Form of Car Retailer Agreement

EX-10.4 8 k78160exv10w4.txt FORM OF CAR RETAILER AGREEMENT EXHIBIT 10.4 MERCEDES-BENZ USA, INC. MERCEDES-BENZ PASSENGER CAR RETAILER AGREEMENT TABLE OF CONTENTS -----------------

I. CHANGES OF DESIGN, SPECIFICATIONS OR OPTIONS 4 J. DISCONTINUANCE OF MANUFACTURE OR IMPORTATION 4 K. MINIMUM VEHICLE INVENTORIES 4 L. PRODUCT MODIFICATIONS 4 II. RETAILER'S MARKETING AND SALES OF MERCEDES- BENZ PASSENGER CAR PRODUCTS 4 A. RETAILER'S GENERAL RESPONSIBILITIES 4 B. EXPORT POLICY 5 C. MERCEDES-BENZ RETAILER ASSOCIATION 5 D. PRE-OWNED VEHICLES 6 E. AREA OF INFLUENCE 6 F. EVALUATION OF RETAILER'S MARKETING AND SALES PERFORMANCE 6 III. RETAILER'S SERVICE OBLIGATIONS 6 A. CLIENT SERVICE STANDARDS 6 B. RETAILER'S SPECIFIC SERVICE OBLIGATIONS 7 1. PRE-DELIVERY INSPECTIONS AND SERVICE 7 2. WARRANTY REPAIRS AND POLICY SERVICE 7 3. SERVICE CAMPAIGN INSPECTIONS AND CORRECTIONS 8 4. ROADSIDE ASSISTANCE PROGRAM 8 C. USE OF PARTS AND ACCESSORIES IN NON-WARRANTY SERVICE 8 1. QUALITY STANDARDS 8 2. RETAILER'S DISCLOSURES AS TO USE OF AND WARRANTIES FOR NON-GENUINE PARTS AND ACCESSORIES 9 D. COMPLIANCE WITH SAFETY AND EMISSION CONTROL REQUIREMENTS 9 E. COMPLIANCE WITH CONSUMER PROTECTION STATUTES, RULES AND REGULATIONS 9 IV. RETAILER'S SERVICE AND PARTS ORGANIZATION 10 A. ORGANIZATION AND STANDARDS 10 B. SERVICE EQUIPMENT AND SPECIAL TOOLS 10 C. PARTS STOCKING LEVEL 10 D. AFTER HOURS DELIVERY 10

E. ASSISTANCE PROVIDED BY MBUSA 11 1. SERVICE MANUALS AND MATERIALS 11 2. FIELD PERSONNEL ASSISTANCE 11 F. EVALUATION OF RETAILER'S SERVICE AND PARTS PERFORMANCE 11 G. ADDITIONAL FACILITIES OR LOCATIONS 11 V. CLIENT SATISFACTION RESPONSIBILITIES 12 A. RETAILER'S CLIENT SATISFACTION OBLIGATIONS 12 1. RETAILER'S CLIENT SATISFACTION PLAN 12 2. EMPLOYEE TRAINING 12 3. CLIENT ASSISTANCE RESPONSE SYSTEM 12 B. EVALUATION OF RETAILER'S CLIENT SATISFACTION PERFORMANCE 12 VI. MERCEDES-BENZ CENTER FACILITIES AND IDENTIFICATION 13 A. LOCATION AND FACILITIES 13 B. CHANGES AND ADDITIONS 13 C. RETAILER'S OPERATING HOURS 14 D. CORPORATE IDENTITY 14 E. EVALUATION OF MERCEDES-BENZ CENTER FACILITIES 14 F. OWNERSHIP AND USE OF MERCEDES-BENZ MARKS 14 1. VALIDITY AND EXCLUSIVE OWNERSHIP OF MERCEDES-BENZ MARKS 14 2. USE BY RETAILER 15 3. DISCONTINUANCE OF USE 15 4. ENFORCEMENT 16 VII. WARRANTIES 16 VIII. CAPITAL, CREDIT, RECORDS AND UNIFORM SYSTEMS 16 A. NET WORKING CAPITAL 16 B. FLOORING AND LINES OF CREDIT 17 C. PAYMENT TERMS 17 D. UNIFORM ACCOUNTING SYSTEM 17

E. RECORDS MAINTENANCE 18 F. EXAMINATION OF MERCEDES-BENZ CENTER ACCOUNTS AND RECORDS 18 G. TAXES 18 H. CONFIDENTIALITY 18 I. MERCEDES-BENZ RETAILER COMMUNICATIONS SYSTEM AND PROPRIETARY MANUFACTURER SYSTEMS 18 J. SALES REPORTING 19 IX. TRANSFERS 19 A. SALE OF ASSETS OR OWNERSHIP INTEREST 19 B. RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE 19 1. RIGHTS GRANTED 19 2. EXERCISE OF MBUSA'S RIGHTS 20 3. RIGHT OF FIRST REFUSAL 20 4. OPTION TO PURCHASE 21 5. RETAILER'S OBLIGATIONS 21 X. SUCCESSION RIGHTS UPON DEATH OR INCAPACITY 22 A. SUCCESSION TO OWNERSHIP AFTER DEATH OF OWNER 22 B. INCAPACITY OF OWNER 23 C. NOMINATION OF SUCCESSOR PRIOR TO DEATH OR INCAPACITY OF OWNER 23 XI. TERMINATION 24 A. VOLUNTARY TERMINATION BY RETAILER 24 B. TERMINATION FOR CAUSE 24 1. IMMEDIATE TERMINATION 24 2. TERMINATION UPON SIXTY DAYS NOTICE 26 3. TERMINATION FOR FAILURE OF PERFORMANCE 27 4. TERMINATION UPON DEATH OR INCAPACITY 27 C. TERMINATION UPON TERMINATION OF DISTRIBUTORSHIP 27 D. TERMINATION FOR FAILURE OF MBUSA TO BE LICENSED 27 E. TERMINATION UPON OFFERING TO ENTER INTO A NEW OR AMENDED PASSENGER CAR RETAILER AGREEMENT 28

F. NOTICE OF TERMINATION 28 G. CONTINUANCE OF BUSINESS RELATIONS 28 H. REPURCHASE PROVISIONS 28 1. MBUSA'S OBLIGATIONS 28 2. RETAILER'S RESPONSIBILITIES 29 3. PAYMENT BY MBUSA 30 XII. DISPUTE RESOLUTION PROCESS 30 A. THE MERCEDES-BENZ BOARD 30 B. MANDATORY MEDIATION 31 C. OPTIONAL ARBITRATION 31 XIII. DEFENSE AND INDEMNIFICATION 32 A. DEFENSE AND INDEMNIFICATION BY MBUSA 32 B. DEFENSE AND INDEMNIFICATION BY RETAILER 33 C. CONDITIONAL DEFENSE AND/OR INDEMNIFICATION 34 D. THE EFFECT OF SUBSEQUENT DEVELOPMENTS 34 E. TIME TO RESPOND AND RESPONSIBILITIES OF THE PARTIES 34 XIV. NOTICE OF BREACH OR FAILURE TO ACT IN GOOD FAITH 35 XV. GENERAL PROVISIONS 35 A. NOTICES 35 B. NO IMPLIED WAIVERS 35 C. SOLE AGREEMENT OF THE PARTIES 35 D. RETAILER NOT AN AGENT OR REPRESENTATIVE 36 E. ASSIGNMENT OF RIGHTS OR DELEGATIONS OF DUTIES 36 F. NO FRANCHISE FEE 36 G. BENEFIT 36 H. NEW JERSEY LAW 36 XVI. DEFINITIONS 37 XVII. ADDITIONAL PROVISIONS 38

MERCEDES-BENZ USA, INC. MERCEDES-BENZ PASSENGER CAR RETAILER AGREEMENT STANDARD PROVISIONS I. ACQUISITION, DELIVERY AND INVENTORY OF MERCEDES-BENZ PASSENGER CAR PRODUCTS A. PRICES AND TERMS OF SALE MBUSA shall offer to sell to Retailer and Retailer shall have the right to purchase from MBUSA Mercedes-Benz Passenger Car Products in accordance with the provisions of this Agreement and the prices and other terms of sale that MBUSA shall establish and revise from time to time. Such revised prices or terms shall apply to any Mercedes-Benz Passenger Car Product not invoiced to Retailer by MBUSA at the time the notice of such change is given to Retailer (in the case of Mercedes-Benz Passenger Cars), or upon issuance of a new or modified parts price list or through change notices, letters, bulletins or revision sheets (in the case of Genuine Mercedes-Benz Passenger Car Parts and Accessories), or at such other times as may be designated in writing by MBUSA. B. AVAILABILITY AND ALLOCATION OF PRODUCTS MBUSA will allocate Mercedes-Benz Passenger Car Products among its passenger car retailers in a fair and equitable manner. MBUSA will, upon Retailer's request, explain the considerations and method used to allocate Mercedes-Benz Passenger Car Products to Retailer. C. DELIVERY OF PRODUCTS MBUSA will ship Mercedes-Benz Passenger Car Products to Retailer by whatever mode of transportation, by whatever route, and from whatever point MBUSA may select. Retailer shall pay MBUSA such charges as MBUSA in its sole discretion establishes for such transportation services. D. PASSAGE OF TITLE Title to each Mercedes-Benz Passenger Car Product shall pass from MBUSA to Retailer, or to the financial institution designated by Retailer, upon MBUSA's receipt of payment for said Product and upon delivery of said Product to Retailer or to a carrier for transportation to Retailer. -1- E. RISK OF DAMAGE OR LOSS Retailer shall bear the risk of damage to or loss of Mercedes-Benz Passenger Car Products during transportation from the point of shipment; however, MBUSA will, if requested by Retailer in such manner and within such time as MBUSA may specify, prosecute claims for damage to or loss of Mercedes-Benz Passenger Cars during said transportation against the responsible carrier for and on behalf of Retailer. To the extent required by law, Retailer shall notify the purchaser of a vehicle of any damage sustained by such vehicle prior to sale. F. DELAY OR FAILURE OF DELIVERY MBUSA shall not be liable for delay or failure to deliver Mercedes-Benz Passenger Car Products that it has previously agreed to deliver, where such delay or failure to deliver is the result of any event beyond the control of MBUSA, including but not limited to any law or regulation of any governmental entity, acts of God, foreign or civil wars, riots, interruptions of navigation, shipwrecks, fires, floods, storms, strikes, lockouts, or other labor troubles, embargoes, blockades, or delay or failure of DCAG to deliver Mercedes-Benz Passenger Car Products. G. DIVERSION AND STORAGE CHARGES Retailer shall be responsible for and shall pay all charges for demurrage, storage and other expense accruing after shipment to Retailer or to a carrier for transportation to Retailer. If diversions of shipments are made upon Retailer's request or are made by MBUSA as a result of Retailer's failure or refusal to accept shipments made pursuant to Retailer's orders, Retailer shall pay all additional charges and expenses incident to such diversions. H. SECURITY INTEREST 1. GRANT OF SECURITY INTEREST As security for the full payment of all sums from time to time owed by Retailer to MBUSA under this Agreement, whether such sums are now or hereafter become due and owing, Retailer hereby grants to MBUSA a security interest in the following items for which MBUSA has not received payment (collectively referred to as "Collateral"): (i) All Genuine Mercedes-Benz Passenger Car Parts and Accessories and other related items delivered by MBUSA to Retailer hereunder on account (all such inventory hereinafter referred to collectively as "Inventory" and individually as "Item of Inventory"); and (ii) All proceeds from any of the foregoing, including without limitation, insurance payable by reason of the loss, damage or -2- destruction of any Item of Inventory; and all accounts and chattel paper of Retailer arising from its sale, lease or other disposition of Inventory now existing or hereafter arising, and all liens, securities, guarantees, remedies and privileges pertaining thereto, together with all rights and liens of Retailer relating thereto. 2. DEFAULT IN PAYMENT Retailer shall be in default of this Section I.H if: (i) Retailer shall fail to pay any amounts secured hereby when due or fail to perform any obligations under this Section I in a timely manner; (ii) there shall occur any material adverse change in the financial condition of Retailer; or (iii) Retailer shall dissolve or become insolvent or bankrupt; and, in any such case, MBUSA may declare all sums secured by this Section I.H immediately due and payable and MBUSA shall have all the rights and remedies afforded to a secured party after default under the Uniform Commercial Code or other applicable law in effect on the date of this Agreement. 3. ASSEMBLY OF COLLATERAL, PAYMENT OF COSTS AND NOTICES Retailer shall, if requested by MBUSA upon the occurrence of any default under Section I.H.2, assemble the Collateral and make it available to MBUSA at a place or places designated by MBUSA. Retailer also shall pay all costs of MBUSA, including without limitation, attorneys fees incurred with respect to the enforcement of any of MBUSA's rights under this Section I.H. 4. RECORDING AND FURTHER ASSURANCES Retailer shall execute and deliver such financing statements and such other instruments or documents and take any other action as MBUSA may request in order to create or maintain the security interest intended to be created by this Section I.H, or to enable MBUSA to exercise and enforce its rights hereunder. A carbon, photographic or other reproduction of this Agreement shall be sufficient as a financing statement and may be filed in lieu of a financing statement in any and all jurisdictions which accept such reproductions. 5. RECORDS AND SCHEDULES OF INVENTORY Retailer shall keep accurate records itemizing and describing the kind, type and quantity of Inventory and shall furnish to MBUSA within five (5) days of receipt of MBUSA's request therefor, a current schedule of inventory in form and substance satisfactory to MBUSA ("Schedule of -3- Inventory"), which shall be true and accurate in all respects. A physical inventory shall be conducted no less than annually in connection with preparation of year-end financial statements of Retailer and, at MBUSA's request, a report of such inventory shall be promptly provided to MBUSA. I. CHANGES OF DESIGN, SPECIFICATIONS OR OPTIONS MBUSA may change the design or specifications of any Mercedes-Benz Passenger Car Product or the options in any Mercedes-Benz Passenger Car Product and shall be under no obligation to provide notice of same or to make any similar change to Mercedes-Benz Passenger Car Products previously purchased by or shipped to Retailer. No change shall be considered a model year change unless so specified by MBUSA. J. DISCONTINUANCE OF MANUFACTURE OR IMPORTATION DCAG and/or MBUSA may discontinue the manufacture, importation or distribution of all or part of any Mercedes-Benz Passenger Car Product, whether passenger car parts, options or accessories, including any model, series or body style of any Mercedes-Benz Passenger Car at any time without any obligation or liability to Retailer by reason thereof. K. MINIMUM VEHICLE INVENTORIES Retailer agrees that it shall, at all times, maintain in showroom ready condition at least the minimum inventory of Mercedes-Benz Passenger Cars that may be established by MBUSA from time to time. L. PRODUCT MODIFICATIONS Retailer agrees that it will not install aftermarket accessories or make any modifications to Mercedes-Benz passenger cars that may impair or adversely affect their safety, emissions, structural integrity or performance. II. RETAILER'S MARKETING AND SALES OF MERCEDES-BENZ PASSENGER CAR PRODUCTS A. RETAILER'S GENERAL RESPONSIBILITIES Retailer recognizes that client satisfaction and the successful promotion and sale of Mercedes-Benz Passenger Car Products are significantly dependent on Retailer's advertising and sales promotion activities. Therefore, Retailer at all times shall: -4- 1. Actively and effectively promote and sell new and used Mercedes-Benz Passenger Car Products to clients located within its Area of Influence; 2. Advertise and merchandise Mercedes-Benz Passenger Car Products, and use current Mercedes-Benz showroom displays, sales materials and other promotional media; 3. Organize a complete sales organization of the highest quality, ensure that its sale personnel meet the educational and management standards established by MBUSA, and, at Retailer's expense, have such personnel as are appropriate attend all training courses prescribed by MBUSA; 4. Comply with the Retailer Advertising Guidelines, maintain a high standard of ethics in advertising, promoting and selling Mercedes-Benz Passenger Car Products, and avoid engaging in any misrepresentation or unfair or deceptive practices. Retailer shall discontinue any advertising that MBUSA considers injurious to MBUSA's business or reputation or to the Mercedes-Benz Marks, or that are likely to be violative of applicable laws or regulations; and 5. Accurately represent to clients the total selling price of Mercedes-Benz Passenger Car Products. Retailer agrees to explain to clients of Mercedes-Benz Passenger Car Products the items that make up the total selling price and to give the clients itemized invoices and all other information required by law. Retailer understands and hereby acknowledges that it may sell Mercedes-Benz Passenger Car Products at whatever price Retailer desires. B. EXPORT POLICY Retailer is authorized to sell Mercedes-Benz Passenger Cars only to clients residing in the United States of America. Retailer agrees that it will not sell Mercedes-Benz Passenger Cars for resale or use outside the United States of America. Retailer agrees to be bound by and comply with any export policy established by MBUSA. C. MERCEDES-BENZ RETAILER ASSOCIATION MBUSA considers participation by Mercedes-Benz passenger car retailers in Mercedes-Benz Passenger Car Retailer Advertising Associations to be a fundamental part of an overall marketing strategy for their businesses and Mercedes-Benz Passenger Car Products. MBUSA urges Retailer to cooperate in the establishment of such an association and to fund its fair share of advertising and merchandising programs undertaken by the association. -5- D. PRE-OWNED VEHICLES Retailer agrees to display and sell pre-owned Mercedes-Benz vehicles at the Approved Location(s). Retailer shall participate in programs as specified by MBUSA for the sale of such vehicles, and shall maintain the minimum reasonable inventory established by MBUSA from time to time for such operations. Retailer shall conduct its pre-owned Mercedes-Benz vehicle operations in conformance with all standards set forth in this Agreement. E. AREA OF INFLUENCE MBUSA will assign to Retailer a geographic area consisting of a collection of zip codes that is called an Area of Influence ("AOI"). MBUSA may alter or adjust Retailer's AOI at any time. The AOI is a tool used by MBUSA to evaluate Retailer's performance of its primary obligations hereunder. Retailer agrees that it has no right or interest in any AOI and that MBUSA may add new retailers to or relocate retailers into Retailer's AOI. Any such addition or relocation of a retailer will result in an alteration or adjustment of Retailer's AOI. F. EVALUATION OF RETAILER'S MARKETING AND SALES PERFORMANCE MBUSA will periodically evaluate Retailer's sales and marketing performance under this Agreement. Retailer's evaluation will be based on such reasonable criteria as MBUSA may establish, including without limitation: (i) Retailer's reasonable sales objectives that may be established by MBUSA; (ii) Retailer's sales of Mercedes-Benz Passenger Cars as a percentage of registrations of Mercedes-Benz Passenger Cars or Competitive Vehicles in Retailer's AOI; (iii) the registrations of Mercedes-Benz Passenger Cars as a percentage of registrations of Competitive Vehicles in Retailer's AOI; (iv) Retailer's sales or registrations of Mercedes-Benz Passenger Cars as compared to sales or registrations of Mercedes-Benz Passenger Cars by authorized Mercedes-Benz passenger car retailers in other areas, including but not limited to the metropolitan area, market and/or region in which Retailer is located; and (v) Retailer's performance in building and maintaining consumer satisfaction with Retailer and Mercedes-Benz Passenger Car Products. MBUSA will review such evaluations with Retailer, and Retailer shall take prompt corrective action, if required, to improve its performance. III. RETAILER'S SERVICE OBLIGATIONS A. CLIENT SERVICE STANDARDS Retailer and MBUSA agree that client satisfaction and the future growth of their respective businesses is substantially dependent upon the ability of owners of -6- Mercedes-Benz passenger cars to obtain high-quality servicing from Retailer. Therefore, Retailer agrees to: 1. Provide prompt, efficient and courteous service of the highest quality for all Mercedes-Benz passenger cars, regardless of where purchased and whether or not under warranty; 2. Accurately diagnose and advise clients of the necessary repairs, and obtain their consent prior to the initiation of such repairs; 3. Professionally perform the necessary repairs; and 4. Treat clients fairly at all times. B. RETAILER'S SPECIFIC SERVICE OBLIGATIONS 1. PRE-DELIVERY INSPECTIONS AND SERVICE Retailer shall perform pre-delivery inspections and service on each Mercedes-Benz Passenger Car prior to sale and delivery thereof by Retailer in accordance with the Warranty Manual. 2. WARRANTY REPAIRS AND POLICY SERVICE Retailer shall promptly, courteously and efficiently perform (i) warranty repairs on each Mercedes-Benz Passenger Car Product that qualifies for such repairs under the provisions of any warranty furnished therewith by MBUSA or DCAG, and (ii) such other inspections, repairs or corrections on Mercedes-Benz Passenger Car Products as may be approved or authorized by MBUSA to be made at MBUSA's expense (hereinafter "policy service"). Retailer shall perform such repairs and service on each such Mercedes-Benz Passenger Car Product as and when requested by the owner or user (or in the case of policy service when requested by MBUSA), without regard to where such Mercedes-Benz Passenger Car Product was purchased and in accordance with the Warranty Manual. MBUSA agrees to compensate Retailer for all warranty repairs and policy service, including labor, diagnosis and Genuine Mercedes-Benz Passenger Car Parts and Accessories, in accordance with procedures and at rates to be established from time to time by MBUSA. Unless otherwise approved in advance by MBUSA, Retailer shall use only Genuine Mercedes-Benz Passenger Car Parts and Accessories when performing Mercedes-Benz warranty repairs and policy service. Warranty repairs and policy service are provided for the benefit of clients, and Retailer agrees that the client shall not be obligated to pay any charges for such work or any other -7- services for which Retailer is reimbursed by MBUSA, except as required by law. 3. SERVICE CAMPAIGN INSPECTIONS AND CORRECTIONS Retailer agrees to perform service campaign inspections and/or corrections for owners or users of all Mercedes-Benz Passenger Car Products that qualify for such inspections and/or corrections in accordance with MBUSA's directives and the applicable procedures in the Warranty Manual. MBUSA agrees to reimburse Retailer for all replacement parts and/or materials required and used in connection with such work and for labor according to such directives and the applicable provisions of the Warranty Manual. 4. ROADSIDE ASSISTANCE PROGRAM Retailer agrees to participate in the Mercedes-Benz Roadside Assistance Program as specified by MBUSA. C. USE OF PARTS AND ACCESSORIES IN NON-WARRANTY SERVICE Subject to provisions of Sections I.L and III.B.2, Retailer has the right to sell, install or use for making non-warranty repairs products that are not Genuine Mercedes-Benz Passenger Car Parts and Accessories. 1. QUALITY STANDARDS Retailer acknowledges, however, that its clients expect that any parts or accessories that Retailer sells, installs or uses in the sale, repair or servicing Mercedes-Benz passenger cars are, or meet the high quality standards of, Genuine Mercedes-Benz Passenger Car Parts and Accessories. Retailer agrees that in sales, repairs or servicing where Retailer does not use Genuine Mercedes-Benz Passenger Car Parts and Accessories, Retailer will utilize only such other parts or accessories as: 1. Will not adversely affect the mechanical operation of the Mercedes-Benz passenger car being sold, repaired or serviced; and 2. Are equivalent in quality and design to Genuine Mercedes- Benz Passenger Car Parts and Accessories. Retailer further agrees that it will not offer to sell any parts or accessories that for reasons of quality or image are reasonably objected to by MBUSA. -8- 2. RETAILER'S DISCLOSURES AS TO USE OF AND WARRANTIES FOR NON-GENUINE PARTS AND ACCESSORIES In order to avoid confusion and to minimize potential client dissatisfaction, in any non-warranty instance where Retailer sells, installs or uses non-Genuine Mercedes-Benz Passenger Car Parts or Accessories, Retailer shall disclose such fact to the client and shall advise the client that the item is not included in warranties furnished by MBUSA or DCAG. Such disclosure shall be written, conspicuous and stated on the client's copy of the service or repair order or sale document. In addition, Retailer will clearly explain to the client the extent of any warranty covering the parts or accessories involved and will deliver a copy of the warranty to the client. D. COMPLIANCE WITH SAFETY AND EMISSION CONTROL REQUIREMENTS Retailer agrees to comply and operate consistently with all applicable provisions of the National Traffic and Motor Vehicle Safety Act of 1966, and the Federal Clean Air Act, as amended, including applicable rules and regulations issued from time to time thereunder, and all other applicable federal, state, and local motor vehicle safety and emission control statutes, rules, and regulations. In the event that the laws of the state in which Retailer is located require motor vehicle retailers or distributors to install in new or used motor vehicles, prior to their sale, any safety devices or other equipment not installed or supplied as standard equipment by DCAG, then Retailer, prior to the sale of any Mercedes-Benz passenger car on which such installations are required, shall properly install such devices or equipment on such Mercedes-Benz passenger cars. Retailer shall comply with state and local laws pertaining to the installation and reporting of such equipment. In the interest of motor vehicle safety and emission control, MBUSA and Retailer agree to provide to each other such information and assistance as may reasonably be requested by the other in connection with the performance of obligations imposed on either party by the National Traffic and Motor Vehicle Safety Act of 1966, and the Federal Clean Air Act, as amended, and their rules and regulations, and all other applicable federal, state and local motor vehicle safety and emission control statutes, rules and regulations. E. COMPLIANCE WITH CONSUMER PROTECTION STATUTES, RULES AND REGULATIONS Retailer agrees to comply and operate consistently with all applicable provisions of any repair or replace or other consumer protection statutes, rules and -9- regulations (hereinafter "consumer protection laws"). Because certain client complaints may impose liability upon MBUSA under consumer protection laws, Retailer agrees to provide prompt notice to MBUSA of such complaints and take such other steps as MBUSA may require. Retailer also agrees to provide applicable required client notifications and disclosures as prescribed by consumer protection laws. Retailer will do nothing to affect adversely MBUSA's rights under consumer protection laws. IV. RETAILER'S SERVICE AND PARTS ORGANIZATION A. ORGANIZATION AND STANDARDS Retailer agrees to organize and maintain a complete service and parts organization of the highest quality, including a qualified service manager, parts manager, diagnostic specialists, technicians and a sufficient complement of qualified service and parts personnel as recommended by MBUSA. Retailer's personnel will meet the educational, management and technical training standards reasonably established by MBUSA and, at Retailer's expense, will complete all service, parts and client satisfaction training courses prescribed by MBUSA. B. SERVICE EQUIPMENT AND SPECIAL TOOLS Retailer agrees to acquire and properly maintain adequate service equipment and such special service tools and instruments as are reasonably specified by MBUSA. Anything herein to the contrary notwithstanding, if MBUSA determines that Retailer requires special tools and instruments to service a model of Mercedes-Benz Passenger Car, Retailer acknowledges that it has no right to purchase such model from MBUSA unless and until it has acquired all such special tools and instruments, and completed all related training courses prescribed by MBUSA. C. PARTS STOCKING LEVEL Retailer agrees to maintain its parts stock at minimum stocking levels reasonably established by MBUSA. D. AFTER-HOURS DELIVERY Retailer agrees to provide MBUSA, upon request, access to a secure area for after-hours parts or passenger car delivery. -10- E. ASSISTANCE PROVIDED BY MBUSA 1. SERVICE MANUALS AND MATERIALS MBUSA agrees to make available to Retailer copies of such service manuals and bulletins, publications, computer software and technical data as MBUSA shall deem to be necessary for the needs of Retailer's service and parts organization. Retailer shall be responsible for keeping such manuals and materials current and available for consultation by its employees. 2. FIELD PERSONNEL ASSISTANCE To assist Retailer in handling its responsibilities under this Agreement, MBUSA agrees to make available qualified field personnel who will, from time to time, advise and counsel Retailer on service-related subjects, including service policies, product and technical adjustments, repair and replacement of product components, client relations, warranty administration, service and parts merchandising, and personnel/management training. F. EVALUATION OF RETAILER'S SERVICE AND PARTS PERFORMANCE. MBUSA will periodically evaluate Retailer's: (i) service performance in areas such as client satisfaction, warranty administration, service repairs, service management, facilities, operating procedures and new vehicle pre-delivery service; and (ii) parts operations, facilities, tools and equipment MBUSA will review such evaluations with Retailer, and Retailer shall take prompt action to improve the service and parts performance to satisfactory levels as MBUSA may require. Such action shall, if requested by MBUSA, include an action plan by Retailer for improvement of service and parts performance within a specific time period approved by MBUSA, including but not limited to the establishment of additional space, facilities or locations for such operations. G. ADDITIONAL FACILITIES OR LOCATIONS If, with MBUSA prior written consent, Retailer establishes additional facilities or locations for its service and parts operations, Retailer shall meet the facilities, identification, organizational, equipment, parts stocking and other standards reasonably established by MBUSA from time to time for such facilities or locations. -11- V. CLIENT SATISFACTION RESPONSIBILITIES The "Three-Pointed Star" is the symbol of automotive excellence. In furtherance of that image and reputation, MBUSA and Retailer agree to conduct their respective businesses in a manner that achieves the highest levels of client satisfaction by marketing the finest products and providing the best service in the automotive industry. A. RETAILER'S CLIENT SATISFACTION OBLIGATIONS Retailer will be responsible for satisfying Mercedes-Benz clients in all matters except those that are directly related to product design and manufacturing. Retailer will take all reasonable steps to ensure that each client is completely satisfied with Mercedes-Benz Passenger Car Products and the services and practices of Retailer. Retailer will not engage in any practice or method of operation if its nature or quality may impair the reputation of MBUSA or Mercedes-Benz Passenger Car Products. 1. RETAILER'S CLIENT SATISFACTION PLAN Upon MBUSA's request, Retailer shall provide a detailed plan of Retailer's client satisfaction program to MBUSA and shall implement such program on a continuous basis. This plan shall include an ongoing system for emphasizing client satisfaction to all Retailer's employees, for training Retailer employees and for conveying to clients that Retailer is committed to the highest, possible level of client satisfaction. 2. EMPLOYEE TRAINING Retailer agrees to participate and to have its employees participate, at Retailer's expense, in Mercedes-Benz client satisfaction training as required by MBUSA. 3. CLIENT ASSISTANCE RESPONSE SYSTEM Retailer agree's to implement a system, approved by MBUSA, that will respond immediately to requests for client assistance from MBUSA. B. EVALUATION OF RETAILER'S CLIENT SATISFACTION PERFORMANCE MBUSA periodically will evaluate Retailer's client satisfaction performance based on the following considerations and efforts by Retailer. 1. MBUSA will provide Retailer with Client Relationship Index ("CRI") reports or such other equivalent data as will permit Retailer to assess its -12- performance and maintain the highest level of client satisfaction. Retailer agrees to review with its employees on a regular basis the results of the client satisfaction reports or other data it receives. 2. Retailer shall continuously develop and implement specific action plans to improve its client satisfaction performance and results. The plans are to be reviewed with MBUSA on a basis that MBUSA deems appropriate. Retailer will respond on a timely basis to requests from MBUSA to take action on unsatisfactory client satisfaction matters and to commit necessary resources to remedy deficiencies reasonably specified by MBUSA. VI. MERCEDES-BENZ CENTER FACILITIES AND IDENTIFICATION A. LOCATION AND FACILITIES Retailer shall provide Mercedes-Benz Center Facilities at the Approved Location(s) that (i) will enable Retailer to effectively perform its responsibilities under this Agreement, (ii) are satisfactory in space, appearance, layout, equipment and corporate identification, and (iii) are otherwise substantially in accordance with the Retailer Operating Requirements Addendum, Retailer Facility Space Analysis Addendum, Corporate Identity Manual and such other standards as MBUSA may establish from time to time. Retailer shall conduct its Mercedes-Benz Center Operations only from the Approved Location(s). If the Approved Location(s) is comprised of more than one place of business, Retailer shall use each such place of business only for the purposes specified therefor in Paragraph F and the Final Paragraph of this Agreement and, if applicable, in the Retailer Facility Space Analysis Addendum. B. CHANGES AND ADDITIONS Retailer shall not move, relocate or change the designated usage or function of the Approved Location(s) or any of the Mercedes-Benz Center Facilities, or substantially modify any of the Mercedes-Benz Center Facilities, nor shall Retailer or any person named in the Final Paragraph of this Agreement directly or indirectly establish or operate any other locations or facilities for the sale or servicing of Mercedes-Benz Passenger Car Products or for the conduct of any other of the Mercedes-Benz Center Operations contemplated by this Agreement, without the prior written consent of MBUSA. Any changes in the Approved Location(s) or the Mercedes-Benz Center Facilities that may be agreed to by MBUSA and Retailer may be reflected in a new Agreement or in a new Retailer Facility Space Analysis Addendum. In particular, Retailer acknowledges that the addition of sales, service or parts operations for another line of vehicles to the Mercedes-Benz Center Facilities or -13- at the Approved Location(s) could adversely affect Retailer's sales, service and parts performance with respect to Mercedes-Benz Passenger Car Products. Accordingly, to give MBUSA an adequate opportunity to evaluate the effect of such a proposed addition and to determine whether or not to consent thereto, Retailer agrees to notify MBUSA in writing at least sixty (60) days before Retailer enters into any agreement or letter of intent with respect to the addition of such sales, service or parts operations to the Mercedes-Benz Center Facilities or at the Approved Location(s). C. RETAILER'S OPERATING HOURS Retailer agrees to conduct Mercedes-Benz Center Operations during all days and hours that are customary and lawful for such operations in the community or locality in which Retailer is located and in accordance with industry standards. In addition, when necessary to accommodate client needs, Retailer shall exceed its operating hours. D. CORPORATE IDENTITY Subject to applicable governmental statutes, ordinances and regulations, Retailer agrees to erect, display and maintain, at Approved Location(s) only and at Retailer's sole expense, such standard authorized product and service signs and other corporate identity elements as are specified in the Corporate Identity Manual or otherwise required by MBUSA from time to time. E. EVALUATION OF MERCEDES-BENZ CENTER FACILITIES MBUSA will periodically evaluate the Mercedes-Benz Center Facilities. In making such evaluations, MBUSA may consider, among other things: the actual building and land provided by Retailer for the performance of its responsibilities under this Agreement, compliance with MBUSA's current requirements for Mercedes-Benz Center Operations; the appearance, condition, layout and signage of the Mercedes-Benz Center Facilities; and such other factors as in MBUSA's opinion may relate to Retailer's performance of its responsibilities under this Agreement. MBUSA will discuss such evaluations with Retailer, and Retailer shall take prompt action to comply with MBUSA's recommendations and minimum facility standards. F. OWNERSHIP AND USE OF MERCEDES-BENZ MARKS 1. VALIDITY AND EXCLUSIVE OWNERSHIP OF MERCEDES-BENZE MARKS Retailer acknowledges the validity and DCAG's exclusive ownership of the Mercedes-Benz Marks, and agrees not to contest the same during the term of the Agreement or at any time thereafter. Retailer and MBUSA 14 agree to cooperate with each other in preventing any acts of trademark infringement or unfair competition with respect to any Mercedes-Benz Mark, but DCAG or MBUSA shall have sole control over all actions and legal proceedings to redress infringement of or any unfair competition with respect to any Mercedes-Benz Mark. 2. USE BY RETAILER MBUSA grants Retailer a non-exclusive license to use the Mercedes-Benz Marks subject to the terms and conditions of the Agreement and the Corporate Identity Manual. Retailer agrees that it will use the Mercedes-Benz Marks only in connection with the sale and servicing of Mercedes-Benz Passenger Car Products and only in such manner, at such location, to such extent, and for such purposes as MBUSA may specify from time to time. Retailer shall promptly change or discontinue its use of any Mercedes-Benz Marks upon MBUSA's request. Retailer shall not use the Mercedes-Benz Marks as part of its corporate or business name without MBUSA's prior written consent. 3. DISCONTINUANCE OF USE Upon termination of this Agreement, Retailer agrees that it shall immediately: a. Discontinue the use of the word Mercedes-Benz and the Mercedes-Benz Marks, or any semblance of same, including without limitation, the use of all stationery, telephone directory listing and other printed material referring in any way to Mercedes-Benz or bearing any Mercedes-Benz Mark; b. Discontinue the use of the word Mercedes-Benz or the Mercedes-Benz Marks, or any semblance of same, as part of its business or corporate name, and file a change or discontinuance of such name with appropriate authorities; c. Remove all product signs bearing said word(s) or Mercedes-Benz Marks at Retailer's sole cost and expense; d. Cease representing itself as an authorized Mercedes-Benz passenger car retailer; and e. Refrain from any action, including without limitation, any advertising, stating or implying that it is authorized to sell or distribute Mercedes-Benz Passenger Car Products. -15- 4. Enforcment In the event Retailer fails to comply with the terms and conditions of this secton VI.F, MBUSA shall have the right, in its sole discretion, to effect compliance through litigation and/ or to enter upon Retailer's premises and remove, without liability, all such product signs and identification bearing the word Mercedes-Benz or any Mercedes-Benz Mark. Retailer agrees that is shall reimburse MBUSA for any costs and expenses incurred in such litigation and/or removal, including reasonable attorney fees. VII. WARRANTIES The only warranties of MBUSA or DCAG applicable to Mercedes-Benz Passenger Car Products shall be the New Vehicle Limited Warranty or such other written warranties that may be expressly furnished by MBUSA or DCAG. Except for its express limited liability under such written warranties, MBUSA and DCAG do not assume any additional warranty obligations or liabilities in connection with any Mercedes-Benz Passenger Car Products. Retailer is not authorized to assume any additional obligations or liabilities on behalf of MBUSA or DCAG. Any such additional obligations assumed by Retailer shall be the sole responsibility of Retailer. Retailer shall expressly incorporate in full and without modification any warranty furnished by MBUSA or DCAG with a Mercedes-Benz Passenger Car as a conspicuous part of each order form or other contact for the sale of such a Mercedes-Benz Passenger Car by Retailer to any buyer. Retailer shall make available to the buyer of each Mercedes-Benz Passenger Car Product prior to the purchase of such Mercedes-Benz Passenger Car Product, copies of such applicable warranties as may be furnished by MBUSA or DCAG. Retailer shall also provide to the buyer of each Mercedes-Benz Passenger Car Product, in full and without modification, any owner's manual, warranty booklet or other owner information which MBUSA or DCAG may provide to Retailer for delivery with such Mercedes-Benz Product. Retailer agrees to abide by and implement in all other respects MBUSA's warranty procedures then in effect. VIII. CAPITAL, CREDIT, RECORDS AND UNIFORM SYSTEMS A. NET WORKING CAPITAL Retailer agrees to establish and maintain actual net working capital in an amount not less than the minimum net working capital specified by MBUSA. MBUSA will have the right to modify the amount of net working capital required, and Retailer agrees promptly to establish and maintain the required amount. -16- B. FLOORING AND LINES OF CREDIT Retailer agrees to obtain and maintain at all times a confirmed and adequate flooring line with a bank or financial institution or other method of financing acceptable to MBUSA to enable Retailer to perform its obligations pursuant to this Agreement. MBUSA may increase the required amounts of flooring or lines of credit, and Retailer agrees promptly to establish and maintain the increased amount. Subject to the foregoing obligations, Retailer is free to do its financing business, wholesale, retail or both, with whomever it chooses and to engage in retail financing activity to the extent it desires. C. PAYMENT TERMS All monies or accounts due Retailer from MBUSA will be considered net of Retailer's indebtedness to MBUSA. MBUSA may deduct or offiet any amounts due or to become due from Retailer to MBUSA, or any amounts held by MBUSA, from or against any sums or accounts due or to become due from MBUSA to Retailer; provided, however, that MBUSA shall not deduct or offset such amounts for any transaction where MBUSA has failed to provide written notice to Retailer of the amounts due within six (6) months of the transaction. Payments by Retailer to MBUSA shall be made in such a manner as prescribed by MBUSA and shall be applied against Retailer's indebtedness in accordance with MBUSA's policies and practices. If Retailer disputes any deduction or offset imposed by MBUSA pursuant to this Section VIII.C, it shall provide written notice of such dispute to MBUSA within ninety (90) days of the date on which MBUSA imposed such deduction or offset. If Retailer fails to provide such notice to MBUSA within that 90-day period, it shall be deemed to have waived any right that it may have to challenge such deduction or offset pursuant to Section XII or before any court, administrative agency or governmental body. D. UNIFORM ACCOUNTING SYSTEM Retailer agrees to maintain its financial books and records in accordance with the Mercedes-Benz Accounting Manual, as amended from time to time by MBUSA. In addition, Retailer shall furnish to MBUSA complete and accurate financial or operating information, including without limitation, a financial and/or operating statement covering the current month and calendar year-to-date operations and showing the true and accurate condition of Retailer's business. Retailer shall promptly furnish to MBUSA copies of any adjusted annual statements, including any and all adjusted, year-end statements prepared for tax or any other purposes. All such information shall be furnished by Retailer to MBUSA via MBUSA's electronic communications network and in such a format and at such times as -17- prescribed by MBUSA. If requested by MBUSA, Retailer shall furnish to MBUSA an audited annual financial statement. E. RECORDS MAINTENANCE Retailer agrees to keep complete, accurate and current records regarding its sale, leasing and servicing of Mercedes-Benz Passenger Car Products for a minimum of five (5) years, exclusive of any retention period required by any governmental entity. Retailer shall prepare, keep current and retain records in support of requests for reimbursement for warranty and policy work performed by Retailer in accordance with the Warranty Manual. F. EXAMINATION OF MERCEDES-BENZ CENTER ACCOUNTS AND RECORDS MBUSA shall have the right at all reasonable times and during regular business hours to inspect the Mercedes-Benz Center Facilities and to examine, audit and reproduce all records, accounts and supporting data relating to all Mercedes-Benz Center operations for any line of vehicles conducted in the Mercedes-Benz Center Facilities or at the Approved Location(s), including without limitation, sales reporting, service and repair of Mercedes-Benz Passenger Car Products by Retailer. G. TAXES Retailer shall be responsible for and duly pay all sales taxes, use taxes, excise taxes and other governmental or municipal charges imposed, levied or based upon the purchase or sale of Mercedes-Benz Passenger Car Products by Retailer, and shall maintain accurate records of the same. H. CONFIDENTIALITY MBUSA agrees that it shall not provide any data or documents submitted to it by Retailer to any third party unless authorized by Retailer, required by law, or required to generate composite or comparative data for analytical purposes. Retailer agrees to keep confidential and not to disclose, directly or indirectly, any information that MBUSA designates as confidential. I. MERCEDES-BENZ RETAILER COMMUNICATIONS SYSTEM AND PROPRIETARY MANUFACTURER SYSTEMS MBUSA has established the Mercedes-Benz Retailer Communications System ("RCS") to retrieve information from and disseminate information to Retailer. The RCS (which presently called MBNet) collects parts, warranty and financial data from Retailer, and provides access to various reports, data bases and -18- administrative messages to Retailer. Retailer shall utilize the RCS to provide such information to MBUSA as MBUSA shall specify from time to time. Retailer shall acquire, install and maintain at its expense the necessary equipment and systems compatible with the RCS, as well as other proprietary manufacturer systems, which are deemed necessary by MBUSA to transact business and serve clients in the most efficient manner. J. SALES REPORTING Retailer agrees to accurately report to MBUSA, with such relevant information as MBUSA may reasonably require, the delivery of each Mercedes-Benz Passenger Car and pre-owned Mercedes-Benz vehicle to an ultimate consumer by the end of the day in which the vehicle is delivered to such ultimate consumer, and to furnish MBUSA with such other reports as MBUSA may reasonably require in accordance with MBUSA's Ultimate Consumer DDR Reporting Provision or such other sales reporting requirements as MBUSA may establish from time to time. IX. TRANSFERS A. SALE OF ASSETS OR OWNERSHIP INTEREST This is a personal service agreement that MBUSA has entered into in reliance upon the personal qualifications, reputation, integrity, expertise and commitment of Owners and Retailer Operator. For this reason, Retailer agrees to obtain MBUSA's prior written consent to any proposed sale or transfer of Retailer's principal assets or any ownership interest of Owner, which consent shall not be unreasonably withheld. MBUSA shall not be obligated to execute a new Agreement with a proposed transferee of such assets or ownership interest unless Retailer first makes arrangements acceptable to MBUSA to satisfy any outstanding indebtedness to MBUSA. B. RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE 1. RIGHTS GRANTED If a proposal to sell Retailer's principal assets or transfer the majority ownership interest in Retailer is submitted by Retailer to MBUSA, or in the event of the death of the majority Owner of Retailer, MBUSA has a right of first refusal or option to purchase such assets or ownership interest, including any leasehold interest or realty. MBUSA's exercise of its right or option under this Section IX.B supersedes Retailer's right to transfer its interest in, or ownership of, the Mercedes-Benz Center. MBUSA's right or option may be assigned by it to any third party and -19- MBUSA hereby guarantees the full payment to Retailer of the purchase price by such assignee. MBUSA may disclose the terms of any pending buy/sell agreement and any other relevant Mercedes-Benz Center performance information to any potential assignee. MBUSA's rights under this Section IX.B will be binding on and enforceable against any assignee or successor in interest of Retailer or purchaser of Retailer's assets. Anything herein to the contrary notwithstanding, MBUSA shall not have a right of first refusal or option to purchase Retailer's principal assets or the majority interest in Retailer if the proposed transferee is the spouse or a child of an Owner and such spouse or child meets the criteria then currently used by MBUSA in qualifying owners of Mercedes-Benz passenger car retailers. If the proposed transferee fails to meet such criteria due to insufficient personal qualifications or expertise, MBUSA may, in its sole discretion, approve the transfer subject to the proposed transferee's successful completion of such training as MBUSA may require. If the proposed transferee fails to complete such training successfully or otherwise fails to meet the criteria then currently used by MBUSA in qualifying such owners within the time period prescribed by MBUSA, MBUSA may thereafter exercise its right of first refusal or option to purchase under this Section IX.B. 2. EXERCISE OF MBUSA'S RIGHTS MBUSA shall have thirty (30) days from the following events within which to exercise its option to purchase or right of first refusal: (i) MBUSA's receipt of all data and documentation customarily required by it to evaluate a proposed transfer of ownership; (ii) MBUSA's receipt of notice from Retailer of the death of the majority Owner of Retailer, or (iii) MBUSA's disapproval of any application submitted by Owner's heirs pursuant to Section X. MBUSA's exercise of its right of first refusal under this Section IX.B neither shall be dependent upon nor require its prior refusal to approve the proposed transfer. 3. RIGHT OF FIRST REFUSAL If Retailer has entered into a bona fide written buy/sell agreement for its Mercedes-Benz Center business or assets, MBUSA's right under this Section IX.B is a right of first refusal, enabling MBUSA to assume the buyer's rights and obligations under such buy/sell agreement, and to cancel this Agreement and all rights granted Retailer. Upon MBUSA's request, Retailer agrees to provide other documents relating to the proposed transfer and any other information which MBUSA deems appropriate, including, but not limited to, those reflecting other agreements or -20- understandings between the parties to the buy/sell agreement. If Retailer refuses to provide such documentation or to state in writing that no such documents exist, it shall be conclusively presumed that the buy/sell agreement is not a bona fide agreement. If Retailer withdraws its proposal in writing within ten (10) days following Retailer's receipt of MBUSA's notice exercising its right of first refusal, such right shall be null and void. If, as a result of MBUSA's exercise of its right of first refusal, Retailer is contractually obligated to reimburse the initial buyer for reasonable attorney's fees, broker's fees, title searches, property inspections, and other similar costs and fees that the buyer incurred in connection with the buy/sell agreement, MBUSA shall reimburse Retailer for such costs and fees in an amount up to but not exceeding Fifty Thousand Dollars ($50,000.00). Retailer shall provide MBUSA with all documents substantiating such costs and fees as MBUSA may reasonably request 4. OPTION TO PURCHASE In the event of the death of the majority Owner or if Retailer submits a proposal which MBUSA determines is not bona fide or in good faith, MBUSA has the option to purchase the principal assets of Retailer utilized in Mercedes-Benz Center Operations, including real estate and leasehold interest, and to cancel this Agreement and the rights granted Retailer hereunder. The purchase price of the Mercedes-Benz Center assets will be determined by good faith negotiations between the parties. If an agreement cannot be reached, the purchase price will be determined pursuant to the Dispute Resolution Process established in Section XII. 5. RETAILER'S OBLIGATIONS Upon MBUSA's exercise of its right or option and tender of performance under the buy/sell agreement or upon whatever terms may be expressed in the buy/sell agreement, Retailer shall forthwith transfer the affected real property by warranty deed conveying marketable title free and clear of all liens, claims, mortgages, encumbrances, tenancies and occupancies. The warranty deed shall be in proper form for recording, and Retailer shall deliver complete possession of the property and deed at the time of closing. Retailer shall also furnish to MBUSA all copies of any easements, licenses or other documents affecting the property or Mercedes-Benz Center Operations and shall assign any permits or licenses that are necessary or desirable for the use of or appurtenant to the property or the conduct of such operations. Retailer also agrees to execute and deliver to MBUSA instruments satisfactory to MBUSA conveying title to all personal property, including leasehold interests, involved in the transfer or sale to MBUSA. If any personal property is subject to any lien or - 21 - charge of any kind, Retailer agrees to procure the discharge and satisfaction thereof prior to the closing of sale of such property to MBUSA. X. SUCCESSION RIGHTS UPON DEATH OR IN CAPACITY A. SUCCESSION TO OWNERSHIP AFTER DEATH OF OWNER In the event an Owner dies and his or her interest in Retailer passes directly to any person or persons ("Heirs") who wish to succeed to Owner's interest, then Owner's legal representative must notify MBUSA within sixty (60) days of the death of Owner of such Heir's or Heirs' intent to succeed Owner. The legal representative also must then designate a proposed Retailer Operator for MBUSA's approval. The effect of such notice from Owner's legal representative will be to suspend any notice of termination provided for in Section XI.B.4 issued hereunder. Upon delivery of such notice, Owner's legal representative shall immediately request any person(s) identified by it as intending to succeed Owner and the designated candidate for Retail Operator to submit an application and to provide all personal and financial information that MBUSA may reasonably and customarily require in connection with its review of such applications. All requested information must be provided promptly to MBUSA and in no case later than thirty (30) days after receipt of such request from Owner's legal representative. MBUSA shall have sixty (60) days after its receipt of all requested information in which to: (i) review such application(s) pursuant to the then current criteria generally applied by MBUSA in qualifying owners and/or retailer operators of Mercedes-Benz passenger car retailers, and (ii) either approve or disapprove the application(s); provided, however, that if MBUSA does not receive such application(s) and all requested information within thirty (30) days of Owner's legal representative's request therefor, MBUSA shall have no obligation to review and approve or disapprove such application(s). If MBUSA approves the application(s), it shall offer to enter into a new Mercedes-Benz Passenger Car Retailer Agreement with Owner's Heir(s) in the form then currently in use, subject to such additional conditions and for such term as MBUSA deems appropriate. In the event that MBUSA does not approve the designated Heir(s) or designated candidate for Retailer Operator, or if Owner's legal representative withdraws his or her notice of the intent of Heir(s) to succeed as Owner(s), or if the legal representative or any proposed Owner or Retailer Operator fails to timely provide the required information, MBUSA may reinstate or issue a notice of termination. This Section X.A is subject to, and shall not be deemed to waive, MBUSA's right to exercise it option to purchase as set forth in Section IX. -22- If MBUSA has notified Retailer that it does not plan to continue to have a Mercedes-Benz passenger car retailer in Retailer's AOI, MBUSA shall have no obligation to execute a new Mercedes-Benz Passenger Car Retailer Agreement with Owner's Heir(s) pursuant to this Section X. B. INCAPACITY OF OWNER The parties agree that, as used herein, incapacity shall refer to any physical or mental ailment that, in MBUSA's opinion, adversely affects an Owner's ability to meet his or her obligations under this Agreement. MBUSA may terminate this Agreement when an incapacitated Owner also is the Retailer Operator identified herein. Prior to the effective date of any notice of termination, an incapacitated Owner who is also the Retailer Operator, or his or her legal representative, may propose a new candidate for the position of Retailer Operator. Such proposal shall be in writing and shall suspend any pending notice of termination until MBUSA advises Retailer of its approval or disapproval of the new candidate. Upon receipt of such notice, MBUSA and Retailer shall follow the qualification procedures set forth in Section X.A. C. NOMINATION OF SUCCESSOR PRIOR TO DEATH OR INCAPACITY OF OWNER An Owner owning a majority of Retailer's stock may nominate a candidate to assume ownership and/or the position of Retailer Operator of the Mercedes-Benz Center upon his or her death or incapacity. As soon as practicable after such nomination, MBUSA will request such personal financial information from the nominated Owner and/or Retailer Operator candidate as it reasonably and customarily may require in evaluating such candidates. MBUSA shall apply criteria then currently used by MBUSA in qualifying owners and/or retailer operators of Mercedes-Benz passenger car retailers. Upon receipt of all requested information, MBUSA shall either approve or disapprove such candidate. If MBUSA initially approves the candidate, said approval shall be reflected in a Successor Addendum and shall remain in effect for five (5) years if the proposed candidate continues to comply with the then current criteria used by MBUSA in qualifying such candidates. If MBUSA does not initially qualify the candidate, MBUSA agrees to review the reason(s) for its decision with Owner. Owner is free at any time to renew its nomination. However, in such instances, the candidate must again qualify pursuant to the then current criteria. Owner may, by written notice, withdraw a nomination at any time, even if MBUSA has previously qualified said candidate. -23- XI. TERMINATION A. VOLUNTARY TERMINATION BY RETAILER Retailer may voluntarily terminate this Agreement at any time by written notice to MBUSA, such termination to be effective thirty (30) days after receipt of the notice by MBUSA unless otherwise mutually agreed in writing. B. TERMINATION FOR CAUSE 1. IMMEDIATE TERMINATION Retailer and MBUSA agree that the following conduct is within Retailer's control and is so contrary to the goals, purposes and objectives of this Agreement as to warrant its immediate termination. Accordingly, Retailer agrees that if it engages in any of the following types of conduct, MBUSA shall have the right to terminate this Agreement immediately: a. Any attempted or actual sale, transfer or assignment by Retailer of this Agreement or any of the rights granted Retailer hereunder, or any attempted or actual transfer, assignment or delegation by Retailer of any of the responsibilities assumed by it under this Agreement, without the prior written consent of MBUSA; b. Subject to the provisions of Section IX, a change by operation of law or otherwise in the direct or indirect ownership of Retailer, whether voluntary or involuntary, from that set forth in the Final Paragraph of this Agreement, except as expressly permitted herein, without the prior written consent of MBUSA; c. Removal, resignation, withdrawal or elimination from Retailer for any reason of the Retailer Operator, provided, however, MBUSA shall give Retailer a reasonable period of time within which to replace such person with a Retailer Operator satisfactory to MBUSA; d. The failure of Retailer to conduct all Mercedes-Benz Center Operations required by this Agreement during and for not less than the customary and lawful hours for five (5) consecutive business days, except in the event such closure or cessation of operation is caused by some physical event beyond the control of the Retailer, such as strikes, civil war, riots, fires, floods, earthquakes, or other acts of God; -24- e. Any undertaking by Retailer to conduct, directly or indirectly, any of the Mercedes-Benz Center Operations at a location or facility other than those specified in Paragraph F and the Final Paragraph of this Agreement for that Mercedes-Benz Center Operation; f. Insolvency of Retailer; voluntary institution by Retailer of any proceeding under the federal bankruptcy laws or under any state insolvency law; institution against Retailer of any proceeding under the federal bankruptcy laws or under any state insolvency law which is not vacated within thirty (30) days from the institution thereof; appointment of a receiver, trustee or other officer having similar powers for Retailer or Retailer's business, provided such appointment is not vacated within thirty (30) days of the date of such appointment; execution by Retailer of an assignment for the benefit of creditors; or any levy under attachment, foreclosure, execution or similar process whereby a third party acquires rights to a significant portion of the assets of Retailer necessary for the performance of Retailer's responsibilities under this Agreement or to the operation or ownership of Retailer, which is not within thirty (30) days from the date of such levy vacated or removed by payment or bonding; g. Any material misrepresentation by Retailer or any person named in the Final Paragraph of this Agreement as to any fact relied on by MBUSA in entering into, amending or continuing with this Agreement, including without limitation any representation concerning the ownership, management or capitalization of Retailer; h. The conviction in a court of original jurisdiction of Retailer or Owner of a crime affecting the Mercedes-Benz Center Operations or of any felony, or any willful failure of Retailer to comply with the provisions of any laws, ordinances, rules, regulations or orders relating to the conduct of Mercedes-Benz Center Operations; i. Submission by Retailer to MBUSA of: (i) a knowingly false or fraudulent report or statement; (ii) a knowingly false or fraudulent claim (or statement in support thereof) for payment, reimbursement or for any discount, allowance, refund, rebate, credit or other incentive under any plan that may be offered by MBUSA, whether or not Retailer offers or makes restitution; (iii) false financial information; (iv) false sales reporting data; or (v) any false report or statement relating to pre-delivery inspection, testing, warranties, service, repair or maintenance required to be performed by Retailer; or -25- j. The failure of Retailer to obtain or maintain any license, permit or authorization necessary for the conduct by Retailer of Mercedes-Benz Center Operations pursuant to this Agreement, or the suspension or revocation such license: permit or authorization. 2. TERMINATION UPON SIXTY DAYS NOTICE The following conduct violates the terms and conditions of this Agreement and, if Retailer engages in such conduct, MBUSA shall have the right to terminate this Agreement upon Sixty (60) days notice if Retailer fails to cure such conduct within the sixty-day period provided in such notice: a. Failure of Retailer to pay MBUSA for any Mercedes-Benz Passenger Car Products; b. Failure of Retailer to establish or maintain the required net working capital or adequate flooring, and lines of credit; c. Any dispute, disagreement or controversy among managers, officers or Owners of Retailer that, in the reasonable opinion of MBUSA, adversely affects the ownership, operation, management, business, reputation or interests of Retailer or MBUSA; d. Impairment of the reputation or financial standing of Retailer subsequent to the execution of this Agreement; e. Refusal to permit MBUSA to examine or audit Retailer's accounting records as provided herein upon receipt by Retailer from MBUSA of written notice requesting such permission or information; f. Failure of Retailer to timely furnish accurate sales or financial information and related supporting data; or g. Breach or violation by Retailer of any other term or provision of this Agreement. -26- 3. TERMINATION FOR FAILURE OF PERFORMANCE If, upon evaluation of Retailer's performance pursuant to Sections II.F, IV.F, V.B or VI.E herein, MBUSA concludes that Retailer has failed to perform adequately its marketing and sales, service or client satisfaction responsibilities or to provide adequate Mercedes-Benz Center Facilities, MBUSA shall issue to Retailer a Retailer Improvement Addendum notifying it of such failure(s). MBUSA will endeavor to review promptly with Retailer the nature and extent of such failure(s) and will grant Retailer one hundred eighty (180) days or such other period as may be required by law to correct such failure(s). If Retailer fails or refuses to correct such failure(s) or has not made substantial progress towards remedying such failure(s) at the expiration of such period, MBUSA may terminate this Agreement upon sixty (60) days notice or such other notice as may be required by law. 4. TERMINATION UPON DEATH OR INCAPACITY Subject to certain exceptions identified in Section X, MBUSA may terminate this Agreement in the event of the death of an Owner or upon the incapacity of any Owner who is also the Retailer Operator, upon written notice to Retailer and such Owner's legal representative. Termination upon either of these events shall be effective ninety (90) days from the date of such notice. C. TERMINATION UPON TERMINATION OF DISTRIBUTORSHIP MBUSA may terminate this Agreement at any time by written notice to Retailer, such termination to be effective thirty (30) days after receipt of notice by Retailer unless otherwise mutually agreed in writing, if any licensing or distribution agreement pursuant to which MBUSA is distributor for Mercedes-Benz Passenger Car Products in the United States of America shall terminate or be terminated. D. TERMINATION FOR FAILURE OF MBUSA TO BE LICENSED If MBUSA fails to obtain or maintain any license, permit or authorization necessary for MBUSA's performance of its obligations under this Agreement or if such license, permit or authorization is suspended or revoked, and such suspension or revocation continues for a period of five (5) days, either party may immediately terminate this Agreement by giving notice to the other party. -27- E. TERMINATION UPON OFFERING TO ENTER INTO A NEW OR AMENDED PASSENGER CAR RETAILER AGREEMENT MBUSA may terminate this Agreement at any time by giving Retailer ninety (90) days prior notice thereof and offering to enter into a new or amended form of Passenger Car Retailer Agreement with Retailer in a form being offered to Mercedes-Benz passenger car retailers. F. NOTICE OF TERMINATION Any notice of termination under this Agreement shall be in writing and shall be mailed to the person(s) designated to receive such notice, via overnight mail, or shall be delivered in person. Such notice shall be effective upon the date of receipt. MBUSA shall state the grounds on which it relies in its termination of Retailer, and shall have the right to amend such notice as appropriate. MBUSA'S failure to refer to additional grounds for termination shall not constitute a waiver of its right later to rely upon such grounds. G. CONTINUANCE OF BUSINESS RELATIONS Upon receipt of any notice of termination, Retailer agrees to conduct itself and its operation until the effective date of termination in a manner that will not injure the reputation or goodwill of the Mercedes-Benz Marks or MBUSA. H. REPURCHASE PROVISIONS 1. MBUSA'S OBLIGATIONS Upon the termination of this Agreement, MBUSA shall have the right to cancel any and all shipments of Mercedes-Benz Passenger Car Products scheduled for delivery to Retailer, and MBUSA shall repurchase from Retailer the following: a. New, unused, unmodified and undamaged Mercedes-Benz Passenger Cars then unsold in Retailer's inventory that are of the then current or prior model year. The prices of such passenger cars shall be the same as those at which they were originally purchased by Retailer, less all prior refunds other allowances made by MBUSA to Retailer with respect thereto. b. New, unused and undamaged Genuine Mercedes-Benz Passenger Car Parts and Accessories then unsold in Retailer's inventory that are in good and saleable condition and are listed in the current parts catalog. The prices for such parts accessories shall be the prices last established by MBUSA for the sale of identical parts or -28- accessories to Mercedes-Benz passenger car retailers in the area in which Retailer is located. c. Special service tools recommended by MBUSA and then owned by Retailer and that are especially designed for servicing Mercedes-Benz Passenger Cars. The prices for such special service tools will be the price paid by Retailer less depreciation calculated on a straight-line basis over a three-year period, or such other price as the parties may negotiate. d. Signs that MBUSA has recommended for identification of Retailer. The price of such signs shall be the price paid by Retailer less appropriate depreciation calculated on a straight-line basis over a three-year period, or such other price as the parties may negotiate. 2. RETAILER'S RESPONSIBILITIES MBUSA'S obligations to repurchase the items set forth in this Section XI.H are contingent upon Retailer fulfilling all of the following obligations: a. Within thirty (30) days after the effective date of termination of this Agreement, Retailer shall deliver or mail to MBUSA a detailed inventory of all items referred to in this Section XI.H that it requests MBUSA repurchase and shall certify that such list is true and accurate. b. Retailer shall be entitled to request repurchase of only those items that it purchased from MBUSA, unless MBUSA agrees otherwise. c. Retailer will deliver to MBUSA at MBUSA's place of business and at Retailer's expense all Mercedes-Benz Passenger Cars Products and special service tools to be repurchased by MBUSA. If Retailer fails to do so, MBUSA may transfer such items and deduct the cost therefor from the repurchase price. d. Retailer will execute and deliver to MBUSA instruments satisfactory to MBUSA conveying good and marketable title to the aforesaid items to MBUSA. If such items are subject to any lien or charge of any kind, Retailer will procure the discharge in satisfaction thereof prior to their repurchase by MBUSA. Retailer will comply with the requirements of any state or federal laws that relate to the repurchase, including bulk sales or transfer laws. -29- e. Retailer will provide to MBUSA in writing the names and addresses of all of its Mercedes-Benz passenger car service clients. f. Retailer will deliver to MBUSA at MBUSA's place of business or to a third person designated by MBUSA and at Retailer's expense any and all sales instruction manuals, promotional materials, technical or service literature, advertising and other printed material, computer software or other media relating to Mercedes-Benz Passenger Car Products then in Retailer's possession and that were acquired or obtained by Retailer from MBUSA. g. Retailer will remove, at its own expense, all signage and corporate identification from Retailer's Approved Location(s), including all Mercedes-Benz Marks, before it is eligible for payment hereunder. 3. PAYMENT BY MBUSA MBUSA will pay Retailer for such items as Retailer may request be repurchased and that qualify hereunder as soon as practicable upon Retailer's compliance with all of the obligations set forth herein and upon computation of any outstanding indebtedness of Retailer to MBUSA. MBUSA shall have the right to offset from any amounts due to Retailer hereunder the total sum of Retailer's outstanding indebtedness to MBUSA. If Retailer disagrees with MBUSA's valuation of any item herein, and Retailer and MBUSA have not resolved their disagreement within ninety (90) days of the effective date of termination of this Agreement, MBUSA shall pay to Retailer the amount to which it reasonably believes Retailer is entitled. Retailer's exclusive remedy to recover any additional sums that it believes are due under this Section shall be by resort to the procedures set forth in Section XII. XII. DISPUTE RESOLUTION PROCESS A. THE MERCEDES-BENZ BOARD MBUSA and Retailer agree to minimize dispute between them. However, in the event that disputes arise, MBUSA and Retailer agree that they will attempt to resolve all matters between them before any formal action is taken to initiate any judicial, administrative or governmental proceedings. A Mercedes-Benz Board ("Board") will act as the administrator of all disputes between MBUSA and Retailer arising out of or relating to this Agreement. The Board will consist of three representatives who will be selected by MBUSA and -30- three retailer operators of Mercedes-Benz passenger car retailers who will be selected by the Mercedes-Benz Retailer Board. The board will determine eligibility requirements, develop procedures to ensure a fair and equitable decision ("ADR Procedures") and select individuals to participate in a Dispute Resolution Panel ("Panel") to hear an eligible dispute. The Panel shall consist of at least one MBUSA representative, one retailer operator of a Mercedes-Benz passenger car retailer, and one independent person who has been selected by the Board. The Board shall also monitor the Dispute Resolution Process, report to MBUSA and the Mercedes-Benz Retailer Board annually on the effectiveness of this process and, when required, make recommendations for changes in this process. There are two steps in the Dispute Resolution Process: mandatory mediation and optional arbitration. All disputes must first be submitted to mediation, unless that step is waived by written agreement of the parties. If mediation does not resolve the dispute to their mutual satisfaction, then Retailer may submit the dispute to arbitration. B. MANDATORY MEDIATION Prior to initiating any judicial, administrative or governmental proceedings, MBUSA and Retailer agree to mediate any dispute arising out of or the relating to the Agreement. MBUSA and Retailer agree that the procedures contained in the Retailer Dispute Resolution Guide shall govern mediation under Section XII.B. Mediation will be conducted by a Panel, which will evaluate each position and recommend a solution. This recommended solution is not binding on either party. If the parties are unable to resolve a dispute under this Section XII, and a party elects to initiate a judicial, administrative or governmental proceedings with respect to such dispute, the prevailing party shall be entitled to recover its costs of such proceeding, including its reasonable attorneys fee, from the other party. The parties hereby agree and stipulate that the Panel's recommended solution is admissible in any arbitration, judicial, administrative or governmental proceedings with respect to the dispute. C. OPTIONAL ARBITRATION If a dispute has not been resolved after mediation, or if Retailer and MBUSA have agreed in writing to waive mediation, Retailer may submit the dispute to arbitration in accordance with the procedures in the Retailer Dispute Resolution Guide. The award of the arbitration panel shall be binding on MBUSA but not on Retailer, and shall be non-appealable except as otherwise provided in the United States Arbitration Act. Retailer may pursue its remedy in a judicial, -31- administrative or governmental proceeding if Retailer chooses not to be bound by the arbitration award. Judgment upon any award rendered by the arbitrator(s) may be entered and enforced in any court having jurisdiction. XIII.DEFENSE AND INDEMNIFICATION A. DEFENSE AND INDEMNIFICATION BY MBUSA MBUSA agrees to assume the defense of Retailer and to indemnify and hold Retailer harmless in any lawsuit naming Retailer as a defendant and involving any Mercedes-Benz Passenger Car Product when the lawsuit also involves allegations of: 1. Bodily injury or property damage arising out of an occurrence allegedly caused solely by a defect or failure to warn of a defect in design, manufacture or assembly of a Mercedes-Benz Passenger Car Product, provided that the defect could not reasonably have been discovered by Retailer during the pre-delivery inspections and service of the Mercedes-Benz Passenger Car Product or otherwise; 2. Any misrepresentation or misleading statement or unfair or deceptive trade practice of MBUSA; or 3. Any substantial damage to a Mercedes-Benz Passenger Car Product purchased by Retailer from MBUSA that was repaired by MBUSA and where Retailer had not been notified of such damage in writing prior to the delivery of the subject passenger car, part or accessory to a retail client; and Provided: 4. That Retailer delivers to MBUSA, in a manner to be designated by MBUSA, within twenty (20) days of the service of any summons or complaint, copies of such documents and requests in writing a defense and/or indemnification therein (except as provided in Section XIII.D below); 5. That the complaint does not involve allegations of Retailer misconduct, including but not limited to, improper or unsatisfactory service or repair, misrepresentation, or any claim of Retailer's unfair or deceptive trade practice; 6. That the Mercedes-Benz Passenger Car Product which is the subject of the lawsuit was not altered by or for Retailer; -32- 7. That Retailer agrees to cooperate fully in the defense of such action as MBUSA may reasonably require; and 8. That Retailer agrees that MBUSA may offset any recovery on Retailer's behalf against any indemnification that may be required hereunder. B. DEFENSE AND INDEMNIFICATION BY RETAILER Retailer agrees to assume the defense of MBUSA or DCAG and to indemnify and hold them harmless in any lawsuit naming MBUSA or DCAG as a defendant when the lawsuit involves allegations of: 1. Retailer's failure to comply, in whole or in part, with any obligation assumed by Retailer under this Agreement; 2. Retailer's negligent or improper inspection, preparation, repair or servicing of a new or used Mercedes-Benz Passenger Car Product, or such other motor vehicles or equipment as may be sold or serviced by Retailer; 3. Retailer's alleged breach of any contract or warranty other than that provided by MBUSA or DCAG; 4. Retailer's alleged misleading statements, misrepresentations, or deceptive or unfair trade practices; 5. Any modification or alteration made by or on behalf of Retailer to a Mercedes-Benz Passenger Car Product, except those made pursuant to the express written instruction or with the express written approval of MBUSA; 6. Any change in the employment status or in the terms or conditions of employment of any officer, employee or agent of Retailer or of any Owner or the Retailer Operator, including but not limited to claims for breach of employment contract, wrongful termination or discharge, tortious interference with contract or economic advantage, and similar claims; and Provided: 7. That MBUSA delivers to Retailer, within twenty (20) days of the service of any summons or complaint, copies of such documents, and requests in writing a defense and/or indemnification therein (except as provided in Section XIII.D below); 8. That MBUSA agrees to cooperate fully in the defense of such action as Retailer may reasonably require; and -33- 9. That the complaint does not involve allegations of liability premised upon separate MBUSA's conduct or omissions. C. CONDITIONAL DEFENSE AND/OR INDEMNIFICATION In agreeing to defend and/or indemnify each other, Retailer and MBUSA may make their agreement conditional on the continued existence of the state of facts as then known to such party and may provide for the withdrawal of such defense and/or indemnification at such time as facts arise which, if known at the time of the original request for a defense and/or indemnification, would have caused either Retailer or MBUSA to refuse such request. The party withdrawing from its agreement to defend and/or indemnify shall give timely notice of its intent to withdraw. Such notice shall be in writing and shall be effective upon receipt. The withdrawing party shall be responsible for all costs and expenses of defense up to the date of receipt of its notice of withdrawal. D. THE EFFECT OF SUBSEQUENT DEVELOPMENTS In the event that subsequent developments in a case make clear that the allegations which initially preclude a request or an acceptance of a request for a defense and/or indemnification are no longer at issue therein or are without foundation, any party having a right to a defense and/or indemnification hereunder may tender such request for a defense and indemnification to the other party. Neither Retailer nor MBUSA shall be required to agree to such subsequent request for a defense and/or indemnification where that party would be unduly prejudiced by such delay. E. TIME TO RESPOND AND RESPONSIBILITIES OF THE PARTIES Retailer and MBUSA shall have sixty (60) days from the receipt of a request for a defense and/or indemnification to conduct an investigation to determine whether or not, or under what conditions, it may agree to defend and/or indemnify pursuant to this Section. If local rules require a response to the complaint in the lawsuit prior to the time provided hereunder for a response to such request, the requesting party shall take all steps necessary, including obtaining counsel, to protect its own interest in the lawsuit until Retailer or MBUSA assumes the requested defense and\or indemnification. In the event that Retailer or MBUSA agrees to assume the defense and/or indemnification of a lawsuit, it shall have the right to engage and direct counsel of its own choosing and, except in cases where the request is made pursuant to Section XIII.D above, shall have the obligation to reimburse the -34- requesting party for all reasonable costs and expense, including actual attorneys' fees, incurred prior to such assumption. XIV. NOTICE OF BREACH OR FAILURE TO ACT IN GOOD FAITH In the interest of maintaining a harmonious relationship between MBUSA and Retailer, if Retailer believes that MBUSA has breached this Agreement or has failed to act in good faith toward Retailer, Retailer shall report its belief and the bases therefor promptly, in writing, to the President or a Vice President of MBUSA. For the purposes of this Section XIV, the term "good faith" shall mean MBUSA and its representatives acting in a fair, honest, commercially reasonable, equitable, and impartial manner toward Retailer. It is the intention of the parties that the purpose of the requirement of such notification by Retailer is to afford MBUSA sufficient opportunity to consider the claim of Retailer and if, in the sole determination of MBUSA, such claim is found to be meritorious, to undertake such measures as may be necessary to correct the condition of which Retailer complains. XV. GENERAL PROVISIONS A. NOTICES Except as otherwise specifically provided herein, any notice required to be given by either party to the other shall be in writing, shall be delivered personally or by mail to the party at its address as stated in this Agreement, and shall be effective upon receipt by hand delivery or upon mailing. B. NO IMPLIED WAIVERS 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. The waiver by any party of a breach of any provision herein shall not constitute a waiver of any succeeding breach of the same or any other provision or constitute a waiver of the provision itself. C. SOLE AGREEMENT OF THE PARTIES This Agreement terminates and supersedes all prior agreements between the parties relating to the subject matters covered herein. There are no prior agreements or understandings, either oral or written, between the parties affecting this Agreement or relating to the sale or service of Mercedes-Benz Passenger Car Products, except as otherwise specifically provided for or referred to in this Agreement. Retailer acknowledges that no representations or statements other than those expressly set forth therein were made by MBUSA or any officer, employee, agent, or representative thereof, or were relied upon by Retailer in entering into this Agreement. -35- D. RETAILER NOT AN AGENT OR REPRESENTATIVE Retailer is an independent business. This Agreement does not constitute Retailer the agent or legal representative of MBUSA or DCAG for any purpose whatsoever. Retailer is not granted any express or implied right or authority to assume or create any obligation on behalf of or in the name of MBUSA or DCAG or to bind MBUSA or DCAG in any manner whatsoever. No fiduciary obligations are created by this Agreement. E. ASSIGNMENT OF RIGHTS OR DELEGATION OF DUTIES This is a personal service agreement and may not be assigned or sold in whole or in part, directly or indirectly, voluntarily or by operation of law, without the prior written consent of MBUSA. Any attempted transfer, assignment or sale without MBUSA's prior written consent will be void and not binding upon MBUSA. F. NO FRANCHISE FEE Retailer warrants that it has paid no fee, nor has it provided any goods or services in lieu of same, to MBUSA in consideration of entering into this Agreement. The sole consideration for MBUSA's entering into this Agreement is Owner's and Retailer Operator's ability, integrity, assurance of personal services, and expressed intention to deal fairly and equitably with MBUSA and the public. G. BENEFIT This Agreement is entered into by and between MBUSA and Retailer for their sole and mutual benefit. Neither this Agreement nor any specific provision contained in it is intended or shall be construed to be for the benefit of any third party. H. NEW JERSEY LAW This Agreement shall be deemed to have been entered into in the State of New Jersey, and all questions concerning the validity, interpretation, or performance of any of its terms, or of any contractual rights or obligations of the parties hereto, shall be governed by and resolved in accordance with the internal laws of the State of New Jersey, including, without limitation, its statutes of limitations. -36- XVI. DEFINITIONS As used in this Agreement, the parties agree that the following terms shall be defined exclusively as set forth below. A. RETAILER: The natural person or entity that executes the Agreement and is authorized by MBUSA to sell and service Mercedes-Benz Passenger Car Products as defined herein. B. OWNER: The persons identified in Paragraph D and the Final Paragraph of this Agreement. C. RETAILER OPERATOR: The person identified in Paragraph E and the Final Paragraph of this Agreement. D. MERCEDES-BENZ CENTER FACILITIES: The buildings, improvements, fixtures and equipment situated at the Approved Location(s) and identified in Paragraph F and the Final Paragraph of this Agreement. E. APPROVED LOCATION(S): The location(s) and any facilities thereon designated in Paragraph F and the Final Paragraph of this Agreement that MBUSA has approved for the Mercedes-Benz Center Operation(s) specified therein. F. MERCEDES-BENZ CENTER OPERATIONS: All retailer functions comtemplated by this Agreement including, without limitation, sale and servicing of Mercedes-Benz Passenger Car Products, use and display of Mercedes-Benz Marks and Mercedes-Benz Passenger Car Products, rental and leasing of Mercedes-Benz Passenger Cars, sale of pre-owned Mercedes-Benz vehicles, body shop work, financing or insurance services and any other activities undertaken by Retailer in connection with Mercedes-Benz Passenger Car Products whether conducted directly or indirectly by Retailer. G. DCAG: DaimlerChrysler Aktiengesellschaft, a corporation of the Federal Republic of Germany and the manufacturer of Mercedes-Benz Passenger Cars, and any successor thereto. H. MERCEDES-BENZ MARKS: The various Mercedes-Benz trademarks, service marks, names, logos and designs that Retailer is authorized to use in the sale and servicing of Mercedes-Benz Passenger Car Products, including the "Three Pointed Star." I. MERCEDES-BENZ PASSENGER CARS: All new Mercedes-Benz passenger cars that MBUSA is authorized to sell to Mercedes-Benz passenger car retailers in the United States of America pursuant to a written distribution agreement between -37- DCAG and MBUSA, and that MBUSA, in its sole discretion, sells to Retailer for resale. J. GENUINE MERCEDES-BENZ PASSENGER CAR PARTS AND ACCESSORIES: All Mercedes-Benz passenger ear parts and accessories manufactured by or on behalf of MBUSA or DCAG and such other parts and accessories specifically approved by DCAG for use in servicing Mercedes-Benz Passenger Cars that MBUSA sells to Retailer for resale. K. MERCEDES-BENZ PASSENGER CAR PRODUCTS: All Mercedes-Benz Passenger Cars and Genuine Mercedes-Benz Passenger Car Parts and Accessories that MBUSA sells to Retailer for resale. L. COMPETITIVE VEHICLES: Those new vehicles that we considered by MBUSA to be directly competitive with Mercedes-Benz Passenger Cars. M. WARRANTY MANUAL: The Mercedes-Benz Warranty Policies and Procedures Manual. XVII. ADDITIONAL PROVISIONS In consideration of MBUSA's agreement to appoint Retailer as a Mercedes-Benz passenger car retailer, Retailer further agrees: -38-