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EXHIBIT 10.36
AGREEMENT BETWEEN
NISSAN MOTOR CORPORATION IN U.S.A.
AND
GROUP 1 AUTOMOTIVE, INC.
This agreement dated April 28, 1998, is entered into by and between
Group 1 Automotive, Inc. ("Group 1"), a Delaware corporation, with its principal
place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, and Nissan Motor
Corporation in U.S.A. ("NMC"), a California corporation, with its principal
place of business at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(the "Agreement").
RECITALS
WHEREAS, NMC distributes Nissan and Infiniti brand automobile products
in the continental Unites States through a network of authorized independent
dealers; and
WHEREAS, Group 1 is in the automobile businesses of retailing and
servicing automobile products, and has acquired, through its wholly owned
affiliates or subsidiaries, several Nissan automobile dealerships and may
acquire additional Nissan and Infiniti automobile dealerships;
WHEREAS NMC's and Group 1's interests could conflict, and it is the
intent of the parties to develop a mutually beneficial business relationship;
NOW THEREFORE, Group 1 and NMC agree as follows:
AGREEMENT
1. ADHERENCE TO THE POLICY
The Nissan (and potentially Infiniti) dealerships owned by Group 1, or its
wholly owned affiliates or subsidiaries, have already agreed to comply with
NMC's dealer agreements and policies and, by this Agreement, Group 1 agrees to
not interfere with such compliance by its NMC authorized dealerships and to
itself comply with and be bound by the terms of NMC's policies, including, but
not limited to, NMC's policy limiting the number of dealers owned or controlled,
directly or indirectly, by a single entity (the "Ownership Policy"), which is
summarized as follows: i) No individual or entity may have an ownership or
management interest, direct or indirect, in Dealers whose Primary Marketing
Area's (PMA's) competitive segment registration count comprises more than 5% of
Nissan's or Infiniti's (as applicable) total, national competitive segment
registrations based on the sum of the retail competitive segment registrations
contained in all PMA's associated with the dealers; ii) No individual or entity
may hold ownership or management, direct or indirect, in Dealers whose PMA's
competitive segment registration count comprises more than 20% of any Nissan or
Infiniti (as applicable) region's total competitive segment registrations
contained in all PMA's associated with dealers in that region, iii) In order
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for any entity to acquire additional Nissan or Infiniti dealerships, within the
limits of this Agreement, the Nissan or Infiniti dealerships which it owns or
controls, directly or indirectly, must (a) be incompliance with all of the
material terms of its respective Dealer Agreements; (b) meet, in all material
respects, all of the applicable Nissan or Infiniti market representation and
other standards and policies; and (c) with respect to the NMC Division and
Region at issue, the Nissan or Infiniti dealerships which the entity owns or
controls must, in the aggregate and with respect to at least 50% of those
individual dealerships, have performed at or above all performance levels set
forth in the Business Plans for those dealerships over the proceeding 12 month
period; and iv) If the proposed acquisition of any Nissan or Infiniti dealership
would cause an individual or entity to exceed the Ownership Policy, NMC will
reject a dealer's application for approval of such ownership transfer until such
time as the purchasing individual or entity shall be able to complete the
acquisition within the requirements of this Policy. Notwithstanding the
foregoing, NMC may withhold consent to a proposed acquisition, even if that
acquisition satisfies the parameters of the Ownership Policy, based on the
grounds set forth in the Nissan Dealer Agreement and applicable state law.
2. IDENTIFICATION OF OWNERS OF GROUP 1
Group 1 represents and warrants that Schedule A hereto identifies each
individual or entity that owns, controls or has a beneficial interest in 5% or
more of Group 1 and/or of its affiliates or subsidiaries. In the event Group 1
becomes aware of any change of ownership, control or interest that results in an
individual or entity not listed on Schedule A obtaining such ownership, control
or beneficial interest, Group 1 shall provide NMC with the documentation and
information required by Schedule A with respect to such individual or entity.
Group 1 will provide NMC with copies of all filings that Group 1 becomes aware
of that are made with the SEC and comparable filings made with state agencies by
persons or entities that own, control or have a beneficial interest in 5% or
more of Group 1 and/or any of its affiliates or subsidiaries. Without limiting
the foregoing, Group 1 will use its reasonable efforts to provide such
information regarding individuals that own, control or have a beneficial
interest in 5% or more of Group 1 as NMC may from time to time reasonably
request.
3. CHANGE IN OWNERSHIP OF GROUP 1
If any person or entity acquires more than 20% of Group 1's common stock issued
and outstanding at any time and Nissan reasonably determines that such person or
entity does not have interests compatible with those of Nissan, or is otherwise
not qualified to have an ownership interest in a Nissan dealership (an "Adverse
Person"), Group 1 must terminate its dealer agreements with Nissan or transfer
the Nissan dealerships to a third party acceptable to Nissan unless, within 90
days after Nissan's determination, the Adverse Person's ownership interest is
reduced to less than 20%.
4. SEPARATE LEGAL ENTITIES FOR EACH NISSAN AND INFINITI
DEALERSHIP
Group 1 shall (i) create or maintain separate legal entities for each Nissan and
Infiniti dealership that it owns, directly or indirectly, shall obtain a
separate motor vehicle license for each such
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dealership, and shall maintain separate financial statements for each such
dealership; and (ii) where such Nissan or Infiniti dealerships are part of a
Contiguous Market Ownership Area pursuant to a Contiguous Market Ownership
Addendum, maintain a single corporate entity for the dealerships in that Area
and shall otherwise comply with the licensing and reporting requirements set
forth in that Addendum; provided, however, that if at the time of acquisition of
any Nissan or Infiniti dealership by Group 1 such dealership is not in
compliance with the requirements of clauses (i) or (ii) of this paragraph, as
applicable, Group 1 will use its reasonable efforts to cause the dealership to
comply with such requirements of clauses (i) or (ii) as soon as reasonably
practicable.
5. BRANDING/BUSINESS NAME
Consistent with NMC policy, the name "Nissan" or "Infiniti," as applicable,
shall prominently appear in the d/b/a and marketing of each dealership. Group 1
agrees that each Nissan and Infiniti dealership owned or controlled by Group 1,
directly or indirectly, shall include in its promotional, marketing and
advertising efforts the approved name of the Dealership or another name approved
by Nissan that includes the Nissan or Infiniti name and, that said dealerships
shall actively and effectively promote primarily the "Nissan" or "Infiniti"
name. Under no circumstances shall the name "Nissan" or "Infiniti" be
subordinated to or promoted less aggressively than any other name (e.g. "Group 1
Automotive" or "Group 1").
6. AUTHORITY OF THE DEALER PRINCIPAL
Each Nissan and Infiniti dealership owned or controlled by Group 1, directly or
indirectly, shall have a Dealer Principal who is delegated full authority to
perform the obligations of Dealer Principal under the terms and conditions set
forth in the applicable Nissan or Infiniti Dealer Sales and Service agreement
("Agreement"), to determine, approve, and implement the terms and provisions of
the Agreement, to make, sign, and execute any documents or further agreements,
both oral and written, between the dealer and NMC, to commit himself to the
achievement of the purposes and objectives of the Agreement, to take any and all
actions which the Dealer Principal may deem prudent, necessary, or appropriate
to effect the foregoing Agreement and to resolve all matters of the terms and
implementation as he shall deem necessary in connection therewith. Group 1 shall
not authorize or permit the Dealer Principal to take any action inconsistent
with the terms, purposes, and objectives of the Agreement.
Whenever Group 1 nominates a new Dealer Principal candidate for a Nissan or
Infiniti dealership, NMC shall have the right to withhold a decision concerning
approval or rejection of the candidate for a period of up to one year, at its
sole discretion; provided, however, that the candidate may operate in the
probationary capacity of Dealer Principal until NMC has approved or rejected
him/her. Such delay or exercise of this evaluation period does not imply
approval of the Dealer Principal candidate.
Should Group 1 reduce or modify the authority of the Dealer Principal, contrary
to the requirements of this and the Dealer Agreement, it must notify Nissan
immediately as to the specific changes in authority. Upon such notice, Nissan
will evaluate the modification of authority and notify Group 1 of its response.
Should Nissan, in its reasonable discretion, object
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to the changes, Group 1 must resolve the situation to Nissan's satisfaction or
restore the authority to that which existed prior to the modification.
NMC shall be entitled to and shall, in fact, rely upon the personal
qualifications, experience, reputation, integrity, ability, and representations
of the individual named as Dealer Principal. Any successor Dealer Principal or
Executive Manager must meet the minimum requirements set forth in NMC's current
policies relating to management.
(d) Evaluation of Management. Group 1 and NMC understand and
acknowledge that the personal qualifications, expertise, reputation, integrity,
experience and ability of the Dealer Principal and Executive Manager and their
ability to effectively manage a dealership's day-to-day operations is critical
to the success of such dealership in performing its obligations under the
respective Agreement. NMC may from time to time develop standards and/or
procedures for evaluating the performance of the Dealer Principal and Executive
Manager and of Group 1's Nissan and Infiniti dealership personnel generally. NMC
may, from time to time, evaluate the performance of the Dealer Principal and
Executive Manager, based on the standards established in the dealership's
business plan, and will advise Group 1, the respective Dealer Principal and the
Executive Manager of the results of such evaluations and the way in which any
deficiencies affect such dealership's performance of its obligations under the
applicable Agreement.
7. DESIGNATED GROUP 1 CONTACT OFFICIAL
Group 1 shall designate a Group 1 executive (other than the Dealer Principal of
the dealership) who will respond directly to any questions or concerns of NMC
regarding the relationship with NMC, the operation or performance of the
dealership(s) generally as a group, or other issues that may arise. That
executive will have full authority, in accordance with Group 1's management
policies, to discuss, address, negotiate and resolve all such issues. Matters
pertaining to a specific dealership will be addressed by Nissan with that
dealership's Dealer Principal.
8. FINANCIAL DISCLOSURES
Group 1 shall provide NMC with copies of all information and materials filed by
Group 1 with the Securities Exchange Commission under the Securities Exchange
Act of 1934, as amended, including, but not limited to, quarterly and annual
financial statement filings, prospectuses and other materials related to Group 1
and/or its automotive affiliates and subsidiaries.
9. SOLE AGREEMENT OF THE PARTIES
There are no prior agreements or understandings, either oral or written, between
the parties affecting this Agreement, except as otherwise specified or referred
to in this Agreement. No change or addition to, or deletion of any portion of
this Agreement shall be valid or binding upon the parties hereto unless approved
in a writing signed by an officer of each of the parties hereto.
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10. SEVERABILITY
If any provision of this Agreement should be held invalid or unenforceable for
any reason whatsoever, or conflicts with any applicable law, this Agreement will
be considered divisible as to such provision(s), and such provision(s) will be
deemed amended to comply with such law, or if it (they) cannot be so amended
without materially affecting the tenor of the Agreement, then it (they) will be
deemed deleted from this Agreement in such jurisdiction, and in either case, the
remainder of the Agreement will be valid and binding.
11. 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, 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.
12. CONCURRENCE AND ACKNOWLEDGMENT
Group 1 acknowledges that NMC's policies and standards are prepared by NMC based
upon NMC's evaluation of the marketplace and other factors, and that NMC may
amend its policies and standards from time to time. Group 1 further agrees that
it will not interfere in the day-to-day operations of Dealer, and will neither
take, nor permit Dealer to take, actions inconsistent with NMC's policies or
Dealer's or Dealer Principal's obligations as set forth in the applicable Sales
and Service Agreement or other executed agreements.
13. APPLICABLE LAW
This Agreement shall be governed by and construed according to the laws of the
State of California. The parties to this Agreement acknowledge that it is not a
"Dealer" or "Franchise" Agreement, is not governed by the State of Federal
Manufacturer/Dealer laws, and that it does not need to be filed with any
Governmental or Administrative agencies under these laws.
14. BENEFIT
This Agreement is entered into by and between NMC and Group 1 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.
15. NOTICE TO THE PARTIES
Any notices permitted or required under the terms of this Agreement shall be
directed to the following respective addresses of the parties, or if either of
the parties shall have specified another address by notice in writing to the
other party, then to the address last specified:
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NISSAN MOTOR CORPORATION IN U.S.A.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇▇▇▇ Ramonat
Manager, Multiple Market & Public Ownership
GROUP 1 AUTOMOTIVE, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇.
Chairman, President and Chief Executive Officer
16. DISPUTE RESOLUTION
The parties acknowledge that, at the state and federal level, various courts and
agencies would, in the absence of this Section 16, be available to them to
resolve claims or controversies which might arise between them. The parties
agree that it is inconsistent with their relationship for either to use courts
or governmental agencies to resolve such claims or controversies.
THEREFORE, CONSISTENT WITH THE PROVISION OF THE UNITED STATES ARBITRATION ACT (9
U.S.C. SEC. 1 ET SEQ.), THE PARTIES TO THIS AGREEMENT AGREE THAT THE DISPUTE
RESOLUTION PROCESS OUTLINED IN THIS SECTION, WHICH INCLUDES BINDING ARBITRATION,
SHALL BE THE EXCLUSIVE MECHANISM FOR RESOLVING ANY DISPUTE, CONTROVERSY OR CLAIM
ARISING OUT OF OR RELATING IN ANY WAY TO THIS AGREEMENT OR TO THE RELATIONSHIP
BETWEEN THE PARTIES, INCLUDING BUT NOT LIMITED TO CLAIMS UNDER ANY STATE OR
FEDERAL STATUTES (HEREINAFTER "DISPUTES").
There are two steps in the Dispute Resolution Process: Mediation and Binding
Arbitration. All Disputes must first be submitted to Mediation, unless that step
is waived by written agreement of the parties. Mediation is conducted by a panel
consisting of an equal number of representatives of the parties designated by
Nissan and selected by Group 1. The Mediation Panel will evaluate each position
and recommend a solution. This recommended solution is not binding.
If a dispute has not been resolved after Mediation, or if Group 1 and Nissan
have agreed in writing to waive Mediation, the Dispute will be settled by
Binding Arbitration.
SPECIFICALLY, THE PARTIES AGREE TO RESOLVE ALL SUCH DISPUTES BY BINDING
ARBITRATION CONDUCTED IN ACCORDANCE WIT THE COMMERCIAL ARBITRATION PROCEDURES OF
THE AMERICAN ARBITRATION ASSOCIATION, OR ANOTHER PROGRAM AGREED TO BY THE
PARTIES, WITH THE PREVAILING PARTY TO RECOVER ITS COSTS AND ATTORNEY'S FEES FROM
THE OTHER PARTY. ALL ARBITRATION AWARDS ARE BINDING AND NON-APPEALABLE, EXCEPT
AS OTHERWISE PROVIDED IN THE UNITED STATES ARBITRATION ACT. JUDGMENT UPON ANY
SUCH AWARD MAY BE ENTERED AND ENFORCED IN ANY COURT HAVING JURISDICTION.
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17. INDEMNITY
Group 1 hereby agrees to indemnify and hold harmless, NMC, its officers,
directors, affiliates and agents and each person who controls NMC within the
meaning of the Securities Act of 1933, as amended (the "Act"), from and against
any and all losses, claims, damages or liabilities, to which they or any of them
may become subject under the Act, the Securities Exchange Act of 1934, as
amended, or any other federal or state securities law, rule or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of the sale by Group 1 of any securities.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
GROUP 1 AUTOMOTIVE, INC. NISSAN MOTOR CORPORATION IN U.S.A.
By: By:
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▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman, President and Vice-President
Chief Executive Officer General Manager, Nissan Division
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