers will avoid severe economic hardship by receiving a significant portion of the liquidated claims through a release and participation agreement with the Debtors shareholder (Participation Agreement), pursuant to which the Debtor's shareholder (or its designee) will purchase a significant participation in the liquidated claim in order to aid Settling Auto Dealers (and the respective customers, employees and vendors who rely on the Settling Auto Dealers) in their continued operations under the Service and Parts Agreement; and (iv) the relief sought herein will materially enhance the Debtors opportunity to reorganize on an expedited basis and preserve its going concern value for the benefit of all stakeholders. The Debtor respectfully requests that the Court schedule a hearing on this Emergency Motion at the same time as other emergency first day motions. PLEASE TAKE FURTHER NOTICE that the Debtor will serve this Notice and Emergency Motion, the attached Memorandum of Points and Authorities annexed hereto, and the Reiss Declaration on (a) the Office of the United States Trustee, (b) the creditors appearing on the list filed in accordance with Rule 1007(d) of the Federal Rules of Bankruptcy Procedure, (c) Suzuki Motor Corporation, (d) all of the Debtors automobile dealers; (e) all state motor vehicle distributor/dealer licensing authorities, and (f) parties that file with the Court and serve upon the Debtor requests for notice of all matters in accordance with Bankruptcy Rule 2002. To the extent necessary, the Debtor requests that the Court waive compliance with Local Bankruptcy Rule 90751(a)(5) and approve service (in addition to the means of service set forth in such Local Bankruptcy Rule) by overnight or electronic delivery. In the event the Court grants the relief requested by the Motion, the Debtor shall provide notice of the entry of the order granting such relief upon each of the foregoing parties and any other parties in interest as the Court directs. The Debtor submits that such notice is sufficient and that no other or further notice be given.
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PLEASE TAKE FURTHER NOTICE that any opposition or other response to this Emergency Motion must be filed with the Court and served on proposed counsel for the Debtor at the above address any time before the hearing or may be presented at the hearing on this Emergency Motion at the time and place set forth in the Notice of Hearing on Emergency Motions. Your failure to timely object may be deemed by the Court to constitute consent to the relief requested herein. WHEREFORE, the Debtor respectfully requests that the Court grant this Emergency Motion and enter an order (i) authorizing the Debtor to enter into postpetition Service and Parts Agreements; (ii) approving uniform procedures for the consensual rejection of Automobile Dealer Agreements and the Dealer Settlement Procedures, which procedures will provide for notice and an opportunity to object as set forth in the Memorandum of Points and Authorities; (iii) authorizing the Debtor to make distributions on account of Settling Auto Dealers allowed claims directly to SMC (or its designee) on account of SMC's (or its designee's) participation under the Participation Agreement; and (iv) granting the Debtor such other relief as the Court deems necessary and appropriate. Dated: November 5, 2012 PACHULSKI STANG ZIEHL & JONES LLP By: /s/ Debra I. Grassgreen Richard M. Pachulski James I. Stang Dean A. Ziehl Linda F. Cantor Debra I. Grassgreen Proposed Attorneys for Debtor and Debtor in Possession
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Dated: November 5, 2012
NELSON MULLINS RILEY & SCARBOROUGH LLP Steven A. McKelvey, Jr. (pro hac vice pending) Stephen G. Morrison (pro hac vice pending) Proposed Special Dealer Network Counsel for Debtor and Debtor in Possession
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Richard M. Pachulski (CA Bar No. 90073) James I. Stang (CA Bar No. 94435) Dean A. Ziehl (CA Bar No. 84529) Linda F. Cantor (CA Bar No. 153762) Debra I. Grassgreen (CA Bar No. 169978) PACHULSKI STANG ZIEHL & JONES LLP 10100 Santa Monica Blvd., Suite 1300 Los Angeles, CA 90067-4114 Telephone: 310/277-6910 Facsimile: 310/201-0760 E-mail: rpachulski@pszjlaw.com jstang@pszjlaw.com dziehl@pszjlaw.com lcantor@pszjlaw.com dgrassgreen@pszjlaw.com Proposed Attorneys for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re: American Suzuki Motor Corporation,1 Debtor. Case No.: 12-_____ (___) Chapter 11 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF EMERGENCY MOTION FOR ORDER (I) AUTHORIZING DEBTOR TO ENTER INTO SERVICE AND PARTS AGREEMENTS WITH AUTOMOBILE DEALERS; (II) APPROVING UNIFORM PROCEDURES FOR CONSENSUAL REJECTION OF PREPETITION AGREEMENTS AND RESOLUTION OF CLAIMS AND (III) GRANTING RELATED RELIEF
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I. BACKGROUND ............................................................................................................................... 1 A. Jurisdiction and Venue .............................................................................................................. 1 B. General Background ................................................................................................................. 1 II. SERVICE AND PARTS AGREEMENT AND DEALER CLAIM SETTLEMENT PROCEDURES ................................................................................................................................ 3 A. B. C. D. Letter Agreement Key Terms ................................................................................................... 7 Service and Parts Agreement Key Terms ................................................................................. 8 Participation Agreement Key Terms ........................................................................................ 8 Proposed Dealer Settlement Procedures ................................................................................... 9
III. RELIEF REQUESTED................................................................................................................. 11 IV. ARGUMENT................................................................................................................................ 12 A. Entering Into the Letter Agreement and Service and Parts Agreement Described Herein Represents a Reasoned Exercise of the Debtors Business Judgment .................................... 13 B. Entry Into the Letter Agreements and Service and Parts Agreements Is In the Best Interests of the Estate............................................................................................................................. 14 (1) (2) (3) (4) Probability of success in the litigation; ........................................................................... 15 Difficulties, if any, to be encountered in the matter of collection; ................................. 15 Complexity of litigation involved and the expense, inconvenience, and delay; and ...... 15 Paramount interest of creditors and a proper deference to their reasonable views. ........ 15
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C. The Rejection of the Automobile Dealership Agreements Is Within the Debtors Sound Business Judgment .................................................................................................................. 16 D. Additional Authority Exists to Establish the Dealer Settlement Procedures .......................... 18 V. CONCLUSION .............................................................................................................................. 19
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Cases CAM/RPC Electronics v. Robertson (In re MGS Marketing), 111 B.R. 264, 267 (BAP 9th Cir. 1990) ......................................................................................... 15 Commercial Fin. Ltd. v. Haw. Dimensions, Inc. (In re Haw. Dimensions, Inc.), 47 B.R. 425, 427 (Bankr. D. Haw. 1985) ....................................................................................... 17 Cosoff v. Rodman (In re W.T. Grant & Co.), 699 F.2d 599, 608 (2d Cir. 1983) ................................ 15 In re Buckhead America Corp. 180 B.R. 83 (D. Del. 1995) ............................................................................................................. 16 In re Calpine Corp., Case No. 05-60200 (Bankr. S.D.N.Y. Aug. 15, 2006) ...................................... 16 In re Carla Leather, Inc., 44 B.R. 457, 465 (Bankr. S.D.N.Y. 1984), affd, 50 B.R. 764 (S.D.N.Y. 1985) ........................... 15 In re Chi-Feng Huang, 23 B.R. 798, 800 (B.A.P. 9th Cir. 1982) ........................................................................................ 17 In re Delta Airlines, Inc., Case No. 05-17923 (S.D.N.Y. Oct. 17, 2005) ........................................... 16 In re First Wellington Canyon Assocs., 1989 WL 106838, at *3 (N.D. Ill. Sept. 8, 1989) ........................................................................... 17 In re Friedmans Inc., 336 B.R. 891, 895 (Bankr. S.D. Ga. 2005) ..................................................................................... 13 In re Pacific Gas & Elec., 304 B.R. 395, 416-17 (Bankr. N.D. Cal. 2004) .............................................................................. 15 In re Phoenix Steel Corp., 82 B.R. 334, 335-36 (Bankr. D. Del. 1987) .................................................................................... 13 In re Taylor, 913 F.2d 102 (3rd Cir. 1990) .......................................................................................................... 16 In re Tom Stimus Chrysler- Plymouth, Inc., 134 B.R. 676, 679 (Bankr. M.D. Fla. 1991) ................. 18 In re Toms Foods, Inc., 2005 WL 3022022, *2 (Bankr. M.D. Ga. 2005) ............................................................................. 13 In re TOUSA Inc., et al., Case No. 08-10928-JKO (Bankr. S.D. Fla. Feb. 18, 2009 ......................... 16 In re Tower Automotive, Inc., Case No. 05- 10578 (S.D.N.Y. Mar. 14, 2005) .................................. 16 In re UAL Corp., Case No. 02-48191 (N.D. Ill. Dec. 9, 2002) ........................................................... 16 In re WATTSHealth Foundation, Inc. d/b/a UHP Healthcare, Case No. 05-22627-TD (Bankr. C.D. Cal., Los Angeles Division, October 24, 2006) .............................................................................. 16 i
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Lubrizol Enters. v. Richmond Metal Finishes, 756 F.2d 1043, 1047 (4th Cir. 1980), cert. denied, 475 U.S. 1057 (1986) ............................................................................................................................. 17 NLRB v. Bildisco (In re Bildisco), 682 F.2d 72, 79 (3rd Cir. 1982) ...................................................................................................... 16 Northview Motors, Inc. v. Chrysler Motors Corp., 186 F.3d 346, 350-51 (3d Cir. 1999) .............................................................................................. 13 Old Carco LLC, 406 B.R. 180 (Bankr. S.D.N.Y. 2009) ............................................................................................ 17 Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968) ................................................................................................................ 14 See Martin v. Kane (In re A&C Properties), 784 F.2d 1377, 1381 (9th Cir. 1986) ........................... 14 Stewart Title Guar. Co. v. Old Republic Natl Title Co., 83 F.3d 735, 741 (5th Cir. 1996) (citing In re Muerexco Petroleum, Inc., 15 F.3d 60, 62 (5th Cir. 1994)) .............................................................................................................................................. 16 Summit Land Co. v. Allen (In re Summit Land Co.), 13 B.R. 310, 315 (Bankr. D. Utah 1981) ........................................................................................ 17 Volkswagen of Am., Inc. v. Dan Hixson Chevrolet Co. (In re Dan Hixson Chevrolet Co.), 12 B.R. 917, 923 (Bankr. N.D. Texas 1981) .................................................................................. 18 Wrenn v. American Cast Iron Pipe Co. (In re Wrenn), 40 F.3d 1162, 1166 (11th Cir. 1994) .............................................................................................. 18 Statutes 11 U.S.C. 363(b) .............................................................................................................................. 13 11 U.S.C. 365(a) .............................................................................................................................. 16 11 U.S.C. 502(a) .............................................................................................................................. 18 Rules Fed. R. Bankr. P. 9019(a) ................................................................................................................... 13
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American Suzuki Motor Corporation, the above-captioned debtor and debtor in possession (the Debtor), hereby files this Memorandum of Points and Authorities in support of Emergency Motion For Order (I) Authorizing Debtor To Enter Into Service And Parts Agreements With Automobile Debtors; (Ii) Approving Uniform Procedures For Consensual Rejection Of PrePetition Agreements And Resolution Of Claims And (Iii) Granting Related Relief and respectively represent as follows: I. BACKGROUND A. Jurisdiction and Venue The Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue is proper pursuant to 28 U.S.C. 1408 and 1409. B. General Background On the date hereof (the Petition Date), the Debtor filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code). The Debtor continues to operate and manage its affairs as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner, or committee has been appointed in this chapter 11 case. The Debtor was established in 1986 as the sole distributor in the continental United States of Suzuki automobiles, motorcycles, all-terrain vehicles, and marine outboard engines (the Suzuki Products). Suzuki Motor Corporation (SMC), the 100% interest holder in the Debtor, manufacturers substantially all of the Suzuki Products1 and is not a debtor in this or any other insolvency proceeding. As of the Petition Date, the Debtor has approximately 295 employees across three divisions: automotive (the Automotive Division), motorcycles and all-terrain vehicles (the Motorcycles/ATV Division), and outboard marine motors and related products (the Marine Division).
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The ATVs are manufactured by an 80% owned affiliate of the Debtor. An overview of the Suzuki Products manufactured by SMC, its affiliates, and certain unaffiliated entities is included in the Declaration of M. Freddie Reiss, Proposed Chief Restructuring Officer, in Support of Emergency First Day Motions.
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In the operation of its business, the Debtor purchases Suzuki Products from SMC and certain other non-debtor affiliates. In turn, the Debtor wholesales virtually its entire inventory through a network of independently owned and unaffiliated dealerships located throughout the continental United States. The dealers then market and sell the Suzuki Products to retail customers. As of the Petition Date, there are approximately 220 automotive dealerships, over 900 motorcycle/ATV dealerships, and over 780 outboard marine dealerships. Through dealers, the Debtor also sells a portion of its automotive inventory (less than 10%) to car rental companies and others (less than 2%) that lease the vehicles to retail customers. The Debtor also purchases the majority of its automotive parts from SMC and certain unaffiliated companies and resells them to the automotive dealers and authorized warranty service providers. The Debtor determined that its Automotive Division is facing and will continue to face a number of serious challenges in the highly regulated and competitive automotive industry in the continental U.S. market. The challenges include unfavorable foreign exchange rates, disproportionally high and increasing costs associated with meeting more stringent state and federal automotive regulatory requirements unique to the continental U.S. market, low sales volumes, a limited number of models in its line-up, and existing and potential litigation costs. The Debtor has exhausted all available means to reduce the cost of operating the Automotive Division for it to operate profitably. Accordingly, the Debtor determined that the best way to preserve and enhance the value of its overall business is to wind down new sales of the Automotive Division in the continental U.S. and realign its business focus on the long-term growth of its Motorcycles/ATV and Marine Divisions. Contemporaneous with the filing of this case, the Debtor filed a plan of reorganization (the Plan). Under the proposed Plan, the Motorcycles/ATV and Marine Divisions will remain largely unaffected including the warranties associated with such products. As part of its restructuring, NounCo, Inc., a wholly owned subsidiary of SMC, will purchase the Motorcycles/ATV and Marine Divisions and the parts and service components of the Automotive Division. The restructured Automotive Division intends to honor automotive warranties and authorize the sale of genuine
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Suzuki automotive parts and services to retail customers through a network of parts and service only dealerships that will provide warranty services. The Debtors Motorcycles/ATV Division is strong and competitively positioned in its market, allowing for long-term growth as economic conditions improve. Similarly, the Marine Division has remained competitive during the recent challenging economic times and the Debtor is working to further build its market share in the marine industry through continued investment in new product development and resuming large-scale marketing events focused on attracting new marine customers. The strategy embodied in the proposed Plan returns the business to its roots in the U.S. market, which began with motorcycles, and is intended to position the overall business for success in the continental U.S. for the benefit of all parties in interest. The Suzuki name is recognized around the world as a brand of quality products that offer reliability and originality. SMC has informed the Debtor that it continues to invest in its operations, improve its overall performance worldwide, and remains committed to manufacturing Suzuki Products for customers around the world. SMCs manufacturing and world-wide distribution of Suzuki automobiles will continue despite the Debtors wind down of the continental U.S. Automotive Division. Additional factual background regarding the Debtor, including its current and historical business operations and the events precipitating its chapter 11 filing, is set forth in detail in the Declaration of M. Freddie Reiss, Proposed Chief Restructuring Officer, in Support of Emergency First Day Motions (the Reiss Declaration) filed contemporaneously with this Motion and incorporated herein by reference. II. SERVICE AND PARTS AGREEMENT AND DEALER CLAIM SETTLEMENT PROCEDURES The Debtor will file the Plan that incorporates its business decision to orderly wind down new automobile sales through its Automotive Division. The Plan implements a private sale of the Debtors Motorcycles/ATV and Marine Divisions, as well as its automobile parts and service
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operations, to a proposed purchaser (the Purchaser) that is to be designated by SMC as a going concern.2 The wind down of the Automotive Division entails, among other things, the rejection of all Automobile Dealer Agreements because the Automobile Dealer Agreements are premised on the Debtors continuing sale of new automobiles beyond those in inventory. Since the Debtor is no longer going to sell new automobiles after the sale of existing inventory, the Automobile Dealer Agreements are no longer necessary. The Debtor, however, wants to ensure that the tens of thousands of customers who still use Suzuki vehicles will have access to service and enjoy the benefits of warranty agreements provided to them. Thus, the Debtor needs to enter into new agreements providing for the continued provision of service and parts by dealers. The Debtor recognizes that dealers may suffer economic hardship as a result of the rejection of the Automobile Dealer Agreements and that dealers may assert large damages claims. Litigation over damage claims could be lengthy and time consuming and does not address the dealers' potential need for immediate liquidity to be able to ensure public safety by providing service and parts. The Debtor, acting alone, is in no position to pay anything immediately to these dealers to settle their damages claims. Working in cooperation with SMC, the Debtor has formulated the proposed mechanism described in this Emergency Motion and this Memorandum which, upon implementation, will help address the hardship faced by dealers and help the Debtor to obtain agreements by dealers to support continued service and provision of parts for Suzuki automobiles. The Debtor does not, by this Emergency Motion, seek to force any automobile dealer to agree to anything. Rather, the Debtor only seeks authority to proceed with dealers who voluntarily choose to participate. Likewise, the Debtor is not trying to cut off the right of any creditor to object to the rejection of Automobile Dealer Agreements or the allowance of any claims. In broad outline, the Debtor proposes to enter into the following agreements with participating dealers (Settling Auto Dealers): (i) the applicable auto dealer and the Debtor will enter into a postpetition service and parts agreement (the Service and Parts Agreement) authorizing the dealer to continue to provide service and warranty work and to sell-off its inventory
The Debtor informed its Automotive Division dealers of the filing of the chapter 11 case by letter. A true and correct copy of the letter is attached hereto as Exhibit A.
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of new automobiles in the ordinary course of business an arrangement that will allow the continued provision of vital services and parts to customers and promote public safety; (ii) the applicable Automobile Dealer Agreements agreements that, as noted above, simply are irrelevant under the present circumstances--will be rejected, subject to notice to creditors and an opportunity to object and (iii) the claim held by such Settling Auto Dealer (excluding the prepetition claims for warranty services, Incentive Programs and holdback (the Excluded Claims)) will be liquidated, subject to notice to creditors and an opportunity to objectwhich in turn will avoid expensive and time consuming litigation over claims asserted by dealers (the agreements described in (ii) and (iii) will be embodied in a letter agreement, (the "Letter Agreement")). Each Settling Auto Dealer will agree to the assignment of the Letter Agreement and the Service and Parts Agreement to the purchaser of substantially all of the assets of the Debtor, and Purchaser already has agreed to accept an assignment of these agreements effective upon the closing of a sale of substantially all of the Debtors assets to Purchaser.3 The Debtor recognizes the potential burden upon consumers and current Suzuki automobile owners, as well as the economic hardships to the dealers arising from, inter alia, the rejection of the Automobile Dealer Agreements and the delay in payments to creditors inherent in the chapter 11 process. In consideration thereof, and in exchange for releases by the Settling Auto Dealers of claims against SMC and related parties specifically identified in the Letter Agreement and the Settling Auto Dealers' agreement to permit SMC (or its designee) to recover its participation out of the distributions to the Settling Auto Dealers under the Bankruptcy Code on account of the allowed claims that Settling Auto Dealers hold against the Debtor, SMC (or its designee) has agreed to pay Settling Auto Dealers a certain amount of the consensually liquidated claim (the Settling Dealer Liquidated Claim) promptly after the execution of the relevant agreements. The payment by SMC (or its designee) to the dealers is not conditioned upon approval by the Court of rejection of the Automobile Dealer Agreements or allowance of the stipulated claim. In substance, SMC (or its
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There are approximately 35 existing service/parts only dealerships, which do not sell automobiles. All will be offered the new Service and Parts Agreement in place of their existing one. These dealers are not the subject of the proposed Dealer Settlement Procedures and will not be affected by the offers being made hereunder .
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designee) will make the upfront payment to Settling Auto Dealers, and then look to the estate to recover that amount from the distribution that the Settling Auto Dealer receives from the estate. In this fashion, money is advanced to the Settling Auto Dealers from a source other than the estate, while the estate and creditors generally benefit from the favorable transactions the Debtor is entering into with Settling Auto Dealers, including the Service and Parts Agreement, consensual rejection of the irrelevant Automobile Dealer Agreements, and the consensual liquidation of the dealers claims (excluding the Excluded Claims). Without the upfront payment by SMC (or its designee), the Debtor believes that automobile dealers would not be likely to proceed with the proposed transactions. Specifically, SMC (or its designee) will provide a cash payment (the Participation Payment) equal to approximately 50% of the total Settling Dealer Liquidated Claim of Settling Auto Dealers who execute and return the agreements contemplated in this Emergency Motion and this Memorandum of Points and Authorities by no later than November 30, 2012, and solely a subordination of SMCs prepetition secured claims to the Settling Dealer Liquidated Claim (i.e. no Participation Payment) for Settling Auto Dealers who execute and return such agreements after November 30, 2012, but before December 28, 2012. The Participation Payment is to be paid by SMC (or its designee) as soon as practicable after the Debtors receipt of an executed Letter Agreement, Service and Parts Agreement and the Participation Payment (the Settlement Date). In exchange for the payment and other consideration set forth in the Participation Agreement, SMC (or its designee) will be entitled to receive a distribution payable from the estate, whether under a plan of reorganization or otherwise, on account of the Settling Dealer Liquidated Claim of the applicable Settling Auto Dealer. SMC (or its designee) will receive the distribution after the Settling Auto Dealer receives the difference between the Settling Dealer Liquidated Claim and the Participation Payment. The amount of the distribution will not exceed the Participation Agreement. Pursuant to the Participation Agreement, Settling Auto Dealers will instruct the Debtor to pay the distribution to SMC (or its designee) directly. By this Emergency Motion, the Debtor requests authority to make such payment directly to SMC (or its designee).
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This Emergency Motion contemplates that there will be three (3) agreements documenting the relief sought herein: (a) the Letter Agreement; (b) the Service and Parts Agreement; and (c) the Participation Agreement. Upon approval of this Emergency Motion, the Debtor will send the Auto Dealers the Letter Agreement, the Service and Parts Agreement and the Participation Agreement and offering them the opportunity to enter into the agreements with the Debtor. The following is a summary of each of the agreements and is qualified by the terms of the agreements themselves. A. Letter Agreement Key Terms The Letter Agreement is a three party settlement agreement among the Debtor, SMC and the Settling Auto Dealer. The Letter Agreement will be substantially in the form attached hereto as Exhibit B. The key terms of the Letter Agreement are: Subject to Bankruptcy Court approval in accordance with the procedures set forth herein, rejection by the Debtor of the Automobile Dealer Agreement (including waiver of all termination rights) retroactively effective upon Settling Auto Dealers execution of the Letter Agreement, a Service and Parts Agreement and the Participation Agreement (the Rejection Effective Date); Assignment of any executed Service and Parts Agreement to Purchaser upon the closing of a sale of substantially all of the Debtors assets to Purchaser (pursuant to a motion or under the Plan); Liquidation of the Settling Auto Dealers claims (excluding the Excluded Claims) for all purposes associated with the case, the Plan (including voting of the claim by the Settling Auto Dealer), and distribution under the Plan, with the Settling Dealer Liquidated Claim being calculated by considering the following factors, to the extent relevant to the component relating to a dealers specific rejection claim: rent/facilities, exclusivity, sales volume, depreciated tools, equipment and signage value, as well as current goodwill; and Continuation as an authorized Suzuki Automotive Division dealer to sell remaining inventory in the dealers possession and any additional automobiles that may be
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offered to and accepted by the dealer for a period of time specified in the Letter Agreement. B. Service and Parts Agreement Key Terms The Service and Parts Agreement is a two party settlement agreement between the Debtor and the Settling Auto Dealer. The Service and Parts Agreement will be substantially in the form attached hereto as Exhibit C. The key terms of the Service and Parts Agreement are: Agreement for Debtor and/or its assignee to allow the Settling Auto Dealer to continue to provide authorized warranty and non-warranty service, as well as to sell genuine Suzuki brand parts until March 31, 2013. C. Participation Agreement Key Terms The Participation Agreement is a two party settlement agreement between SMC (or its designee) and the Settling Auto Dealer. The Participation Agreement will be substantially in the form attached hereto as Exhibit D. The key terms of Participation Agreement are: Settling Auto Dealer agrees to provide a general release to SMC and other related parties (the Settling Auto Dealer Release) upon the Settlement Date and payment of the Participation Payment. The Settling Auto Dealer Release will cover any and all claims, known or unknown, accruing prior to the Settlement Date, against SMC, all of its subsidiaries and affiliates (other than the Debtor) and all of SMCs and its subsidiaries and affiliates present and former officers, directors, managers, employees, professionals, advisors and other agents (collectively, Agents) and all of the Debtors Agents. SMC (or its designee) will pay a Participation Payment to each Settling Auto Dealer equal to approximately 50% of the Settling Dealer Liquidated Claim if the Settlement Date is November 30, 2012 or earlier, or solely subordination of SMCs prepetition secured claims (i.e. no Participation Payment) if the Settlement Date is after November 30, 2012, but before December 28, 2012, with such payment being made on or as soon as practicable after the Settlement Date.
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In exchange for the payment and other consideration set forth in the Participation Agreement, SMC (or its designee) will be entitled to receive a distribution payable from the estate, whether under a plan of reorganization or otherwise, on account of the Settling Dealer Liquidated Claim of the applicable Settling Auto Dealer, SMC (or its designee) will receive the distribution after the Settling Auto Dealer receives the difference between the Settling Dealer Liquidated Claim and the Participation Payment. The amount of the distribution will not exceed the Participation Agreement. Pursuant to the Participation Agreement, Settling Auto Dealers will instruct the Debtor to pay the distribution to SMC (or its designee) directly. By this Emergency Motion, the Debtor requests authority to make such payment directly to SMC (or its designee).
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Settling Auto Dealers will receive the voluntary agreement from SMC to subordinate its pre-bankruptcy secured claims to the Settling Dealer Liquidated Claim pursuant to the Plan.
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If for any reason the Service and Parts Agreement is not assigned by the Debtor to Purchaser (or another purchaser of substantially all of the Debtor's assets) in connection with the closing of the sale of the Debtor's assets, then at the request of Purchaser (or another purchaser of substantially all of the Debtor's asserts), the applicable dealer will promptly enter into the Service and Parts Agreement with Purchaser (or another purchaser of substantially all of the Debtor's assets).
Proposed Dealer Settlement Procedures The Debtor seeks approval of the following Dealer Settlement Procedures with respect to the
rejection of the Automobile Dealer Agreements and claim allowances contemplated under the Dealer Settlement Agreement: Upon approval of this Emergency Motion, the Debtor and SMC, respectively, will contact each of the Automobile Dealers for the purpose of entering into the foregoing agreements as it relates to them respectively. Each such Automobile Dealer will have
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been previously served with a copy of this Emergency Motion and all exhibits thereto. If the Debtor, SMC and the Settling Auto Dealer enter into the applicable agreements, the Debtor will file a Notice of Proposed Rejection and Settling Dealer Liquidated Claim Allowance substantially in the form attached hereto as Exhibit E. The Debtor will serve the Notice of Proposed Rejection and Settling Dealer Liquidated Claim Allowance upon: (i) the Settling Auto Dealer and counsel, if applicable; (ii) the Office of the United States Trustee; (iii) the creditors appearing on the list filed in accordance with Fed. R. Bankr. P. 1007(d) by the Debtor unless and until the Committee is appointed, then in that event, to counsel of the Committee; (iii) SMC; (iv) all state motor vehicle distributor/dealer licensing authorities where the Settling Auto Dealer operates, and (v) parties that file with the Court and serve upon the Debtor requests for notice of all matters in accordance with Bankruptcy Rule 2002 (collectively, the Notice Parties). If no objection to the Notice of Notice of Proposed Rejection and Settling Dealer Liquidated Claim Allowance is received in writing by counsel for the Debtor within 7 days of the date of service of the Notice of Notice of Proposed Rejection and Settling Dealer Liquidated Claim Allowance, then Debtor will lodge an order substantially in the form of Exhibit F providing that: (a) the applicable prepetition Automobile Dealer Agreement is rejected retroactively to the Rejection Effective Date; the Settling Dealer Liquidated Claim shall be allowed at the amount set forth in the Notice of Notice of Proposed Rejection and Settling Dealer Liquidated Claim Allowance or all purposes in connection with this case, including voting and distributions under the Plan. After payment of the Participation Payment, SMC (or its designee) shall file a notice of the payment of the Participation Payment substantially in the form of Exhibit G.
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Doc 3 Filed 11/05/12 Entered 11/05/12 17:33:12 Main Document Page 19 of 137 III. RELIEF REQUESTED
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By this Emergency Motion, the Debtor seeks entry of a proposed form of order substantially in the form annexed hereto as Exhibit H for authority to enter into the Service and Parts Agreement and the Dealer Settlement Agreement in its sole discretion and approving the Dealer Settlement Procedures as outlined above. Subject to the rights of parties to notice and opportunity to object, this Emergency Motion requests that the Court merely ratify a fully consensual process between the Debtor, the Automobile Dealer, and SMC (or its designee). It does not seek to bind any Automobile Dealers who do not agree to enter into any of the agreements. Given that the Debtor is attempting to wind-down over 220 automobile dealers in a short period of time, and at the same time protect the interests of the public, consumers, dealers and the Debtor, the Debtor must begin communicating with the Automobile Dealers and resolving the ongoing terms of their business relationship as soon as possible. In addition to aiding its reorganization efforts, the Dealer Settlement Procedures promote judicial economy. It would be expensive, cumbersome, and highly inefficient to require the Debtor to hold individual hearings and file individual motions with respect to each proposed settlement with an Automobile Dealer. Specifically, if the Dealer Settlement Procedures are approved, they will alleviate the potential burden on this Courts calendar which could result if the Debtor was required to file a motion and attend a hearing to seek approval of each and every individual settlement. Moreover, if the Debtor is authorized to settle dealer claims as set forth herein, which again, is only a confirmation of a fully consensual claim stipulation and agreements between the parties, the Debtor would be spared the expense, delay, and uncertainty that would otherwise be associated with litigating these claims. The Dealer Settlement Procedures will: (a) facilitate an uninterrupted transition of critical warranty and service repair work and parts for hundreds of thousands of Suzuki automobile owners and thereby promote public safety; (b) provide greater certainty in administering the claims objection process by providing an overall framework for a consensual resolution of what would
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otherwise be contingent and disputed damages claims; (c) provide a mechanism for the agreed rejection of Automobile Dealer Agreements, while providing appropriate notice to parties in interest and an opportunity for them to object; (d) ease the financial burden of the chapter 11 process and rejection of the Automobile Dealer Agreement by providing Settling Auto Dealers with a means to receive cash upon the Settlement Date; (e) establish an efficient mechanism to settle and allow Claims, while providing appropriate notice to parties in interest and an opportunity for them to object, and (f) help minimize the expense, delay and uncertainty in the claims objection and settlement process, which, in turn, will help conserve the resources of the Court and the Debtors estate. As such, the Debtor submits that the proposed Dealer Settlement Procedures will inure to the benefit of all parties in interest and that this Court should utilize its authority, pursuant to sections 105(a), 363(b), 365(a) of the Bankruptcy Code and Bankruptcy Rules 3007 and 9019, to enter an order approving the Dealer Settlement Procedures; authorizing the Debtor to enter into the Letter Agreement and Service and Parts Agreements and authorizing the Debtor to make direct payments to SMC or its designee on account of its participation interest in the distribution payable on account of the allowed Settling Dealer Liquidated Damage Claim. IV. ARGUMENT Approval of this Emergency Motion is critical to the Debtors plan confirmation efforts and the Debtors efforts to preserve the going concern value of its estate. In the Debtors experience, litigating the damages claims of terminated dealers is time consuming, factually intensive, and very costly. The proposed agreements and procedures provide for not only the consensual rejection and liquidation of claims on an expeditious basis, but also will allow for the uninterrupted warranty and service repair work and parts for the benefit and safety of hundreds of thousands of consumers and the public. The Debtor also will avert potentially thousands of consumer claims if such warranty and repair work were discontinued.
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A.
Entering Into the Letter Agreement and Service and Parts Agreement Described
Herein Represents a Reasoned Exercise of the Debtors Business Judgment Section 363(b) of the Bankruptcy Code permits a debtor to use, sell or lease property of the estate outside the ordinary course of business after notice and a hearing. 11 U.S.C. 363(b). Additionally, Bankruptcy Rule 9019(a) permits a bankruptcy court to approve a compromise or settlement after notice and a hearing. Fed. R. Bankr. P. 9019(a). In many instances, compromises or settlements under Bankruptcy Rule 9019 are considered to be a use or sale of property of the estate outside the ordinary course of business under section 363(b) of the Bankruptcy Code. See, e.g., Northview Motors, Inc. v. Chrysler Motors Corp., 186 F.3d 346, 350-51 (3d Cir. 1999) (noting that settlements and compromises are generally considered to be a sale of property of the estate). In the ordinary course of its business prepetition, the Debtor terminated automobile dealer relationships and entered into service only agreements. Thus, the Debtor submits that entry into service only agreements or agreements similar to the Service and Parts Agreement is consistent with its prepetition business practices and thus, is within the ordinary course of business. Because the Debtors reorganization effort necessarily includes the rejection of the prepetition Auto Dealer Agreements, this Emergency Motion also involves the rejection of executory contracts, the settlement of damage claims and an agreement between the Debtors shareholder (or its designee) and the Settling Auto Dealers for participation in the distributions on that claim, the Debtor requests authority for the Debtor to enter into such agreements in an abundance of caution under the business judgment standard. See, e.g., In re Friedmans Inc., 336 B.R. 891, 895 (Bankr. S.D. Ga. 2005) (Courts review a debtors use of estate property outside of the ordinary course of business pursuant to a debtors demonstration of sound business judgment.); In re Toms Foods, Inc., 2005 WL 3022022, *2 (Bankr. M.D. Ga. 2005) (In determining whether to approve a proposed sale under section 363, courts generally apply standards that . . . represent essentially a business judgment test.); In re Phoenix Steel Corp., 82 B.R. 334, 335-36 (Bankr. D. Del. 1987) (stating that judicial approval under section 363 of the Bankruptcy Code requires a showing that the proposed action is supported by, among other things, a good business reason).
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Here, the Debtor has adequate funding through the DIP Financing to fund its administrative obligations under the Service and Parts Agreements. Further, the Debtor has procured the agreement of Purchaser to accept assignment of the Service and Parts Agreements at the closing of the sale to Purchaser of certain of the Debtors assets. Thus, the Debtor submits that entry into the Service and Parts Agreements and Letter Agreements is within its sound business judgment, consistent with its business decision to orderly wind-down its Automotive Division, in aid of its plan confirmation effort, and essential to preserving the Debtors value and ability to sell itself as a going concern. B. Entry Into the Letter Agreements and Service and Parts Agreements Is In the Best
Interests of the Estate The Debtor seeks authority to enter into the Letter Agreements and Service and Parts Agreements described herein and to efficiently and economically settle the numerous damages claims filed against the Debtors estate without the necessity of obtaining this Courts approval for each settlement by motion and hearing. In proposing settlements with respect to these claims, the Debtor will remain guided by the factors established by relevant case law under Bankruptcy Rule 9019 regarding the reasonableness of such settlements and the standard for approval of the use, sale or lease of property of the estate outside the ordinary course of business. To the extent that settling a claim is viewed as a settlement of litigation, the bankruptcy courts central inquiry is whether the proposed settlement and the related use of estate assets are fair and equitable and are in the best interests of the estate. See, e.g., Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968) (noting that [c]ompromises are a normal part of the process of reorganization, and holding that in determining whether a settlement is in the best interests of the estate, the court considers whether the settlement is fair and equitable) (citation omitted). The Ninth Circuit has held, consistent with TMT Trailer, that in deciding whether a proposed settlement agreement meets the requisite standards of fairness, equity, and reasonableness, the court should consider the paramount interest of creditors and offer a proper deference to their reasonable views. See Martin v. Kane (In re A&C Properties), 784 F.2d 1377, 1381 (9th Cir. 1986); accord
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CAM/RPC Electronics v. Robertson (In re MGS Marketing), 111 B.R. 264, 267 (BAP 9th Cir. 1990). A courts role in approving any settlement under Rule 9019 is limited. In re Pacific Gas & Elec., 304 B.R. 395, 416-17 (Bankr. N.D. Cal. 2004). A court should not substitute its own judgment for the judgment of a trustee or the debtor. See In re Carla Leather, Inc., 44 B.R. 457, 465 (Bankr. S.D.N.Y. 1984), affd, 50 B.R. 764 (S.D.N.Y. 1985). Further, a court, in reviewing a proposed settlement, is not to decide the numerous questions of law and fact . . . but rather to canvass the issues and see whether the settlement falls below the lowest point in the range of reasonableness. Cosoff v. Rodman (In re W.T. Grant & Co.), 699 F.2d 599, 608 (2d Cir. 1983); Pacific Gas & Elec., 304 B.R. at 417 (this court need only find that the settlement was negotiated in good faith and is reasonable, fair and equitable). In A&C Properties, the Ninth Circuit set forth four factors courts must consider in determining whether a settlement agreement is fair, reasonable and adequate: (1) (2) (3) Probability of success in the litigation; Difficulties, if any, to be encountered in the matter of collection; Complexity of litigation involved and the expense, inconvenience, and delay; and (4) Paramount interest of creditors and a proper deference to their reasonable views. A&C Properties, 784 F.2d at 1381. The Debtor submits that the claim settlements embodied in the Letter Agreements and Service and Parts Agreements would meet the above articulated standards. Specifically, no claim settlement will be agreed unless there is an agreement between the Debtor and the Settling Auto Dealer upon the Settling Dealer Liquidated Claim based on the judgment of the Debtor upon consideration of (a) the probability of success if the claim is litigated or arbitrated; (b) the complexity, expense and likely duration of any litigation or arbitration with respect to such claim; (c) other factors relevant to assessing the wisdom of the settlement; and (d) the fairness of the settlement
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vis--vis the Debtors estate and creditors. In accordance with the procedures set forth herein, all claim settlements will be subject to notice and opportunity to object. Settlement procedures designed to streamline the court approval process, similar to those proposed above, have been approved in other large chapter 11 cases. See, e.g., In re WATTSHealth Foundation, Inc. d/b/a UHP Healthcare, Case No. 05-22627-TD (Bankr. C.D. Cal., Los Angeles Division, October 24, 2006); In re TOUSA Inc., et al., Case No. 08-10928-JKO (Bankr. S.D. Fla. Feb. 18, 2009; In re Calpine Corp., Case No. 05-60200 (Bankr. S.D.N.Y. Aug. 15, 2006); In re Delta Airlines, Inc., Case No. 05-17923 (S.D.N.Y. Oct. 17, 2005); In re Tower Automotive, Inc., Case No. 05- 10578 (S.D.N.Y. Mar. 14, 2005); In re UAL Corp., Case No. 02-48191 (N.D. Ill. Dec. 9, 2002). The Debtor submits that the proposed Dealer Settlement Procedures will reduce the administrative burden on the estate of having to seek approval of each settlement on an individual basis. Accordingly, because the relief sought herein benefits the estate without any prejudice to creditors, it satisfies the business judgment test under section 363(b) of the Bankruptcy Code and Bankruptcy Rule 9019, and should be granted. C. The Rejection of the Automobile Dealership Agreements Is Within the Debtors Sound
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Business Judgment Section 365(a) of the Bankruptcy Code provides that a debtor in possession, subject to the courts approval, may assume or reject any executory contract or unexpired lease of the debtor. 11 U.S.C. 365(a). This provision allows a debtor in possession to relieve the bankruptcy estate of burdensome agreements which have not been completely performed. Stewart Title Guar. Co. v. Old Republic Natl Title Co., 83 F.3d 735, 741 (5th Cir. 1996) (citing In re Muerexco Petroleum, Inc., 15 F.3d 60, 62 (5th Cir. 1994)). The standard applied to determine whether the rejection of an executory contract should be authorized is the business judgment standard. See In re Taylor, 913 F.2d 102 (3rd Cir. 1990); NLRB v. Bildisco (In re Bildisco), 682 F.2d 72, 79 (3rd Cir. 1982) (The usual test for rejection of an executory contract is simply whether rejection would benefit the estate, the business judgment test); In re Buckhead America Corp. 180 B.R. 83 (D. Del. 1995).
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As the Bankruptcy Appellate Panel for the Ninth Circuit held in In re Chi-Feng Huang, 23 B.R. 798, 800 (B.A.P. 9th Cir. 1982), the Debtor may exercise its business judgment to reject executory contracts that are no longer useful or necessary to the bankruptcy estate. The standard for rejection is satisfied when a debtor has made a business determination that rejection will benefit the estate. See Commercial Fin. Ltd. v. Haw. Dimensions, Inc. (In re Haw. Dimensions, Inc.), 47 B.R. 425, 427 (Bankr. D. Haw. 1985) ([U]nder the business judgment test, a court should approve a debtors proposed rejection if such rejection will benefit the estate.). The business judgment standard mandates that a court approve a debtors business decision unless the decision is in bad faith, or results from whim or caprice. See Lubrizol Enters. v. Richmond Metal Finishes, 756 F.2d 1043, 1047 (4th Cir. 1980), cert. denied, 475 U.S. 1057 (1986). In applying the business judgment standard, courts show great deference to the debtors decision to reject. See, e.g., In re First Wellington Canyon Assocs., 1989 WL 106838, at *3 (N.D. Ill. Sept. 8, 1989) (Under this test, the debtors business judgment on whether to reject an executory contract must be accorded deference unless shown that the bankrupts decision was taken in bad faith or in gross abuse of the bankrupts retained discretion.); Summit Land Co. v. Allen (In re Summit Land Co.), 13 B.R. 310, 315 (Bankr. D. Utah 1981) (noting that, absent extraordinary circumstances, court approval of a debtors decision to assume or reject an executory contract should be granted as a matter of course). Outside of bankruptcy, motor vehicle dealer laws regulating the relationship between distributors and dealers in the various states often place restrictions on the termination of dealership agreements and otherwise impose time-consuming, burdensome and expensive obligations upon distributors who seek to end the commercial relationship with an authorized dealer. By contrast, a chapter 11 debtor has a right (and in fact an obligation) under the Bankruptcy Code to either assume or reject its executory contracts, including dealer agreements. As such, these dealer laws are preempted by the Bankruptcy Code to the extent that they purport to interfere with or undermine the Debtor's ability to reject executory contracts or unexpired leases, including the proposed rejection of the Automobile Dealer Agreements. In re Old Carco LLC, 406 B.R. 180 (Bankr. S.D.N.Y. 2009)(holding that [D]ealer Statutes are preempted by sec. 365 with respect to rejection of the
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Rejected Agreements.); Volkswagen of Am., Inc. v. Dan Hixson Chevrolet Co. (In re Dan Hixson Chevrolet Co.), 12 B.R. 917, 923 (Bankr. N.D. Texas 1981) (holding that section 365 of the Bankruptcy Code preempted a Texas law requiring a "good cause" hearing if a dealer protests a manufacturer's attempted termination of a dealer agreement, because permitting the "good cause" proceeding to continue might frustrate the purposes of federal bankruptcy law); In re Tom Stimus Chrysler- Plymouth, Inc., 134 B.R. 676, 679 (Bankr. M.D. Fla. 1991) (holding that section 365 of the Bankruptcy Code governs the assumption or rejection of a contract, even if the agreement otherwise would have been terminated under Florida dealer laws). For all of the reasons set forth herein and in more detail in the Reiss Declaration, the Debtor is winding down its Automotive Division. Therefore, rejection of Automobile Dealer Agreements represents a sound exercise of the Debtors business judgment. Particularly, whereas here, the rejections are proposed to made consensually and in the context of concurrent entry into a postpetition agreement that will provide for the seamless transition of warranty and service work, there can be no question that the Debtors rejections as proposed in this Emergency Motion fall squarely within the Debtors exercise of its sound business judgment. D. Additional Authority Exists to Establish the Dealer Settlement Procedures Section 502(a) of the Bankruptcy Code provides that [a] claim or interest, proof of which is filed under section 501 of this title, is deemed allowed, unless a party in interest objects. 11 U.S.C. 502(a); see also Wrenn v. American Cast Iron Pipe Co. (In re Wrenn), 40 F.3d 1162, 1166 (11th Cir. 1994). Accordingly, all of the Claims in these cases must be reviewed for possible objection or resolution as part of the claims process. The Debtor seeks authority to establish the Dealer Settlement Procedures to (i) efficiently and economically liquidate and allow hundreds of dealers damages claims that would otherwise be asserted against the estate by the Debtors automobile dealers, (ii) provide a mechanism to allow Settling Auto Dealers to receive cash sooner rather than later from SMC (or its designee), (iii) enhance public safety by ensuring seamless service and parts, and (iv) avoid protracted and costly claim litigation which will burden the estate. The Debtor believes that the proposed Dealer
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Settlement Procedures constitute a cost-effective method of resolving claims, providing notice and opportunity to object to interested parties prior to rejection or allowance of claims, and maximizing the value of their estate. Indeed, given the number of automobile dealers (over 220), it would be expensive, cumbersome and highly inefficient for the Debtor to be required to file motions for rejections and claim allowances on a one-by-one basis. In that regard, the Dealer Settlement Procedures promote judicial efficiency by alleviating the potential burden on this Courts calendar which could result if the Debtors were required to file pleadings and conduct a hearing to seek approval of each and every individual Service and Parts Agreement. Moreover, if the Debtor is authorized to settle such claims as set forth herein, the Debtor and this estate would be spared the expense, delay and uncertainty that would otherwise be associated with litigating those claims. V. CONCLUSION Based upon the foregoing, the Debtor respectfully requests that the Court grant this Emergency Motion and enter an Order (i) authorizing, but not directing, the Debtor to enter into the Letter Agreements and Service and Parts Agreements described herein in its sole discretion; (ii) subject to notice and opportunity to object and Bankruptcy Court approval, authorizing retroactive rejection of Automobile Dealer Agreements of the Rejection Effective Date; (iii) subject to notice and opportunity to object and Bankruptcy Court approval, allowing dealer claims in the stipulated amount as set forth in the Letter Agreements for all purposes associated with this case including the Plan; (iv) authorizing distributions by the Debtor on account of the Participation Payment; [Remainder of page intentionally blank]
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(v) approving the Dealer Settlement Procedures; and (vi) granting such other relief to the Debtor as the Court deems necessary and appropriate. Dated: November 5, 2012 PACHULSKI STANG ZIEHL & JONES LLP By: /s/ Debra I. Grassgreen Richard M. Pachulski James I. Stang Dean A. Ziehl Linda F. Cantor Debra I. Grassgreen [Proposed] Attorneys for Debtor and Debtor in Possession Dated: November 5, 2012 NELSON MULLINS RILEY & SCARBOROUGH LLP Steven A. McKelvey, Jr. (pro hac vice pending) Stephen G. Morrison (pro hac vice pending) Special Dealership Network Counsel for Debtor and Debtor in Possession
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EXHIBIT A (Notice Letter)
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November 5, 2012 Via Federal Express [INSERT DEALER NAME] [Dealer No. _____________] [ADDRESS] [CITY, STATE, ZIP CODE] Dear ______________, We value our relationship with our dealers and we believe it is important that you hear directly from us about important developments at American Suzuki Motor Corporation (ASMC). Today we announced that, following a thorough review of our current position and future opportunities in the U.S. automotive market, we have made the difficult but necessary decision to wind down and discontinue new automobile sales in the continental U.S. All warranties will continue to be fully honored, in accordance with their terms, and automobile parts and service will be provided to consumers through ASMCs planned continuation of a service and parts dealer network. We will realign our business to focus on the long-term growth of our Motorcycles/ATV and Marine divisions, and we believe the best path to achieve this realignment in an efficient and orderly manner is to restructure our operations under chapter 11. We have filed with the Bankruptcy Court a series of priority requests (known as "first day motions") seeking court permission to continue without interruption warranty reimbursements, incentives and holdback payments due to dealers in the normal course of business. As part of our chapter 11 filing, we have prepared and are submitting a proposed Plan of Reorganization and Disclosure Statement that together specify how ASMC intends to transition its Automotive division from a sales, parts and service dealer network to support consumers and dealers through a service and parts only operation. We intend to complete the chapter 11 process as efficiently as possible. Our objective is to provide you with a reasonable period of time to wind down sales, and to offer you financial support to plan for the future, and we are working diligently to achieve the best possible transition for you. We intend to engage most of our existing dealers to offer parts and service to consumers in the future. We will work closely with you during the wind-down of new automobile sales operations, and because each dealer is situated differently, ASMC will be contacting Automotive dealers individually to communicate the details of ASMCs offer. Additionally, we will provide marketing and incentives to help promote the continued sale of the automobiles remaining in your inventory and in the pipeline. We are committed to providing you with information throughout this process and have attached the full press release that we issued earlier today. We also have attached a "Q&A" to address some of the questions we expect you may have. We will be following up with you and request that you send your preferred contact information to autodealer@suz.com, along with any additional questions you may have. You can also call our Restructuring Hotline at (877) 465-4819 between 9:30 a.m. and 8:00 p.m. (EST). And, if you happen to receive any inquiries about todays announcement from the media, please send them to Rachel Rosenblatt at (917) 626-9683 or Rachel.Rosenblatt@FTIConsulting.com. I remain grateful to you for your professionalism throughout this process. Sincerely,
Takashi Iwatsuki, Chairman Enclosures: Press Release Automotive Dealer Q&A
EXHIBIT A-1
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Q: ASMC has filed for reorganization under chapter 11 of the U.S Bankruptcy Code. How will this affect my dealership? A: Initially, your dealership will continue business as usual, selling the remaining vehicles in your inventory and pipeline and providing authorized warranty and non-warranty service. ASMC will stay in communication with you as we move through the chapter 11 reorganization process. ASMC has prepared and will be submitting to the Bankruptcy Court a number of filings and a proposed chapter 11 Plan, which, subject to Court approval, would permit ASMC to reject all currently existing Dealer Agreements held by Suzuki automotive dealers in the continental U.S., and to offer instead a Service and Parts Agreement to most existing automotive dealers. The Plan also contemplates a sale of assets and that the purchaser would honor warranties and continue the supply of parts and service. If a dealer does not become a service point, then ASMC will provide detailed information on the winding down of the dealership operation.
Q: Will ASMC offer financial compensation since my dealership will no longer have new Suzuki vehicle sales, and will become a service and parts operation only? A: Subject to Court approval, under terms that will be detailed in a letter to follow in the next several days, ASMC will offer financial support and compensation to its current automotive dealers. If approved by the Bankruptcy Court, ASMC will offer not only a Service and Parts Agreement, but also will offer your dealership a specific dollar claim in the Bankruptcy Case, generally taking into account each dealerships sales history, facilities, and other factors. Although the Plan is subject to Court approval, ASMC hopes the Plan will be approved and that the offered compensation will allow ASMC and its dealers to avoid disputes that would be costly and time-consuming for all parties.
Q: How will I be notified of my dealership's future status, and the amount of financial support and compensation? A: ASMC has made your dealership's current and future status a top priority, and already has asked the Court to allow ASMC to communicate immediately its offer to your dealership. Subject to Court approval, ASMC will send you a letter within the next several days that will advise you of the terms of its offer.
Q: What will happen to my dealership's receivables, such as parts accounts, warranty reimbursements, incentives and holdback, during the pendency of the bankruptcy? A: ASMC plans to pay all receivables to dealers the same as it would in the ordinary course of business. It already has filed a request with the Court to allow these payments without interruption. ASMC anticipates this request will be granted as part of ASMC's "first day motions." If the request is approved, you should see no disruption in ASMCs normal procedures with respect to payment of receivables.
Q:
How will the automobile business wind down work?
A: ASMC presently plans to continue new sales, including very attractive incentives and promotional activities. ASMC will work diligently to help ensure that there is no disruption in the high level of service that consumers expect, and ASMC and the purchaser of its assets will continue to work with many of its existing dealers to offer parts and service to consumers in the future, pursuant to a new Service and Parts Agreement.
EXHIBIT A-2
Case 8:12-bk-22808-CB Doc 3 Filed 11/05/12 Entered 11/05/12 17:33:12 November 5, 2012 Main Document Page 32 of 137 Page 3
Q: What does the bankruptcy mean for current Suzuki vehicle owners?
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A: ASMC and the purchaser of ASMC's assets will continue to fully honor all factory and ASMCbacked warranties, and will continue to make parts and service available to Suzuki owners through dealers receiving the new Service and Parts Agreement
Q:
Why would a potential customer purchase a Suzuki vehicle now?
A: The Suzuki vehicles remaining in dealers' inventories and for future allocation are attractive, quality vehicles, which are competitively priced with the market. ASMC will continue offering very attractive incentives on the vehicles to allow dealers to favorably price their vehicles. Furthermore, both ASMC and the purchaser of ASMC's assets will continue to fully honor all warranties on Suzuki vehicles and to make parts and service available.
Q:
So does this mean that ASMC is going out of business?
A: No, ASMC is reorganizing its business under chapter 11, which provides a structured process for ASMC to sell assets, restructure debt, cancel contracts and close portions of its operations. Through chapter 11 reorganization, ASMC will end its auto sales business. If the chapter 11 Plan is approved by the Bankruptcy Court, the purchaser of ASMC's assets will: continue honoring all auto warranties continue to have authorized service and parts dealers, and continue the motorcycle, ATV and marine businesses
Q:
How long will this chapter 11 proceeding take? And what happens in the meantime?
A: ASMC intends to complete the restructuring process as efficiently and quickly as possible. In the meantime, ASMC will continue to operate its business as usual in many respects. ASMC has filed a series of motions with the Court requesting approval to continue paying dealer incentives, warranty reimbursements, and other expenses in the ordinary course of business. ASMC anticipates these motions will be granted without delay so that there is minimal disruption in ASMCs normal operations.
Q:
What does ASMC hope to accomplish under chapter 11?
A: ASMC will realign its business focus on the long-term growth of its Motorcycles/ATV and Marine divisions. ASMC will wind down and discontinue new automobile sales in the continental U.S. and manage a smooth transition from new vehicle sales to exclusively service and parts operations. If ASMC's chapter 11 Plan is approved by the Bankruptcy Court, a purchaser of ASMC's assets will purchase ASMC's Motorcycles/ATV and Marine businesses, as well as the automotive service operation, which will be responsible for parts and warranties. ASMC intends to implement these changes through a process in which Suzuki automotive dealers will be fairly compensated within the scope of the bankruptcy, and subject to Bankruptcy Court approval. Under the restructured automotive division, most automotive dealers will continue as service and parts dealers. ASMC believes that the restructuring process is the best way to help avoid disputes that are costly and time-consuming for all parties.
Q:
Why did ASMC file for chapter 11?
A: For many years ASMC has committed enormous resources to its efforts to remain in the automotive sales market in the U.S. However, because of its low U.S. sales volumes, the limited number
EXHIBIT A-3
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of models in its line-up, unfavorable foreign exchange rates and the high/increasing costs associated with meeting state and federal regulatory requirements unique to the U.S. market, ASMC has finally concluded that it has no choice but to wind down and discontinue its automobile sales in the continental U.S. utilizing the chapter 11 process.
Q:
If I am interested in accessing the legal filings in the chapter 11 case, how can I do that?
A: ASMC has engaged Rust Omni, the bankruptcy administrative services division of Rust Consulting, Inc., as its noticing and claims agent. All filings with the court, claims and other information about ASMC's chapter 11 process can be found on the Rust Omni website at www.omnimgt.com/ASMC.
Q:
Where has the chapter 11 case been filed?
A: The case has been filed in the United States Bankruptcy Court, Central District of California in Santa Ana, which is in close proximity to ASMC's U.S. corporate headquarters.
Q: Whom can I contact if I have additional questions about the chapter 11 filing or my dealership? A: Please call toll free (877) 465-4819 between 9:30 a.m. and 8:00 p.m. (EST) to speak to a live person who will answer your questions or direct your call to the appropriate person. You also can send an email to autodealer@suz.com for a prompt response.
EXHIBIT A-4
Case 8:12-bk-22808-CB Doc 3 Filed 11/05/12 Entered 11/05/12 17:33:12 November 5, 2012 Main Document Page 34 of 137 Page 5 Press Release
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AMERICAN SUZUKI MOTOR CORPORATION (ASMC) ANNOUNCES RESTRUCTURING AND REALIGNMENT TO FOCUS ON MOTORCYCLES/ATV AND MARINE DIVISIONS ASMC to wind down and discontinue new automobile sales in continental U.S. Consumers will be protected and all warranties will continue to be fully honored
BREA, Calif., Nov. 5, 2012 American Suzuki Motor Corporation (ASMC or the Company), the sole distributor in the continental United States of Suzuki Motor Corporation (SMC) automobiles, motorcycles, all-terrain vehicles and marine outboard engines, today announced that it plans to realign its business to focus on the long-term growth of its Motorcycles/ATV and Marine divisions. Following a thorough review of its current position and future opportunities in the U.S. automotive market, ASMC will wind down and discontinue new automobile sales in the continental U.S. The Company has determined the best path to achieve this realignment in an efficient and orderly manner is to restructure its operations under chapter 11. The case will be filed in the United States Bankruptcy Court, Central District of California in Santa Ana. Consistent with ASMCs long history of standing by its products, owners of ASMC automobiles will be protected. All warranties will continue to be fully honored and automobile parts and service will be provided to consumers without interruption through ASMCs parts and service dealer network. ASMC remains firmly committed to Motorcycles/ATV and Marine products, and these divisions are competitively positioned in their respective markets, allowing for long-term growth as economic conditions improve. The realignment is intended to better position ASMC for long-term success and is a return to the Companys roots in the U.S. market, which began with motorcycles and has grown to include ATV and marine products. ASMC remains very proud of its high quality, high performance motorcycle, ATV and Marine products. The Company will continue to bring ASMC products to market, including its full lineup of sportbike, cruiser, touring, scooter, dualsport, motocross, off-road motorcycles and KingQuad ATV line, as well as its flagship DF300AP, state-of-the-art DF20A, and DF15A, among other models. Additionally, ASMC is working to further build its market share through continued investment in additional support for dealers through marketing and advertising activities and sales promotion. Suzuki will continue to have a strong presence as a sponsor of teams in supercross, outdoor motocross and road racing. In evaluating its position in the highly regulated and competitive U.S. automotive industry, ASMC determined that its Automotive division was facing a number of serious challenges. These challenges include low sales volumes, a limited number of models in its line-up, unfavorable foreign exchange rates, the high costs associated with growing and maintaining an automotive distribution system in the continental U.S. and the disproportionally high and increasing costs associated with stringent state and federal regulatory requirements unique to the U.S. market. While the decision to discontinue new automobile sales in the U.S. was difficult to make, todays actions were inevitable under these circumstances. ASMC is dedicated to honoring its commitments to Automotive customers through and after the wind down of new automobile sales in the continental U.S. An Orderly Process to Serve Consumers ASMC intends to work within its current U.S. Automotive dealer network to help structure a smooth transition from new automobile sales to exclusively parts and service operations, or, in some instances, an orderly wind down of dealership operations. ASMC intends to market and sell its remaining U.S. automobile inventory through its Automotive dealers. Through and after the restructuring, all warranties will be fully honored and automobile parts and services will be provided to consumers through the dealer network. ASMC intends to honor any automobile buyback agreements that are currently in place with financial institutions.
EXHIBIT A-5
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As part of its chapter 11 filings, ASMC will submit a proposed Plan of Reorganization and Disclosure Statement that specifies how the Motorcycle, ATV and Marine divisions will be maintained and enhanced, and how its relationship with Automotive dealers will be largely transitioned to support consumers and dealers through continued parts and service operations. SMC or its nominee intends to purchase ASMCs Motorcycle, ATV and Marine businesses, as well as the Automotive service operation responsible for parts and warranties, through a new U.S. subsidiary that will retain the ASMC brand name. ASMC believes it has sufficient cash on hand to operate its businesses during the restructuring. If necessary, ASMC will request permission from the court to borrow additional funds from ASMC needed during the restructuring. Honoring Commitments ASMC intends to operate its Motorcycles/ATV and Marine businesses as usual and is dedicated to completing the realignment process as smoothly and efficiently as possible. ASMC will continue to fully stand behind all of its products and honor all warranties from these divisions. ASMC is working with GE Capitals Retail Finance and Commercial Distribution Finance businesses to continue providing motorcycles and ATV consumer financing programs and motorcycle, ATV and marine dealer inventory financing respectively. The Company expects existing agreements with other dealer and consumer financing providers to continue as well. ASMC has filed a series of first day motions requesting approval to continue paying employee wages and benefits in the ordinary course, offering dealer incentives and payments under customer warranties. ASMC also expects to pay vendors in the normal course of business for goods and services delivered on or after its November 5, 2012 filing. Payments for goods received before ASMCs November 5, 2012 filing will be made in accordance with the chapter 11 procedure. SMC, the 100 percent interest holder in ASMC, is not a debtor in the chapter 11 filing. ASMCs legal advisor on the restructuring is Pachulski Stang Ziehl & Jones LLP, and its financial advisor is FTI Consulting, Inc. Nelson Mullins Riley & Scarborough LLP is serving as special counsel on automobile dealer and industry issues. Further, ASMC has proposed the appointment of M. Freddie Reiss, Senior Managing Director at FTI Consulting, as Chief Restructuring Officer, and has also added two independent Board members to assist it through this period. Additional information regarding ASMCs business realignment can be found at the Companys website, www.suzuki.com, or via an information hotline at 1-877-465-4819.
MEDIA CONTACTS: Rachel Rosenblatt FTI Consulting 917-626-9683 rachel.rosenblatt@fticonsulting.com
Kal Goldberg FTI Consulting 917-741-1013 kal.goldberg@fticonsulting.com
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EXHIBIT A-6
Case 8:12-bk-22808-CB
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EXHIBIT B (Letter Agreement)
Case 8:12-bk-22808-CB
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November [__], 2012 Via Federal Express [INSERT DEALER NAME] [ADDRESS] [CITY, STATE, ZIP CODE] Dealer No. [_____________] As we advised [INSERT DEALER ENTITY NAME] (referred to herein as Dealer or you) in our letter dated November 5, 2012, American Suzuki Motor Corporation (ASMC) has made the difficult decision to exit the automotive sales market in the United States and has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (Bankruptcy Code) in the United States Bankruptcy Court for the Central District of California (Bankruptcy Court). In the bankruptcy case (Bankruptcy Case), ASMC has proposed to sell, subject to Bankruptcy Court approval, certain of its assets to a purchaser (Purchaser), an affiliate of Suzuki Motor Corporation (SMC). If the sale to Purchaser is approved, Purchaser would continue the automotive parts and service business and other non-automotive businesses. [IF BANKRUPTCY COURT APPROVES, THE FOLLOWING SENTENCE WILL BE ADDED: The Bankruptcy Court has approved ASMC sending you this offer relating to your claim in the Bankruptcy Case.] Proposed Service and Parts Agreement and Allowed Claim As a result of ASMCs exit from the automotive sales market, ASMC will move the Bankruptcy Court to reject your Suzuki Automotive Dealer Agreement, including the Standard Provisions and all ancillary agreements related thereto (Dealer Agreement). Subject to Bankruptcy Court approval, however, ASMC is willing to provide you with the opportunity to continue to provide Suzuki service and parts pursuant to this Letter Agreement and the enclosed Service and Parts Agreement, and to provide you with financial assistance in connection with the winding down of your Suzuki automotive sales operations pursuant to the Statement of Terms set forth below (this letter agreement, including the Statement of Terms, is referred to herein as the Letter Agreement). Although ASMCs resources are limited and the bankruptcy process imposes restrictions on the company, we have attempted in good faith to calculate a fair and reasonable amount of compensation and financial assistance for you under the circumstances. In doing so, ASMC has considered various factors as applicable, including rent/facilities, exclusivity, sales volume, depreciated tools and equipment, depreciated signage, as well as current goodwill related to your Suzuki auto operations. Accordingly, subject to Bankruptcy Court approval and the terms of this Letter Agreement, ASMC agrees that you will hold an allowed Settling Dealer Liquidated Claim (as defined below) in the Bankruptcy Case based upon the rejection of your Dealer Agreement in the amount of [$____________]. The Settling Dealer Liquidated Claim includes any and all claims that you may hold or assert resulting from the rejection of your Dealer Agreement.
EXHIBIT B-1
Case 8:12-bk-22808-CB Doc 3 Filed 11/05/12 Entered 11/05/12 17:33:12 Dealer No. [_____________] Main Document Page 38 of 137 November 5, 2012 Page 2 Advance Payment by SMC
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Moreover, in order to provide immediate liquidity to dealers, SMC, the Purchaser or another entity designated by SMC (the Participant Party) will agree to pay you up to [$____________] of the Settling Dealer Liquidated Claim within 10 days following execution and return receipt of the Letter Agreement, Service and Parts Agreement, and the enclosed Participation Agreement by the early return deadline set forth below. SMC will also agree to subordinate SMCs pre-bankruptcy secured claims to your Settling Dealer Liquidated Claim pursuant to ASMCs proposed Plan of Reorganization dated November [__], 2012 (Plan), if the Plan is confirmed as anticipated. In exchange for the advance payment from Participant Party and SMCs agreement to subordinate its pre-bankruptcy secured claims pursuant to the Plan, if it is confirmed, the Participant Party will receive a junior participation in the your Settling Dealer Liquidated Claim in the amount paid to you above (without interest), which shall be re-paid to Participant Party after you have received payment of the remaining portion of your claim, and SMC and related parties will receive a release of claims. With the agreements of the Participant Party and SMC described above, ASMC anticipates your Settling Dealer Liquidated Claim will be paid in full pursuant to ASMCs Plan, as more fully described in its Disclosure Statement dated November [__], 2012, neither of which have been approved by the Bankruptcy Court. ASMC makes no representations or warranties regarding whether its Plan will be confirmed by the Bankruptcy Court or the amount of your ultimate distribution, as set forth in 3(c) below. Additional Terms The Letter Agreement also provides, subject to Bankruptcy Court approval, (1) the rejection of the Dealer Agreement, (2) the continuance of automotive sales and service through the Sales Wind Down Period as provided in the Statement of Terms; (3) a waiver of any other termination-related assistance; and (4) for the assignment of this Letter Agreement and the Service and Parts Agreement to the Purchaser or an Overbidder (as defined below).
The following is a comparison of what you may expect if you accept / decline ASMC's proposed terms: DEALER OPTIONS
EXHIBIT B-2
Case 8:12-bk-22808-CB Doc 3 Filed 11/05/12 Entered 11/05/12 17:33:12 Dealer No. [_____________] Main Document Page 39 of 137 November 5, 2012 Page 3
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ACCEPT THIS AGREEMENT Receive [$______] within 10 days from Participant Party without need for further Bankruptcy Court approval ASMC anticipates payment in full of your remaining Settling Dealer Liquidated Claim following confirmation of plan in bankruptcy. Plan has not yet been approved by Bankruptcy Court.* Continue as authorized Suzuki service and parts dealer throughout the wind down period and thereafter pursuant to new Service and Parts Agreement.* SMCs subordination of its prebankruptcy secured claims to your Settling Dealer Liquidated Claim
No advance payment by Participant Party Assert claim in bankruptcy; claim may be
DECLINE THIS AGREEMENT
opposed by ASMC; litigation time and expense; uncertainty as to timing and amount of payment, if any*
Rejection of current dealer agreement; no

guaranteed continuation as authorized Suzuki service and parts dealer* No subordination of SMCs bankruptcy secured claims pre-
* Subject to Bankruptcy Court Approval
Return Deadlines Early Return Deadline. If the enclosed documents are executed and received by November 30, 2012: (1) Participant Party will pay [$____________] of the agreed Settling Dealer Liquidated Claim and (2) ASMC will execute a Service and Parts Agreement with you, thus authorizing you to continue your service and parts operations, subject to state licensing requirements, if any. Return Deadline. If the enclosed documents are not executed and received by November 30, 2012, but are executed and received by December 28, 2012 ("Return Deadline"), (1) Participant Party will not make any payment with respect to your Settling Dealer Liquidated Claim, but SMC still will subordinate SMCs own pre-bankruptcy secured claims to your Settling Dealer Liquidated Claim pursuant to the Plan, if it is confirmed, and (2) ASMC may, subject to its sole discretion, execute and seek Bankruptcy Court approval of a Service and Parts Agreement with you. Return by this later deadline would not ensure that ASMC will execute and thereby grant you the opportunity to continue your authorized service and parts operations. We have enclosed two return Federal Express envelopes (1) one for the return of the enclosed Letter Agreement and Service and Parts Agreement to ASMC and (2) one for the return of the enclosed Participation Agreement to SMC. If ASMC does not receive the executed Letter Agreement and Service and Parts Agreement by the Return Deadline, ASMC's offer as provided in this letter will be automatically withdrawn without further notice and ASMC will move before the Bankruptcy Court to reject your Dealer Agreement. In addition, if SMC does not receive
EXHIBIT B-3
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the executed Participation Agreement by the Return Deadline, SMCs offer as provided in the Participation Agreement will be automatically withdrawn without further notice. No changes may be made to any of the documents. Contact Information If you have any questions, please call our Restructuring Hotline at (877) 405-4819 between 8:30 a.m. EST and 8:30 p.m. EST. Alternatively, you can send any questions you may have to autodealer@suz.com. If you have any questions for SMC about the Participation Agreement, you may contact its counsel, Lee R. Bogdanoff, Michael L. Tuchin, or David A. Fidler at 310407-4000. THIS DOCUMENT SHALL BE NULL AND VOID IF (A) IT IS NOT EXECUTED BY DEALER ALONG WITH THE SERVICE AND PARTS AGREEMENT AND RECEIVED BY ASMC ON OR BEFORE DECEMBER 28, 2012, (B) IF THE PARTICIPATION AGREEMENT IS NOT EXECUTED AND RECEIVED BY SMC ON OR BEFORE DECEMBER 28, 2012, OR (C) IF DEALER CHANGES ANY TERM HEREIN, IN THE SERVICE AND PARTS AGREEMENT OR IN THE PARTICIPATION AGREEMENT. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT B-4
Case 8:12-bk-22808-CB Doc 3 Filed 11/05/12 Entered 11/05/12 17:33:12 Dealer No. [_____________] Main Document Page 41 of 137 November 5, 2012 Page 5 STATEMENT OF TERMS
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1. Effective Date. This Letter Agreement shall be deemed withdrawn and null and void if not executed and received by ASMC no later than the Return Deadline. This Letter Agreement shall become effective on the date (the Effective Date) which is the last to occur of (a) execution and ASMCs receipt of this Letter Agreement (including Tab 1) and the Service and Parts Agreement; (b) SMC's receipt of the Participation Agreement; and (c) approval by the Bankruptcy Court by final order. The terms of this Letter Agreement are expressly subject to and conditioned upon approval by the Bankruptcy Court. 2. Rejection of Dealer Agreement.
a. Dealer hereby agrees and consents to the rejection of the Dealer Agreement pursuant to Section 365(a) of the Bankruptcy Code, which shall occur and be effective upon the Effective Date. Such rejection shall include the rejection of all modifications, amendments, attachments, supplements, restatements, ancillary agreements, or other agreements that in any manner affect such Dealer Agreement and all executory contracts related thereto, if any, including all easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal and any other interests. Notwithstanding such rejection, Dealer may continue the authorized sales of new Suzuki Vehicles and the authorized warranty and non-warranty service of Suzuki Vehicles during the Sales Wind Down Period, as set forth below. b. Rejection of the Dealer Agreement shall not constitute a termination of preexisting obligations owed to ASMC under the Dealer Agreement, including without limitation all payables owed to ASMC under Dealers Open Parts Account and Product (Vehicle) Account, the provision of any services for which Dealer previously received payment, and Dealers obligation to indemnify ASMC. 3. Settling Dealer Liquidated Claim.
a. In exchange for Dealers execution of this Letter Agreement, including without limitation Dealers consent to the rejection of the Dealer Agreement, Dealers authorization and agreement to sell the remaining new vehicle inventory and continue providing Suzuki warranty and non-warranty authorized service as set forth below, Dealers execution of the Service and Parts Agreement, and Dealers agreement for the assignment of the Service and Parts Agreement to Purchaser or a third party overbidder approved by the Bankruptcy Court to acquire certain of ASMCs assets (Overbidder), ASMC agrees that you will hold a Settling Dealer Liquidated Claim (as defined below) in the Bankruptcy in the amount of [$____________]. The Settling Dealer Liquidated Claim includes any and all claims that you may hold or assert; provided, however, that the Settling Dealer Liquidated Claim shall not include any pre-bankruptcy claims arising from warranty reimbursement, Incentive Programs (as defined below), and holdback (collectively, "Excluded Claims"). The amount set forth herein shall constitute the total amount of Dealers Settling Dealer Liquidated Claim for all purposes associated with the Bankruptcy Case, including without limitation the Plan, voting on the Plan, and any distribution.
EXHIBIT B-5
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b. Dealer acknowledges and covenants that the Settling Dealer Liquidated Claim agreed to herein includes all claims, demands, charges, actions and causes of action, both at law and in equity, arising under statute, common law or otherwise, whether known or unknown, foreseen or unforeseen (Claims) which Dealer may have or may claim to have arising based upon, connected with, incident to, or arising out of (a) the rejection of the Dealer Agreement; (b) Dealers pre-petition business relationships with AMSC; (c) the Dealer Agreement and any predecessor agreements; (d) Dealers pre-petition transactions with ASMC; (e) any agreements or Claims relating to Dealers facilities; (f) any representations regarding motor vehicle sales or otherwise related to Dealers operations under the Dealer Agreement; (g) any Claims of Dealer pursuant to Section 13.6 of the Standard Provisions in the Dealer Agreement (and like provisions under earlier versions of the Standard Provisions) and any termination rights under any applicable law, rules, or regulations; and (h) any other events, transactions, discussions, Claims, or occurrences of any kind arising in whole or in part prior to the date of this Agreement; provided, however, that the Settling Dealer Liquidated Claim shall not include Excluded Claims owed to Dealer in the ordinary course of business but not yet paid, regardless whether such payments were earned pre-petition or during the Sales Wind Down Period. c. Dealer agrees to cooperate as reasonably necessary to obtain any Bankruptcy Court approval and provide and/or file any necessary documentation in connection with such approval of the Settling Dealer Liquidated Claim, including signing and returning the proof of claim attached hereto as Tab 1, which you authorize ASMC to file on your behalf in the Bankruptcy Case. d. Notwithstanding any statement in this Letter Agreement, the amount of the eventual payment on the Settling Dealer Liquidated Claim in the Bankruptcy Case is unknown at this time and ASMC makes no representations or warranties regarding the amount or timing of the ultimate distribution on account of Dealers Settling Dealer Liquidated Claim. ASMC cannot assure you that the Plan will be confirmed and, if confirmed, your Settling Dealer Liquidated Claim will be paid in full. The only assurance that can be given you is that you will receive the payment from the Participant Party on your Settling Dealer Liquidated Claim without any other conditions and that SMC will subordinate its pre-bankruptcy secured claims to any allowed Settling Dealer Liquidated Claim Settling Dealer Liquidated Claim under the Plan, if that Plan is confirmed. e. Any payment by ASMC on account of your Settling Dealer Liquidated Claim is expressly subject to and conditioned upon: (i) Bankruptcy Court approval of the Settling Dealer Liquidated Claim and any proposed payment pursuant to the Plan or otherwise; (ii) Dealers compliance with the terms of this Letter Agreement and the Service and Parts Agreement (if applicable); and (iii) ASMCs setoff or recoupment rights. In addition to all other remedies available to ASMC, Dealer's failure to comply with the terms of this Letter Agreement or the Service and Parts Agreement (if applicable) shall entitle ASMC or its assignee to repayment of any Settling Dealer Liquidated Claim paid. 4. Participation by SMC; Distributions.
EXHIBIT B-6
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a. In consideration of the funds paid by Participant Party and other consideration set forth in the Participation Agreement, Dealer shall execute the Participation Agreement with Participant Party. The Participation Agreement is attached hereto as Tab 2. Please note the Participation Agreement also requires that you represent and warrant that you own your claims free and clear of any lien and that you have not assigned and will not assign them. b. Dealer hereby irrevocably appoints and designates ASMC as disbursing agent for Distributions (as defined in the Participation Agreement) on account of Dealers Settling Dealer Liquidated Claim and directs ASMC to make Distributions on account of such claim as follows: (i) first to Dealer until Dealer recovers, taking into account the Participation Payment and Distributions received by Dealer, an amount equal to the amount of the Settling Dealer Liquidated Claim, without interest (Dealer Recovery Limit) and (ii) then, upon Dealers receipt of the Dealer Recovery Limit, 100% of all remaining Distributions to Participant Party on account of Dealers Settling Dealer Liquidated Claim, whether or not the Bankruptcy Courts allowance of the claim in favor of dealer is more than or less than Dealers Settling Dealer Liquidated Claim 5. Complete Waiver of Termination Rights; Release.
a. In consideration of ASMCs agreements under this Letter Agreement, including without limitation the liquidation of the Settling Dealer Liquidated Claim, and the Participation Payment, Dealer agrees to waive all other rights to assert or receive termination-related assistance of any kind under the Dealer Agreement or any applicable laws, rules, or regulations. Dealer hereby waives any and all rights under the Dealer Agreement or any applicable laws, rules or regulations regarding termination notice, termination rights, termination assistance, facility assistance, or other termination rights. Therefore, other than your Settling Dealer Liquidated Claim, none of ASMC, SMC, Participant Party, Purchaser, or Overbidder shall have any obligation to (i) repurchase from Dealer any Suzuki Vehicles; (ii) repurchase any Suzuki Parts and Accessories, except upon expiration or termination of the Service and Parts Agreement; (iii) repurchase Suzuki Special Tools; (iv) repurchase Suzuki signage, which signs shall be removed by Dealer at your sole expense either (a) by Dealer within 180-days of the Sales Wind Down Period if Dealer does not receive an executed Service and Parts Agreement, or (b) by Dealer in accordance with the terms of the Service and Parts Agreement if such agreement is offered and executed; (v) compensate Dealer for rent or facility improvements of any kind; and (vi) compensate Dealer for goodwill or blue sky. b. For the avoidance of doubt, Dealer acknowledges and agrees that Section 13.6 of the current Standard Provisions in the Dealer Agreement (and like provisions under earlier versions of the Standard Provisions) and any termination rights under any applicable law, rules, or regulations shall not apply to (i) the rejection of the Dealer Agreement as provided herein, (ii) the subsequent termination of any part of Dealer Operations upon the conclusion of the Sales Wind Down Period or otherwise; (iii) any subsequent rejection of this Letter Agreement or the Service and Parts Agreement upon the conversion of the Bankruptcy Case to one under Chapter 7 of the Bankruptcy Code or otherwise; or (iv) the subsequent termination of the Sales and Parts Agreement by its terms.
EXHIBIT B-7
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c. Upon the effective date of the Plan and except for the Settling Dealer Liquidated Claim against ASMC in the Bankruptcy Case, Dealer hereby releases, relinquishes, surrenders, cancels and forever discharges and, by these presents, for itself, its heirs, executors, estates, shareholders, members, owners, administrators, beneficiaries, subsidiaries, parent companies, affiliates and aliases, agents and assigns (collectively with Dealer, the Releasing Parties), do hereby, release, relinquish, surrender, cancel and forever discharge any, every and all Claims which Releasing Parties may have, or which Releasing Parties may claim to have, against ASMC and its subsidiaries, parent companies, affiliates, predecessors, successors and assigns (collectively, with the Agents as defined herein, the Released Parties) and each of their respective officers, directors, shareholders, lenders, owners, employees, managers, members, professionals, attorneys, partners, fiduciaries, and other legal representatives (collectively, Agents) , based upon, connected with, incident to, or arising out of, (a) Dealers business relationships with AMSC or SMC; (b) the Dealer Agreement and any predecessor agreements; (c) Dealers Letter Agreement and Service and Parts Agreement with ASMC (except for performance thereunder by ASMC and/or Purchaser, as applicable); (d) Dealers transactions with ASMC (other than the performance by ASMC or Purchaser, as applicable, under the Letter Agreement and Service and Parts Agreement); (e) the operation of Dealers dealership; (f) any agreements or Claims relating to Dealers facilities; (g) any representations regarding motor vehicle sales or otherwise related to Dealers operations under the Dealer Agreement; (h) any Claims of Dealer pursuant to Section 13.6 of the Standard Provisions in the Dealer Agreement (and like provisions under earlier versions of the Standard Provisions) and any termination rights under any applicable law, rules, or regulations; or (i) any other events, transactions, discussions, Claims, or occurrences of any kind arising in whole or in part prior to the date of this Agreement, it being the intent and purpose of this Release that it shall evidence a full, final and complete release of all Claims which Releasing Parties may have, or claim to have, against Released Parties by reason of anything that has occurred prior to the date of this Agreement. Nothing in this paragraph shall limit the effectiveness of the releases given under Dealers Participation Agreement. d. Release of Unknown and Unanticipated Claims. The Releasing Parties acknowledge there is a risk that, after the execution of this Agreement, they may discover, incur, or suffer damages from Claims (as defined above) which were unknown or unanticipated at the time this Agreement was executed, including, without limitation, unknown or unanticipated Claims. The Releasing Parties hereto acknowledge that they are assuming the risk of such unanticipated Claims and agree that this Agreement applies thereto. The Releasing Parties hereto expressly waive the benefits of Section 1542 of the California Civil Code, which provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. The Releasing Parties hereto waive and relinquish all rights and benefits which they have or may have under Section 1542 or the law of any other state or jurisdiction to the same or similar effect to the full extent that they may lawfully waive and relinquish all rights and benefits pertaining to the Claims (as defined above) that are subject matter of this Agreement.
EXHIBIT B-8
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e. This Release shall not apply to any rights, obligations or product complaints grounded in warranty or product liability owed by any Released Party to any Releasing Party or to any other person. Nor shall this Release apply to claims, causes of action, demands, losses and damages due to injuries or deaths caused by a claimed defect in the design, manufacture, assembly, testing and distribution (other than retail distribution by any Releasing Party to any consumer) of a Suzuki product, whether such claims are based upon theories of negligence, breach of warranty or product/strict liability. This Release also shall not apply to any Excluded Claims. 6. Wind Down of Sales; Service and Parts During Sales Wind Down Period.
a. Dealer shall have the right to continue selling new Suzuki Vehicles as an authorized Suzuki automotive dealer from the Effective Date of this Letter Agreement until March 31, 2013 (the Sales Wind Down Period). Upon conclusion of the Sales Wind Down Period, Dealers right to sell new Suzuki Vehicles and to be an authorized new Suzuki Vehicles dealer under the terms of this Agreement or under any prior dealer agreement or other agreement shall terminate, unless extended in writing by ASMC, Purchaser, or Overbidder, as applicable, in its sole and absolute discretion. b. During the Sales Wind Down Period, Dealer shall have the right and obligation to provide Suzuki warranty service and parts pursuant to the terms of this Letter Agreement. Upon conclusion of the Sales Wind Down Period, Dealers provision of service and parts shall be governed by the Service and Parts Agreement, as set forth below. c. Dealers sale of new Suzuki Vehicles and provision of parts and service during the Sales Wind Down Period shall be governed by this Letter Agreement and, to the extent not inconsistent with the foregoing and except as modified herein, ASMCs Standard Provisions of its current Suzuki Automobile Dealer Agreement, which is attached hereto as Tab 3, excluding the following provisions which are not incorporated herein and are superseded by the terms of this Letter Agreement: Sections 6.4, 6.9, 6.10, 6.11, 7.5, 7.6, 13, 14(a), and 16.9. In the event of a conflict between this Letter Agreement and the referenced Standard Provisions of the Dealer Agreement, this Letter Agreement shall control. d. ASMC shall seek Bankruptcy Court approval to pay certain amounts due between Dealer and ASMC during the Sales Wind Down Period by credit to Dealers Product (Vehicle) Account and Open Parts Account in the ordinary course of ASMCs business. If the Bankruptcy Court gives its approval, upon conclusion of the Sales Wind Down Period, any balance owed on the Dealer's Auto Product Account shall be paid in the ordinary course of ASMC's business, with ASMC reserving the right to setoff any amounts or obligations owed by Dealer to ASMC. e. ASMC shall seek Bankruptcy Court approval to continue or implement certain sales incentives (Incentive Programs) in connection with the sale of Suzuki Vehicles during the Sales Wind Down Period. In exchange for such incentives, Dealer agrees to comply the terms of the Incentive Programs as approved by the Bankruptcy Court.
EXHIBIT B-9
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f. Dealer acknowledges and agrees that, except as provided herein, it shall not have the right to purchase new Suzuki Vehicles from ASMC, Purchaser, or Overbidder, as applicable, which rights, if any, are hereby waived. Notwithstanding the foregoing, ASMC, Purchaser, or Overbidder, as applicable, may in its sole and absolute discretion make certain quantities of its limited number of new Suzuki Vehicles available for purchase by Dealer during the Sales Wind Down Period. Dealer hereby waives any right to require ASMC, Purchaser, or Overbidder to repurchase any such new Suzuki Vehicles existing under the Dealer Agreement or applicable law. 7. Service and Parts Agreement.
a. Simultaneously with the execution of this Letter Agreement, Dealer shall execute the Service and Parts Agreement. The Service and Parts Agreement is attached hereto as Tab 4. Following the conclusion of the Sales Wind Down Period as provided herein, and subject to ASMCs execution of the Service and Parts Agreement, the Dealers Dealer Operations shall terminate except as expressly provided and authorized in the Service and Parts Agreement. b. The Service and Parts Agreement will expire or terminate on its own terms as set forth therein and, as set forth above, Dealer hereby waives and relinquishes any right to termination notice, termination rights, termination assistance, renewal, facility assistance, or other termination rights in connection with such expiration or termination, except as expressly set forth in the Service and Parts Agreement. Dealer acknowledges that, under the terms of this Letter Agreement, Dealer is provided with full compensation for current goodwill, signage, tools, equipment, facilities assistance, rent, and all other amounts that are due or may be due under applicable law for the termination and/or rejection of your Dealer Agreement, including all of Dealers sales, service, and parts operations; provided, however, Dealer shall be entitled to repurchase of eligible parts in compliance with ASMCs or its assignees parts repurchase policies. Therefore, if the Service and Parts Agreement is ended or terminated for any reason, Dealer is not entitled to any additional compensation, including any post-termination assistance provided or mandated by applicable law for the termination or cessation of Dealers continuing service and parts operation, and this Agreement shall constitute a complete waiver to such assistance or compensation. If the Service and Parts Agreement is ended or terminated, the only remaining payment Dealer shall be entitled to receive on account thereof is the amount due, if any, for the re-purchase of eligible parts, as well as any special tools acquired post-petition from ASMC or its assignee to the extent required under the Service and Parts Agreement or pursuant to applicable law. 8. Consent to Assignment; Waiver of Rights upon Conversion.
a. Dealer acknowledges that ASMC has the right, but not the obligation, to assign the Service and Parts Agreement and this Letter Agreement to the Purchaser or Overbidder. ASMC intends to assign the Service and Parts Agreement and may, at its sole option, assign this Letter Agreement to Purchaser or Overbidder, provided the proposed sale to Purchaser or Overbidder closes. Dealer specifically agrees to such assignments, agrees that it will not object
EXHIBIT B-10
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to such assignments, and waives any right to request assurance of future performance by Purchaser or Overbidder. b. In consideration of ASMCs entry into the Service and Parts Agreement and proposed assignment to Purchaser or Overbidder, in the event the Bankruptcy Case is converted to one under Chapter 7 of the Bankruptcy Code, Dealer (i) acknowledges that it shall not be entitled to assert an administrative priority claim for the Settling Dealer Liquidated Claim, which claim is resolved by this Letter Agreement and is a pre-petition, general unsecured claim; (ii) waives the right to assert an administrative priority claim for any subsequent rejection of this Letter Agreement or the Service and Parts Agreement; (iii) waives any right under Section 365 of the Bankruptcy Code for the assumption or rejection of the Letter Agreement or the Service and Parts Agreement, as applicable, within sixty days of such date of conversion, including without limitation the right to have such agreements deemed rejected if not assumed during such time period; and (iv) except as set forth above in Section 7(b), upon a rejection or termination of this Letter Agreement or the Service and Parts Agreement by the Chapter 7 trustee, waives any and all termination rights existing under any applicable agreement or applicable laws, rules, or regulations. 9. Cooperation. Dealer shall cooperate with ASMC, SMC, Purchaser and the Participant Party and take all reasonable and necessary steps to effectuate the agreements set forth herein and pursue confirmation of the Plan, as it may be modified from time to time, which shall be consistent with the provisions of the settlement set forth herein; provided, however, that nothing herein shall be construed to require a specific vote on the Plan by the Dealer in the absence of a disclosure statement approved by the Bankruptcy Court. 10. Confidentiality. Dealer agrees that, without the prior written consent of ASMC, SMC, Purchaser or Overbidder, as applicable, it shall not, except as required by law or as necessary to obtain requisite approval by the Bankruptcy Court, disclose to any person (other than its agents or employees having a need to know such information in the conduct of their duties for Dealer, which agents or employees shall be bound by a similar undertaking of confidentiality) the terms or conditions of this Letter Agreement or the underlying negotiations and transactions. 11. Indemnification. Dealer shall indemnify, defend, and hold harmless ASMC, SMC, Purchaser, Overbidder, and Participant Party, as applicable, and any of their respective Agents, affiliates, subsidiaries, assigns and successors in interest from any and all claims, demands, fines, penalties, suits, causes of action, liabilities, losses, damages, judgments, and expenses (including without limitation reasonable costs and attorneys fees) which may be imposed or incurred by ASMC, SMC, and Purchaser, as applicable, arising from, relating to, or caused by (a) Dealers breach of this Letter Agreement; (b) Dealers execution, delivery of, or performance under this Letter Agreement; (c) Dealers violation of applicable laws, rules, or regulations; or (d) any act for which Dealer owes ASMC a duty of indemnification under Section 14.1(b) of the Dealer Agreement. 12. Miscellaneous.
EXHIBIT B-11
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a. Defined Terms. All capitalized terms not defined herein shall have the meaning ascribed to them in the Dealer Agreement Standard Provisions at Tab 3. b. Assignment. This Letter Agreement may not be assigned or transferred by Dealer, in whole or in part, directly or indirectly, voluntarily or by operation of law, without the prior written consent of ASMC. Any assignment, transfer or delegation by Dealer in contradiction of this provision will be null and void. This Agreement will bind and inure to the benefit of the successors and assigns of ASMC, Purchaser or Overbidder, as applicable, and Dealer. Nothing in this paragraph limits the rights of SMC or its designee under the Participation Agreement. c. Authority. Dealer and the individuals executing this Letter Agreement on Dealers behalf hereby represent and warrant that this Letter Agreement has been duly authorized by Dealer and that all necessary corporate action has been taken and all necessary corporate approvals have been obtained in connection with the execution and delivery of this Letter Agreement. d. Remedies for Failure to Remove Signs. Dealer acknowledges that it has received compensation for sign removal under the terms of this Letter Agreement and shall have the obligation to remove all Suzuki signage at its sole cost and expense upon termination of the Sales Wind Down Period or Service and Parts Agreement, as applicable. In the event Dealer fails to timely remove all Suzuki signs as provided in Section 5(a), the parties agree that (i) ASMC, Purchaser, and/or Overbidder, as applicable, will suffer irreparable injury for which money damages are not an adequate remedy and, as a result, ASMC, Purchaser, and/or Overbidder, as applicable, shall be entitled to injunctive relief or such other equitable relief as a court may determine; (ii) ASMC, Purchaser, and/or Overbidder as applicable, shall have the right to enter upon Dealers premises and remove, without notice or liability, all Suzuki logo signs and any other identification bearing the Suzuki trademarks, service marks, names, logos, and designs; (iii) ASMC, Purchaser, and/or Overbidder, as applicable, shall be entitled to payment from the Dealer as liquidated damages an amount of $1,000/day until the signs are removed, the parties hereby agreeing that this is a bona fide liquidated damages provision and not a penalty or forfeiture provision; and (iv) Dealer agrees that it shall reimburse AMSC, Purchaser, and/or Overbidder, as applicable, for all costs, attorneys fees, and other expenses incurred by ASMC, Purchaser, and/or Overbidder, as applicable, in connection with any action to remove the signs. e. No Implied Waiver. The delay or failure by ASMC, Purchaser, or Overbidder, as applicable, to require performance by Dealer or the waiver by ASMC, Purchaser, or Overbidder, as applicable, of a breach of any provision of this Agreement will not affect the right to subsequently require performance. Any continuation of business relations between the parties following the termination or expiration of this Letter Agreement shall not be deemed to be a waiver of the termination or expiration, nor shall it imply that either party has committed to continue to do business with the other at any time in the future. f. Sole Agreement of the Parties; Amendment. This Letter Agreement, together with the Service and Parts Agreement referenced herein, contains the entire, integrated agreement between Dealer and ASMC and there are no prior or other agreements or
EXHIBIT B-12
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understandings, either oral or written, between the parties with respect to the subject matter hereof. This Agreement cancels and supersedes all previous agreements between the parties relating to the subject matter covered hereof. No change or addition to, or deletion of, any portion of this Letter Agreement shall be valid or binding upon the parties to this Letter Agreement unless the same is approved in writing by an officer of each of the parties. g. Voluntary Act; No Reliance. Dealer has reviewed this Letter Agreement with your legal, tax, or other advisors, or had the opportunity to do so, and is fully aware of all of your rights and alternatives. In executing this Letter Agreement, Dealer acknowledges that your decisions and actions are entirely voluntary and free from any duress. DEALER ACKNOWLEDGES THAT NO REPRESENTATIONS OR STATEMENTS OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS LETTER AGREEMENT WERE MADE BY ASMC, SMC, OR ANY OF THEIR RESPECTIVE OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES THEREOF, OR WERE RELIED UPON BY DEALER IN ENTERING INTO THIS LETTER AGREEMENT. h. Severability. If any provision of this Letter Agreement, or the Service and Parts Agreement referenced herein, should be held invalid or unenforceable for any reason whatsoever, or should violate any law of the United States, the District of Columbia, or any State or Territory thereof, this Agreement shall be considered divisible as to such provisions, and such provisions shall be deemed deleted from this Agreement in such jurisdiction as if such provisions were not included herein. i. Attorneys Fees. Each party shall bear its own attorneys fees in connection with the negotiation and execution of this Letter Agreement and obtaining any requisite approval of the Bankruptcy Court. In any action, proceeding or dispute arising in connection with any alleged breach of this Letter Agreement or otherwise relating in any way to this Letter Agreement, the prevailing party shall be entitled to recover reasonable attorneys fees and costs. j. Jurisdiction; Applicable Laws. By executing this Letter Agreement, Dealer hereby consents and agrees that the Bankruptcy Court shall retain full, complete, and exclusive jurisdiction to interpret, enforce, and adjudicate disputes concerning the terms of this Letter Agreement and any other matter relating thereto. In the event the Bankruptcy Court declines jurisdiction over any such dispute, Dealer hereby consents and agrees that jurisdiction shall be in the United States District Court for the Central District of California. Except as modified, waived, or displaced herein, this Agreement is subject to all applicable state and federal laws. k. Benefit. Dealer agrees that SMC, Participant Party, and Purchaser or Overbidder, as applicable, are express beneficiaries of this Letter Agreement and shall be entitled to enforce the terms of this Letter Agreement and to obtain remedies in connection therewith. No other person or entity not a party to this Agreement shall have rights under this Agreement as a third party beneficiary or otherwise.
EXHIBIT B-13
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l. Survival. The provisions of this Letter Agreement, which by their nature survive expiration or termination of this Agreement, shall survive, including without limitation, Sections 5, 8(b), 10, 11, 12(d), and 12(j). m. Counterparts; Signatures. This Letter Agreement may be signed in counterparts with the same effect as if the signatures were upon a single instrument, and all such counterparts together shall be deemed an original of this Letter Agreement. For purposes of this Letter Agreement, a facsimile copy of a partys signature shall be sufficient to bind such party. n. No Strict Construction. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by Dealer, on the one hand, and ASMC, on the other hand, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Letter Agreement. Without limitation as to the foregoing, no rule of strict construction construing ambiguities against the draftsperson shall be applied against any party with respect to this Letter Agreement.
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EXHIBIT B-14
Case 8:12-bk-22808-CB Doc 3 Filed 11/05/12 Entered 11/05/12 17:33:12 Dealer No. [_____________] Main Document Page 51 of 137 November 5, 2012 Page 15 below.
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In witness hereof, ASMC and Dealer have executed this Agreement on the date indicated
AMERICAN SUZUKI MOTOR CORPORATION ______________________________________ By:___________________________________ Its:___________________________________
[INSERT DEALER NAME] ______________________________________ By:___________________________________ Its:___________________________________ APPROVED AND AGREED TO THIS _____ DAY OF _____________, 2012
Enclosures Tab 1 Proof of Claim Tab 2 Participation Agreement and return envelope to SMC Tab 3 Dealer Agreement Standard Provisions Tab 4 Service and Parts Agreement Tab 5 Return envelope for Letter Agreement, Proof of Claim, and Service and Parts Agreement
EXHIBIT B-15
Case 8:12-bk-22808-CB
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Tab 1 (Proof of Claim)
B 10 (Official Form 10) (12/11)
Case 8:12-bk-22808-CB
Case Number:
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UNITED STATES BANKRUPTCY COURT __________ DISTRICT of California Central District OF __________
Name of Debtor:
SETTLING DEALER LIQUIDATED CLAIM
AMERICAN SUZUKI MOTOR CORPORATION

NOTE: Do not use this form to make a claim for an administrative expense that arises after the bankruptcy filing. You may file a request for payment of an administrative expense according to 11 U.S.C. 503. Name of Creditor (the person or other entity to whom the debtor owes money or property): Name and address where notices should be sent: COURT USE ONLY Check this box if this claim amends a previously filed claim. Court Claim Number:______________ (If known) Filed on:_____________________ Name and address where payment should be sent (if different from above): Check this box if you are aware that anyone else has filed a proof of claim relating to this claim. Attach copy of statement giving particulars.
Telephone number:
email:
Telephone number:
email: $_______________________________
1. Amount of Claim as of Date Case Filed: If all or part of the claim is secured, complete item 4.
(Settling Dealer Liquidated Claim)
If all or part of the claim is entitled to priority, complete item 5. Check this box if the claim includes interest or other charges in addition to the principal amount of the claim. Attach a statement that itemizes interest or charges. 2. Basis for Claim: _________________________________________________________________ (See instruction #2) 3. Last four digits of any number by which creditor identifies debtor: ___ ___ ___ ___ 3a. Debtor may have scheduled account as: _____________________________ (See instruction #3a) 3b. Uniform Claim Identifier (optional): __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ (See instruction #3b) Amount of arrearage and other charges, as of the time case was filed, included in secured claim, if any: $__________________ Basis for perfection: _______________________________________ Amount of Secured Claim: Variable Amount Unsecured: $__________________ $__________________
4. Secured Claim (See instruction #4) Check the appropriate box if the claim is secured by a lien on property or a right of setoff, attach required redacted documents, and provide the requested information. Nature of property or right of setoff: Describe: Value of Property: $________________ Annual Interest Rate_______% (when case was filed) Fixed or Real Estate Motor Vehicle Other
5. Amount of Claim Entitled to Priority under 11 U.S.C. 507 (a). If any part of the claim falls into one of the following categories, check the box specifying the priority and state the amount. Domestic support obligations under 11 U.S.C. 507 (a)(1)(A) or (a)(1)(B). Wages, salaries, or commissions (up to $11,725*) earned within 180 days before the case was filed or the debtors business ceased, whichever is earlier 11 U.S.C. 507 (a)(4). Taxes or penalties owed to governmental units 11 U.S.C. 507 (a)(8). Contributions to an employee benefit plan 11 U.S.C. 507 (a)(5). Other Specify applicable paragraph of 11 U.S.C. 507 (a)(__).
Amount entitled to priority: $______________________
Up to $2,600* of deposits toward purchase, lease, or rental of property or services for personal, family, or household use 11 U.S.C. 507 (a)(7).
*Amounts are subject to adjustment on 4/1/13 and every 3 years thereafter with respect to cases commenced on or after the date of adjustment. 6. Credits. The amount of all payments on this claim has been credited for the purpose of making this proof of claim. (See instruction #6)
EXHIBIT B - TAB 1-1
Case 8:12-bk-22808-CB
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7. Documents: Attached are redacted copies of any documents that support the claim, such as promissory notes, purchase orders, invoices, itemized statements of running accounts, contracts, judgments, mortgages, and security agreements. If the claim is secured, box 4 has been completed, and redacted copies of documents providing evidence of perfection of a security interest are attached. (See instruction #7, and the definition of redacted.) DO NOT SEND ORIGINAL DOCUMENTS. ATTACHED DOCUMENTS MAY BE DESTROYED AFTER SCANNING. If the documents are not available, please explain: 8. Signature: (See instruction #8) Check the appropriate box. I am the creditor. I am the creditors authorized agent. (Attach copy of power of attorney, if any.) I am the trustee, or the debtor, or their authorized agent. (See Bankruptcy Rule 3004.) I am a guarantor, surety, indorser, or other codebtor. (See Bankruptcy Rule 3005.)
I declare under penalty of perjury that the information provided in this claim is true and correct to the best of my knowledge, information, and reasonable belief. Print Name: _________________________________________________ Title: _________________________________________________ Company: _________________________________________________ Address and telephone number (if different from notice address above): (Signature) (Date) _________________________________________________ _________________________________________________ _________________________________________________ Telephone number: email: Penalty for presenting fraudulent claim: Fine of up to $500,000 or imprisonment for up to 5 years, or both. 18 U.S.C. 152 and 3571. INSTRUCTIONS FOR PROOF OF CLAIM FORM The instructions and definitions below are general explanations of the law. In certain circumstances, such as bankruptcy cases not filed voluntarily by the debtor, exceptions to these general rules may apply. Items to be completed in Proof of Claim form 4. Secured Claim: Court, Name of Debtor, and Case Number: Check whether the claim is fully or partially secured. Skip this section if the claim Fill in the federal judicial district in which the bankruptcy case was filed (for is entirely unsecured. (See Definitions.) If the claim is secured, check the box for example, Central District of California), the debtors full name, and the case the nature and value of property that secures the claim, attach copies of lien number. If the creditor received a notice of the case from the bankruptcy court, documentation, and state, as of the date of the bankruptcy filing, the annual interest all of this information is at the top of the notice. rate (and whether it is fixed or variable), and the amount past due on the claim. Creditors Name and Address: Fill in the name of the person or entity asserting a claim and the name and 5. Amount of Claim Entitled to Priority Under 11 U.S.C. 507 (a). If any portion of the claim falls into any category shown, check the appropriate address of the person who should receive notices issued during the bankruptcy box(es) and state the amount entitled to priority. (See Definitions.) A claim may case. A separate space is provided for the payment address if it differs from the be partly priority and partly non-priority. For example, in some of the categories, notice address. The creditor has a continuing obligation to keep the court the law limits the amount entitled to priority. informed of its current address. See Federal Rule of Bankruptcy Procedure (FRBP) 2002(g). 6. Credits: An authorized signature on this proof of claim serves as an acknowledgment that 1. Amount of Claim as of Date Case Filed: when calculating the amount of the claim, the creditor gave the debtor credit for State the total amount owed to the creditor on the date of the bankruptcy filing. any payments received toward the debt. Follow the instructions concerning whether to complete items 4 and 5. Check the box if interest or other charges are included in the claim. 7. Documents: Attach redacted copies of any documents that show the debt exists and a lien 2. Basis for Claim: State the type of debt or how it was incurred. Examples include goods sold, secures the debt. You must also attach copies of documents that evidence perfection of any security interest. You may also attach a summary in addition to the money loaned, services performed, personal injury/wrongful death, car loan, documents themselves. FRBP 3001(c) and (d). If the claim is based on delivering mortgage note, and credit card. If the claim is based on delivering health care goods or services, limit the disclosure of the goods or services so as to avoid health care goods or services, limit disclosing confidential health care information. Do not send original documents, as attachments may be destroyed after scanning. embarrassment or the disclosure of confidential health care information. You may be required to provide additional disclosure if an interested party objects to the claim. 8. Date and Signature: The individual completing this proof of claim must sign and date it. FRBP 9011. If the claim is filed electronically, FRBP 5005(a)(2) authorizes courts to establish 3. Last Four Digits of Any Number by Which Creditor Identifies Debtor: State only the last four digits of the debtors account or other number used by the local rules specifying what constitutes a signature. If you sign this form, you creditor to identify the debtor. declare under penalty of perjury that the information provided is true and correct to the best of your knowledge, information, and reasonable belief. Your signature is also a certification that the claim meets the requirements of FRBP 9011(b). 3a. Debtor May Have Scheduled Account As: Report a change in the creditors name, a transferred claim, or any other Whether the claim is filed electronically or in person, if your name is on the signature line, you are responsible for the declaration. Print the name and title, if information that clarifies a difference between this proof of claim and the claim any, of the creditor or other person authorized to file this claim. State the filers as scheduled by the debtor. address and telephone number if it differs from the address given on the top of the form for purposes of receiving notices. If the claim is filed by an authorized agent, 3b. Uniform Claim Identifier: attach a complete copy of any power of attorney, and provide both the name of the If you use a uniform claim identifier, you may report it here. A uniform claim individual filing the claim and the name of the agent. If the authorized agent is a identifier is an optional 24-character identifier that certain large creditors use to servicer, identify the corporate servicer as the company. Criminal penalties apply facilitate electronic payment in chapter 13 cases. for making a false statement on a proof of claim.
EXHIBIT B - TAB 1-2
Case 8:12-bk-22808-CB
Doc 3 Filed 11/05/12 Entered 11/05/12 17:33:12 Desc Main Document Page 55 of 137 __________DEFINITIONS__________ ______INFORMATION______
A claim also may be secured if the creditor owes the debtor money (has a right to setoff). Unsecured Claim An unsecured claim is one that does not meet the requirements of a secured claim. A claim may be partly unsecured if the amount of the claim exceeds the value of the property on which the creditor has a lien. Claim Entitled to Priority Under 11 U.S.C. 507 (a) Priority claims are certain categories of unsecured claims that are paid from the available money or property in a bankruptcy case before other unsecured claims. Redacted A document has been redacted when the person filing it has masked, edited out, or otherwise deleted, certain information. A creditor must show only the last four digits of any social-security, individuals tax-identification, or financial-account number, only the initials of a minors name, and only the year of any persons date of birth. If the claim is based on the delivery of health care goods or services, limit the disclosure of the goods or services so as to avoid embarrassment or the disclosure of confidential health care information. Evidence of Perfection Evidence of perfection may include a mortgage, lien, certificate of title, financing statement, or other document showing that the lien has been filed or recorded.
Debtor A debtor is the person, corporation, or other entity that has filed a bankruptcy case. Creditor A creditor is a person, corporation, or other entity to whom debtor owes a debt that was incurred before the date of the bankruptcy filing. See 11 U.S.C. 101 (10). Claim A claim is the creditors right to receive payment for a debt owed by the debtor on the date of the bankruptcy filing. See 11 U.S.C. 101 (5). A claim may be secured or unsecured. Proof of Claim A proof of claim is a form used by the creditor to indicate the amount of the debt owed by the debtor on the date of the bankruptcy filing. The creditor must file the form with the clerk of the same bankruptcy court in which the bankruptcy case was filed. Secured Claim Under 11 U.S.C. 506 (a) A secured claim is one backed by a lien on property of the debtor. The claim is secured so long as the creditor has the right to be paid from the property prior to other creditors. The amount of the secured claim cannot exceed the value of the property. Any amount owed to the creditor in excess of the value of the property is an unsecured claim. Examples of liens on property include a mortgage on real estate or a security interest in a car. A lien may be voluntarily granted by a debtor or may be obtained through a court proceeding. In some states, a court judgment is a lien.
Acknowledgment of Filing of Claim To receive acknowledgment of your filing, you may either enclose a stamped self-addressed envelope and a copy of this proof of claim or you may access the courts PACER system (www.pacer.psc.uscourts.gov) for a small fee to view your filed proof of claim. Offers to Purchase a Claim Certain entities are in the business of purchasing claims for an amount less than the face value of the claims. One or more of these entities may contact the creditor and offer to purchase the claim. Some of the written communications from these entities may easily be confused with official court documentation or communications from the debtor. These entities do not represent the bankruptcy court or the debtor. The creditor has no obligation to sell its claim. However, if the creditor decides to sell its claim, any transfer of such claim is subject to FRBP 3001(e), any applicable provisions of the Bankruptcy Code (11 U.S.C. 101 et seq.), and any applicable orders of the bankruptcy court.
EXHIBIT B - TAB 1-3
Case 8:12-bk-22808-CB
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Tab 2 (Participation Agreement - Intentionally Omitted) (Return Envelope to SMC)
Case 8:12-bk-22808-CB
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Tab 3 (Dealer Agreement Standard Provisions)
Case 8:12-bk-22808-CB
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Standard Provisions
Dealer Sales and Service Agreement
American Suzuki Motor Corporation
EXHIBIT B - TAB 3-1
Case 8:12-bk-22808-CB
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TABLE OF CONTENTS
1. 2. 3.
RIGHTS GRANTED TO DEALER................................................................................................... 2.1 Dealer Rights ................................................................................................................................. RESPONSIBILITIES ACCEPTED BY THE DEALER.................................................................. 2.1 Dealer Responsibilities ................................................................................................................. CHANGE IN MANAGEMENT OR OWNERSHIP......................................................................... 3.1 Prior Approval of Changes .......................................................................................................... 3.2 Multiple or Public Ownership Requirements ............................................................................
4.
PLACE OF BUSINESS ....................................................................................................................... 4.1 4.2 4.3 4.4 4.5 4.6 4.7 Location ......................................................................................................................................... Change in Location Size ................................................................................................................................................. Dealership Appearance and Image ............................................................................................. Business Hours .............................................................................................................................. Identification ................................................................................................................................. Multiple Brands ............................................................................................................................ Use of Suzuki Marks..................................................................................................................... Misuse; No Rights Against Others .............................................................................................. Discontinuance of Use................................................................................................................... Equitable Remedies ......................................................................................................................
5.
TRADEMARKS................................................................................................................................... 5.1 5.2 5.3 5.4
6.
PURCHASE OF SUZUKI VEHICLES BY DEALER ..................................................................... 6.1 General Terms and Conditions.................................................................................................... 6.2 Prices .............................................................................................................................................. 6.3 Routing; Unloading; Shortage/Damage...................................................................................... 6.4 Product Return ............................................................................................................................. 6.5 Payments........................................................................................................................................ 6.6 Title; Risk of Loss ......................................................................................................................... 6.7 Delinquencies................................................................................................................................. 6.8 Financial Condition ...................................................................................................................... 6.9 Delays ............................................................................................................................................ 6.10 Product Supply............................................................................................................................ 6.11 Product Discontinuance .............................................................................................................
7.
RETAIL SALES OF SUZUKI VEHICLES ...................................................................................... 7.1 7.2 7.3 7.4 7.5 7.6 Dealers Sales Responsibilities ..................................................................................................... Advertising/Promotion Materials................................................................................................ Types of Sales ................................................................................................................................ Warranty Information; No Other Warranties........................................................................... Dealer Sales Performance ............................................................................................................ Inventories .....................................................................................................................................
8.
CUSTOMER SATISFACTION .........................................................................................................
ii
EXHIBIT B - TAB 3-2
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9.1 Customer Satisfaction 9. SERVICE. 9.1 General ........................................................................................................................................... 9.2 Suzuki Vehicle Pre-Delivery Inspections and Adjustments ......... 9.3 Warranty Repairs ......................................................................................................................... 9.4. Service Compliance..................................................................................................................... 9.5 Service Area and Equipment ....................................................................................................... 9.6 Records and Manuals ................................................................................................................... 9.7 Service Personnel .......................................................................................................................... 9.8 Tools and Equipment.................................................................................................................... 9.9 Campaign Inspections and Corrections...................................................................................... 9.10 Compliance with Consumer Protection Statutes, Rules and Regulations ............................. PARTS AND ACCESSORIES............................................................................................................ 10.1 10.2 10.3 10.4 10.5 11. 11.1 11.2 11.3 11.4 12 12.1 12.2 12.3 12.4 12.5 12.6 12.7 13. 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 14. 15. Inventory ..................................................................................................................................... Shipment Acceptance ................................................................................................................. Non-Genuine Parts and Accessories.......................................................................................... Accessories................................................................................................................................... Sales of Parts and Accessories ................................................................................................... Advertising and Promoting Suzuki Vehicles ............................................................................ Retail Only................................................................................................................................... Customer Confidence ................................................................................................................. Activities Regarding Suzuki Name............................................................................................ Service Reporting........................................................................................................................ Retail Delivery Reporting .......................................................................................................... Data Transmission ...................................................................................................................... Uniform Accounting System ...................................................................................................... Application of Payment .............................................................................................................. Examination of Dealers Accounts and Records...................................................................... Compliance with Laws ............................................................................................................... Termination by Suzuki on 60 Days Notice ............................................................................... Termination by Suzuki Failure of Performance Immediately................................................ Termination by Suzuki Immediately ........................................................................................ Termination by Dealer ............................................................................................................... Termination by Agreement........................................................................................................ Suzuki Option To Repurchase................................................................................................... Death or Incapacity .................................................................................................................... Continuance of Business Relations............................................................................................
10.
ADVERTISING AND PROMOTION ...............................................................................................
REPORTING, RECORDS, INSPECTION AND OTHER RESPONSIBILITIES........................
TERMINATION ..................................................................................................................................
INDEMNIFICATION ......................................................................................................................... 14.1 Indemnification ........................................................................................................................... LIMITATION OF LIABILITY .........................................................................................................
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EXHIBIT B - TAB 3-3
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15.1 Limitation of Liability ............................................................................................................... 16. MISCELLANEOUS ........................................................................................................................... 16.1 Notices, etc ................................................................................................................................... 16.2 Assignment of Rights or Delegation of Duties .......................................................................... 16.3 No Franchise Fee......................................................................................................................... 16.4 Benefit .......................................................................................................................................... 16.5 Vendor-Vendee Relationship ..................................................................................................... 16.6 Suzukis Policies.......................................................................................................................... 16.7 No Implied Waiver...................................................................................................................... 16.8 Sole Agreement of the Parties; Amendment............................................................................. 16.9 Construction, Severability and Jurisdiction............................................................................. 16.10 Attorneys Fees.......................................................................................................................... 17. GLOSSARY ......................................................................................................................................... 17.1 Defined Terms ............................................................................................................................. ATTACHMENT A........................................................................................................................................ ATTACHMENT B........................................................................................................................................
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STANDARD PROVISIONS
1.
RIGHTS GRANTED TO DEALER
1.1 Dealer Rights. Subject to the terms of this Agreement, Suzuki hereby grants Dealer the non-exclusive rights:
(a) To buy and resell at retail, in the ordinary course of Dealers business, the Suzuki Vehicles (as defined in Section 17.1), the types of which may be periodically revised by Suzuki in its discretion upon notice to Dealer; (b) To identify itself as an authorized dealer of the Suzuki Vehicles utilizing approved signage solely at the Location; and (c) To use the name Suzuki and the Suzuki Marks in the advertising, promotion, sale and servicing of the Suzuki Vehicles in the manner herein provided from the Location.
No obligation exists on the part of Suzuki to sell any other Suzuki products to Dealer. Suzuki reserves the right to sell the Suzuki Vehicles to retail customers and to grant the privilege of using the name Suzuki or the Suzuki Marks to other dealers or entities, wherever they may be located. 2. RESPONSIBILITIES ACCEPTED BY THE DEALER
2.1 Dealer Responsibilities. Dealer accepts its appointment as an authorized Suzuki dealer and agrees to:
(a) Promote, advertise, market and sell the Suzuki Vehicles actively, aggressively, honestly and effectively, subject to the terms and conditions of this Agreement, in order to meet, and expand to the fullest extent possible, the demand for Suzuki Vehicles by retail customers that are generally located in the area of the Location; (b) Service the Suzuki Vehicles in the same manner, subject to the terms and conditions of this Agreement; (c) Establish and maintain satisfactory and attractive dealership facilities at the Location in accordance with the written guidelines established and amended from time to time by Suzuki; (d) Make all payments to Suzuki when due; and (e) Discharge its other obligations under this Agreement.
3.
CHANGE IN MANAGEMENT OR OWNERSHIP
3.1 Prior Approval of Changes. If Dealer proposes a change in General Manager, a change in ownership, or a transfer of the dealership business or its principal assets to any person conditioned upon Suzuki entering into a Dealer Agreement with that person, Suzuki will consider Dealer's proposal and not unreasonably refuse to approve it, subject to the following: (a) Dealer agrees to give Suzuki prior written notice of any proposed change or transfer described above. Dealer understands that if any such change is made prior to Suzuki approval of the proposal,
EXHIBIT B - TAB 3-5
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termination of this Agreement will be warranted and Suzuki will have no further obligation to consider Dealer's proposal. (b) Suzuki agrees to consider Dealer's proposal, taking into account factors such as (1) the personal, business, and financial qualifications of the proposed General Manager and owners, and (2) whether the proposed change is likely to result in a successful dealership operation with acceptable management, capitalization, and ownership which will provide satisfactory sales, service, and facilities at an approved location, while promoting and preserving competition and customer satisfaction. (c) Suzuki will notify Dealer in writing or electronically of Suzuki decision on Dealer's proposal within 60 days after Suzuki has received from Dealer all applications and information reasonably requested by Suzuki. If Suzuki disagrees with the proposal, it will specify its reasons. Suzuki may request that Dealer submit such applications and information in writing or electronically. (d) Any material change in Dealer's proposal, including change in price, facilities, capitalization, proposed owners, or General Manager, will be considered a new proposal, and the time period for Suzuki to respond shall recommence. (e) Suzuki prior written approval is not required where the transfer of equity ownership or beneficial interest to an individual is (1) less than ten percent in a calendar year, and (2) between existing dealer owners previously approved by Suzuki where there is no change in majority ownership or voting control. Dealer agrees to notify Suzuki within 30 days of the date of the change and to execute a new Dealer Statement of Ownership. (f) Suzuki is not obligated to approve any proposed changes in management or ownership under this Section unless Dealer makes arrangements acceptable to Suzuki to satisfy any indebtedness of Dealer to Suzuki and other commitments of Dealer to Suzuki. 3.2 Multiple or Public Ownership Requirements. In addition to the provisions of Section 3.1, Dealer acknowledges and agrees that no person or entity, whether publicly owned or privately owned, may directly or indirectly, in whole or in part, own and/or operate Dealer except in accordance with the terms and conditions of Suzukis policies on public ownership and multiple ownership, as established and amended from time to time by Suzuki. Additionally, Dealer agrees that Suzuki may, through the reasonable exercise of its discretion, refuse to approve a proposed transfer, sale or other ownership and/or operator change if such transfer, sale or other change would result in a violation of Suzukis policies on public ownership and/or multiple ownership. 4. PLACE OF BUSINESS
4.1 Location. Dealer shall operate its Dealer Operations, including showroom and sales, service and parts departments, only at the Location, and in a manner that is in compliance with Suzukis dealership and operation facilities standard and other guidelines established and amended by Suzuki from time to time. Dealer agrees to conduct Dealership Operations only from the Location.
Effective performance of Dealer's responsibilities under this Agreement requires that the dealership be reasonably equipped to communicate with customers and Suzuki and to properly diagnose and service Suzuki Vehicles. Accordingly, Dealer agrees to provide for use in the Dealership Operations any equipment reasonably designated by Suzuki as necessary for Dealer to perform effectively under this Agreement.
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4.2 Change in Location. If Dealer wants to make any change in the Location or Premises including a change in size, or in the uses previously approved for those Premises, Dealer will give Suzuki prior written notice of the proposed change, together with the reasons for the proposal, for Suzuki evaluation and final decision. No change in location or in the use of Premises will be made without Suzuki prior written authorization pursuant to its business judgment. 4.3 Size. Dealer's facilities at the Premises must meet or exceed Suzuki's minimum size requirements which are identified and attached hereto as Attachment B, the Facility Standards Addendum and other standards as established from time to time; provided, however, that if Suzuki substantial changes to its standards, it will consult with the Dealer Advisory Board. Notwithstanding this, Suzuki reserves the right to exercise its own disrection in establishing such standards. Dealer agrees to provide Premises at the Location that will promote the effective performance and conduct of the Dealership Operations, and Suzuki's image and goodwill. Such Premises must be adequately sized to allow for display and storage of the Suzuki Vehicles, provide for office space, a parts area and service facilities of sufficient size to accommodate the volume of sales and service of the Dealer in conformance with written recommendations from Suzuki. 4.4 Dealership Appearance and Image. In order to establish an effective network of authorized Suzuki dealers, Dealers place of business shall at all times be maintained so as to present a good image for Dealer and Suzuki and will comply with all conditions of Suzukis Square Brand Image Program and other standards as established from time to time; provided, however, that if Suzuki substantial changes to its standards, it will consult with the Dealer Advisory Board. Notwithstanding this, Suzuki reserves the right to exercise its own disrection in establishing such standards. Dealer agrees that its Premises will be properly equipped and maintained, and that the interior and exterior retail environment and signs will comply with Suzuki's requirements, which may be amended from time to time, in order to promote and preserve the image of Suzuki and its dealers. 4.5 Business Hours. Dealer agrees to keep Dealership Operations open for business during all days and hours that are customary and lawful for such operations in the community or locality in which Dealer is located and in accordance with industry standards. Dealer shall not be considered open unless all Dealership Operations are open to the public, and Dealers personnel are present to assist customers. 4.6 Identification. Subject to any applicable governmental ordinance, regulation or statute, Dealers place of business shall be properly and appropriately identified as a Suzuki retail store by display of authorized Suzuki outdoor signs. Dealer shall purchase from Suzuki and install the size and style of Suzuki outdoor logo signs, as may be required from time to time, and shall maintain such signs to include electrical hookups and operation. Suzuki will review all Suzuki identification at Dealers place of business on a periodic basis to assure that it is adequate, attractive and well maintained. Dealer shall follow Suzukis recommendations or requirements regarding Suzuki identification. 4.7 Multiple Brands. Suzuki recognizes that Dealer may handle brands which are competitive with the Suzuki Vehicles. In the event Dealer handles such competitive products, Dealer agrees that it will give Suzuki prior written notice of each such competitive products. Further, Dealer agrees to afford the Suzuki Vehicles the effort that Dealer gives to competitive products handled by Dealer in terms of advertising, promotion and sale, floor space, inventory and service in direct proporation to the relative market share of Suzuki Vehicles sold by Dealer. Dealer shall also maintain equal or greater prominence as that afforded to competitive brands in the installation and display of Suzuki logo signs and all other signage bearing the Suzuki Marks.
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5. TRADEMARKS
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5.1 Use of Suzuki Marks. Dealer acknowledges that Suzuki, or Suzukis parent or affiliated companies, is the exclusive owner of the Suzuki Marks. Dealer agrees that it will take no action inconsistent with such ownership and agrees that all use of the Suzuki Marks by Dealer will inure to the benefit of Suzuki and Suzukis parent and affiliated companies. Dealer further acknowledges the great value of the goodwill associated with the Suzuki Marks and the fact that they are inherently distinctive and/or have acquired secondary meaning in the mind of the public such that they are associated with Suzuki and its parent and affiliated companies. During the term of this Agreement and thereafter, Dealer agrees that it will neither have nor claim any right, title, or interest in respect of the Suzuki Marks or otherwise claim any rights of Suzuki and/or its parent or affiliated companies in and to the Suzuki Marks. Suzuki grants to Dealer a non-exclusive and non-transferable license to display or otherwise use the Suzuki Marks at the Location solely in connection with the selling or servicing of the Suzuki Vehicles. Dealer may use the Suzuki Marks at the Location for the foregoing purposes solely in a manner specified by Suzuki and subject to the prior written approval of Suzuki. Dealer agrees that the Suzuki Marks may be used as part of the name under which Dealer conducts its business only with the prior written approval of Suzuki. Dealer will not apply to register any name, which includes a Suzuki Mark as an Internet domain name without Suzuki prior written approval. Dealer agrees to purchase and sell goods bearing Marks only from parties authorized or licensed by Suzuki. The foregoing license or any approval previously granted by Suzuki shall terminate automatically upon termination of this Agreement for any reason, or may be cancelled or withdrawn by Suzuki at any time. Dealer shall immediately discontinue any advertising that Suzuki may find to be injurious to Suzukis business or reputation or to the Suzuki Marks. Dealer agrees to permit any designated representative of Suzuki upon the Premises during regular business hours to inspect Suzuki Vehicles or services in connection with Marks. 5.2 Misuse; No Rights Against Others. Dealer agrees not to sell or offer for sale as Suzuki Vehicles any products which are not the Suzuki Vehicles. Dealer shall not have any rights (1) against Suzuki for damages or any other remedy by reason of Suzukis failure or alleged failure to prosecute any alleged infringements or imitations by others of the Suzuki Marks, or (2) against Suzuki or any other person whatsoever to object to or otherwise prevent Suzukis allowing any other dealer to display the Suzuki Marks or use them as part of any business name. 5.3 Discontinuance of Use. Upon termination or expiration of this Agreement, Dealer agrees that it shall immediately:
(a) Discontinue the use of the Suzuki Marks, or any confusingly similar mark, including without limitation the use of all stationery, telephone directory listings, printed material, broadcasting and electronic media, including but not limited to television and the Internet, and all forms of transmission, either developed or undeveloped, referring in any way to Suzuki or bearing any of the Suzuki Marks; (b) Discontinue the use of the Suzuki Marks, or any confusingly similar mark, as part of its business or corporate name, and file a change or discontinuance of such name with appropriate authorities; Marks; (c) Remove at Dealers expense all Suzuki logo signs and all other signage bearing the Suzuki
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(d) Cease representing itself as an authorized Suzuki dealer; and Refrain from any action, including without limitation any advertisement, statement or implication in any printed or electronic media, that it is authorized to sell or distribute the Suzuki Vehicles.
5.4 Equitable Remedies. In the event Dealer fails to comply promptly with the terms and conditions of Section 9, the parties agree that (1) Suzuki will suffer irreparable injury for which money damages are not an adequate remedy and, as a result, Suzuki shall be entitled to injunctive relief or such other equitable relief as a court may determine, and (2) Suzuki shall have the right to enter upon Dealers premises and remove, all Suzuki logo signs and any other identification bearing the Suzuki Marks. Dealer agrees that it shall reimburse Suzuki for any costs and expenses incurred in the removal of signs owned by Dealer bearing the Suzuki Marks, including reasonable attorneys fees. 6. PURCHASE OF SUZUKI VEHICLES BY DEALER
6.1 General Terms and Conditions. Suzuki will sell the Suzuki Vehicles to Dealer, and Dealer shall purchase the Suzuki Vehicles from Suzuki in accordance with the terms and conditions set forth in this Agreement and the sales programs offered by Suzuki from time to time. Suzuki reserves the right to change any term or condition, including price (as set forth in Section 6.2) and payment term, at any time without accountability to Dealer. However, Suzuki shall endeavor to provide Dealer with advance notice of any such change. The Suzuki Vehicles supplied by Suzuki to Dealer are warranted only in accordance with Suzukis written warranty to consumers, which written warranty is supplied to Dealer for distribution to Dealers customers and which may be amended from time to time by Suzuki. OTHER THAN THE WARRANTY CONTAINED IN SUZUKIS WRITTEN WARRANTY, SUZUKI DISCLAIMS ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT BY WAY OF LIMITATION, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 6.2 Prices. All sales to Dealer shall be at such prices as from time to time are established by Suzuki and in effect at the time of shipment, and as invoiced. Such prices are referred to herein as the Dealer Price. Suzuki reserves the right to change its Dealer Price for any reason and, without limiting the foregoing, Suzuki will not be bound by Dealers pre-sale of the Suzuki Vehicles to a customer in the event of a price increase. Suzuki will give notice to Dealer of any change increasing the price to be paid by Dealer before shipping any current Suzuki Vehicles to which such change is applicable. Dealer may cancel or modify orders for the Suzuki Vehicles to which any such change applies, provided written notice of cancellation is delivered to Suzuki within 10 days after receipt by Dealer of Suzukis price change notice. Dealer agrees that it is responsible for and shall comply with all laws calling for the collection and/or payment of all taxes, including sales and use taxes. On all Suzuki Vehicles ordered by Dealer, Dealer shall pay the equalized transportation and freight charges as Suzuki in good faith establishes from time to time. If Dealer fails or refuses to accept a delivery, these charges as well as all return charges shall be added to Dealers account with Suzuki; provided, however, that the assessment of such charges is in addition to, and not in lieu of, any other liability hereunder for Dealers failure or refusal to accept delivery. 6.3 Routing; Unloading; Shortage/Damage. Suzuki will attempt to use the best available carrier for all shipments to Dealer, and Suzuki hereby reserves the right to make the final choice of carrier at Suzukis sole discretion. Upon receipt by Dealer of each shipment, Dealer shall accept and immediately inspect the vehicles for any damage or loss. When weather or night shipments do not permit immediate 5
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inspection, any damage or loss must be reported within 48 hours of delivery by certified letter. Claims for visible or concealed damage any shipment of the Suzuki Vehicles must be filed in accordance with Suzukis Service Policies and Procedures Manual, as amended by Suzuki from time to time. 6.4 Product Return. Suzuki will not accept the return of the Suzuki Vehicles from Dealer, except where required by law. If Suzuki must, by local law, accept the return of the Suzuki Vehicles from Dealer, Dealer shall pay all transportation charges and freight charges. All Suzuki Vehicles returned must be new, unused, undamaged and in their original condition; provided, however, that if any Suzuki Product is damaged upon return, Suzuki may, but is under no obligation to, accept such damaged Vehicles and may deduct the amount of the damage from the original invoice price. 6.5 Payments. Dealer shall establish and maintain a commercial floor plan with an independent commercial lender acceptable to Suzuki for the exclusive purchase of the Suzuki Vehicles. Dealer shall provide written evidence of such floor plan promptly upon request of Suzuki. Dealer must submit payment for all Suzuki Vehicles, and must pay all open account balances, in accordance with the terms and conditions described in the Dealer Credit Policy, as amended from time to time, or as established from time to time by Suzuki. Dealer acknowledges that Suzuki may require prepayment or payment on a cash on delivery (C.O.D.) basis for the Suzuki Vehicles. 6.6 Title; Risk of Loss. Title to the Suzuki Vehicles passes to Dealer only upon payment in full for said Suzuki Vehicles delivered to Dealer. Until full payment for the Suzuki Vehicles is made, Suzuki retains and is hereby granted a security interest in all Suzuki Vehicles, and in the proceeds thereof, which shall allow Suzuki at any reasonable time after a delinquency under Section 10.5, and without notice or demand and with or without legal process, to take possession of said Suzuki Vehicles. When a shipment of the Suzuki Vehicles to Dealer is delivered to a transportation carrier for delivery to Dealer, the risk of loss for the shipment passes to Dealer at that point and any loss or damage during shipment must be resolved solely between the carrier and Dealer. If Suzuki accepts a return of any of the Suzuki Vehicles from Dealer, the risk of loss with respect thereto shall not pass to Suzuki until delivery to Suzuki is completed. 6.7 Delinquencies. If Dealer becomes delinquent in any of its accounts with Suzuki (e.g., delinquent Open Parts Account or delinquent Product (Vehicle) Account), Dealer shall be in default on all of its accounts with Suzuki. All past due accounts will then be accelerated and become immediately due and payable. Furthermore, Suzuki may without notice to Dealer suspend all pending orders for the Suzuki Vehicles until such time as the delinquency is cured. Any collection charges (including attorneys fees) incurred by Suzuki in connection with the collection of any indebtedness from Dealer to Suzuki shall be paid by Dealer. Upon termination or expiration of this Agreement, Dealer agrees that all unfilled orders for the Suzuki Vehicles are immediately and without notice cancelled. 6.8 Financial Condition. Dealer shall maintain sufficient minimum working capital and net worth, as Suzuki reasonably determines, based on Dealers size and market opportunities, to allow Dealer to perform its obligations under this Agreement. 6.9 Delays. Although Suzuki will use due diligence to ship promptly orders accepted by it, Suzuki shall not be liable for any delay in shipment caused by a shortage of supplies at the Suzuki vehicle distribution facility nearest Dealer, due to riots, war, willful acts of third parties, strikes or other union labor problems, import restrictions, acts of God, or any other cause beyond Suzukis control. Although Suzuki will attempt to fill all orders accepted by it, Suzuki will not be liable for failure to fill any of Dealers orders. 6
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6.10 Product Supply. Suzuki will endeavor to distribute new Suzuki Vehicles among its dealers in a fair and equitable manner. Many factors affect the availability and distribution of Suzuki Vehicles to dealers, including component availability and available production capacity, sales potential for retail customers generally located in the area of the Location varying consumer demand, weather and transportation conditions, governmental regulations, and other conditions beyond the control of Suzuki. Suzuki reserves to itself discretion in accepting orders and distributing Suzuki Vehicles, and its judgments and decisions are final. 6.11 Product Discontinuance. Suzuki retains the right to discontinue, cancel or alter any of the Suzuki Vehicles as well as the design, styling, color or other features of said product lines or models and shall be under no obligation to provide notice of the same. Suzuki does not represent that any of the Suzuki Vehicles or said product lines or models will continue for any period of time or that any additional or new Suzuki Vehicles from time to time will be made available to Dealer for purchase. 7. RETAIL SALES OF SUZUKI VEHICLES
7.1 Dealers Sales Responsibilities. Dealer recognizes that customer satisfaction and the successful promotion and sale of the Suzuki Vehicles are significantly dependent on Dealers advertising and sales promotion activities. Therefore, in addition to Dealers obligations under Section 2.1, Dealer at all times shall:
(a) Maintain at its expense an adequate, stable, qualified and trained sales organization that is knowledgeable about the Suzuki Vehicles; (b) Maintain high standards of ethics in advertising, promoting and selling the Suzuki Vehicles and avoid engaging in any misrepresentation or unfair or deceptive practices; (c) Accurately represent to customers the total selling price of the Suzuki Vehicles. Dealer agrees to give customers itemized statements and all other information required by law, including information about any Suzuki suggested retail price. Dealer understands and acknowledges that it may sell the Suzuki Vehicles at whatever reasonable price Dealer desires; (d) Not charge customers for services for which Dealer is reimbursed by Suzuki; and 7.2 Advertising/Promotion Materials. Pursuant to its responsibilities under this Agreement, Dealer shall stock an adequate supply of advertising and promotional materials for advertising and promotion of the Suzuki Vehicles consistent with Dealers size, market opportunities and sales potential.
7.3 Types of Sales. It is Suzuki's policy not to sell or allocate new Suzuki Vehicles to dealers for resale to persons or parties (or their agents) engaged in the business of reselling, brokering (including but not limited to buying services), exporting or wholesaling Suzuki Vehicles. Dealer shall sell Suzuki Vehicles to retail customers only (i.e., for personal use or primary business use other than resale), except for sales to or trades with other authorized Suzuki dealers. Unless otherwise authorized by Suzuki, Dealer shall not sell, directly or indirectly, the Suzuki Vehicles to any unauthorized Suzuki dealer, any other person(s), or their agents engaged in the business of reselling, brokering (including but not limited to buying services), exporting or wholesaling Suzuki Vehicles, in this country or a foreign country. Dealer shall emphasize sales of the Suzuki Vehicles to retail customers that are generally located in the area of the Location. Dealer is authorized to sell Suzuki Vehicles only to customers located in the United States. Dealer agrees that it will not sell new Suzuki Vehicles for resale or principal use outside the United States. In addition, Dealer shall not sell to anyone or otherwise promote the sale of any Suzuki Vehicle that has been manufactured for sale to a customer outside the United States or that does not meet the requirements of all laws applicable to Dealer and/or the Location. For the purpose of this Agreement, the term "United States" means the continental United States and Alaska (excluding Hawaii). 7
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7.4 Warranty Information; No Other Warranties. Dealer acknowledges its responsibility to be completely familiar with the Suzuki warranties and any change published by Suzuki from time to time. Dealer shall display in its showroom the complete text of the warranties in accordance with government regulations and instructions from Suzuki, and Dealer shall deliver a copy of the Suzuki warranties and shall review their provisions with each buyer of the Suzuki Vehicles. Dealer understands that Suzuki makes no warranties or representations, express or implied, for itself or the manufacturer of the Suzuki Vehicles, except as provided in the current Suzuki warranty policy in effect from time to time. Dealer shall promote only Suzuki approved and sanctioned warranties and extended service contracts as Suzuki warranties and service contracts, and shall not promote any other warranty or extended warranty as a Suzuki warranty. 7.5 Dealer Sales Performance. Suzuki may from time to time establish a reasonable monthly, quarterly, semi-annual and/or annual sales goal for Suzuki Vehicles, which Dealer will strive to achieve through aggressive marketing and promotional practices. Dealer shall from time to time submit a business plan at the request of Suzuki that contains Dealers strategy for such items as future sales (including goals), advertising, promotion, merchandising, provision of service, staffing and other matters, and complying with other obligations under this Agreement, as Suzuki may reasonably request. Suzuki may at any time assign Dealer a geographic area called a Primary Market Area (PMA), which Suzuki may change in its discretion from time to time. Dealer agrees that it will have no exclusive right to any such PMA or any other geographic area and Suzuki may add new dealers, relocate dealers or adjust Dealers PMA as it decides in its sole discretion. In entering into this Agreement, Dealer acknowledges that other dealers might be authorized by Suzuki to compete in the area(s) in which Dealer operates. Dealers sales performance may be evaluated under various criteria established by Suzuki, which may include, but are not limited to, the achievement of sales goals established by Suzuki; comparisons of Dealers sales and/or registrations to those of other Suzuki dealers of comparable size and market opportunities, and other line makes within Dealers PMA or such area(s) which Suzuki believes is a reasonable basis for comparison; sales performance trends over a reasonable period of time; compliance with Dealers business plan; and the manner in which Dealer has conducted its sales and marketing operations. 7.6 Inventories. Dealer acknowledges that customers expect Dealer to have a reasonable quantity and variety of current model of Suzuki Vehicle in its inventory. Accordingly, Dealer agrees to purchase and stock, at all times, a minimum inventory of Suzuki Vehicles in quantities adequate to meet or exceed Dealers proper share of current and anticipated demand for the Suzuki Vehicles by retail customers are generally located in the area of the Location or other PMA assigned to the dealer by Suzuki pursuant to Section 7.5. 8. CUSTOMER SATISFACTION
8.1 Customer Satisfaction. One of Suzuki's main goals is to be recognized as marketing the finest products and providing the best service in the automobile industry. Accordingly, the Suzuki name should be synonymous with the highest level of customer satisfaction. Dealer and Suzuki recognize that appropriate care for the customer is necessary to promote customer satisfaction with Suzuki Vehicles and its dealers, which is vital to our current and future business success. Dealer therefore agrees to conduct its operations in a manner which will promote customer satisfaction with the purchase and ownership experience. Dealer will emphasize customer satisfaction to all Dealer's employees, ensuring that customers are at all times treated in a prompt, courteous, fair, and professional manner. Dealer will use its best efforts to positively resolve, 8
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requests for customer assistance, and conveying to customers that Dealer is committed to the highest level of customer satisfaction. Suzuki will provide Dealer with a written report at least annually pursuant to the procedures in effect evaluating the Dealers purchase and delivery customer satisfaction and Dealers service customer satisfaction. The report will compare the Dealers performance to other Suzuki dealers in the Region. Suzuki may revise the customer satisfaction evaluation process from time to time. Dealer acknowledges that Suzuki may from time to time, adopt incentive programs, policies and procedures that reward customer satisfaction. 9. SERVICE
9.1 General. Dealer, as an independent business, shall strive to offer the best possible customer service to owners and users of all Suzuki Vehicles. Customer satisfaction with service plays a vital role in the success and profitability of Suzuki dealers. Providing superior, high quality service is Suzukis goal to help its dealers ensure long term success in the marketplace. Suzuki acknowledges that service satisfaction is the key to repeat business. Service satisfaction is also a crucial element to minimize the expense of recruiting and gaining new customers. Suzuki has established guidelines and educational efforts outlined in the publications titled, the "Suzuki Service Policies and Procedures Manual", which may be amended or replaced from time to time. Dealer agrees to follow the philosophies and guidelines outlined in these publications and also to be prepared to revise and modernize its operation as the demands of the market change. Dealer agrees to deliver all of the Suzuki Vehicles in a professional manner consistent with these manuals, and each customer is to receive from Dealer a thorough briefing on the operation, maintenance and cautions of operating the Suzuki Vehicles.
9.2 Suzuki Vehicle Pre-Delivery Inspections and Adjustments. Because new vehicle delivery condition is critical to customer satisfaction, Dealer agrees to perform specified pre-delivery inspections and adjustments on each new Suzuki Vehicle and verify completion according to procedures identified in the Suzuki Policy and Procedures Manual.
9.3 Warranty Repairs. Dealer understands that proper and efficient warranty repairs are an essential part of good customer relations. In accordance with the provisions of the Suzuki Service Policies and Procedures Manual furnished by Suzuki to Dealer from time to time, Dealer shall perform any warranty repairs of the Suzuki Vehicles which qualify for repairs without charge to the customer under the provisions of such Suzuki Service Policies and Procedures Manual regardless of whether or not Dealer sold the Suzuki Vehicles requiring warranty repairs. Dealer shall use only new and genuine Suzuki parts in performing any warranty repairs. Dealer shall be solely responsible for the service work performed in making the warranty repairs. When the vehicle is returned to the owner, Dealer will provide owner a copy and explanation of the repair document reflecting all services performed. Suzuki will reimburse Dealer only for warranty repairs performed in accordance with prevailing Suzuki policies and procedures, as published by Suzuki from time to time, or as otherwise required by applicable law. Dealer shall use only proper warranty claim forms furnished by Suzuki and agrees to make reasonable efforts to submit warranty claims via electronic methods through the SCAT System. Credit for authorized warranty repairs will be issued by Suzuki in a timely manner. 9.4 Service Compliance. Dealer shall provide prompt, accurate, efficient and courteous maintenance and repair service to all owners and users of the Suzuki Vehicles, regardless of from whom the Suzuki Vehicles were purchased. All service will be performed and administered in a professional manner and in accordance with all applicable laws and regulations, this Agreement, Suzuki Service Policies and Procedures Manual, as amended from time to time. When performing service other than warranty repairs, Dealer may sell and install non-genuine Suzuki parts. All service shall be performed in accordance with recommendations, specifications and publications (including Suzuki Service Policies and Procedures Manual) as may be furnished to Dealer by Suzuki from time 9
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to time and updated from time to time, which Dealer shall arrange to be circulated to its service department and then filed in a permanent service library. However, Dealer shall be solely responsible to its customers to have all service work performed properly and in a good workmanship manner. Prior to commencing any service work, Dealer shall advise the customer of the work anticipated by Dealer to be required and the cost (including parts and labor) thereof and obtain the consent of the customer to such work. 9.5 Service Area and Equipment. Dealer shall maintain an appropriately sized service department which shall be painted, kept neat and properly organized to insure efficient operation, and which presents a positive impression and inspires consumer confidence. Dealers service department shall provide sufficient working space to handle Dealers expected service volume based upon the sale of Suzuki vehicles and service work occurring in the general area. Dealer shall equip this department with the appropriate and necessary shop equipment (including equipment outlined in the Suzuki Operations Guide in effect from time to time), furniture, Suzuki special tools and those tools used in normal day-to-day operations. 9.6 Records and Manuals. Dealer shall maintain and keep updated all manuals, bulletins, microfiche, video training tapes and written or electronic records received from Suzuki. Dealer and its service personnel shall have available, and be familiar with, all service and maintenance manuals provided by Suzuki. 9.7 Service Personnel. Dealer agrees to maintain an adequate service and parts organization as recommended by Suzuki, including a competent, trained service and parts manager(s), trained service and parts personnel and, where service volume or other conditions make it advisable, a consumer relations manager. Service personnel in the dealership shall be competent and properly trained at Dealers expense to handle all service work of Dealers customers. Dealer shall have at least two full-time technicians who have been certified by the Suzuki Service School, and more than two full-time technicians if the service department volume warrants additional mechanics. Dealer shall send its dealer personnel to service training classes, service schools and clinics, technical training schools, seminars and other dealer employee training courses as provided by Suzuki from time to time, including all of Suzukis Technical Training Programs, and Dealer shall ensure that its technicians also participate in all video training and testing programs (including the Mechanic to Mechanic series). Dealer acknowledges the need for such school and training to keep current on all Suzuki Vehicles for the protection of Dealers customers, and agrees to support its service department personnel with respect thereto. 9.8 Tools and Equipment. Dealer agrees to provide and maintain on Dealership Premises essential service tools as required by Suzuki, and such other tools and equipment as reasonably necessary to fulfill its responsibilities to properly diagnose and service Products. Dealer also agrees to allow Suzuki or its designated representative to survey or inspect Dealer's tools and equipment to ensure that they are in good repair and proper calibration to enable Dealer to meet its service responsibilities. In the event a dispute arises from such a survey or inspection, Suzuki personnel agree to discuss the matter with the Dealer in order to resolve the dispute. 9.9 Campaign Inspection and Corrections. Suzuki will notify Dealer of suspected unsatisfactory conditions on Products and issue campaign instructions. Dealer agrees to inspect and correct suspected unsatisfactory conditions on Products in accordance with the instructions. Dealer will also determine that campaign inspections and corrections have been made on Products Vehicles in its inventory prior to sale, and follow-up on Products on which campaigns are outstanding. 10
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Suzuki may ship, and Dealer agrees to accept, unordered parts and materials required for campaigns. Upon campaign completion, Dealer will receive credit for excess parts and materials so shipped if they are returned or disposed of according to Suzuki instructions. 9.10 Compliance with Consumer Protection Statutes, Rules and Regulations. Because certain customer complaints may impose liability upon Suzuki under various repairs or replacement laws or other consumer protection laws and regulations, Dealer agrees to provide adequate and prompt written notice to Suzuki of such complaints and take such other steps as Suzuki may reasonably require. Dealer shall do nothing to adversely affect Suzukis rights under such laws and regulations. Subject to any law or any regulation to the contrary, Dealer shall be liable to Suzuki for any refunds or vehicle replacements provided to customers where Suzuki reasonably establishes that Dealer failed to carry out vehicle repairs in accordance with Suzukis written published policies and procedures or its express oral instructions subsequently confirmed in writing. Dealer also agrees to provide all required customer notifications and disclosures as prescribed by repair or replacement laws or other consumer laws or regulations. 10. PARTS AND ACCESSORIES
10.1 Inventory. Dealer agrees to maintain an adequate inventory of Suzuki parts and accessories to meet customer service demand and warranty requirements, to maintain the highest level of customer satisfaction and to abide by the provisions of Suzukis Service Policies and Procedures Manual in effect from time to time. Orders for parts and accessories will be submitted and processed according to written or electronic procedures established by Suzuki or other designated suppliers. 10.2 Shipment Acceptance. Dealer shall accept all shipments of Suzuki parts or accessories ordered by it. In the event of an error in a shipment by Suzuki, Dealer must submit a parts discrepancy report and receive the prior written approval of Suzuki before returning the parts. 10.3 Non-Genuine Parts and Accessories. Dealer shall not sell, install or use any nonSuzuki part or accessory that could adversely affect the mechanical operation, safety, integrity or reputation of the Suzuki Vehicles or that could cause unsafe handling or dangerous riding characteristics. Dealer shall disclose any such sale, installation or use of non-genuine parts or accessories to the customer and advise the customer that such parts or accessories are not included in any warranties furnished by Suzuki. 10.4 Accessories. In addition to Dealers obligations under Section 10.3, Dealer acknowledges that Dealer is responsible for the aftermarket and accessory items that Dealer installs on any Suzuki Vehicles and must disclose to each customer in writing the use thereof and caution each customer regarding the possible voiding of any Suzuki warranty, the proper use of accessory items, any effect the items may have on handling characteristics, mileage, safety, emissions and any prohibitions under federal (including EPA) or state laws or regulations. 11. ADVERTISING AND PROMOTION
11.1 Advertising and Promoting Suzuki Vehicles. Dealer acknowledges the value of advertising and promotions and agrees to conduct ongoing advertising and promotional programs at whatever level is necessary to comply with Section 2.1 and the other terms of this Agreement. Without limiting the foregoing, and in addition to Dealers individually generated programs, Dealer shall also utilize all point-of-sale, merchandising, promotion and advertising materials provided by 11
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Suzuki and shall become and remain familiar with the Suzuki Dealer Advertising Planner in effect from time to time and adhere to its principles. 11.2 Retail Only. In its advertising and promotional activities, Dealer must identify itself as a retail dealer and must not in any way attempt to mislead the public into a belief that Dealer is a wholesaler, jobber, factory direct dealer or anything other than a retail dealer. 11.3 Customer Confidence. Dealer shall advertise and promote the Suzuki Vehicles only in a manner that will develop customer confidence in the Suzuki Vehicles, and will not use any advertising or promotions tending to mislead or deceive the public. Dealer shall discontinue any advertising or promotions that Suzuki may find in its sole judgment to be injurious to Suzuki business or likely to deceive the public. In furtherance of developing customer confidence, Dealer acknowledges that it is solely responsible for and must stand behind the price, performance, specifications, equipment warranty and other information contained in its advertisements or promotions. If Dealers advertisements or promotions of the Suzuki Vehicles contain specific obligations or offers, Dealer must be prepared to and must fulfill all such obligations and offers set forth therein. 11.4 Activities Regarding Suzuki Name. To further expose and popularize the name SUZUKI, Suzuki will from time to time participate in promotional or advertising activities with other parties, which may include the sale or exchange of the Suzuki Vehicles for advertising or promotional value. Dealer shall cooperate by rendering assembly, pre-delivery and warranty service in connection with such promotions or advertisements, for which service Dealer shall be compensated at the established rates. 12. REPORTING, RECORDS, INSPECTION AND OTHER RESPONSIBILITIES
12.1 Service Reporting. Dealer agrees to provide Suzuki with reports of warranty service and other service work performed by Dealer in the form and within the times required by Suzuki. 12.2 Retail Delivery Reporting. Dealer shall immediately upon delivery of a Suzuki Vehicle to a retail purchaser complete and transmit to Suzuki a report of retail sale called the "Retail Delivery Report" and furnish to Suzuki, via SCAT system or other internet system, with other reports and records as may be reasonable required by Suzuki. 12.3 Data Transmission. To provide for effective and efficient communication, data interchange and electronic transactions between Suzuki, its dealers, and its customers, Suzuki may establish reasonable requirements for Dealer's acquisition and use of certain computer software, computer hardware, and systems in Dealership Operations, including but not limited to Suzuki's SCAT system and involving the Internet. Dealer agrees to comply with those requirements and all restrictions and limitations applicable to such computer software, computer hardware or systems. Suzuki may provide Dealer from time to time certain customer information or other information or data. Dealer agrees to use such information or-data only as designated by Suzuki, and not to otherwise disclose such information or data without Suzuki written permission, unless otherwise required by law. This restriction only applies to information and data provided by Suzuki to its dealers, and does not apply to data or information Dealer obtains from its customers or other sources. 12.4 Uniform Accounting System. A uniform accounting system facilitates an evaluation of Dealer business management practices and the impact of Suzuki policies and practices. Suzuki therefore agrees to maintain, and Dealer agrees to use and maintain records in accordance with a uniform accounting system set forth in the Suzuki Standard Accounting Manual furnished to Dealer. 12
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Dealer further agrees to electronically submit to Suzuki, by the tenth business day of every month, dealer financial data, including but not limited to financial statements and supporting schedules, in a manner specified by Suzuki and on a timely basis. 12.5 Application for Payment. Dealer also agrees to timely submit true and accurate applications or claims for payments, discounts or allowances; true and correct orders for Products and reports of sale and delivery; and any other reports or statements required by Suzuki, in the manner specified by Suzuki, and to retain such records for at least two years. 12.6 Examination of Dealers Accounts and Records. Suzuki shall have the right during regular business hours to inspect Dealers facilities, visit with Dealers employees and to access, audit and reproduce all records, accounts and supporting data relating to Dealers obligations under this Agreement, including without limitation, sales; sales reporting; service and repair of the Suzuki Vehicles by Dealer. Suzuki will provide two business days' notice before auditing Dealer's records. The obligations of Dealer under the above provisions also include giving Suzuki access to any electronically stored data and, if requested by Suzuki, making and delivering to Suzuki a hard copy thereof. If requested by Dealer, Suzuki agrees to review any report with Dealer and to provide a copy of any report of the examination or audit of Dealer. 12.7 Compliance with Laws. In addition to other provisions of this Agreement that require compliance by Dealer with various laws, Dealer shall at all times conduct its business in full compliance with all applicable federal, state and local laws, rules and regulations, including but not limited to, consumer fraud and deceptive trade practices laws, and all applicable building and safety codes. 13. TERMINATION
13.1 Termination by Suzuki on 60 Days Notice. Suzuki may terminate this Agreement upon sixty (60) days notice after the occurrence of any of the following events:
(a) The replacement of the approved General Manager without Suzukis prior written approval; provided, however, that Dealer shall have 15 days from the date notice is received to cure such event. (b) Any attempted or actual sale, transfer, or assignment by Dealer of this Agreement or any of the rights granted Dealer hereunder, or any attempted or actual transfer, assignment or delegation by Dealer of any of the responsibilities assumed by it under this Agreement contrary to the terms of this Agreement; provided, however, that Dealer shall have 15 days from the date notice is received to cure such event. (c) Any change, whether voluntary or involuntary, in the record or beneficial ownership of Dealer as set forth in the Dealer Statement of Ownership furnished by Dealer, unless permitted by Section 3.1(e) or pursuant to Suzuki written approval; provided, however, that Dealer shall have 15 days from the date notice is received to cure such event. (d) Any unauthorized sale or transfer of any Suzuki Vehicle to any person engaged in the business of reselling, brokering, exporting or wholesaling the Suzuki Vehicles, either in this country or a foreign country, other than another authorized domestic Suzuki dealer, in violation of Section 7.3; provided, however, that Dealer shall have 15 days from the date notice is received to cure such event. (e) Failure of Dealer to maintain the line of credit required by Section 6.5; provided, however, that Dealer shall have 15 days from the date notice is received to cure such event.
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(f) Failure of Dealer to timely pay its obligations to Suzuki; provided, however, that Dealer shall have 15 days from the date notice is received to cure such event. (g) Any dispute among the owners or management personnel of Dealer which, in Suzuki's opinion, may adversely affect the Dealership Operations or the interests of Dealer or Suzuki. (h) Any change in the Dealer's approved Location(s) or Premises or any portion of its Dealership Operation without the prior written consent of Suzuki. (i) Any sale, transfer, relinquishment, discontinuance, or change of use by Dealer of any of the Dealership Premises or other principal assets required in the conduct of the Dealership Operations, without Suzuki prior written approval. (j) Submission by Dealer of false applications or reports, including false orders for Vehicles or reports of delivery or transfer of Vehicles. (k) A finding by a government agency or court of original jurisdiction or a settlement arising from charges that Dealer, or a predecessor of Dealer owned or controlled by the same person, had committed an act involving dishonesty or moral turpitude or any unfair or deceptive business practice which, in Suzuki opinion, may adversely affect the reputation or interests of Dealer or Suzuki. (l) A material breach or material violation by Dealer of any other term or provision of this Agreement not expressly identified as a ground for termination in Section 13.
If the 60-day notice specified in this Section 13.1 is less than the period required by applicable law, such period of notice shall be deemed increased to the minimum period required by such law. 13.2 Termination by Suzuki for Dealer Failure of Performance. If Suzuki determines that Dealer's Premises are not in compliance with Suzuki's written standards, or that Dealer has failed to adequately perform its sales or service responsibilities, including those responsibilities relating to customer satisfaction and training, Suzuki will review such failure with Dealer.
As soon as practical thereafter, Suzuki will notify Dealer in writing or electronically of the nature of Dealer's failure and of the period of time during which Dealer will have the opportunity to correct the failure. If Dealer does correct the failure by the expiration of the period, Suzuki will so advise the Dealer in writing or electronically. If, however, Dealer remains in material breach of its obligations at the expiration of the period, Suzuki may terminate this Agreement by giving Dealer 60 days advance written notice.
13.3 Termination by Suzuki Immediately. Suzuki may terminate this Agreement immediately upon notice after the occurrence of any one of the following events:
(a) Insolvency of Dealer; or filing by or against Dealer of a petition in bankruptcy; or filing of a proceeding for the appointment of a receiver or trustee for Dealer, provided such filing or appointment is not dismissed or vacated within thirty days; or execution by Dealer of an assignment for the benefit of creditors or any foreclosure or other due process of law whereby a third party acquires rights to the operation, ownership or assets of Dealer. (b) Submission by Dealer of false applications or claims for any payment, credit, discount, or allowance, including false applications in connection with incentive activities, where the false information
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was submitted to generate a payment to Dealer for a claim which would not otherwise have qualified for payment. (c) Failure of Dealer to conduct customary sales and service operations during customary business hours for seven consecutive business days. (d) Abandonment of the Location by Dealer. (e) Revocation or suspension for any period of time of Dealers license to sell the Suzuki Vehicles. (f) Refusal by Dealer to timely furnish sales, service or financial information and related supporting data, or to permit a Suzuki designated representative of Suzuki to access, examine, audit, or take copies of any of the accounts or records Dealer is to maintain under the accounting manual and this Agreement. (g) Conviction in a court of original jurisdiction of Dealer, or a predecessor of Dealer owned or controlled by the same person, or any General Manager or dealer owner of any felony. (h) Failure to comply with instructions of Suzuki regarding compliance with applicable laws, including without limitation, recalls or other safety or product improvement campaigns or programs, and/or failure to make a good faith effort to comply with the Federal Clean Air Act, the National Traffic and Motor Vehicle Safety Act or Consumer Product Safety Act or any other laws, orders, rules or regulations regarding recalls or other safety or product improvement campaigns or programs. (i) Failure to comply with the provisions of Section 5.
If the immediate notice specified in Section 13.3 is less than the period required by applicable law, such period of notice shall be deemed increased to the minimum period required by such law. 13.4 Termination by Dealer. Dealer has the right to terminate this Agreement without cause at any time upon written notice to Suzuki. Termination will be effective 30 days after Suzuki receipt of the notice, unless otherwise mutually agreed in writing. 13.5 Termination by Agreement. This Agreement may be terminated at any time by written agreement between Suzuki and Dealer. 13.6 Suzuki Repurchase Option Upon Termination. Upon the termination of this Agreement for any reason, Suzuki will purchase from Dealer, free and clear of all liens, charges and encumbrances, the following: (a) New, unused, unaltered, undamaged, unlicensed and marketable current model Suzuki Vehicles, with mileage of 100 miles of less, which were purchased by Dealer from Suzuki, and are in Dealer's inventory, at Dealer's vehicle price less destination charges and any voluntary advertising associated assessments made on behalf of a Suzuki Advertising Association. Suzuki shall pick up said Suzuki Vehicles and pay all transportation charges for return of said vehicles; (b) The new, current model Suzuki Parts and Accessories at Suzuki's invoice price to Dealer, less Suzuki's prevailing restocking charge, but only if delivered by Dealer at Dealer's expense, to Suzuki's Parts Warehouse located nearest Dealer provided however, that these Suzuki Parts and Accessories must be in a new, unused, undamaged and saleable condition and in the original package 15
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quality; provided further, that Suzuki will not purchase any Suzuki Parts and Accessories which Suzuki deems to be obsolete;
(c) The current Suzuki Special Tools, but only if delivered by Dealer at Dealers expense, to Suzukis Parts Warehouse located nearest Dealer provided however, that these Special Tools are in saleable, good working condition (reasonable wear and tear excepted) and were purchased by the Dealer from Suzuki within three (3) years preceding the effective date of expiration of termination of this Agreement. (d) The current Suzuki signage, but only if Dealer purchased and installed equipment from Suzuki's designated vendor and is in good working condition, reasonable wear and tear is excepted.
The current Suzuki signs but only if Dealer purchased and installed the equipment and signs from Suzuki's designated vendor and are in good working condition. Reasonable wear and tear is excepted. 13.7 Death or Incapacity. This Agreement shall automatically terminate, effective 90 days after the death of the General Manager or any Owner, or the incapacity of the General Manager or the Owner of a majority of the stock or other equity interests of Dealer; provided, that Dealer may request one or more extensions of the effective date of expiration to assist Dealer in terminating its dealership business or to provide for a transfer of assets or ownership previously approved under this Agreement. The request, however, must be made no more than 30 days prior to the effective date of termination; in which event, Suzuki will not unreasonably refuse to grant such an extension. Dealer agrees that factors which would make Suzukis refusal to grant such an extension reasonable include, without limitation, (1) an unreasonably long period of extension; (2) failure to provide Suzuki with all documents relating to succession (including any trust documents or wills); (3) failure of Dealer to advise Suzuki of who will inherit, or claims to inherit, or otherwise succeed to the interests of the deceased or incapacitated person; (4) a dispute regarding entitlement to Dealers assets or a deceased or incapacitated Owners interests, or failure to resolve such a dispute within a reasonable time; (5) inadequate consumer sales and service or satisfaction in the geographic area in which Dealer conducts its business; or (6) impairment of the Suzuki name or the Suzuki Marks. As used in this Agreement, the term incapacity means (i) any physical or mental ailment of the General Manager or the majority Owner that adversely affects Dealers ability to meet its obligations under this Agreement, or (ii) the management of the financial affairs of the General Manager by another person (whether or not appointed by a court). Dealer may apply for a Successor Addendum designating a proposed General Manager and/or owner(s) of a successor dealer to be established under a new dealer contract in the future, in order to continue the operations identified in this Agreement after it terminates because of death or incapacity. Suzuki will execute the Successor Addendum if the proposed General Manager or owner(s) meet Suzukis standards for approving changes in such regards. However, the proposed General Manager or owner(s) will not be required to meet usual capital or financial capability requirements until after the Successor Addendum is implemented by death or incapacity, in which event the proposed person(s) will provide Suzuki within 30 days prior to the termination of this Agreement, including any extensions, such information as Suzuki requires. Dealer may cancel an executed Successor Addendum at any time prior to the death or incapacity of the General Manager, the death of any Owner or the incapacity of the majority Owner. Suzuki may cancel an executed Successor Addendum only if the proposed General Manager or owner(s) no longer meet Suzukis standards. The parties may execute a superseding Successor Addendum by agreement. A Successor Addendum shall expire automatically upon expiration of the term of this Agreement. 16
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Dealer acknowledges that owner(s) have the independent responsibility to take whatever actions are necessary to create the right in the proposed owner(s) to any transfer of ownership approved by Suzuki under the Successor Addendum. If Dealer and Suzuki have not executed a Successor Addendum at the time of the occurrence of any of the events described in the first sentence of the first paragraph of this Section 13.7, any remaining Owner(s) and/or the legal representative of any deceased Owner(s) and/or incapacitated majority Owner may propose a General Manager and/or owner(s) of a successor dealer to be established under a new dealer contract, in order to continue the operations identified in this Agreement after it terminates because of death or incapacity. The proposal, including all applications and information reasonably requested by Suzuki to reach its decision, must be made in writing to Suzuki at least 30 days prior to the termination of this Agreement, including any extensions. Suzuki will accept a proposal, provided that (a) the proposed successor dealers owner(s) and General Manager meet Suzukis standards and are ready, willing and able to comply with the requirements of a new dealer contract, and (b) all outstanding monetary obligations of Dealer to Suzuki have been paid. Within 60 days after receiving the required information or such longer period that Suzuki decides it needs in order to reach a decision, Suzuki will notify Dealer in writing of its decision regarding, as applicable, (1) the capital or financial capability requirements of a person previously approved under a Successor Addendum, or (2) a proposal submitted as required where no Successor Addendum was executed. Suzukis offer of a new dealer contract under such circumstances will automatically expire if not accepted by the proposed successor dealer within 60 days after it receives the offer. To enable Suzuki to maintain the high quality of its dealer network and to make plans for serving the future needs of customers, Dealer may furnish Suzuki with a written plan detailing such persons plans for eventual retirement and the proposed succession to such persons interest. All such plans shall be subject to Suzukis approval as provided above. Dealer shall promptly, but in no event later than 10 days, give Suzuki written notice of the occurrence of any of the events described in the first sentence of the first paragraph of this Section 13.7.
If this Agreement is scheduled to expire or terminate because of the death or incapacity of a General Manager or the death of a Dealer Owner and Dealer requests an extension of the effective date of expiration or termination thirty days prior to such date. Suzuki will defer the effective date for up to a total of eighteen months after such death or incapacity occurs to assist Dealer in winding up its Dealership Operations.
13.8 Continuance of Business Relations. Upon receipt of any notice of termination, Dealer agrees to conduct itself and its operation until the effective date of termination in a manner that shall not injure the reputation or goodwill of the Suzuki Marks or Suzuki. In the event that following the termination or expiration of this Agreement either party has business dealings with the other with respect to the Suzuki Vehicles or service, such dealings shall not constitute either a renewal of this Agreement or a waiver of such termination or expiration. However, all such dealings shall be governed by terms identical to this Agreement for the duration of such dealings unless the parties execute a new and different agreement with respect to such dealings. 14. INDEMNIFICATION 14.1 Indemnification. Indemnification between Suzuki and Dealer shall be as follows:
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(a) Indemnification by Suzuki. Subject to the provisions of this Section 14.1, Suzuki shall indemnify, defend and hold Dealer harmless against any losses, damages, liabilities, judgments and expenses, plus reasonable attorneys fees and court costs, resulting from any lawsuit, proceeding or claim against Dealer by a third party for bodily injury, property damage or breach of warranty claimed to have been caused solely by an alleged defect in the design, manufacture or assembly of any Suzuki Vehicles sold by Suzuki to Dealer for resale that has not been altered, converted or modified by or for Dealer, if the alleged defect was not detectable by Dealer in a reasonable inspection of the Suzuki Product or service or installation relating thereto. In the event that any lawsuit making such allegations is brought naming Dealer as a defendant, Suzuki may, following receipt of notice as provided in Section 14.1(c), undertake the defense of said action on behalf of Dealer at Suzukis sole expense and with counsel of Suzukis choice. Suzuki shall have the right to decline to undertake such defense or, after undertaking the defense, to tender the defense back to Dealer, and Dealer must accept such tender and waives any conflict of interest if Suzuki reasonably concludes that the allegations being pursued are no longer those set forth above or that the acts of Dealer as alleged provide a basis for Dealers liability which is independent from any claim against Suzuki. (b) Indemnification by Dealer. Subject to the provisions of this Section 14.1, Dealer shall indemnify, defend and hold Suzuki and its affiliates harmless against any losses, damages, liabilities, judgments and expenses, plus reasonable attorneys fees and court costs, resulting from any lawsuit, proceeding or claim against Suzuki or any of its affiliates by a third party claimed to have been caused by: (1) Dealers actual or alleged breach of this Agreement, including Dealers service and installation obligations; or (2) Dealers actual or alleged failure to perform or negligent or improper performance of (i) any warranty work, (ii) any installation, maintenance or repair service on the Suzuki Vehicles or any other goods, or (iii) the inspection required of Dealer before delivery of the Suzuki Vehicles to a customer; or (3) Dealers actual or alleged breach of any contract between Dealer and Dealers customer or actual or alleged breach of any warranty other than that provided by Suzuki; or (4) Dealers actual or alleged misleading statements, misrepresentations or unfair or deceptive acts or practices, whether through advertisements or otherwise, affecting any customer of Dealer; or (5) Any modification, conversion or alteration made by or for Dealer to a Suzuki Product, except those made pursuant to the express written approval and instruction of Suzuki; or (6) Any violation of any applicable law or regulation, including without limitation any law or regulation dealing with environmental matters, consumer protection, emissions or work place practices or conditions (including OSHA); or (7) The hiring, retention or termination of any person by Dealer, including but not limited to claims of employment discrimination, age, race or sex discrimination or harassment, wrongful discharge or termination, breach of the covenant of good faith and fair dealing, breach of contract, interference with contractual relations, intentional and/or negligent infliction of emotional distress, defamation, negligent hiring, or violations of or non-compliance with the Fair Labor Standards Act or the Employment Retirement Income and Security Act or any similar state or local laws. In the event that any lawsuit making allegations as set forth above is brought naming Suzuki as a defendant, Dealer will, following receipt of notice as provided in Section 14.1(c),
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undertake the defense of said action on behalf of Suzuki at Dealers sole expense and with counsel of Dealers choice. Dealer shall have the right to decline to undertake such defense or, after undertaking the defense to tender the defense back to Suzuki, and Suzuki must accept such tender, if Dealer reasonably concludes that the allegations being pursued are no longer those set forth above. (c) Notification. Whenever a claim is made or a lawsuit is commenced against either Suzuki or Dealer or both of them, each shall, within 30 days after service of the complaint or written notice of the claim, notify the other of any request to assume its defense and to indemnify it. The request to assume the defense and to indemnify shall be accepted or rejected by the party to which it is made within 30 days following its receipt. Failure of either Suzuki or Dealer to notify the other as required by this Section 14.1(c) shall result in the discharge of any obligation by Suzuki or Dealer under Section 14, and without limiting the foregoing each party waives any argument that a failure to provide such timely notification is excused due to lack of prejudice.
15.
LIMITATION OF LIABILITY
15.1 Limitation of Liability. Under no circumstances shall Suzuki be liable to Dealer for incidental or consequential damages or special damages (including loss of profit or other commercial losses) which result in whole or in part from any breach of this Agreement, any interruption in Dealers business or from any matter covered by Section 14.1(a), whether a claim for such losses or damages is based upon warranty, contract, negligence, strict liability in tort or any other legal theory. 16. MISCELLANEOUS
16.1 Notice. Any notice required to be given by either party to the other in connection with this Agreement will be in writing and delivered personally or by a nationally recognized overnight courier or by first class or certified mail as provided in this Agreement. Notices to Dealer will be directed to Dealer or its representatives at Dealer's principal place of business and, except for indemnification requests made pursuant to Section 14.1(c), notices by Dealer will be directed to __________________. 16.2 Assignment of Rights or Delegation of Duties. This is a personal service agreement and may not be assigned or transferred by Dealer in whole or in part, directly or indirectly, voluntarily or by operation of law, without the prior written approval of Suzuki. Any attempted transfer or assignment without Suzukis prior written approval will be void and not binding upon Suzuki. Dealer shall not establish or appoint any associate dealer or sub-dealer for the sale or service of any Suzuki Vehicles, or permit anyone else either to act on Dealers behalf or perform any of Dealers obligations under this Agreement. 16.3 No Franchise Fee. Dealer has not paid any fee for this Agreement. The sole consideration for Suzukis entering into this Agreement is Dealers ability, integrity, and assurance of personal services and expressed intention to deal fairly and equitably with Suzuki and the public. 16.4 Benefit. This Agreement is entered into by and between Suzuki and Dealer for their sole benefit. Neither this Agreement nor any specific provision contained in it is intended or shall be construed to be for the benefit of or create any rights whatsoever in any third party, including without limitation any person or entity that applies or otherwise seeks to become an Owner (whether the spouse or heirs of an Owner or otherwise), a General Manager or a transferee of any license held by Dealer. 19
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16.5 No Agent or Legal Representative Status. This Agreement does not make either party the agent or legal representative of the other for any purpose, nor does it grant either party authority to assume or create any obligation on behalf of or in the name of the others. No fiduciary obligations are created by this Agreement. 16.6 Suzukis Policies. This Agreement refers to certain policies and standards including but not limited to the Dealer Application, Facility Standards, Dealer Minimum Standards Addendum and Dealer Updates. Dealer acknowledges that these policies and standards are prepared by Suzuki in its sole discretion based upon new or changing technology, laws or Suzukis evaluation of the marketplace or other circumstances. Without limiting any other provisions of this Agreement, Dealer will follow all policies and standards of Suzuki in the sale, servicing and promotion of the Suzuki Vehicles and in all other operations of Dealer under this Agreement. All policies and standards of Suzuki (which may include, by way of example, bulletins, statements in manuals and the like) which are in effect on the date of this Agreement or issued thereafter shall be deemed a part of this Agreement. In addition, Dealer acknowledges that Suzuki may from time to time discontinue, amend, supplement or add such policies and standards. 16.7 No Implied Waiver. The delay or failure of either party to require performance by the other party or the waiver by either party of a breach of any provision of this Agreement will not affect the right to subsequently require such performance. Any continuation of business relations between the parties following termination or expiration of this Agreement shall not be deemed a waiver of the termination or expiration, nor shall it imply that either party has committed to continue to do business with the other at any time in the future. 16.8 Sole Agreement of the Parties; Amendment. This Agreement, together with the exhibits and the attachments thereto, contains the entire, integrated agreement between Dealer and Suzuki, and there are no prior or other agreements or understandings, either oral or written, between the parties affecting this Agreement or relating to the sale or service of the Suzuki Vehicles, except as otherwise specifically provided for or referred to in this Agreement. Dealer acknowledges that no representations or statements other than those expressly set forth in this Agreement were made by Suzuki or any officer, employee, agent or representative thereof, or were relied upon by Dealer in entering into this Agreement. This Agreement cancels and supersedes all previous agreements between the parties relating to the subject matter covered herein. No change or addition to, or deletion of, any portion of this Agreement shall be valid or binding upon the parties to this Agreement unless the same is approved in writing by an officer of each of the parties; provided, however, that Suzuki has the right to amend, modify or change this Agreement in case of legislation, governmental regulation or circumstances beyond the control of Suzuki that might materially affect the contractual relationship between Suzuki and Dealer. 16.9 Construction, Severability and Jurisdiction. This Agreement is entered into in Brea, California, and all claims, arising directly or indirectly hereunder, including the circumstances under which it was entered, shall be construed according to the internal laws of the State of California except to the extent (and only to the extent) that the laws of the United States or another jurisdiction expressly preempt the internal laws of the State of California. Neither trade usage nor any course of dealing shall be used to modify, amend or change this Agreement. If suit is brought by either party to enforce the terms hereof, jurisdiction shall be in the Superior Court, Orange County, California, or the United States District Court for the Central District of California. If any provisions of this Agreement should be held invalid or unenforceable for any reason whatsoever, or should violate any law of the United States, the District of Columbia or any State or Territory thereof, this Agreement shall be considered divisible as to such provisions, and such 20
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provisions shall be deemed deleted from this Agreement in such jurisdiction as if such provisions were not included herein. In the event that any provision of this Agreement should be held to violate only the laws of the District of Columbia, or of any State or Territory, the remainder of this Agreement shall be valid and binding with respect to jurisdictions outside of such District, State or Territory. Suzuki may, in its discretion, institute a program of alternate dispute resolution consisting of optional or mandatory mediation and/or arbitration of claims. Dealer agrees to abide by the terms of any such program if and when instituted by Suzuki. Dealer acknowledges that Suzuki and Dealer can mutually agree to the binding arbitration of claims. 16.10 Attorneys Fees. In any action, proceeding or dispute arising in connection with any alleged breach of this Agreement or otherwise relating in any way to this Agreement, the prevailing party shall be entitled to recover reasonable attorneys fees and costs. 17. GLOSSARY
17.1 Defined Terms. As used in this Agreement, the parties agree that the following capitalized terms shall be defined as follows: Dealership Operations -- All operations contemplated by the Dealer Agreement. These operations include the showroom, sales, service and parts department and any other activities undertaken by Dealer related to the Suzuki Vehicles, including rental and leasing operations, used vehicle sales and body shop operations, finance and insurance operations, and any electronic commerce, whether conducted directly or indirectly by Dealer. Service Policies and Procedures Manual -- The Manual issued periodically which details certain administrative and performance requirements for Dealer service under the Dealer Agreement. Products-- All Suzuki new and used motor vehicles, parts and accessories and equipment which Suzuki from time to time purchases for resale to authorized Suzuki dealers. Suzuki Marks - the various Suzuki trademarks, service marks, names, logos, and designs that Dealer is authorized by Suzuki from time to time to use in the sale and servicing of the Suzuki Vehicles. Suzuki Vehicles - the types of current model types of new motor vehicles identified in the Suzuki Vehicles Addendum, a copy of which is attached as Attachment A, and which Suzuki Vehicles Addendum may be changed by Suzuki from time to time in its discretion. Dealer acknowledges that Suzuki does not itself manufacture any of the Suzuki Vehicles, but purchases and distributes them for resale. Dealer acknowledges that (i) Suzuki does not have exclusive rights to sell or distribute the Suzuki Vehicles in the United States and that the manufacturer of the Suzuki Vehicles has the right to and may sell the Suzuki Vehicles or competing Vehicles and components to other persons in the United States, and (ii) Dealer is not a third party beneficiary or any other beneficiary of any contracts or arrangements between Suzuki and any manufacturer of the Suzuki Vehicles.
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ATTACHMENT A SUZUKI VEHICLES ADDENDUM
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The following Suzuki brand Vehicles are the subject of this Suzuki Automotive Dealer Agreement: 1. _____________________________________________________ 2. _____________________________________________________ 3. _____________________________________________________ 4. _____________________________________________________ 5. _____________________________________________________ 6. _____________________________________________________ 7. _____________________________________________________ 8. _____________________________________________________ 9. _____________________________________________________ 10. _____________________________________________________ 11. _____________________________________________________ 12. _____________________________________________________
Please Initial:
____________ (Dealer)
____________ (ASMC)
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ATTACHMENT B
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FACILITIES STANDARDS ADDENDUM
Please Initial:
____________ (Dealer)
____________ (ASMC)
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Tab 4 (Service and Parts Agreement Intentionally Omitted)
EXHIBIT B - TAB 4
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Tab 5 (Return Envelope for Letter Agreement, Proof of Claim and Service and Parts Agreement)
EXHIBIT B - TAB 5
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EXHIBIT C (Service and Parts Agreement)
EXHIBIT C
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SUZUKI SERVICE AND PARTS AGREEMENT This Suzuki Service and Parts Agreement is entered into between American Suzuki Motor Corporation, a California corporation, (Suzuki) and _______________________________, a(n) corporation (if other than an individual) doing business as ___________________, with its place of business at _________________________ (Service Dealer).
I.
PURPOSE AND OBJECTIVES Suzuki is the exclusive distributor in the continental United States for Suzuki Parts and Accessories (Suzuki Products) and sells the Suzuki Products to authorized Suzuki service and parts facilities (Service Dealers) for warranty repair of Suzuki branded automobiles (wholesaled by the prior continental U.S. distributor of Suzuki automobiles), and retail parts and service sales by such Service Dealers. It is of vital importance to Suzuki that the Suzuki branded automobiles are serviced and the Suzuki Products are sold and serviced in a manner that promotes consumer confidence and satisfaction. Accordingly, Suzuki has established a network of authorized Suzuki Service Dealers, operating at approved locations and pursuant to certain standards, to provide warranty service on Suzuki brand automobiles and to sell and service the Suzuki Products. Service Dealer desires to become one of Suzukis authorized Service Dealers and thereby seeks to (a) purchase the Suzuki Products from Suzuki for the purpose of reselling the parts and accessories at retail in the United States at the Location designated in this Agreement; and (b) performing warranty repairs on Suzuki branded automobiles at the Location. The purpose of this Agreement is to set forth the rights and responsibilities of Suzuki and Service Dealer relating to the warranty repairs and the sales and service of the Suzuki Products in a manner that will best serve the interests of customers. Suzuki and Service Dealer recognize that Service Dealer must satisfy the warranty customers needs, and that Service Dealer is required to fulfill its obligations hereunder through sound and ethical sales and service efforts at the retail level. Suzuki and Service Dealer agree that Service Dealer's conscientious regard for quality customer service is an essential part of Service Dealer's obligations under this Agreement. By signing this Agreement, Service Dealer agrees to (a) actively, honestly and effectively promote the sale of the Suzuki Products to warranty and retail customers and give to the public prompt, efficient and courteous service; (b) conduct its business in an independent and responsible manner which will reflect favorably upon Suzuki and the Suzuki Products; (c) preserve and promote the goodwill of Suzuki and the Suzuki Products; and (d) abide by the obligations and standards outlined in this Agreement.
II.
TERM OF AGREEMENT This Agreement shall become effective when executed by Suzuki, shall continue for a period of eight years, and shall expire exactly eight years following its execution, unless terminated earlier as provided in this Agreement or continued or renewed beyond its expiration date by express written approval of Suzuki. Any such continuation or renewal of this Agreement shall not constitute a waiver by Suzuki of any breach of this Agreement by Service Dealer. If the parties continue their business relationship beyond the scheduled expiration date without having executed a new agreement, this agreement shall be continued indefinitely, subject to termination by either party on one hundred eighty days written notice.
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EXHIBIT C-1
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III.
OWNERSHIP OF SERVICE DEALER This Agreement is a personal services contract and has been entered into by Suzuki in reliance upon and in consideration of Service Dealer's representation that only the following named persons are Service Dealer's legal and/or beneficial owners in the percentages stated below (the Owners), and that such persons are committed to achieving the purpose, goals and commitments of this Agreement: _____________________________________________________ _____________________________________________________ _____________________________________________________ Service Dealer represents that (a) no person or entity has any voting or other rights to control Service Dealer other than the Owners in the percentages stated above, and (b) Suzuki has received a copy of all charter documents of Service Dealer and all documents that in any way govern the relationship between or among the Owners (e.g., shareholder agreements, voting or other types of trusts, etc.). Service Dealer shall promptly notify Suzuki of any change in any residence address of any Owner. Service Dealer agrees that Suzuki will not execute this Agreement until each Owner executes this Agreement and returns to Suzuki the Guarantor's Agreement and Continuing Guarantee, as required under Suzuki's policies, or unless waived by Suzuki.
IV.
MANAGEMENT OF SERVICE DEALER Management. Suzuki and Service Dealer agree that the retention of qualified management with a proven, relevant, and successful dealer management background is of critical importance to satisfy the commitments made by Service Dealer in this Agreement. Service Dealer agrees that it will at all times maintain a qualified General Manager, Service Manager, or Service Director that is in complete charge of Service Dealer's operations and is fully active in the day-to-day operations of Service Dealer. Service Dealer agrees that it will submit the names and qualifications of any existing or proposed General Manager, Service Manager, or Service Director upon request from Suzuki.
V.
INCORPORATION OF STANDARD PROVISIONS AND OTHER DOCUMENTS
Service Dealer acknowledges and agrees that the Standard Provisions and any designated Addenda are incorporated into this Agreement and shall be deemed a part of this Agreement, and Service Dealer agrees to comply with the requirements and obligations of these incorporated documents.
VI.
APPROVED SERVICE DEALER LOCATION(S) Service Dealer agrees that it will conduct its Suzuki operations, including the sale or service of any Suzuki Products, only and exclusively at the approved location(s) identified in this section (the Location). Suzuki designates and approves the following facilities as the exclusive location(s) for the sale and servicing of Suzuki Products and the display of Suzuki marks: ____________________________________________
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EXHIBIT C-2
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VII.
OTHER CONDITIONS Service Dealer further agrees to the following conditions: (1) Service Dealer acknowledges that Service Dealer (or a prior entity from whom Service Dealer directly or indirectly obtained its Suzuki assets) entered into this Agreement and a Letter Agreement with Suzuki as part of Suzuki's Chapter 11 reorganization proceeding. Service Dealer acknowledges and agrees that the terms of the Letter Agreement are incorporated into this Agreement and shall be deemed a part of this Agreement, including without limitation consent to the assignment of this Agreement to the purchaser in the reorganization proceeding and waiver of termination rights and certain rights upon conversion of the reorganization proceeding to one under Chapter 7, and Service Dealer agrees to comply with the requirements and obligations of the Letter Agreement.
VIII.
ACKNOWLEDGMENT Service Dealer understands that this Agreement will have a very significant impact on its legal rights and liabilities in its relationship with Suzuki. It is important that Service Dealer understands this Agreement. Service Dealer acknowledges that it has had the time and opportunity to seek professional assistance concerning this Agreement. Service Dealer has thoroughly reviewed all of the terms and provisions of this Agreement and understands them fully, and freely and voluntarily enters into this Agreement. Service Dealer's signature below acknowledges receipt of a copy of the Agreement, IN WITNESS WHEREOF, this Agreement has been made and entered into at Brea, California, on the effective date of this Agreement, which is the ________ day of ______________________________, ___________. ____________________________________________ (SERVICE DEALER NAME) By: (SIGNATURE) ____________________________________________ Name (Printed) Title: Dealer Principal AMERICAN SUZUKI MOTOR COPRORATION By: (SIGNATURE) ___________________________________ Name (PRINTED) Title: ______________________________
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EXHIBIT C-3
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SUZUKI SERVICE AND PARTS AGREEMENT
Standard Provisions
EXHIBIT C-4
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TABLE OF CONTENTS
1. 2. 3.
RIGHTS GRANTED TO DEALER ............................................................ 1 1.1 2.1 3.1 3.2 3.3 3.4 Service Point Rights .................................................................... 1 Service Point Responsibilities ......................................................... 1 Prior Approval of Changes ........................................................... 1 Multiple or Public Ownership Requirements ..................................... 2 Payment of Debts ........................................................................ 2 Consent Not a Waiver .................................................................. 2 Location ................................................................................... 2 Change in Location ..................................................................... 2 Size .......................................................................................... 2 Appearance and Maintenance ........................................................ 2 Business Hours ........................................................................... 3 Signs and Identification ................................................................ 3 Legal Right of Use....................................................................... 3 Use of Suzuki Marks ................................................................... 3 Misuse; No Rights Against Others .................................................. 4 Discontinuance of Use .................................................................. 4 Equitable Remedies ..................................................................... 4 General Terms and Conditions ...................................................... 5 Prices ....................................................................................... 5 Routing; Unloading; Shortage/Damage ............................................ 5 Product Return .......................................................................... 5 Payments .................................................................................. 5 Title; Risk of Loss ....................................................................... 6 Delinquencies ............................................................................. 6 Settlement of Accounts and Set-Off ................................................. 6 Repossessions ............................................................................. 6 Financial Condition ..................................................................... 6 Delays ...................................................................................... 6 Product Orders and Distribution .................................................... 7 Product Discontinuance ................................................................ 7 RESPONSIBILITIES ACCEPTED BY SERVICE POINT............................... 1 CHANGE IN MANAGEMENT OR OWNERSHIP ........................................ 1
4.
PLACE OF BUSINESS ........................................................................... 2 4.1 4.2 4.3 4.4 4.5 4.6 4.7
5.
TRADEMARKS .................................................................................... 3 5.1 5.2 5.3 5.4
6.
PURCHASE OF SUZUKI PRODUCTS BY SERVICE POINT ......................... 5 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13
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EXHIBIT C-5
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7.
SERVICE ............................................................................................. 7 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 General .................................................................................... 7 Warranty Repairs ....................................................................... 7 Service Compliance ..................................................................... 7 Service Area and Equipment ......................................................... 7 Records and Manuals .................................................................. 7 Service Personnel ........................................................................ 8 Special Tools .............................................................................. 8 Recall and Safety Procedures ......................................................... 8 Compliance with Consumer Protection Statutes, Rules and Regulations .. 8 Inventory .................................................................................. 8 Shipment Acceptance ................................................................... 8 Non-Genuine Parts and Accessories ................................................ 8 Sales of Parts and Accessories ........................................................ 8 Advertising and Promoting Suzuki Products ..................................... 9 Retail Only ................................................................................ 9 Customer Confidence ................................................................... 9 Service Reporting........................................................................ 9 Data Transmission ...................................................................... 9 Records Maintenance ................................................................... 9 Examination of Service Points Accounts and Records......................... 9 Compliance with Laws ................................................................. 9 Financial Statements .................................................................... 9 Change in Financial Condition ...................................................... 10 Termination by Suzuki Immediately ............................................... 10 Termination by Suzuki on 60 Days Notice ....................................... 11 Failure of Performance ............................................................... 11 Minimum Notice Period .............................................................. 12 Death or Incapacity .................................................................... 12 Termination Without Cause ......................................................... 12 Notice of Termination ................................................................. 12 Continuance of Business Relations ................................................. 13 Repurchase Obligations ............................................................... 13 Insurance ................................................................................. 13 ii
EXHIBIT C-6
8.
PARTS AND ACCESSORIES ................................................................... 8 8.1 8.2 8.3 8.4
9.
ADVERTISING AND PROMOTION ......................................................... 9 9.1 9.2 9.3
10.
REPORTING, RECORDS, INSPECTION AND OTHER RESPONSIBILITIES .. 9 10.1 10.2 10.3 10.4 10.5 10.6 10.7
11.
TERMINATION ................................................................................... 10 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9
12.
INSURANCE ....................................................................................... 13 12.1
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13. 14.
INDEMNIFICATION ............................................................................ 13 13.1 14.1 14.2 14.3 14.4 14.5 14.6 Indemnification ......................................................................... 13 Rights Granted .......................................................................... 15 Transfers to Immediate Family ..................................................... 15 Exercise of Rights ...................................................................... 15 Apportionment of Assets.............................................................. 15 Assignment of Rights .................................................................. 15 Contrary Provisions Void ............................................................ 15 Limitation of Liability ................................................................. 15 Notices, etc. .............................................................................. 15 Assignment of Rights or Delegation of Duties ................................... 16 No Franchise Fee ....................................................................... 16 Benefit ..................................................................................... 16 Vendor-Vendee Relationship ........................................................ 16 No Joint Employment ................................................................. 16 Consent of Suzuki ...................................................................... 16 Suzukis Policies ........................................................................ 16 No Implied Waiver ..................................................................... 17 Sole Agreement of the Parties; Amendment ..................................... 17 Construction, Severability and Jurisdiction ...................................... 17 Alternative Dispute Resolution ...................................................... 17 Release of Claims ....................................................................... 17 Attorneys Fees.......................................................................... 17 Effective Date ........................................................................... 17 Use of the Term Service Dealer ..................................................... 17 Future Availability of Suzuki Products ........................................... 18 Modification by Applicable Law .................................................... 18 RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE ........................ 15
15.
MISCELLANEOUS ............................................................................... 15 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 15.10 15.11 15.12 15.13 15.14 15.15 15.16 15.17 15.18 15.19
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EXHIBIT C-7
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1.
RIGHTS GRANTED TO SERVICE DEALER
1.1 Service Dealer Rights. Subject to the terms of this Agreement, Suzuki hereby grants Service Dealer the non-exclusive rights: (1) To perform warranty service on Suzuki branded automobiles, and to buy and resell at retail, in the ordinary course of Service Dealer's business, the Suzuki Products, the types of which may be periodically revised by Suzuki in its discretion upon notice to Service Dealer; (2) To identify itself as an authorized warranty repair provider for Suzuki branded automobiles and an authorized seller of Suzuki branded parts and accessories, utilizing approved signage solely at the Location; and (3) To use the name Suzuki and the Suzuki Marks in the advertising, promotion, sale and servicing of the Suzuki Products from the Location in the manner provided in this Agreement. No obligation exists on the part of Suzuki to sell any Suzuki products to Service Dealer other than as set forth in this Agreement. Suzuki reserves the right to sell the Suzuki Products to any customers, including retail customers, and to grant the privilege of using the name Suzuki or the Suzuki Marks to other service dealers or entities, wherever they may be located. 2. RESPONSIBILITIES ACCEPTED BY SERVICE DEALER Service Dealer accepts its appointment as an authorized
2.1 Service Dealer Responsibilities. Suzuki Service Dealer and agrees to:
(1) Promote, advertise, market and sell the Suzuki Products actively, aggressively, honestly and effectively, subject to the terms and conditions of this Agreement, in order to meet, and expand to the fullest extent possible, the demand for Suzuki Products by warranty and retail customers that arc generally located in the area of the Location; (2) Provide warranty service to Suzuki branded automobiles in the same manner, subject to the terms and conditions of this Agreement; (3) Establish and maintain satisfactory and attractive service dealer facilities at the Location in accordance with the written guidelines established and amended from time to time by Suzuki; (4) (5) 3. Make all payments to Suzuki when due; and Discharge all obligations under this Agreement.
CHANGE IN MANAGEMENT OR OWNERSHIP
3.1 Prior Approval of Changes. This Agreement is a personal service contract. Suzuki has entered into this Agreement because Service Dealer has represented to Suzuki that the Owners and the General Manager of Service Dealer possess the personal qualifications, skill and commitment necessary to ensure that Service Dealer shall promote, sell and service the Suzuki Products in the most effective manner and comply with all of its obligations under this Agreement. Because Suzuki has entered into this Agreement in reliance upon these representations and Service Dealer's assurances of the active involvement of such persons in Service Dealer's operations, any transfer of the service dealer business or its principal assets, any change in ownership no matter what the share or relationship between parties (and including a pledge of any stock, partnership or other equity interest or a claim of a spouse in any divorce proceedings), or any changes in the General Manager from the person specified in Section IV, requires the prior written consent of Suzuki.
EXHIBIT C-8
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Service Dealer agrees that it will provide Suzuki with prior written notice of any proposed change or transfer described in this Section and will provide all documents requested by Suzuki to evaluate the proposed change or transfer. Service Dealer understands that if any such change or transfer is made prior to obtaining Suzukis written consent, immediate termination of this Agreement will be warranted, and Suzuki will have no further obligation to consider any proposed change or transfer. Service Dealer acknowledges that Suzukis evaluation of any request for consent under this Section will be based on many different factors and that Suzuki may properly deny any such request on any rational basis even though some other person might have approved such request based on a different balancing of some factors or for other reasons. 3.2 Multiple or Public Ownership Requirements. Service Dealer acknowledges and agrees that no person or entity, whether publicly owned or privately owned, may directly or indirectly, in whole or in part, own and/or operate Service Dealer except in accordance with the terms and conditions of Suzukis policies on public ownership and multiple ownership, as established and amended from time to time by Suzuki. Additionally, Service Dealer agrees that Suzuki may, through the reasonable exercise of its discretion, refuse to approve a proposed transfer, sale or other ownership and/or operator change if such transfer, sale or other change would result in a violation of Suzukis policies on public ownership and/or multiple ownership. 3.3 Payment of Debts. Suzuki is under no obligation to approve any request made under Section 3.1 unless Service Dealer makes arrangements acceptable to Suzuki to satisfy all debts of Service Dealer to Suzuki at the time of transfer or change, and Suzuki may condition any such approval on the making of such payment. 3.4 Consent Not a Waiver. The making by Service Dealer of a request under Section 3.1 does not prevent Suzuki from exercising any of its rights hereunder. Suzukis approval of any request under Section 3.1 shall not operate as a cure of any breach by Service Dealer of, or waiver by Suzuki of its rights under, this Agreement. 4. PLACE OF BUSINESS
4.1 Location. Service Dealer shall operate its service and parts facility, only at the Location, and in a manner that is in compliance with Suzukis image requirements, facility standards and other guidelines established and amended by Suzuki from time to time. Service Dealer may not, directly or indirectly, display Suzuki Marks or establish or conduct any Service Dealer operations, including but not limited to the display, sale or servicing of Suzuki Products, at any facility or site other than the Location without the prior written consent of Suzuki. 4.2 Change in Location. Service Dealer understands that it is approved to operate as a Suzuki service dealer only from the Location, and Suzuki has no obligation to consider any proposed change in the Location. If Service Dealer wants to change the Location or in the uses previously approved for the Location, Service Dealer must provide Suzuki with prior written notice of the proposed change, together with the reasons for the proposal. Service Dealer acknowledges that Suzukis evaluation of any such request will be based on many different factors and that Suzuki may deny any such request on any rational basis. 4.3 Size. Service Dealer's facilities must conform to any minimum size requirements of Suzuki as established and amended from time to time, and be of adequate size to provide for office space, a parts area and service facilities of sufficient size to accommodate the volume of parts sales and warranty service of the Service Dealer in conformance with written recommendations from Suzuki. 4.4 Appearance and Maintenance. In order to establish an effective network of authorized Suzuki service dealers, Service Dealer's place of business shall at all times be maintained so as to present a good image for Service Dealer and Suzuki and to comply with all conditions of any Suzuki image requirements, facility standards and other guidelines established and amended by Suzuki from time to time. It is Service Dealer's responsibility to maintain an attractive facility for the benefit of the customer, Service Dealer and Suzuki. Service Dealer acknowledges that an attractive, well-lighted, neat and clean facility will attract more customers.
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EXHIBIT C-9
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4.5 Business Hours. Service Dealer agrees to keep all of its operations open for business during all days and hours that are customary and lawful for such operations in the community or locality in which Service Dealer is located and in accordance with industry standards. Service Dealer shall not be considered open unless service and parts operations are open to the public and Service Dealer's personnel are present to assist customers. 4.6 Signs and Identification. Subject to any applicable governmental ordinance, regulation or statute, Service Dealer's place of business shall be properly and appropriately identified as a Suzuki parts and service facility by display of authorized Suzuki outdoor signs in compliance with any signage program or other standards or requirements as established by Suzuki from time to time. Service Dealer shall purchase from a vendor approved by Suzuki and install the size and style of Suzuki outdoor logo signs, as may be required from time to time, and shall maintain such signs to include electrical hookups and operation. Suzuki will review all Suzuki identification at Service Dealer's place of business on a periodic basis to assure that it is adequate, attractive and well maintained. Service Dealer shall follow Suzukis recommendations or requirements regarding Suzuki identification. 4.7 Legal Right of Use. Upon Suzukis request, Service Dealer shall submit to Suzuki a copy of the deed or other legal title documents to the Location, the lease under which Service Dealer is leasing the Location, or the document(s) otherwise granting Service Dealer the right to use the Location, as the case may be. Upon request, Service Dealer shall submit to Suzuki a copy of any business license, Service Dealer license, or other license required for legal operation of the Service Dealer from the Location. 5. TRADEMARKS
5.1 Use of Suzuki Marks. Service Dealer acknowledges that Suzuki, or Suzukis parent or affiliated companies, is the exclusive owner of the Suzuki trademarks, service marks, names, logos, and designs that Service Dealer is authorized by Suzuki from time to time to use in the sale and servicing of the Suzuki Products (the Suzuki Marks), and, but for the limited license provided by Suzuki, Service Dealer would have no right to use the Suzuki Marks. Service Dealer agrees that it will take no action inconsistent with such ownership and agrees that all use of the Suzuki Marks by Service Dealer will inure to the benefit of Suzuki and Suzukis parent and affiliated companies. Service Dealer further acknowledges the great value of the goodwill associated with the Suzuki Marks and the fact that they are inherently distinctive and/or have acquired secondary meaning in the mind of the public such that they are associated with Suzuki and its parent and affiliated companies. During the term of this Agreement and thereafter, Service Dealer agrees that it will neither have nor claim any right, title, or interest in respect of the Suzuki Marks or otherwise claim any rights of Suzuki and/or its parent or affiliated companies in and to the Suzuki Marks. Suzuki grants to Service Dealer a non-exclusive and non-transferable license to display or otherwise use the Suzuki Marks at the Location solely in connection with the selling or servicing of the Suzuki Products. Service Dealer may use the Suzuki Marks at the Location for the foregoing purposes solely in a manner specified by Suzuki and subject to the prior written approval of Suzuki. Service Dealer agrees that the Suzuki Marks may be used as part of any name under which Service Dealer exists or conducts its business only with the prior written approval of Suzuki. The foregoing license or any approval previously granted by Suzuki shall terminate automatically upon termination of this Agreement for any reason, or the license may be cancelled or withdrawn by Suzuki at any time. Service Dealer further agrees that it promptly shall discontinue the display and use of any Suzuki Marks, or shall change the manner in which any Suzuki Marks are displayed and used, when for any reason it is requested to do so by Suzuki. Service Dealer shall immediately discontinue any advertising that Suzuki may find to be injurious to Suzukis business or reputation or to the Suzuki Marks. Service Dealer expressly acknowledges that it has no right or license to use the Suzuki Marks to advertise, display, promote, sell, or service Suzuki Products from any facility or site other than the Location without prior written consent from Suzuki. Service Dealer agrees that its limited right and license to use the Suzuki Marks is automatically revoked upon any change in the Location, any change in ownership of Service Dealer, or any transfer of the Service Dealer business or its principal assets without prior written approval from
EXHIBIT C-10
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Suzuki. Service Dealer further agrees that its limited right and license to use the Suzuki Marks is automatically revoked upon termination of this Agreement for any reason. 5.2 Misuse; No Rights Against Others. Service Dealer agrees not to sell or offer for sale as Suzuki Products any products which are not the Suzuki Products. Service Dealer shall not have any rights (a) against Suzuki for damages or any other remedy by reason of Suzukis failure or alleged failure to prosecute any alleged infringements or imitations by others of the Suzuki Marks, or (b) against Suzuki or any other person whatsoever to object to or otherwise prevent Suzukis allowing any other Service Dealer to display the Suzuki Marks or use them as part of any business name. 5.3 Discontinuance of Use. Upon termination or expiration of this Agreement, Service Dealer agrees that it shall immediately: (1) Discontinue the use of the Suzuki Marks, or any confusingly similar mark, including without limitation the use of all stationery, telephone directory listings, internet addresses or listings, printed material, broadcasting and electronic media, including but not limited to television and the Internet, and all forms of transmission, either developed or undeveloped, referring in any way to Suzuki or bearing any of the Suzuki Marks; (2) Discontinue the use of the Suzuki Marks, or any confusingly similar mark, as part of its business or corporate name, and file a change or discontinuance of such name with appropriate authorities; (3) (4) Remove all Suzuki signage at its sole cost and expense; Cease representing itself as an authorized Suzuki Service Dealer; and
(5) Refrain from any action, including without limitation any advertisement, statement or implication in any printed or electronic media, that it is authorized to sell, service, or distribute the Suzuki Products. 5.4 Equitable Remedies. In the event Service Dealer fails to comply promptly with the terms and conditions of Section 5, the parties agree that (a) Suzuki will suffer irreparable injury for which money damages are not an adequate remedy and, as a result, Suzuki shall be entitled to injunctive relief or such other equitable relief as a court may determine, and (b) Suzuki shall have the right to enter upon Service Dealer's premises and remove, without notice or liability, all Suzuki logo signs and any other identification bearing the Suzuki Marks. Service Dealer agrees that it shall reimburse Suzuki for all costs, attorneys fees, and other expenses incurred by Suzuki in connection with any action to remove the signs, prevent the unauthorized use of the Suzuki Marks, or otherwise enforce its rights in the Suzuki Marks.
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EXHIBIT C-11
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6.
PURCHASE OF SUZUKI PRODUCTS BY SERVICE DEALER
6.1 General Terms and Conditions. Suzuki will sell the Suzuki Products to Service Dealer, and Service Dealer shall purchase the Suzuki Products from Suzuki in accordance with the terms and conditions set forth in this Agreement and the sales programs offered by Suzuki from time to time. Suzuki reserves the right to change any term or condition, including price (as set forth in Section 6.2) and payment term, at any time without accountability to Service Dealer. The Suzuki Products supplied by Suzuki to Service Dealer are warranted only in accordance with Suzukis written warranty to consumers, which written warranty is supplied to Service Dealer for distribution to Service Dealer's customers and which may be amended from time to time by Suzuki. OTHER THAN THE WARRANTY CONTAINED IN SUZUKIS WRITTEN WARRANTY, SUZUKI DISCLAIMS ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT BY WAY OF LIMITATION, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 6.2 Prices. All sales to Service Dealer shall be at such prices and upon such terms as from time to time are established by Suzuki and in effect at the time of shipment, and as invoiced. Such prices are referred to herein as the Service Dealer Price. Suzuki reserves the right to change its Service Dealer Price for any reason and, without limiting the foregoing, Suzuki will not be bound by Service Dealer's pre-sale of the Suzuki Products to a customer in the event of a price increase. Suzuki will give notice to Service Dealer of any change increasing the price to be paid by Service Dealer before shipping any current Suzuki Products to which such change is applicable. Service Dealer may cancel or modify orders for the Suzuki Products to which any such change applies, provided written notice of cancellation is delivered to Suzuki within 10 days after receipt by Service Dealer of Suzukis price change notice. Service Dealer agrees that it is responsible for and shall comply with all laws calling for the collection and/or payment of all taxes, including sales and use taxes. On all Suzuki Products ordered by Service Dealer, Service Dealer shall pay the transportation and freight charges as Suzuki establishes from time to time. If Service Dealer fails or refuses to accept a delivery, these charges as well as all return charges and charges incurred by Suzuki as a result of any diversion of the Suzuki Products shall be added to Service Dealer's account with Suzuki; provided, however, that the assessment of such charges is in addition to, and not in lieu of, any other liability hereunder for Service Dealer's failure or refusal to accept delivery. 6.3 Routing; Unloading; Shortage/Damage. Suzuki reserves the right to make the final choice of distribution points and carrier for all shipments of Suzuki Products to Service Dealers at Suzukis sole discretion. Service Dealer agrees to pay for and reimburse Suzuki for any delivery, freight, handling, or other charges which appear on Suzukis invoice to Service Dealer. Service Dealer shall provide equipment and labor for unloading from delivery trucks all shipments in accordance with the Department of Transportation and other federal, state or local regulations. Upon receipt by Service Dealer of each shipment, Service Dealer shall note in writing on the carriers delivery receipt any shortages in, or damages to, any shipment of the Suzuki Products. In addition, within 48 hours of delivery, Service Dealer shall report in writing to Suzuki any merchandise shortage in a shipment of the Suzuki Products to Service Dealer. Claims for visible or concealed damage to merchandise in any shipment of the Suzuki Products must be filed in accordance with Suzukis approved procedure. 6.4 Product Return. Suzuki will not accept the return of the Suzuki Products from Service Dealer, except where required by law. If Suzuki is required by law to accept the return of Suzuki Products from Service Dealer, Service Dealer may return such products upon receipt of written authorization from Suzuki under the following conditions: (a) Service Dealer shall pay all transportation and handling charges; (b) Service Dealer shall pay the Suzuki restocking charge then in effect; (c) Products returned must be new, unused, undamaged and in the original container in the original quantities as supplied by Suzuki; and (d) Any inventory returned must be verified by Suzuki. 6.5 Payments. Service Dealer must submit payment for all Suzuki Products, and must pay all open account balances, in accordance with the terms and conditions described in the "Service Dealer Credit Policy", as
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EXHIBIT C-12
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amended from time to time, or as established from time to time by the Suzuki Credit Department. Service Dealer acknowledges that Suzuki may require prepayment or payment on a cash on delivery (C.O.D.) basis for all Suzuki products. 6.6 Title; Risk of Loss. Title to the Suzuki Products passes to Service Dealer only upon payment in full for the Suzuki Products delivered to Service Dealer. Until full payment for the Suzuki Products is made, Suzuki retains title and a purchase money security interest in all Suzuki Products, and in the proceeds thereof, which shall allow Suzuki at any reasonable time after a delinquency, and without notice or demand and with or without legal process, to take possession of said Suzuki Products. Service Dealer shall execute all security documentation and UCC-1 financing statements necessary or advisable in Suzukis judgment either to cause the attachment or perfection of the foregoing security interest. When a shipment of the Suzuki Products to Service Dealer leaves the Suzuki warehouse or otherwise is delivered to a transportation carrier for delivery to Service Dealer, the risk of loss for the shipment passes to Service Dealer at that point and any loss or damage during shipment must be resolved solely between the carrier and Service Dealer. If Suzuki accepts a return of any of the Suzuki Products from Service Dealer, the risk of loss with respect to the returned Suzuki Products shall not pass to Suzuki until delivery to Suzuki is completed. 6.7 Delinquencies. If Service Dealer becomes delinquent in any of its accounts with Suzuki, Service Dealer shall be in default on all of its accounts with Suzuki. All accounts will then be accelerated and become immediately due and payable. Furthermore, Suzuki may without notice to Service Dealer suspend all pending orders for the Suzuki Products until such time as the delinquency is cured or cancel all pending orders. Any collection charges (including attorneys fees) incurred by Suzuki in connection with the collection of any indebtedness from Service Dealer to Suzuki shall be paid by Service Dealer. Upon termination or expiration of this Agreement, Service Dealer agrees that all unfilled orders for the Suzuki Products are immediately and without notice cancelled. 6.8 Settlement of Accounts and Set-Off. All monies or accounts due to Service Dealer from Suzuki will be considered net of Service Dealer's existing or outstanding obligations to Suzuki. Suzuki may deduct or offset any amounts due or to become due from Service Dealer to Suzuki, or any amounts held by Suzuki, from or against any amounts due or to become due from Suzuki to Service Dealer. Suzuki shall have the right to apply payments received from or on behalf of Service Dealer to any amount owed to Suzuki, and all obligations owed by Service Dealer to Suzuki shall be due and payable when billed, unless other terms are established by Suzuki in writing. 6.9 Repossessions. If Service Dealer becomes delinquent in any of its account payments to Suzuki or any financial institution having recourse against Suzuki, Suzuki may repossess all of Service Dealer's Suzuki Products. If any of Service Dealer's inventory of the Suzuki Products is repossessed, Service Dealer shall be responsible for all repossession charges, including but not limited to handling expenses, freight costs, restocking charges as Suzuki may determine from time to time, storage costs, resale costs, any deficiencies related to damage, and attorneys fees. Any and all such expenses may, at Suzukis option, be charged to Service Dealer's open account or otherwise recovered from Service Dealer. 6.10 Financial Condition. Service Dealer and Suzuki understand that the successful operation of a retail business depends upon maintaining adequate levels of capitalization. Service Dealer agrees that it shall at all times maintain such minimum capitalization and credit levels as Suzuki determines is necessary, based on Service Dealer's size and market opportunities, to allow Service Dealer to perform its obligations under this Agreement. 6.11 Delays. Suzuki shall not be liable for any delay in shipment caused by a shortage of supplies at the Suzuki warehousing facility nearest Service Dealer, due to riots, war, willful acts of third parties, strikes or other union labor problems, import restrictions, acts of God, or any other cause beyond Suzukis control. Suzuki will not be liable for failure to fill any of Service Dealer's orders or for placing Service Dealer's orders in a back-order status.
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EXHIBIT C-13
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6.12 Product Orders and Distribution. All orders of Suzuki Products must be submitted in accordance with Suzuki directives and are subject to final acceptance by Suzuki. Suzuki shall endeavor to deliver Suzuki Products as ordered by Service Dealer. However, Suzuki must also deliver Suzuki Products to other service dealers and customers. Therefore, Suzuki reserves all rights to use its discretion in processing orders for Suzuki Products, and Suzukis decision in the fulfillment of product orders shall be final. 6.13 Product Discontinuance. Suzuki retains the right to discontinue, cancel or alter any of the Suzuki Products and shall be under no obligation to provide notice of the same. Suzuki does not represent that any of the Suzuki Products will continue for any period of time or that any additional Suzuki Products from time to time will be made available to Service Dealer for purchase. 7. SERVICE
7.1 General. Service Dealer, as an independent business, shall strive to offer the best possible customer service to owners and users of all Suzuki branded automobiles and Suzuki Products. Service Dealer acknowledges that service satisfaction is the key to repeat business. Service satisfaction is also a crucial element to minimize the expense of recruiting and gaining new customers. Suzuki has established guidelines and educational efforts outlined in the publications entitled, the Service Operations Guide and Warranty Policy and Procedure Manual, which may be amended or replaced from time to time. 7.2 Warranty Repairs. Service Dealer understands that proper and efficient warranty repairs are an essential part of good customer relations. In accordance with the provisions of the warranty policy and service bulletins furnished by Suzuki to Service Dealer from time to time, Service Dealer shall perform any warranty repairs of Suzuki Products which qualify for repairs without charge to the customer under the provisions of such warranties and service bulletins, regardless of whether or not Service Dealer sold the Suzuki Products requiring warranty repairs. Service Dealer shall use only new and genuine Suzuki parts in performing any warranty repairs. Service Dealer shall be solely responsible for the service work performed in making the warranty repairs. Suzuki will reimburse Service Dealer only for warranty repairs performed in accordance with prevailing Suzuki policies and procedures, as published by Suzuki from time to time, or as otherwise required by applicable law. Suzuki shall compensate Service Dealer for proper warranty claims, in accordance with the procedures and at the rates to be announced by Suzuki from time to time. 7.3 Service Compliance. Service Dealer shall provide prompt, accurate, efficient and courteous maintenance and repair service to all owners and users of Suzuki brand automobiles and Suzuki Products. All service shall be performed in accordance with recommendations, specifications and publications (including Service Manuals, Supplements, Ready Reference Manuals and Wiring Diagram Manuals) as may be furnished to Service Dealer by Suzuki from time to time and updated from time to time, which Service Dealer shall arrange to be circulated to its service department and then filed in a permanent service library. However, Service Dealer shall be solely responsible to its customers and the public to have all service work performed properly and in a good workmanship manner. Prior to commencing any service work, Service Dealer shall advise the customer of the work anticipated by Service Dealer to be required and the cost (including parts and labor) thereof and obtain the written consent of the customer to such work. 7.4 Service Area and Equipment. Service Dealer shall maintain an appropriately sized service department which shall be painted, kept neat and properly organized to insure efficient operation, and which presents a positive impression and inspires consumer confidence. Service Dealer's service department shall provide sufficient working space to comply with all Suzuki guides, requirements, or expectations, and to handle Service Dealer's expected service volume. Service Dealer shall equip this department with the appropriate and necessary shop equipment, furniture, Suzuki special tools and those tools used in normal day-to-day operations. 7.5 Records and Manuals. Service Dealer shall maintain and keep updated all manuals, bulletins, training materials, and records received from Suzuki. Service Dealer and its service personnel shall have available, and be familiar with, all service and maintenance manuals prepared or offered by Suzuki.
EXHIBIT C-14
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7.6 Service Personnel. Service personnel in the Service Dealer shall be competent and properly trained at Service Dealer's expense to handle all service work of Service Dealer's customers. Service Dealer shall send its Service Dealer personnel to service training classes, service schools and clinics, technical training schools, seminars and other Service Dealer employee training courses as provided or offered by Suzuki from time to time. Service Dealer acknowledges the need for such schools and training to keep current on all Suzuki Products for the protection of Service Dealer's customers, and agrees to support its service department personnel with respect thereto. 7.7 Special Tools. Service Dealer shall purchase and maintain any special tools required by Suzuki from time to time. Service Dealer is aware of and accepts the need for such special tools to provide its customers fast, efficient and accurate service. All special tools will be kept in a protected area and available to all technicians for their usage. 7.8 Recall and Safety Procedures. Service Dealer agrees that it shall help administer any warranty recall or safety modification program initiated by Suzuki, that it shall comply with any notification concerning a recall of any Suzuki Product, and that it shall comply with the requirements of any recall or safety modification programs to their fullest extent. Service Dealer also agrees to follow all local, state and federal guidelines as pertains to warranty recalls and safety modification programs. Service Dealer's staff shall place the highest possible priority on performing the necessary repairs prior to the delivery of any new product and also to the repairs of any product brought to their attention by a retail consumer. Service Dealer acknowledges the necessity of complying with recall and other safety or product improvement notices to insure the protection of the consumer and to comply with government laws, orders, rules and regulations. 7.9 Compliance with Consumer Protection Statutes, Rules and Regulations. Because certain customer complaints may impose liability upon Suzuki under various repair or replacement laws or other consumer protection laws and regulations, Service Dealer agrees to provide adequate and prompt written notice to Suzuki of such complaints and take such other steps as Suzuki may reasonably require. Service Dealer shall do nothing to adversely affect Suzukis rights under such laws and regulations. Subject to any law or any regulation to the contrary, Service Dealer shall be liable to Suzuki for any refunds or replacements provided to customers if Service Dealer failed to carry out repairs in accordance with Suzukis written published policies and procedures or in a manner consistent with Suzukis oral or written instructions. Service Dealer also agrees to provide all required customer notifications and disclosures as prescribed by repair or replacement laws or other consumer laws or regulations. 8. PARTS AND ACCESSORIES
8.1 Inventory. Service Dealer agrees to maintain an adequate inventory of Suzuki parts and accessories to fulfill customer service and warranty requirements in a timely manner. 8.2 Shipment Acceptance. Service Dealer shall accept all shipments of Suzuki parts or accessories ordered by it. In the event of an error in a shipment by Suzuki, Service Dealer must submit a parts discrepancy report and receive the prior written approval of Suzuki before returning the parts. 8.3 Non-Genuine Parts and Accessories. Service Dealer shall not sell, install or use any nonSuzuki part or accessory that could adversely affect the mechanical operation, safety, integrity or reputation of any Suzuki brand automobiles or that could cause unsafe handling or dangerous riding characteristics or that does not meet the standards required by law. Service Dealer shall disclose any sale, installation or use of non-genuine parts or accessories to the customer and advise the customer that such parts or accessories are not included in any warranties furnished by Suzuki. Such disclosure and advice shall be in writing and conspicuously placed on the customers copy of the service or repair order or sale document. 8.4 Sales of Parts and Accessories. Service Dealer shall sell all parts and accessories in an ethical manner under a proper and reasonable pricing structure and with concern that the customer receives the right parts or accessories for his needs.
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EXHIBIT C-15
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9.
ADVERTISING AND PROMOTION
9.1 Advertising and Promoting Suzuki Products. Service Dealer acknowledges the value of advertising and promotions and agrees to conduct ongoing advertising and promotional programs at whatever level is necessary to comply with the terms of this Agreement. 9.2 Retail Only. In its advertising and promotional activities, Service Dealer must identify itself as a retail service dealer and must not in any way attempt to mislead the public into a belief that Service Dealer is a wholesaler, jobber, factory direct Service Dealer or anything other than an independent retail service dealer. 9.3 Customer Confidence. Service Dealer shall advertise and promote the Suzuki Products only in a manner that will develop customer confidence in the Suzuki Products, and will not use any advertising or promotions tending to mislead or deceive the public. Service Dealer shall discontinue any advertising or promotions that Suzuki may find in its sole judgment to be injurious to Suzuki business or likely to deceive the public. In furtherance of developing customer confidence, Service Dealer acknowledges that it is solely responsible for and must stand behind the price, performance, specifications, equipment warranty and other information contained in its advertisements or promotions. If Service Dealer's advertisements or promotions of the Suzuki Products contain specific obligations or offers, Service Dealer must be prepared to and must fulfill all such obligations and offers set forth therein. Service Dealer acknowledges that Suzuki assumes no responsibility or obligation to review the content of advertising performed by Service Dealer, and Service Dealer shall be solely responsibility for the content of its advertising and for ensuring its advertising complies with all applicable laws. 10. REPORTING, RECORDS, INSPECTION AND OTHER RESPONSIBILITIES
10.1 Service Reporting. Service Dealer agrees to keep accurate records of its servicing of Suzuki Products and to provide Suzuki with reports of warranty service and other service work performed by Service Dealer in the form and within the times required by Suzuki. 10.2 Data Transmission. To facilitate accurate and prompt reporting of Service Dealer's operational and/or financial information as Suzuki may require, Service Dealer shall install and maintain electronic communication processing facilities which are compatible with and which will facilitate the transmission and reception of such information on the electronic communications network utilized by Suzuki from time to time. 10.3 Records Maintenance. Service Dealer agrees to keep complete, accurate and current records regarding its sales and servicing of the Suzuki Products and other obligations under this Agreement for a minimum of five (5) years, in addition to any retention period required by any governmental entity. 10.4 Examination of Service Dealers Accounts and Records. Suzuki, without notice and for any reason whatsoever, shall have the right during regular business hours to inspect Service Dealer's facilities, visit with Service Dealer's employees and to access, audit and reproduce all records, accounts and supporting data relating to Service Dealer's obligations under this Agreement, including without limitation, sales; sales reporting; service and repair of the Suzuki Products by Service Dealer. The obligations of Service Dealer under the above provisions also include giving Suzuki access to any electronically stored data and, if requested by Suzuki, making and delivering to Suzuki a hard copy thereof. If requested by Service Dealer, Suzuki agrees to review any report with Service Dealer and to provide a copy of any report of the examination or audit of Service Dealer. 10.5 Compliance with Laws. In addition to other provisions of this Agreement that require compliance by Service Dealer with various laws, Service Dealer shall at all times conduct its business in full compliance with all applicable federal, state and local laws, rules and regulations, including but not limited to, consumer fraud and deceptive trade practices laws, and all applicable building and safety codes. Financial Statements. Service Dealer agrees to furnish Suzuki with such reports or records of 10.6 its financial condition as Suzuki may request from time to time. All financial information furnished by Service
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EXHIBIT C-16
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Dealer or any Owner shall be complete and accurate in all respects and shall be handled by Suzuki on a confidential basis, unless disclosure is required by law or is offered into evidence in any proceeding. 10.7 Change in Financial Condition. Service Dealer shall notify Suzuki immediately of any material adverse change in Service Dealer's financial condition or business prospects. 11. TERMINATION
11.1 Termination by Suzuki Immediately. Suzuki may terminate this Agreement immediately upon notice after the occurrence of any of the following events: (1) Service Dealer or any Owner becomes insolvent (i.e., is unable to pay bills in a timely manner); files a petition under any bankruptcy law; executes an assignment for the benefit of creditors or appoints (or has appointed for it or him/her) a personal representative, receiver or trustee or another officer having similar powers that is not removed within 15 days; or a levy is made against Service Dealer or any Owner under attachment, execution or similar process; or a foreclosure sale is commenced against Service Dealer or involving the Location, which is not stayed, vacated or removed by payment or bonding within 10 days. (2) Revocation or suspension for any period of time of any Service Dealer license, business license, or other license Service Dealer is required to maintain to sell or service the Suzuki Products legally from the Location. (3) Transfer (whether through sale, merger or otherwise) of any ownership or interest in Service Dealer or the transfer (whether through sale or otherwise) of the Service Dealer business or any substantial part of Service Dealer's assets, without the prior written consent of Suzuki. (4) Sale of any Suzuki Products to any person or entity for resale, either in this country or a foreign country, other than another authorized domestic Suzuki service dealer. (5) Moving the Location without Suzukis prior written approval or conducting any display, sale or service of Suzuki Products at a facility other than the Location without the prior written consent of Suzuki. (6) The submission of any false document or other information by Service Dealer to Suzuki, the making of any material misrepresentation in Service Dealer's Service Dealer Application or in any statement or document delivered by Service Dealer hereunder, or the commission of fraud in any way related to Service Dealer's business. (7) Failure to conduct customary Service Dealer operations for five (5) consecutive calendar days without prior permission from Suzuki unless such failure is due to adverse weather or for reasons beyond Service Dealer's control. (8) Abandonment of the Location by Service Dealer.
(9) Any civil, criminal or administrative liability is found against Service Dealer, any Owner or the General Manager, for a felony, any crime involving moral turpitude, or any matter which may adversely affect the ownership, operation, management, reputation, business or interests of Service Dealer or Suzuki or impairs the goodwill associated with the Suzuki Marks. (10) Failure to comply with instructions of Suzuki regarding compliance with applicable laws, including without limitation, recalls or other safety or product improvement campaigns or programs, and/or failure to make a good faith effort to comply with any laws, orders, rules or regulations regarding recalls or other safety or product improvement campaigns or programs.
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EXHIBIT C-17
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(11) (12) (13) (14) Agreement.
Sale of any non-genuine part on the representation that it is a genuine Suzuki Product. Failure to obtain and carry the insurance required under this Agreement. Any attempt by Service Dealer to assign in whole or in part this Agreement. Any use of the Suzuki Marks in a manner that is inconsistent with the provisions of this
(15) Importation of Suzuki Products into the United States by Service Dealer from any source other than Suzuki or exportation of Suzuki Products purchased or obtained from Suzuki to foreign countries. 11.2 Termination by Suzuki on 60 Days Notice. Suzuki may terminate this Agreement upon 60 days notice after the occurrence of any one of the following events: (1) approval. The removal or replacement of the General Manager without Suzukis prior written
(2) Failure of Service Dealer to properly maintain signs or other displays in a manner approved by Suzuki. (3) Failure of Service Dealer to permit Suzuki to access, audit or reproduce Service Dealer's records, accounts and supporting data as provided herein or to furnish all sales, financial or other information, and related supporting information, in a timely manner. (4) Impairment of the reputation or financial standing of Service Dealer or any Owner, or any entity affiliated with any of them, subsequent to execution of this Agreement. (5) Failure of Service Dealer to make any payment to Suzuki when due.
(6) Dissension, dispute or disagreement among the Owners or management of Service Dealer which in the sole judgment of Suzuki is detrimental to the proper operation of Service Dealer or adversely affects the ownership, business, reputation or interests of Service Dealer or Suzuki. (7) the Location. Withdrawal by Suzuki from all or any part of the market served by Service Dealer from
(8) Failure of Service Dealer to perform adequately its service, parts or customer satisfaction responsibilities or to provide adequate Service Dealer facilities at the Location. (9) Material breach or violation by Service Dealer of any other term or provision of this Agreement not otherwise expressly identified as a ground for termination. 11.3 Failure of Performance. If Suzuki concludes that Service Dealer has failed to perform adequately its service, parts or customer satisfaction responsibilities or to provide adequate Service Dealer facilities at the Location, Suzuki shall notify Service Dealer in writing of such failure(s) an will endeavor to review promptly with Service Dealer the nature and extent of such failure(s), and will grant to Service Dealer 90 days or such other longer period as may be required by law to correct such failure(s). If Service Dealer has not, in Suzuki's reasonable judgment, substantially remedied such failure at the expiration of such period, Suzuki may terminate this Agreement upon 60 days notice or such other notice as may be required by law.
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EXHIBIT C-18
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11.4 Minimum Notice Period. If the notice period specified in any portion of Section 11 (including subsections) is less than the period required by applicable law, such notice period shall be deemed increased to the minimum period required by such law. 11.5 Death or Incapacity. This Agreement shall automatically terminate, effective 90 days after the death of the General Manager or any Owner, or the incapacity of the General Manager or the Owner of a majority of the stock or other equity interests of Service Dealer; provided, that Service Dealer may request one or more extensions of the effective date of expiration to assist Service Dealer in terminating its Service Dealer business or to provide for a transfer of assets or ownership previously approved under this Agreement. The request for extension, however, must be made no more than 30 days prior to the effective date of termination. As used in this Agreement, the term incapacity means (a) any physical or mental ailment of the General Manager or the majority Owner that adversely affects Service Dealer's ability to meet its obligations under this Agreement, or (b) the management of the financial affairs of the General Manager by another person (whether or not appointed by a court). Service Dealer shall promptly give Suzuki written notice of the occurrence of any event outlined in this paragraph, and in no event shall such notice be provided more than 10 days after the occurrence. Service Dealer may apply for a Successor Addendum designating a proposed General Manager and/or owner(s) of a successor Service Dealer to be established under a new service dealer contract in the future, in order to continue the operations identified in this Agreement alter it terminates because of death or incapacity. Suzuki will execute the Successor Addendum if the proposed General Manager or owner(s) meet Suzukis standards for approving changes in such regards. However, the proposed General Manager or owner(s) will not be required to meet usual capital or financial capability requirements until after the Successor Addendum is implemented by death or incapacity, in which event the proposed person(s) will provide Suzuki within 30 days prior to the termination of this Agreement, including any extensions, such information as Suzuki requires. Service Dealer may cancel an executed Successor Addendum at any time prior to the death or incapacity of the General Manager, the death of any Owner or the incapacity of the majority Owner. Suzuki may cancel an executed Successor Addendum only if the proposed General Manager or owner(s) no longer meet Suzukis standards. The parties may execute a superseding Successor Addendum by agreement. A Successor Addendum shall expire automatically upon expiration of the term of this Agreement. Service Dealer acknowledges that owner(s) have the independent responsibility to take whatever actions are necessary to create the right in the proposed owner(s) to any transfer of ownership approved by Suzuki under the Successor Addendum. If Service Dealer and Suzuki have not executed a Successor Addendum at the time of the occurrence of any of the events described in the first sentence of the first paragraph of this Section, any remaining Owner(s) and/or the legal representative of any deceased Owner(s) and/or incapacitated majority Owner may propose a General Manager and/or owner(s) of a successor Service Dealer to be established under a new Service Dealer contract, in order to continue the operations identified in this Agreement after it terminates because of death or incapacity. The proposal, including all applications and information reasonably requested by Suzuki to reach its decision, must he made in writing to Suzuki at least 30 days prior to the termination of this Agreement, including any extensions. Suzuki will accept a proposal only if (a) the proposed successor Service Dealers owner(s) and General Manager meet Suzukis standards and are ready, willing and able to comply with the requirements of a new Service Dealer contract, and (b) all outstanding monetary obligations of Service Dealer to Suzuki have been paid. 11.6 Termination Without Cause. Either Party may terminate this Agreement unilaterally, without any cause or breach, on the giving of at least 180 days written notice to the other Party. 11.7 Notice of Termination. Any notice of termination under this Agreement shall be mailed or delivered to the other party as provided herein. Such notice shall be effective upon the date of receipt or confirmed delivery to the address for Notices, as specified in this Agreement. Suzuki need not state all grounds on which it relies in its termination of Service Dealer, and shall have the right to amend such notice as appropriate. Suzukis failure to refer to any additional grounds for termination shall not constitute a waiver of its right later to rely upon such grounds.
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EXHIBIT C-19
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11.8 Continuance of Business Relations. Upon receipt of any notice of termination, Service Dealer agrees to conduct itself and its operation until the effective date of termination in a manner that shall not injure the reputation or goodwill of the Suzuki Marks or Suzuki. In the event that following the termination or expiration of this Agreement either party has business dealings with the other with respect to the Suzuki Products or service, such dealings shall not constitute either a renewal of this Agreement or a waiver of such termination or expiration. However, all such dealings shall be governed by terms identical to this Agreement for the duration of such dealings unless the parties execute a new and different agreement with respect to such dealings. 11.9 Repurchase Obligations. Upon the expiration or termination of this Agreement for any reason (other than pursuant to an approved agreement to sell or transfer the dealership business or assets), Suzuki will repurchase from Service Dealer all new, unused, and undamaged current model Suzuki Products, which were purchased by Service Dealer from Suzuki and remain in Service Dealers inventory. The repurchase price for the Suzuki Products shall be Suzukis invoice price to Dealer, less Suzukis prevailing restocking charge. This obligation shall arise only if Service Dealer delivers the Suzuki Products at its own expense to the Suzuki Parts Warehouse located nearest Service Dealer, and the Suzuki Products are free and clear of all liens, charges, and encumbrances. 12. INSURANCE
Insurance. Service Dealer shall maintain continuously in effect, at its own expense, insurance against all liability for the acts or omissions of the Service Dealer or any of its employees, agents, servants or contractors in connection with the sale of the Suzuki Products or rendering of services by Service Dealer, and for all claims for damage to property, or for injury or death of any person, whether directly or indirectly, resulting from such acts or omissions. Such insurance shall be of such types and in such amounts as Suzuki shall require, and Service Dealer agrees to comply with any Suzuki policies regarding required insurance coverage. The Commercial General Liability Insurance and the Garage Liability Insurance shall name Suzuki as an additional insured, and the property insurance shall name Suzuki as a loss payee. Service Dealer shall furnish to Suzuki a Certificate of Insurance with evidence that premiums therefore have been paid at least annually, and Service Dealer shall require its insurance company to provide 30 days prior written notice to Suzuki in the event of cancellation or any material change in any policy. 13. INDEMNIFICATION 13.1 Indemnification. Indemnification between Suzuki and Service Dealer shall be as follows:
(1) Indemnification by Suzuki. Subject to the provisions of this Section, Suzuki shall indemnify, defend and hold Service Dealer harmless against any losses, damages, liabilities, judgments and expenses, plus reasonable attorneys fees and court costs, resulting from any lawsuit, proceeding or claim against Service Dealer by a third party for bodily injury, property damage or breach of warranty claimed to have been caused solely by an alleged defect in the design, manufacture or assembly of any Suzuki Products sold by Suzuki to Service Dealer for resale that has not been altered, converted or modified by or for Service Dealer, if the alleged defect was not detectable by Service Dealer in a reasonable inspection of the Suzuki Product or service or installation relating thereto. In the event that any lawsuit making such allegations is brought naming Service Dealer as a defendant, Suzuki may, following receipt of notice as provided in this Section, undertake the defense of said action on behalf of Service Dealer at Suzukis sole expense and with counsel of Suzukis choice. Suzuki shall have the right to decline to undertake such defense or, after undertaking the defense, to tender the defense back to Service Dealer, and Service Dealer must accept such tender and waives any conflict of interest if Suzuki reasonably concludes that the allegations being pursued are no longer those set forth above or that the acts of Service Dealer as alleged provide a basis for Service Dealers liability which is independent from any claim against Suzuki.
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EXHIBIT C-20
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(2) Indemnification by Service Dealer. Service Dealer shall indemnify, defend and hold Suzuki and its affiliates harmless against any losses, damages, liabilities, judgments and expenses, plus reasonable attorneys fees and court costs, resulting from any lawsuit, proceeding or claim against Suzuki or any of its affiliates by a third party claimed to have been caused in whole or in part by: (a) Service Dealers actual or alleged breach of this Agreement, including Service Dealers service and installation obligations, or any actual or alleged failure to comply with any obligation under this Agreement; or (b) Service Dealers actual or alleged Failure to perform or negligent or improper performance of (i) any warranty work, (ii) any installation, maintenance or repair service on the Suzuki Products or any other goods, or (iii) the assembly, set-up or inspection required of Service Dealer before delivery of the Suzuki Products to a customer; or (c) Service Dealers actual or alleged breach of any contract between Service Dealer and Service Dealers customer or actual or alleged breach of any warranty other than that provided by Suzuki; or (d) Service Dealers actual or alleged misleading statements, misrepresentations or unfair or deceptive acts or practices, whether through advertisements or otherwise, affecting any customer of Service Dealer; or (e) Any modification, conversion or alteration made by or for Service Dealer to a Suzuki Product, except those made pursuant to the express written approval and instruction of Suzuki; or (f) Any violation of any applicable law or regulation, including without limitation any law or regulation dealing with environmental matters, consumer protection, emissions or work place practices or conditions (including OSHA); or (g) The hiring, retention or termination of any person by Service Dealer, including but not limited to claims of employment discrimination, age, race or sex discrimination or harassment, wrongful discharge or termination, breach of the covenant of good faith and fair dealing, breach of contract, interference with contractual relations, intentional and/or negligent infliction of emotional distress, defamation, negligent hiring, or violations of or non-compliance with the Fair Labor Standards Act or the Employment Retirement Income and Security Act or any similar state or local laws. In the event that any lawsuit making allegations as set forth above is brought naming Suzuki as a defendant, Service Dealer will, following receipt of notice as provided this Section, undertake the defense of said action on behalf of Suzuki at Service Dealers sole expense and with counsel of Service Dealers choice. Service Dealer shall have the right to decline to undertake such defense or, after undertaking the defense to tender the defense back to Suzuki, and Suzuki must accept such tender, if the allegations being pursued are no longer those set forth above and it can do so without prejudice to Suzuki. (3) Notification. Whenever a claim is made or a lawsuit potentially subject to indemnity is commenced against either Suzuki or Service Dealer or both of them, each shall, within 30 days after service of the complaint or written notice of the claim, notify the other of any request to assume its defense and to indemnify it. The request to assume the defense and to indemnify shall be accepted or rejected by the party to which it is made within 30 days following its receipt. A party requesting or demanding indemnification or assumption of defense of any claim must take all reasonable steps to defend the claims and avoid any prejudice to the indemnifying party until a response to the request is provided.
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EXHIBIT C-21
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14.
RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE
14.1 Rights Granted. If Service Dealer or any Owner holding a majority of the ownership or voting interest in Service Dealer enter into a bona fide agreement for the transfer of the majority ownership or voting interest in or the Primary Assets of Service Dealer with a third party, Suzuki shall have a right of first refusal or option to purchase the Ownership Interest or Assets, instead of the third party, and on the same terms and conditions as agreed upon between or among the Service Dealer or owner and the third party. 14.2 Transfers to Immediate Family. Suzukis Right of First Refusal or Option to Purchase shall not apply to the transfer of Ownership or Service Dealer assets where all parties to the agreement are related to one another as immediate family members (parents, spouses, siblings, children, grandparents, or grandchildren). 14.3 Exercise of Rights. Suzuki shall have thirty (30) days from its receipt of all the following information to provide written notice to Service Dealer if it chooses to exercise its Right of First Refusal or Option to Purchase: (i) the executed transfer agreements including all exhibits, schedules, attachments, applicable leases and any relevant side agreements relating in any way to the transfer of money, value or other performance in exchange for the Ownership Interest or Assets; (ii) all data and documentation customarily required by Suzuki to evaluate a proposed transfer of ownership; and (iii) if the transfer of ownership of real property is contemplated, a real estate appraisal and environmental report prepared in connection with or relied upon by the parties to the proposed transfer. If Suzuki exercises its Right of First Refusal or Option to Purchase, Suzuki will assume the proposed buyers rights and obligations under the transfer agreement, and Suzuki shall have the same amount of time to meet any preconditions or requirements of the agreement following its exercise of these rights as the proposed purchaser had from execution of the transfer agreement (including any prior version of the agreement). Suzuki has the right to request any documents and information relating to the proposed transfer that a proposed purchaser would customarily require under the circumstances, and Service Dealer agrees to provide such documents and information in a timely manner. 14.4 Apportionment of Assets. If the proposed transfer by Service Dealer includes assets or ownership interests unrelated to its Suzuki Service Dealer operations, Suzukis Right of First Refusal of Option to Purchase shall extend only to the assets or ownership interests related to Suzuki Service Dealer operations, and the purchase price shall be apportioned accordingly. In determining the proper apportionment of the purchase price, any purported allocation proposed by Service Dealer or contained in the transfer agreement shall not be controlling, and the total purchase price shall be apportioned based on the relative fair market value of the assets included in the agreement as a percentage of the overall purchase price. 14.5 Assignment of Rights. Suzuki shall have the right to assign its Right of First Refusal or Option to Purchase to a third party who shall be entitled to all rights granted to Suzuki under this Section 14 (including subsections). 14.6 Contrary Provisions Void. Service Dealer acknowledges that any provision contained in an agreement for transfer of the Ownership Interest in or Primary Assets of Service Dealer purporting to increase the purchase price or otherwise alter the terms of the agreement if Suzuki or another party exercises a Right of First Refusal or Option to Purchase shall be void and unenforceable against Suzuki. 15. MISCELLANEOUS
15.1 Limitation of Liability. Under no circumstances shall Suzuki be liable to Service Dealer for incidental or consequential damages or special damages (including loss of profit or other commercial losses) which result in whole or in part from any breach of this Agreement, or for any interruption in Service Dealers business, regardless of whether a claim for such losses or damages is based upon warranty, contract, negligence, strict liability in tort or any other legal theory. 15.2 Notices, etc. Any notice, request or consent pursuant to this Agreement must be in writing and personally delivered or sent by any traceable means (e.g., Federal Express, UPS, certified mail, etc.) to the
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address of the parties shown on this Agreement. All notices to Suzuki must be sent to the attention of the Marine Division Manager, American Suzuki Motor Corporation in Brea, California. All notices to Service Dealer must be sent to the attention of the General Manager or any majority Owner at the Location. When so delivered, such service of notice shall satisfy all requirements for notice under this Agreement. 15.3 Assignment of Rights or Delegation of Duties. This is a personal service agreement and may not be assigned or transferred by Service Dealer in whole or in part, directly or indirectly, voluntarily or by operation of law, without the prior written approval of Suzuki. Any attempted transfer or assignment without Suzukis prior written approval will be void and not binding upon Suzuki. Service Dealer shall not establish or appoint any associate Service Dealer or sub-Service Dealer for the sale or service of any Suzuki Products, or permit anyone else either to act on Service Dealers behalf or perform any of Service Dealers obligations under this Agreement. 15.4 No Franchise Fee. Service Dealer warrants that it has paid no fee, nor has it provided any goods or services in lieu of same, to Suzuki or any other party in consideration of entering into this Agreement. The sole consideration for Suzukis entering into this Agreement is Service Dealers ability, integrity, and assurance of personal services and expressed intention to deal fairly and equitably with Suzuki and the public. 15.5 Benefit. This Agreement is entered into by and between Suzuki and Service Dealer for their sole benefit. Neither this Agreement nor any specific provision contained in it is intended or shall be construed to be for the benefit of or create any rights whatsoever in any third party, including without limitation any person or entity that applies or otherwise seeks to become an Owner (whether the spouse or heirs of an Owner or otherwise), a General Manager or a transferee of any license held by Service Dealer. 15.6 Vendor-Vendee Relationship. The relationship between Suzuki and Service Dealer shall be solely that of vendor and vendee and, without limiting the foregoing, this Agreement creates no fiduciary relationship, agency, joint venture or partnership of any kind between Suzuki and Service Dealer. Service Dealer is an independent business and an independent contractor with Suzuki, and is solely responsible for its own acts, conduct and relations with its customers and the public. This Agreement is not a property right, and Service Dealer is not the agent or legal representative of Suzuki or Suzuki Motor Corporation, the manufacturer of the Suzuki Products, for any purpose whatsoever. Service Dealer does not have any expressed or implied right or authority to assume or create any obligations or responsibilities on behalf of or in the name of Suzuki or Suzuki Motor Corporation. 15.7 No Joint Employment. Service Dealer acknowledges its obligation under this Agreement to sell and service the Suzuki Products and other obligations related to the operation of the Service Dealer and recognizes the necessity to employ and train qualified personnel to satisfy these commitments. To this end, Service Dealer agrees to employ only qualified personnel who will fulfill the commitments made by Service Dealer to Suzuki in this Agreement. Notwithstanding the foregoing, Service Dealer retains the sole and exclusive right to determine whom to hire and their qualifications; to direct, control and supervise Service Dealers employees; and to establish all terms and conditions of employment of Service Dealers employees. All supervision, control and direction of Service Dealers employees shall be the sole and exclusive responsibility of Service Dealer. Service Dealer shall at all times remain the sole employer of persons employed by Service Dealer and, to this end, Service Dealer and Suzuki agree that no act or omission of Service Dealer or Suzuki shall be construed to make or render them joint employer, co-employer or alter ego of each other. 15.8 Consent of Suzuki. Any time that this Agreement provides that Service Dealer must obtain Suzukis approval or consent to any proposed conduct or change, Service Dealer must provide all information requested by Suzuki concerning the proposal. 15.9 Suzukis Policies. This Agreement refers to certain policies and standards. Service Dealer acknowledges that these policies and standards are prepared by Suzuki in its sole discretion based upon new or
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changing technology, changes in legal requirements, Suzukis evaluation of the marketplace, or other circumstances. 15.10 No Implied Waiver. The failure of either party at any time to require performance by the other party of any provision herein shall in no way affect the right of such party to require such performance at any time thereafter, nor shall any waiver by any party of a breach of any provision herein constitute a waiver of any succeeding breach of the same or any other provision, nor constitute a waiver of the provision itself. 15.11 Sole Agreement of the Parties; Amendment. This Agreement, together with the exhibits and the attachments thereto, and the documents expressly incorporated into this Agreement, contains the entire, integrated agreement between Service Dealer and Suzuki, and there are no prior or other agreements or understandings, either oral or written, between the parties affecting this Agreement or relating to the sale or service of the Suzuki Products, except as otherwise specifically provided for or referred to in this Agreement. Service Dealer acknowledges that no representations or statements other than those expressly set forth in this Agreement were made by Suzuki or any officer, employee, agent or representative thereof, or were relied upon by Service Dealer in entering into this Agreement. This Agreement cancels and supersedes all previous agreements between the parties relating to the subject matter covered herein other than as expressly incorporated into this Agreement. No change or addition to, or deletion of, any portion of this Agreement shall be valid or binding upon the parties to this Agreement unless the same is approved in writing by an officer of each of the parties; provided, however, that Suzuki has the right to amend, modify or change this Agreement in case of legislation, governmental regulation or circumstances beyond the control of Suzuki that might materially affect the contractual relationship between Suzuki and Service Dealer. 15.12 Construction, Severability and Jurisdiction. If any provisions of this Agreement should be held invalid or unenforceable for any reason whatsoever, or should violate any law of the United States, the District of Columbia or any State or Territory thereof, this Agreement shall be considered divisible as to such provisions, and such provisions shall be deemed deleted from this Agreement in such jurisdiction as if such provisions were not included herein. In the event that any provision of this Agreement should be held to violate only the laws of the District of Columbia, or of any State or Territory, the impacted provision shall remain valid and binding with respect to jurisdictions outside of such District, State or Territory. 15.13 Alternative Dispute Resolution. Suzuki may, in its discretion, institute a program of alternate dispute resolution consisting of optional or mandatory mediation and/or binding arbitration of claims. Service Dealer agrees to abide by the terms of any such program if and when instituted by Suzuki. 15.14 Release of Claims. Service Dealer hereby fully releases any and all claims of any kind or nature whatsoever Service Dealer had or has against Suzuki arising from, or out of, or in connection with any prior agreement entered into between them, provided that the foregoing provisions shall not be deemed a release of any claim arising out of prior sales of the Suzuki Products by Suzuki to Service Dealer. 15.15 Attorneys Fees. In any action, proceeding or dispute arising in connection with any alleged breach of this Agreement or otherwise relating in any way to this Agreement, the prevailing party shall be entitled to recover reasonable attorneys fees and costs. 15.16 Effective Date. This Agreement is not valid and binding unless and until executed by a duly authorized officer of Suzuki, and its effective date will be the date entered upon the execution hereof by such officer of Suzuki. 15.17 Use of the Term Service Dealer. The term Service Dealer as used in this Agreement is intended solely as a reference to the individual or corporation authorized to conduct the sales and service of Suzuki Parts and Accessories under the terms of this Agreement. Service Dealer acknowledges that the inclusion of the word Dealer is not intended to and does not extend any rights to sell Suzuki motor vehicles or to provide any rights or protections beyond those expressly contained in this Agreement. Service Dealer further
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acknowledges that inclusion of the word Dealer is not intended to and does not make Service Dealer a Dealer or Dealership under any applicable law that would not otherwise apply to Service Dealer. 15.18 Future Availability of Suzuki Products. Service Dealer acknowledges that Suzuki has ceased distributing and selling new Suzuki automobiles in the United States and that the manufacturer warranties on existing Suzuki automobiles in operation will expire over time. As a result, the need for warranty repairs will diminish, and as the need for warranty repairs diminishes, Suzuki may choose to cease the sale or distribution of Suzuki Products that Suzuki determines, in its sole discretion, are no longer needed to comply with outstanding warranty obligations. 15.19 Modification by Applicable Law. If any provision of this Agreement is deemed to contravene the laws or regulations applicable to the Agreement in the state or jurisdiction where the Agreement is to be performed, the provision shall be deemed to be modified to conform to the applicable law or regulations, and the remainder of the Agreement shall remain in full force and effect.
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EXHIBIT D (Participation Agreement)
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PARTICIPATION AGREEMENT This Participation Agreement (Agreement) is dated as of November [__], 2012 and is between [_____________[Dealer #_______]] (Dealer) and Suzuki Motor Corporation (SMC). This Agreement is the participation agreement contemplated by the letter agreement (Letter Agreement) between Dealer and American Suzuki Motor Corporation (ASMC) entered into in connection with ASMCs bankruptcy case (Bankruptcy Case) under Chapter 11 of the United States Bankruptcy Code (Bankruptcy Code) in the United States Bankruptcy Court for the Central District of California (Bankruptcy Court). Dealer and SMC hereby agree as follows: 1. Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following meanings when used in this Agreement. Furthermore, capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Letter Agreement. a. Closing Date: means the date on which the consummation of the purchase and sale of the Participation (as defined below) hereunder occurs, which shall be within ten (10) days of the Effective Date. b. Distribution: means any payment of any kind, whether in the form of cash or otherwise, by ASMC, its estate, or any successor on account of Dealers Settling Dealer Liquidated Claim (as defined below), including any distributions under ASMCs Plan of Reorganization or otherwise on account of such claim in the Bankruptcy Case or following any conversion thereof. c. Effective Date: means the date which is the last to occur of (i) execution of this Agreement by Dealer; (ii) receipt of executed Agreement by SMC; and (iii) execution by SMC. d. Participation Payment: means the amount paid to Dealer by SMC or its designee as consideration for this Agreement, which amount shall be [$___________], provided this Agreement, the Letter Agreement and the Service and Parts Agreement, are executed (without modification) and received by November 30, 2012. If the enclosed documents are not executed and received by November 30, 2012, but are executed and received by December 28, 2012 ("Return Deadline"), SMC will not make any advance payment toward your Settling Dealer Liquidated Claim, but SMC still will subordinate the SMC Secured Claims (as defined below) to your Settling Dealer Liquidated Claim. e. Plan of Reorganization: means the Plan of Reorganization dated November [___], 2012 proposed by ASMC in the Bankruptcy Case, as it may be amended, modified, or supplemented from time to time with SMCs consent. f. Settling Dealer Liquidated Claim: shall have the same meaning as defined in the Letter Agreement and shall be in the amount of [$____________].
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g. SMC: SMC shall have the right to assign or designate any and all of its rights and obligations under this Agreement to a designee. In the event of such assignment or designation, "SMC" shall also refer to SMCs designee. h. SMC General Unsecured Claim: means all of SMCs prepetition general unsecured claims against ASMC. i. SMC Secured Claims: Any and all of the secured claims of SMC against the Debtor arising from or relating to that certain Loan and Security Agreement dated July 27, 2012 2. Participation. Dealer hereby sells, and SMC or its designee hereby purchases, an undivided interest in Dealers Settling Dealer Liquidated Claim in an amount equal to the Participation Payment (the Participation), whether or not the Bankruptcy Courts allowance of a claim in favor of Dealer is greater than or less than Dealers Settling Dealer Liquidated Claim, which Participation shall be entitled to receive Distributions in accordance with Section 4 of this Agreement. 3. Payment. On the Closing Date, SMC or its designee shall, at its option as to the manner of delivery of payment, pay Dealer the Participation Payment by check delivered to the address set forth below or by wire transfer in accordance with the wire transfer instructions set forth on Schedule A. 4. Priority of SMC Participation as Between Dealer and SMC or its Designee.
a. Dealer hereby agrees that the Participation purchased by SMC or its designee under this Agreement shall be junior for Distribution purposes to Dealers interest in the Settling Dealer Liquidated Claim until Dealer receives, taking into account the Participation Payment and Distributions received by Dealer, an amount equal to the amount of the Settling Dealer Liquidated Claim, without interest (Dealer Recovery Limit). Upon Dealers receipt of the Dealer Recovery Limit, SMC or its designee shall thereafter be entitled to receive 100% of any Distributions, whether or not the Bankruptcy Courts allowance of a claim in favor of Dealer is greater than or less than Dealer's Settling Dealer Liquidated Claim. Dealer agrees that ASMC shall be the disbursing agent for Distributions, hereby irrevocably appoints and designates ASMC as such disbursing agent, and hereby directs ASMC to make Distributions directly to SMC or its designee as they are entitled to such Distributions under this Agreement. b. If any Distribution is made to Dealer after the Dealer Recovery Limit has been met, the Dealer shall hold such Distribution in trust for SMC or its designee and immediately pay the Distribution to SMC or its designee. 5. SMC Subordination. In exchange for the release and other consideration set forth herein, SMC will subordinate for purposes of Distributions under the Plan of Reorganization, to the extent necessary, the SMC Secured Claim to the payment of the Dealer Liquidated Claim until such claim is paid in full, without interest, under the Plan of Reorganization. Such subordination shall extend to any Distribution under the Plan of Reorganization on account of the Dealer Liquidated Claim, whether such Distribution is paid to the Dealer or to SMC or its 2
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designee on account of the Participation. The subordination provided herein shall not apply to the SMC General Unsecured Claim. 6. Release; Covenant Not to Sue. For the consideration provided in this Agreement, including without limitation the payment of the Participation Payment and SMC's subordination: a. Dealer hereby releases, relinquishes, surrenders, cancels and forever discharges and, by these presents, for itself, its heirs, executors, estates, shareholders, members, owners, administrators, beneficiaries, subsidiaries, parent companies, affiliates and aliases, agents and assigns (collectively with Dealer, the Releasing Parties), do hereby, release, relinquish, surrender, cancel and forever discharge any, every and all claims, demands, charges, actions and causes of action, both at law and in equity, arising under statute, common law or otherwise, whether known or unknown, foreseen or unforeseen (Claims), which Releasing Parties may have, or which Releasing Parties may claim to have, against (i) SMC and its subsidiaries (including without limitation the purchaser (Purchaser) under the proposed sale in the Bankruptcy Case), parent companies, and affiliates, and (ii) each of their respective legal representatives, predecessors, successors, assigns, officers, directors, shareholders, lenders, owners, employees, managers, members, professionals, attorneys, partners, and fiduciaries (excluding ASMC) (collectively the Released Parties), based upon, connected with, incident to, or arising out of, (a) Dealers business relationship with ASMC or SMC; (b) the Dealer Agreement and any predecessor agreements; (c) Dealers Letter Agreement and Service and Parts Agreement with ASMC; (d) Dealers transactions with ASMC; (e) the operation of Dealers dealership; (f) any agreements or Claims relating to Dealers facilities; (g) any representations regarding motor vehicle sales or otherwise related to Dealers operations under the Dealer Agreement; (h) any Claims of Dealer pursuant to Section 13.6 of the Standard Provisions in the Dealer Agreement and any termination rights under any applicable law, rules, or regulations; or (i) any other events, transactions, discussions, Claims, or occurrences of any kind arising in whole or in part prior to the date of this Agreement, it being the intent and purpose of this Release that it shall evidence a full, final and complete release of all Claims which Releasing Parties may have, or claim to have, against Released Parties by reason of anything that has occurred prior to the date of this Agreement. Notwithstanding the foregoing, ASMC shall not be deemed to be one of the Released Parties. b. Dealer, for itself and other Releasing Parties, hereby agrees not to, at any time, sue, protest, institute, or assist in instituting any proceeding in any court or administrative proceeding, or otherwise assert (i) any Claim that is covered by the release in Section 6.a. above or (ii) any Claim that is based upon, related to, arising from, or otherwise connected with the assignment of the Service and Parts Agreement to the Purchaser in the Bankruptcy Case or an allegation that such assignment is void, voidable, unenforceable, violates any applicable law, or contravenes any agreement. Any breach of the foregoing shall absolutely entitle SMC and the Purchaser to an immediate and permanent injunction to be issued by any court of competent jurisdiction, precluding Dealer from contesting SMCs or the Purchasers application for injunctive relief and prohibiting any further act by Dealer in violation of this Section 6. In addition, SMC and Purchaser shall have all other equitable rights in connection with a breach of this Section 6 by Dealer, including without limitation the right to specific performance.
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c. Release of Unknown and Unanticipated Claims. The Releasing Parties acknowledge there is a risk that, after the execution of this Agreement, they may discover, incur, or suffer damages from Claims (as defined above) which were unknown or unanticipated at the time this Agreement was executed, including, without limitation, unknown or unanticipated Claims. The Releasing Parties hereto acknowledge that they are assuming the risk of such unanticipated Claims and agree that this Agreement applies thereto. The Releasing Parties hereto expressly waive the benefits of Section 1542 of the California Civil Code, which provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. Effective upon execution of this Agreement, the Releasing Parties hereto waive and relinquish all rights and benefits which they have or may have under Section 1542 or the law of any other state or jurisdiction to the same or similar effect to the full extent that they may lawfully waive and relinquish all rights and benefits pertaining to the Claims (as defined above) that are the subject matter of this Agreement. d. This Release shall not apply to any rights, obligations or product complaints grounded in warranty or product liability owed by any Released Party to any Releasing Party or to any other person. Nor shall this Release apply to claims, causes of action, demands, losses and damages due to injuries or deaths caused by a claimed defect in the design, manufacture, assembly, testing and distribution (other than retail distribution by any Dealer Releasing Party to any consumer) of a Suzuki product, whether such claims are based upon theories of negligence, breach of warranty or product/strict liability. 7. Representations by Dealer. Dealer represents and warrants to SMC on and as of the Closing Date that: a. Dealer is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Dealer has full power and authority to execute, deliver and perform its obligations under this Agreement, including all documents executed in connection herewith, and to sell and assign the Participation hereunder. b. This Agreement has been duly and validly authorized, executed and delivered by Dealer and is legal, valid, binding and enforceable against Dealer in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors rights generally or by equitable principles relating to enforceability. c. Dealer is the sole owner of the Settling Dealer Liquidated Claim and all Claims released hereunder free and clear of all liens and encumbrances and has not conveyed and will not convey any interest in the Settling Dealer Liquidated Claim or such Claims to any other person.
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d. Dealer is a sophisticated seller with respect to the Participation and this Agreement, has adequate information concerning the business and financial condition of ASMC to make an informed decision regarding the sale of the Participation and this Agreement, and has independently and without reliance upon SMC and based on such information as Dealer has deemed appropriate, made its own analysis and decision to enter into this Agreement. 8. Miscellaneous.
a. Survival. All representations, warranties and covenants made by the parties hereto shall be considered to have been relied upon by the parties hereto and shall survive the Closing Date hereunder and the execution, delivery and performance of this Agreement and any transfer or assignment by Dealer pursuant to Section 8(b) hereof. b. Assignment. SMC may assign this Agreement without Dealers consent and without notice to Dealer; provided such assignment does not relieve SMC or its designee of the obligation to make the Participation Payment referenced herein. This Agreement may not be assigned or transferred by Dealer, in whole or in part, directly or indirectly, voluntarily or by operation of law, without the prior written consent of SMC. Any assignment, transfer or delegation in contradiction of this provision will be null and void. Subject to the foregoing, this Agreement will bind and inure to the benefit of the successors and assigns of SMC and Dealer. SMC may designate another entity to purchase the Participation and furnish the Participation Payment. c. Notice. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (i) in the case of delivery by hand, when delivered, (ii) in the case of delivery by mail, three days after being deposited in the mails, postage prepaid, or (iii) in the case of delivery by facsimile transmission, when sent and receipt has been electronically confirmed, addressed as follows for each of the parties hereto (until notice of a change thereof is delivered as provided in this Section 8(c)): If to Dealer: At the address set forth below Dealers signature line below or, if no address is given, at the last known address as shown on ASMCs books and records. ___________________________ ___________________________ ___________________________ Attention: __________________ Telephone: _________________ Facsimile: __________________ Klee, Tuchin, Bogdanoff & Stern LLP 1999 Avenue of the Stars Thirty Ninth Floor Los Angeles, CA 90067 5
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Attention: Lee R. Bogdanoff, Michael L. Tuchin & David A. Fidler Telephone: 310-407-4000 Facsimile: 310-407-9090 d. Further Assurances. Each of the parties hereto agrees to execute and deliver, or to cause to be executed and delivered, all such instruments, and to take all such action as the other party may reasonably request in order to effectuate the intent and purposes of, and to carry out the terms of this Agreement. e. No Implied Waiver. The delay or failure by SMC or its designee to require performance by Dealer or the waiver by SMC or its designee of a breach of any provision of this Agreement will not affect the right to subsequently require performance. f. No Reliance by Others. None of the provisions of this Agreement shall inure to the benefit of any person other than Dealer, SMC, Purchaser and any designee of SMC; consequently, no person other than Dealer, SMC, Purchaser and any designee of SMC shall be, entitled to rely upon or raise as a claim or defense, in any manner whatsoever, the failure of either Dealer, SMC or SMC's designee to comply with the provisions of this Agreement. Neither Dealer nor SMC nor its designee shall incur any liability to any other person for any act or omission of the other. g. Sole Agreement of the Parties; Amendment. This Agreement, along with Letter Agreement referenced herein, contains the entire, integrated agreement between Dealer and SMC, and there are no prior or other agreements or understandings, either oral or written, between the parties with respect to the subject matter hereof. This Agreement cancels and supersedes all previous agreements between the parties relating to the subject matter covered hereof. No change or addition to, or deletion of, any portion of this Agreement shall be valid or binding upon the parties to this Agreement unless the same is approved in writing by an officer of each of the parties. h. Voluntary Act; No Reliance. Dealer has reviewed this Agreement with its legal, tax, or other advisors, or had the opportunity to do so, and is fully aware of all of its rights and alternatives. In executing this Agreement, Dealer acknowledges that its decisions and actions are entirely voluntary and free from any duress. DEALER ACKNOWLEDGES THAT NO REPRESENTATIONS OR STATEMENTS OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT WERE MADE BY SMC OR ANY OF ITS RESPECTIVE OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES THEREOF, OR WERE RELIED UPON BY DEALER IN ENTERING INTO THIS AGREEMENT. i. Severability. If any provision of this Agreement or the Letter Agreement referenced herein should be held invalid or unenforceable for any reason whatsoever, or should violate any law of the United States, the District of Columbia, or any State or Territory thereof, 6
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this Agreement shall be considered divisible as to such provisions, and such provisions shall be deemed deleted from this Agreement in such jurisdiction as if such provisions were not included herein. j. Attorneys Fees. Each party shall bear its own attorneys fees in connection with the negotiation and execution of this Agreement and obtaining any requisite approval of the Bankruptcy Court. In any action, proceeding or dispute arising in connection with any alleged breach of this Agreement or otherwise relating in any way to this Agreement, the prevailing party shall be entitled to recover reasonable attorneys fees and costs. k. Jurisdiction; Applicable Law. By executing this Agreement, Dealer hereby consents and agrees that the Bankruptcy Court shall retain full, complete, and exclusive jurisdiction to interpret, enforce, and adjudicate disputes concerning the terms of this Agreement and any other matter relating thereto. In the event the Bankruptcy Court declines jurisdiction over any such dispute, Dealer hereby consents and agrees that jurisdiction shall be in the United States District Court for the Central District of California. This Agreement and the rights and obligations of the parties hereunder shall be governed by and interpreted in accordance with the law of the State of California without regard to its conflicts of laws provisions. l. Counterparts; Signatures. This Agreement may be signed in counterparts with the same effect as if the signatures were upon a single instrument, and all such counterparts together shall be deemed an original of this Agreement. For purposes of this Agreement, a facsimile copy of a partys signature shall be sufficient to bind such party. m. Agreement Not Dependent on Bankruptcy Court Approval of Other Agreements. This Agreement shall be effective upon the Effective Date; if the Letter Agreement and/or Service and Parts Agreement are not approved by the Bankruptcy Court, or the Settling Dealer Liquidated Claim otherwise is not allowed in the amount agreed under the Letter Agreement, this Agreement shall remain in full force and effect. n. No Solicitation under Plan of Reorganization. Nothing in this Agreement constitutes or shall be deemed or construed to constitute an agreement to vote any claim under the Plan of Reorganization or any other plan of reorganization, and Dealer shall retain all rights to vote the entirety of the Settling Dealer Liquidated Claim under the Plan of Reorganization or any other plan of reorganization notwithstanding the Participation. o. No Strict Construction. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by Dealer, on the one hand, and SMC, on the other hand, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. Without limitation as to the foregoing, no rule of strict construction construing ambiguities against the draftsperson shall be applied against any party with respect to this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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above.
In witness hereof, SMC and Dealer have executed this Agreement as of the date indicated
SUZUKI MOTOR CORPORATION ______________________________________ By:___________________________________ Its:___________________________________ [INSERT DEALER NAME] ______________________________________ By:___________________________________ Its:___________________________________ Dealer Address: ___________________________ ___________________________ ___________________________ Attention: _________________ Telephone: ________________ Facsimile: _________________ THIS DOCUMENT SHALL BE NULL AND VOID IF NOT EXECUTED BY DEALER AND RECEIVED BY SMC ON OR BEFORE DECEMBER 28, 2012, OR IF DEALER CHANGES ANY TERM HEREIN.
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Schedule A Wire Instructions for Dealer: ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________
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EXHIBIT E (Notice of Proposed Rejection and Settling Dealer Liquidated Claim Allowance)
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Richard M. Pachulski (CA Bar No. 90073) James I. Stang (CA Bar No. 94435) Dean A. Ziehl (CA Bar No. 84529) Linda F. Cantor (CA Bar No. 153762) Debra I. Grassgreen (CA Bar No. 169978) PACHULSKI STANG ZIEHL & JONES LLP 10100 Santa Monica Blvd., Suite 1300 Los Angeles, CA 90067-4114 Telephone: 310/277-6910 Facsimile: 310/201-0760 E-mail: rpachulski@pszjlaw.com jstang@pszjlaw.com dziehl@pszjlaw.com lcantor@pszjlaw.com dgrassgreen@pszjlaw.com [Proposed] Attorneys for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re: American Suzuki Motor Corporation,1 Debtor. Case No.: 12-_____ (___) Chapter 11 NOTICE OF PROPOSED REJECTION AND SETTLING DEALER LIQUIDATED CLAIM ALLOWANCE DEADLINE FOR SERVICE OF OBJECTIONS: ____________________
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ATTORNEYS AT LAW LOS ANGELES, CALIFORNIA
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TO ALL INTERESTED PARTIES: PLEASE TAKE NOTICE that the ORDER (I) AUTHORIZING DEBTOR TO ENTER INTO SERVICE AND PARTS AGREEMENTS WITH AUTOMOTIVE DEALERS; (II) APPROVING UNIFORM PROCEDURES FOR CONSENSUAL REJECTION OF PRE-PETITION AGREEMENTS AND RESOLUTION OF CLAIMS AND (III) GRANTING RELATED RELIEF (entered by the
DOCS_LA:259270.5 12832/001
EXHIBIT E-1
Case 8:12-bk-22808-CB
Desc
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Bankruptcy Court on November ___, 2012 [Docket No. __] (the Order) established the Dealer Settlement Procedures. PLEASE TAKE FURTHER NOTICE that, as permitted under the Order, the Debtor has entered into a Letter Agreement with ____________ [Dealer No. ___] (Settling Auto Dealer) dated as of ____________, 2012 (the Rejection Effective Date). Counsel for the Settling Auto Dealer is ______________________. PLEASE TAKE FURTHER NOTICE that the Letter Agreement will be binding on the Debtor and the estate unless a written objection, conforming to the requirements of this Notice, is filed and served upon the Notice Parties below within 7 days of the date of service of this Notice. PLEASE TAKE FURTHER NOTICE that the rejection of the Settling Auto Dealers Suzuki Automotive Auto Dealer Agreement, including the Standard Provisions and all ancillary agreements related thereto (the Auto Dealer Agreement) is effective as of the Rejection Effective Date unless a written objection, conforming to the requirements of this Notice, is filed and served upon the Notice Parties below within 7 days of the date of service of this Notice as indicated in the caption of this Notice. PLEASE TAKE FURTHER NOTICE that the Settling Auto Dealer will be allowed a general unsecured non-priority claim for all purposes associated with this case, including voting and distribution under any plan of reorganization, in the amount of $_______ (the Settling Dealer Liquidated Claim) on account of the Settling Auto Dealers claims, including damages arising out of the rejection and termination of the Auto Dealer Agreement and excluding prepetition claims for warranty services and Incentive Programs unless a written objection, conforming to the requirements of this Notice and the Local Bankruptcy Rules of the Central District of California, is filed and served upon the Notice Parties within 7 days of the date of service of this Notice. PLEASE TAKE FURTHER NOTICE that upon receipt of any objection to this Notice, the Debtor will schedule a hearing on the objection with the Court at the Courts earliest convenience and furnish written notice of such hearing. PLEASE TAKE FURTHER NOTICE that all objections to this Notice, the Letter Agreement, the rejection of the Auto Dealer Agreement or the Settling Dealer Liquidated Claim
DOCS_LA:259270.5 12832/001
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EXHIBIT E-2
Case 8:12-bk-22808-CB
Desc
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must include a written statement of all reasons in opposition thereto, declarations and copies of all photographs and documentary evidence on which the responding party intends to rely, and any responding memorandum of points and authorities. Factual contentions involved in any objection must be presented, heard, and determined upon declarations and other written evidence. Any declarant must be in court for the purposes of cross examination, unless the Debtor has provided a written waiver of cross examination. Counsel for the objecting party, and the objecting party who is appearing without counsel, must be present at the hearing on the Notice and must have such familiarity with the case as to permit informed discussion and argument regarding the requested approval of the Notice, the Settling Dealer Liquidated Claim, and rejection of the Auto Dealer Agreement. The failure of counsel or an unrepresented party to appear, unless excused by the court in advance, may be deemed consent to a ruling adverse to that counsels or unrepresented partys position. PLEASE TAKE FURTHER NOTICE that any objections to the Letter Agreement, rejection of the Auto Dealer Agreement or the Settling Dealer Liquidated Claim must be served on the following Notice Parties: (i) the Debtor, c/0 Pachulski Stang Ziehl & Jones LLP, 10100 Santa Monica Boulevard, Suite 1300, Los Angeles, California 90067, Attn: James I. Stang and Nelson Mullins Riley & Scarborough LLP, Meridian, 17th Floor, 1320 Main Street, Columbia South Carolina 29201, Attn: Steven A. McKelvey, Jr. and Stephen G. Morrison; (ii) the Settling Auto Dealer and counsel, if applicable; (iii) the Office of the United States Trustee; (iii) the creditors appearing on the list filed in accordance with Fed. R. Bankr. P. 1007(d) by the Debtor unless and until the Committee is appointed, then in that event, to counsel of the Committee; (iv) Suzuki Motor Corporation, c/o Klee, Tuchin, Bogdanoff & Stern LLP, 1999 Avenue of the Stars, 39th Floor, Los Angeles, CA 90067-6049, Attn: Michael L. Tuchin and Lee R. Bogdanoff; and (v) parties that file with the Court and serve upon the Debtor requests for notice of all matters in accordance with Bankruptcy Rule 2002.
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EXHIBIT E-3
Case 8:12-bk-22808-CB
Desc
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PLEASE TAKE FURTHER NOTICE that the Debtor, creditors and interested parties shall be entitled to file and serve any response to objections to the Letter Agreement, rejection of the Auto Dealer Agreement or the Settling Dealer Liquidated Claim no later than one Court day before the hearing on such objection. Service of such response shall by effectuated on any objecting party and the Notice parties described above. Dated: November __, 2012 PACHULSKI STANG ZIEHL & JONES LLP By:
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Richard M. Pachulski James I. Stang Dean A. Ziehl Linda F. Cantor Debra I. Grassgreen [Proposed] Attorneys for Debtor and Debtor in Possession
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NELSON MULLINS RILEY & SCARBOROUGH LLP By:
Steven A. McKelvey, Jr. Stephen G. Morrison Special Dealer Network Counsel for Debtor and Debtor in Possession
EXHIBIT E-4
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Case 8:12-bk-22808-CB
Desc
EXHIBIT F (Order Re Notice of Proposed Rejection and Settling Dealer Liquidated Claim Allowance)
EXHIBIT F
Case 8:12-bk-22808-CB
Desc
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Richard M. Pachulski (CA Bar No. 90073) James I. Stang (CA Bar No. 94435) Dean A. Ziehl (CA Bar No. 84529) Linda F. Cantor (CA Bar No. 153762) Debra I. Grassgreen (CA Bar No. 169978) PACHULSKI STANG ZIEHL & JONES LLP 10100 Santa Monica Blvd., Suite 1300 Los Angeles, CA 90067-4114 Telephone: 310/277-6910 Facsimile: 310/201-0760 E-mail: rpachulski@pszjlaw.com jstang@pszjlaw.com dziehl@pszjlaw.com lcantor@pszjlaw.com dgrassgreen@pszjlaw.com [Proposed] Attorneys for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re: American Suzuki Motor Corporation,1 Debtor. Case No.: 12-_____ (___) Chapter 11 NOTICE OF PROPOSED REJECTION AND SETTLING DEALER LIQUIDATED CLAIM ALLOWANCE DEADLINE FOR SERVICE OF OBJECTIONS: ____________________
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TO ALL INTERESTED PARTIES: PLEASE TAKE NOTICE that the ORDER (I) AUTHORIZING DEBTOR TO ENTER INTO SERVICE AND PARTS AGREEMENTS WITH AUTOMOTIVE DEALERS; (II) APPROVING UNIFORM PROCEDURES FOR CONSENSUAL REJECTION OF PRE-PETITION AGREEMENTS AND RESOLUTION OF CLAIMS AND (III) GRANTING RELATED RELIEF (entered by the
DOCS_LA:259270.5 12832/001
EXHIBIT F-1
Case 8:12-bk-22808-CB
Desc
1 2 3 4 5 6 7 8 9 10
Bankruptcy Court on November ___, 2012 [Docket No. __] (the Order) established the Dealer Settlement Procedures. PLEASE TAKE FURTHER NOTICE that, as permitted under the Order, the Debtor has entered into a Letter Agreement with ____________ [Dealer No. ___] (Settling Auto Dealer) dated as of ____________, 2012 (the Rejection Effective Date). Counsel for the Settling Auto Dealer is ______________________. PLEASE TAKE FURTHER NOTICE that the Letter Agreement will be binding on the Debtor and the estate unless a written objection, conforming to the requirements of this Notice, is filed and served upon the Notice Parties below within 7 days of the date of service of this Notice. PLEASE TAKE FURTHER NOTICE that the rejection of the Settling Auto Dealers Suzuki Automotive Auto Dealer Agreement, including the Standard Provisions and all ancillary agreements related thereto (the Auto Dealer Agreement) is effective as of the Rejection Effective Date unless a written objection, conforming to the requirements of this Notice, is filed and served upon the Notice Parties below within 7 days of the date of service of this Notice as indicated in the caption of this Notice. PLEASE TAKE FURTHER NOTICE that the Settling Auto Dealer will be allowed a general unsecured non-priority claim for all purposes associated with this case, including voting and distribution under any plan of reorganization, in the amount of $_______ (the Settling Dealer Liquidated Claim) on account of the Settling Auto Dealers claims, including damages arising out of the rejection and termination of the Auto Dealer Agreement and excluding prepetition claims for warranty services and Incentive Programs unless a written objection, conforming to the requirements of this Notice and the Local Bankruptcy Rules of the Central District of California, is filed and served upon the Notice Parties within 7 days of the date of service of this Notice. PLEASE TAKE FURTHER NOTICE that upon receipt of any objection to this Notice, the Debtor will schedule a hearing on the objection with the Court at the Courts earliest convenience and furnish written notice of such hearing. PLEASE TAKE FURTHER NOTICE that all objections to this Notice, the Letter Agreement, the rejection of the Auto Dealer Agreement or the Settling Dealer Liquidated Claim
DOCS_LA:259270.5 12832/001
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EXHIBIT F-2
Case 8:12-bk-22808-CB
Desc
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must include a written statement of all reasons in opposition thereto, declarations and copies of all photographs and documentary evidence on which the responding party intends to rely, and any responding memorandum of points and authorities. Factual contentions involved in any objection must be presented, heard, and determined upon declarations and other written evidence. Any declarant must be in court for the purposes of cross examination, unless the Debtor has provided a written waiver of cross examination. Counsel for the objecting party, and the objecting party who is appearing without counsel, must be present at the hearing on the Notice and must have such familiarity with the case as to permit informed discussion and argument regarding the requested approval of the Notice, the Settling Dealer Liquidated Claim, and rejection of the Auto Dealer Agreement. The failure of counsel or an unrepresented party to appear, unless excused by the court in advance, may be deemed consent to a ruling adverse to that counsels or unrepresented partys position. PLEASE TAKE FURTHER NOTICE that any objections to the Letter Agreement, rejection of the Auto Dealer Agreement or the Settling Dealer Liquidated Claim must be served on the following Notice Parties: (i) the Debtor, c/0 Pachulski Stang Ziehl & Jones LLP, 10100 Santa Monica Boulevard, Suite 1300, Los Angeles, California 90067, Attn: James I. Stang and Nelson Mullins Riley & Scarborough LLP, Meridian, 17th Floor, 1320 Main Street, Columbia South Carolina 29201, Attn: Steven A. McKelvey, Jr. and Stephen G. Morrison; (ii) the Settling Auto Dealer and counsel, if applicable; (iii) the Office of the United States Trustee; (iii) the creditors appearing on the list filed in accordance with Fed. R. Bankr. P. 1007(d) by the Debtor unless and until the Committee is appointed, then in that event, to counsel of the Committee; (iv) Suzuki Motor Corporation, c/o Klee, Tuchin, Bogdanoff & Stern LLP, 1999 Avenue of the Stars, 39th Floor, Los Angeles, CA 90067-6049, Attn: Michael L. Tuchin and Lee R. Bogdanoff; and (v) parties that file with the Court and serve upon the Debtor requests for notice of all matters in accordance with Bankruptcy Rule 2002.
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EXHIBIT F-3
Case 8:12-bk-22808-CB
Desc
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PLEASE TAKE FURTHER NOTICE that the Debtor, creditors and interested parties shall be entitled to file and serve any response to objections to the Letter Agreement, rejection of the Auto Dealer Agreement or the Settling Dealer Liquidated Claim no later than one Court day before the hearing on such objection. Service of such response shall by effectuated on any objecting party and the Notice parties described above. Dated: November __, 2012 PACHULSKI STANG ZIEHL & JONES LLP By:
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Richard M. Pachulski James I. Stang Dean A. Ziehl Linda F. Cantor Debra I. Grassgreen [Proposed] Attorneys for Debtor and Debtor in Possession
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NELSON MULLINS RILEY & SCARBOROUGH LLP By:
Steven A. McKelvey, Jr. Stephen G. Morrison Special Dealer Network Counsel for Debtor and Debtor in Possession
EXHIBIT F-4
Case 8:12-bk-22808-CB
Desc
EXHIBIT G (Notice of Participation Payment)
EXHIBIT G
Case 8:12-bk-22808-CB
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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, THIRTY-NINTH FLOOR LOS ANGELES, CALIFORNIA 90067
LEE R. BOGDANOFF (State Bar No. 119542) MICHAEL L. TUCHIN (State Bar No. 150375) MARTIN R. BARASH (State Bar No. 162314) DAVID A. FIDLER (State Bar No. 195648) KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 Avenue of the Stars, Thirty-Ninth Floor Los Angeles, California 90067 Telephone: 310-407-4000 Facsimile: 310-407-9090 Email: lbogdanoff@ktbslaw.com; mtuchin@ktbslaw.com; mbarash@ktbslaw.com; dfidler@ktbslaw.com Attorneys for Suzuki Motor Corporation UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re AMERICAN SUZUKI MOTOR CORPORATION,1 a California corporation, Debtor. Case No. 8:12Chapter 11 NOTICE RE PARTICIPATION PAYMENT (Settling Auto Dealer Name and Dealer No.)
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1
PLEASE TAKE NOTICE that Suzuki Motor Corporation or its designee has paid ______________, Dealer No. _____ a Participation Payment in the amount of $_____________________. DATED: November __, 2012 KLEE, TUCHIN, BOGDANOFF & STERN LLP By: ____________________________________ Lee R. Bogdanoff, Esq. Michael L. Tuchin, Esq. Martin R. Barash, Esq. David A. Fidler, Esq. Attorneys for Suzuki Motor Corporation
EXHIBIT G-1
DOCS_LA:260219.2 12832/002
Case 8:12-bk-22808-CB
Desc
EXHIBIT H (Proposed Order)
EXHIBIT H
Case 8:12-bk-22808-CB
Desc
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Richard M. Pachulski (CA Bar No. 90073) James I. Stang (CA Bar No. 94435) Dean A. Ziehl (CA Bar No. 84529) Debra I. Grassgreen (CA Bar No. 169978) Linda F. Cantor (CA Bar No. 153762) PACHULSKI STANG ZIEHL & JONES LLP 10100 Santa Monica Blvd., Suite 1300 Los Angeles, CA 90067-4114 Telephone: 310/277-6910 Facsimile: 310/201-0760 E-mail: rpachulski@pszjlaw.com jstang@pszjlaw.com dziehl@pszjlaw.com dgrassgreen@pszjlaw.com lcantor@pszjlaw.com Proposed Attorneys for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re: American Suzuki Motor Corporation,1 Debtor. Case No.: 12-_____ (___) Chapter 11 ORDER (I) AUTHORIZING DEBTOR TO ENTER INTO SERVICE AND PARTS AGREEMENTS WITH AUTOMOBILE DEALERS; (II) APPROVING UNIFORM PROCEDURES FOR CONSENSUAL REJECTION OF PRE-PETITION AGREEMENTS AND RESOLUTION OF CLAIMS AND (III) GRANTING RELATED RELIEF
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Upon the motion (the "Motion") of the above-captioned debtor an d debtor in possession (the "Debtor") for entry of an order,(i) authorizing the Debtor authorizing debtor to enter into service and parts agreements with automobile dealers; (ii) approving uniform procedures for consensual rejection of pre-petition agreements and resolution of claims and (iii) granting related relief; and the Court having jurisdiction to consider the Motion and the relief requested therein pursuant to 28
DOCS_LA:260215.5 12832/001 EXHIBIT H-1
Case 8:12-bk-22808-CB
Desc
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U.S.C. 157 and 1334; and consideration of the Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b)(2); and venue being proper pursuant to 28 U.S.C. 1408 and 1409; and it appearing that the relief requested in the Motion is in the best interests of the Debtor's estate, its creditors, and all other parties in interest; and the Debtor having provided adequate and appropriate notice of the Motion and the opportunity for a hearing on the Motion under the circumstances and no other or further notice need be provided; and the Court having reviewed the Motion and having heard the statements in support of the relief requested therein at a hearing before the Court (the "Hearing"); and the Court having considered the Motion, all pleadings and papers filed in connection with the Motion, including the Declaration of M. Freddie Reiss, Proposed Chief Restructuring Officer, in Support of Emergency First Day Motions and the Memorandum of Points and Authorities filed in support thereof, and the arguments of counsel and evidence proffered at the hearing on the Motion; after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT: 1. 2. 3. The Motion is granted; The Dealer Settlement Procedures are approved; The Debtor is authorized to enter into the Letter Agreements and
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Service and Parts Agreements in substantially the forms attached to the Motion in its sole discretion pursuant to the Dealer Settlement Procedures; 4. The Debtor is authorized to reject the Automobile Dealer Agreements
pursuant to the Dealer Settlement Procedures; 5. The Debtor is authorized to stipulate to allowance of Settling Dealer
Liquidated Claims for all purposes associated with this case including the Plan and voting thereon pursuant to the Dealer Settlement Procedures and 6. Subject to allowance by the Court of a Settling D Claim, the Debtor is
authorized to make any distributions from the estate on account of such claim to which Suzuki Motor Corporation or its designee ("SMC Party") is entitled under the Participation Agreement directly to such SMC Party.
###
DOCS_LA:260215.5 12832/001
EXHIBIT H2

The Last Four Digits of The Debtor's Federal Tax Identification Number Are (8739) - The Debtor's Address Is: 3251 East Imperial Highway, Brea, CA 92821

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The Last Four Digits of The Debtor's Federal Tax Identification Number Are (8739) - The Debtor's Address Is: 3251 East Imperial Highway, Brea, CA 92821

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Case 8:12-bk-22808-CB

Dated: November 5, 2012

EXHIBIT A (Notice Letter)

Takashi Iwatsuki, Chairman Enclosures: Press Release Automotive Dealer Q&A

How will the automobile business wind down work?

Why would a potential customer purchase a Suzuki vehicle now?

So does this mean that ASMC is going out of business?

What does ASMC hope to accomplish under chapter 11?

Why did ASMC file for chapter 11?

Where has the chapter 11 case been filed?

MEDIA CONTACTS: Rachel Rosenblatt FTI Consulting 917-626-9683 rachel.rosenblatt@fticonsulting.com

Kal Goldberg FTI Consulting 917-741-1013 kal.goldberg@fticonsulting.com

EXHIBIT B (Letter Agreement)

No advance payment by Participant Party Assert claim in bankruptcy; claim may be

DECLINE THIS AGREEMENT

Rejection of current dealer agreement; no

* Subject to Bankruptcy Court Approval

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

AMERICAN SUZUKI MOTOR CORPORATION ______________________________________ By:___________________________________ Its:___________________________________

Tab 1 (Proof of Claim)

B 10 (Official Form 10) (12/11)

SETTLING DEALER LIQUIDATED CLAIM

AMERICAN SUZUKI MOTOR CORPORATION

(Settling Dealer Liquidated Claim)

Amount entitled to priority: $______________________

EXHIBIT B - TAB 1-1

B 10 (Official Form 10) (12/11)

EXHIBIT B - TAB 1-2

B 10 (Official Form 10) (12/11)

EXHIBIT B - TAB 1-3

Tab 2 (Participation Agreement - Intentionally Omitted) (Return Envelope to SMC)

Tab 3 (Dealer Agreement Standard Provisions)

Dealer Sales and Service Agreement

American Suzuki Motor Corporation

EXHIBIT B - TAB 3-1

TRADEMARKS................................................................................................................................... 5.1 5.2 5.3 5.4

CUSTOMER SATISFACTION .........................................................................................................

EXHIBIT B - TAB 3-2

ADVERTISING AND PROMOTION ...............................................................................................

REPORTING, RECORDS, INSPECTION AND OTHER RESPONSIBILITIES........................

EXHIBIT B - TAB 3-3

RIGHTS GRANTED TO DEALER

CHANGE IN MANAGEMENT OR OWNERSHIP

EXHIBIT B - TAB 3-5

EXHIBIT B - TAB 3-6

EXHIBIT B - TAB 3-7

EXHIBIT B - TAB 3-8

EXHIBIT B - TAB 3-15

EXHIBIT B - TAB 3-17

EXHIBIT B - TAB 3-18

EXHIBIT B - TAB 3-19

EXHIBIT B - TAB 3-20

EXHIBIT B - TAB 3-21

EXHIBIT B - TAB 3-22

EXHIBIT B - TAB 3-25

EXHIBIT B - TAB 3-26

FACILITIES STANDARDS ADDENDUM

EXHIBIT B - TAB 3-27

Tab 4 (Service and Parts Agreement Intentionally Omitted)

EXHIBIT C (Service and Parts Agreement)

INCORPORATION OF STANDARD PROVISIONS AND OTHER DOCUMENTS

SUZUKI SERVICE AND PARTS AGREEMENT

AMERICAN SUZUKI MOTOR CORPORATION ____________________ By:_ Its:___________________