EXHIBIT 10.12
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DEALER AGREEMENT
 

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smart USA Distributor LLC
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Passenger Car Dealer Agreement
Table of Contents

          DEALER AGREEMENT   PAGE  
smart USA STATEMENT OF COMMITTMENT
    7  
A. Appointment of Dealer
    7  
B. Term
    8  
C. Additional Provisions
    8  
D. Dealership Ownership
    8  
E. Dealership Facilities
    8  
F. Modification of Agreement
    9  
G. Execution of Agreement
    9  
H. Mutual Release
    9  
I. Certification
    9  
J. Final Paragraph
    10  
STANDARD PROVISIONS
       
I. Acquisition, Delivery and Inventory of smart USA Passenger car products
    11  
A. Prices and Terms of Sale
    11  
B. Availability and Allocation of Products
    11  
C. Delivery of Products
    11  
D. Passage of Title
    11  
E. Risk of Damage or Loss
    11  
F. Delay or Failure of Delivery
    11  
G. Diversion and Storage Charges
    12  
H. Security Interest
    12  
1 Grant of Security Interest
    12  
2 Default in Payment
    12  
3 Assembly of Collateral, Payment of Costs and Notices
    12  
4 Recording and Further Assurances
    13  
5 Records and Schedules of Inventory
    13  
I. Changes of Design, Specifications or Options
    13  
J. Discontinuance of Manufacture or Importation
    13  
K. Minimum Vehicle Inventories
    13  
L. Product Modifications
    13  

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smart USA Distributor LLC
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Passenger Car Dealer Agreement
Table of Contents

          DEALER AGREEMENT (CONTINUED)   PAGE  
II. Dealer’s Marketing and Sales of smart USA Passenger Car Products
    14  
A. Dealer’s General Responsibilities
    14  
B. Export Policy
    14  
C. smart USA Dealer Association
    14  
D. Pre-Owned Vehicles
    15  
E. Dealer Market Area
    15  
F. Evaluation of Dealer’s Marketing and Sales Performance
    15  
III. Dealer’s Service Obligations
    16  
A. Customer Service Standards
    16  
B. Dealer’s Specific Service Obligations
    16  
1 Pre-Delivery Inspections and Service
    16  
2 Warranty Repairs and Policy Service
    16  
3 Service/Retail Campaign Inspections and Corrections
    17  
4 Roadside Assistance Program
    17  
C. Use of Parts and Accessories in Non-Warranty Service
    17  
1 Quality Standards
    17  
2 Dealer’s Disclosures as to Use of and Warranties for Non-Genuine Parts and
Accessories
    17  
D. Compliance with Safety and Emission Control Requirements
    18  
E. Compliance with Consumer Protection Statutes, Rules and Regulations
    19  
F. Insurance Requirements
    19  
IV. Dealer’s Service and Parts Organization
    19  
A. Organization and Standards
    19  
B. Service Equipment and Special Tools
    20  
1 smart USA Special Tools
    20  
2 smart USA Service Equipment
    20  
C. Parts Stocking and Service Levels
    20  
D. After Hours Delivery
    20  
E. Assistance Provided by smart USA Distributor
    21  
1 Service Manuals and Materials
    21  
2 Field Personnel Assistance
    21  
F. Evaluation of Dealer’s Service and Parts Performance
    21  
G. Additional Facilities or Locations
    21  

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smart USA Distributor LLC
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Passenger Car Dealer Agreement
Table of Contents

          DEALER AGREEMENT (CONTINUED)   PAGE  
V. Customer Satisfaction Responsibilities
    22  
A. Dealer’s Customer Satisfaction Obligations
    22  
1 Dealer’s Customer Satisfaction Plan
    22  
2 Employee Training
    22  
3 Customer Assistance Response System
    22  
B. Evaluation of Dealer’s Customer Satisfaction Performance
    22  
VI. Dealership Facilities and Identification
    22  
A. Location and Facilities
    22  
B. Changes and Additions
    23  
C. Dealer’s Operating Hours
    23  
D. Corporate Identity
    23  
E. Evaluation and Dealership Facilities
    23  
F. Ownership and Use of smart Marks and smart USA Marks
    24  
1 Validity and Exclusive Ownership of smart Marks
    24  
2 Use by Dealer
    24  
3 Discontinuance of Use
    24  
4 Enforcement
    25  
VII. Warranties
    25  
VIII. Capital, Credit, Records and Uniform Systems
    25  
A. Net Working Capital
    25  
B. Flooring and Lines of Credit
    25  
C. Payment Terms
    26  
D. Uniform Accounting System
    26  
E. Records Maintenance
    26  
F. Examination of Dealership Accounts and Records
    26  
G. Taxes
    27  
H. Confidentiality
    27  
I. smart USA Dealer Communications System and Proprietary Manufacturer Systems
    27  
J. Sales Reporting
    27  

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smart USA Distributor LLC
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Passenger Car Dealer Agreement
Table of Contents

          DEALER AGREEMENT (CONTINUED)   PAGE  
IX. Transfers
    27  
A. Sale of Assets or Ownership Interest
    27  
B. Right of First Refusal or Option To Purchase
    28  
1 Rights Granted
    28  
2 Exercise of smart USA Distributor’s Rights
    29  
3 Right of First Refusal
    29  
4 Option to Purchase
    29  
5 Dealer’s Obligations
    30  
X. Succession Rights Upon Death or Incapacity
    30  
A. Succession to Ownership After Death of Owner
    30  
B. Incapacity of Owner
    31  
C. Nomination of Successor Prior to Death or Incapacity of Owner
    31  
XI. Termination
    32  
A. Voluntary Termination by Dealer
    32  
B. Termination For Cause
    32  
1 Immediate Termination
    32  
2 Termination Upon Sixty Days Notice
    34  
3 Termination for Failure of Performance
    34  
4 Termination Upon Death or Incapacity
    35  
C. Termination Upon Termination of Distributorship
    35  
D. Termination for Failure of smart USA Distributor to be Licensed
    35  
E. Termination Upon offering to Enter into a New or Amended Passenger Car Dealer
Agreement
    35  
F. Notice of Termination
    35  
G. Continuance of Business Relations
    36  
H. Repurchase Provisions
    36  
1 Distributor’s Obligations
    36  
2 Dealer’s Responsibilities
    36  
3 Payment by Distributor
    37  
XII. Defense and Indemnification
    38  
A. Defense and Indemnification By Distributor
    38  
B. Defense and Indemnification By Dealer
    39  
C. Conditional Defense and/or Indemnification
    39  
D. The Effect of Subsequent Developments
    40  
E. Time to Respond and Responsibilities of the Parties
    40  

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smart USA Distributor LLC
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Passenger Car Dealer Agreement
Table of Contents

          DEALER AGREEMENT (CONTINUED)   PAGE  
XIII. Notice of Breach or Failure to Act in Good Faith
    40  
XIV. General Provisions
    41  
A. Notices
    41  
B. No Implied Waivers
    41  
C. Sole Agreement of the Parties
    41  
D. Dealer Not an Agent or Representative
    41  
E. Assignment of Rights or Delegations of Duties
    41  
F. No Franchise Fee
    41  
G. Benefit
    42  
H. Michigan Law
    42  
XV. Definitions
    42  
XVI. Additional Provisions
    43  

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(SMART LOGO) [c96591c9659101.gif]
smart USA DISTRIBUTOR LLC
smart USA Passenger Car Dealer Agreement
This PASSENGER CAR DEALER AGREEMENT is effective as of the day last set forth
below by and between smart USA DISTRIBUTOR LLC (“Distributor”) and the natural
person or entity identified as “Dealer” in the Final Paragraph of this
Agreement.
smart USA STATEMENT OF COMMITMENT
This smart USA Passenger Car Dealer Agreement and all addendums hereto
(collectively, the “Agreement”) state the commitment of Distributor and Dealer
to each other as well as their relationship to the owners of smart USA Passenger
Car Products.
Distributor, the exclusive distributor of smart USA Passenger Car Products in
the United States of America and Puerto Rico, brings to this relationship the
peerless reputation and image of Daimler AG (“DAG”). DAG has produced
automobiles longer than any other manufacturer in the world. It has never let
sheer numbers of products, or the requirement of transportation alone, become
the yardstick for the design of its products. Its devoted craftsmen have built,
and continue to build, the finest automobiles in the world.
smart USA Passenger Car dealers are community leaders whose reputations,
integrity and expertise are essential to the sales and servicing of smart USA
Passenger Cars. They must have well located places of business with outstanding
sales, service and parts facilities; they must be staffed by courteous and well
trained personnel who are dedicated to serving smart USA customers during the
acquisition and ownership experience; and they must be focused on attaining the
collective long term goals reflected herein as well as their own individual
goals.
smart USA owners are loyal, devoted and proud; their minds are open to new
ideas; they are environmentally concerned and forward-looking; but they are also
demanding towards the factory as far as the product is concerned and towards the
dealer as to how it is sold and serviced. DAG, Distributor, and Dealer are
committed to meeting and, where possible, exceeding those high expectations.
By executing this Agreement, and pursuant to its terms, Distributor and its
smart USA passenger car dealers dedicate themselves jointly to serving and
satisfying the past, present and future owners of smart USA Passenger Car
Products.
A. APPOINTMENT OF DEALER
Distributor hereby appoints Dealer and grants it the non-exclusive right to buy
and resell smart USA Passenger Car Products. Dealer accepts such appointment and
understands that its appointment as a Dealer (i) does not grant it an exclusive
right to sell smart USA Passenger Car Products in its Area of Responsibility
(AOR) or in any other geographic area, and (ii) does not grant it any right to
buy or resell vehicles or other products that are not smart USA Passenger Car
Products.

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B. TERM
This Agreement shall have a term commencing on its effective date continuing
until the date set forth in the Final Paragraph.
C. ADDITIONAL PROVISIONS
The accompanying smart USA Passenger Car Dealer Agreement Standard Provisions,
Retail Capacity Addendum, Dealer Operating Covenant and Standards Addendum,
Dealer Area of Responsibility Addendum, Dealer Improvement Addendum (if
applicable), other facility addenda (if applicable) as identified in
Paragraph E, and Communications Guidelines and Graphic Standards (if applicable)
are hereby incorporated into and made a part of this Agreement. The data
requirements reflected in the Retail Capacity Addendum, Dealer Operating
Covenant and Standards Requirements Addendum, and Dealer Area of Responsibility
Addendum are periodically updated with the current related addendum displayed
electronically on a website accessible via Distributor’s satellite communication
system. Dealer further agrees to be bound by and comply with the Warranty
Manual, Dealership Facility Planning & Corporate Identification Manual and all
other manuals, bulletins, instructions and directives issued to or which may
issued to Dealer by Distributor during the term of this agreement.
D. DEALER OWNERSHIP
This is a personal service agreement. Distributor is entering into the Agreement
in reliance upon the personal qualifications, reputation, integrity and
expertise of Owners and upon their representation that they are committed to
achieving the purposes and goals of this Agreement. Dealer agrees that there
will be no change in the identity of Owner or in Dealer’s ownership, name,
identity, business organization or structure without the prior written consent
of Distributor, which consent shall not be unreasonably withheld. If Dealer is a
corporation, limited liability company or any other entity, Dealer agrees to
notify Distributor in writing of any change in the identity of its officers,
directors, managing member, general partner or managing partner, as the case may
be.
E. DEALER FACILITIES
Dealer agrees that the Dealership Facilities shall satisfy all applicable
provisions of this Agreement, including the facility, space, appearance, layout,
equipment and corporate identification requirements in the Retail Capacity
Addendum, and Dealership Facility Planning & Corporate Identification Manual.
Unless otherwise provided in the Retail Capacity Addendum, Distributor hereby
approves the location (s) of the Dealership Facilities identified in the Final
Paragraph for the exclusive purpose of: (i) a showroom and sales facility for
smart USA Passenger Cars; (ii) a service, and parts facility for smart USA
Passenger Cars; (iii) facilities for display and sale of pre-owned smart USA
vehicles; and (iv) if applicable, other facilities for such other purposes(s) as
may be identified in the Final Paragraph. Additional facilities will operate
pursuant to the terms of the smart USA Passenger Car Dealer Agreement herein and
the following Dealer Agreement Addenda if applicable: Service Center Addendum,
Pre-Owned & Service Center Addendum, and Service Annex Addendum. Dealer shall
not move, relocate or change the designated usage or function of the Approved
Locations(s) or any of the Dealership Facilities without the prior written
consent of Distributor. In particular, Dealer shall not add sales, service or
parts operations for any other line of vehicles to the Dealership Facilities or
at the Approved Location(s) without the prior written consent of the
Distributor.

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F. MODIFICATION OF AGREEMENT
No waiver, modification or change of any of the terms of this Agreement or
change or erasure of any printed part of this Agreement or addition to it
(except filling of blank spaces and lines) will be valid or binding on
Distributor unless approved in writing by the President of Distributor.
G. EXECUTION OF AGREEMENT
This Agreement shall not become effective until signed by a duly authorized
officer of Dealer, if a corporation or limited liability Company, or by one of
the general partners of Dealer, if a partnership, or by the named individual if
a sole proprietorship, and countersigned by the President of Distributor.
H. MUTUAL RELEASE
Each party hereby releases the other from any and all claims and causes of
action that it may have against the other for money damages arising from any
event occurring up to and including the effective date of this Agreement, except
for any accounts payable by one party to the other reflected on the smart USA
Consolidated Statement or adjustments to any prior payment, credit or other
benefit arising from any audit or other examination conducted by Distributor
with respect thereto. This mutual release does not extend to claims that either
party does not know or reasonably suspect to exist in its favor as of the
effective date of this Agreement or that arise under Section XII of the Standard
Provisions to this Agreement.
I. CERTIFICATION
By their signatures on the following page, the parties certify that they have
read and understand the Agreement, including all of the additional provisions
incorporated herein, and agree to be bound by and comply with all of its terms
and conditions.

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J. FINAL PARAGRAPH
Dealer is EXAMPLE COPY, incorporated or formed under the laws of the State of
EXAMPLE STATE doing business as (‘EXAMPLE COPY). Dealer is located in the City
of EXAMPLE CITY which is in the State of EXAMPLE.
The Owners of Dealership (including all shareholders, general and limited
partners, members and other owners) are as follows:

      Name: EXAMPLE   60%     % interest

The Dealer Operator of Dealer is as follows:
Name: EXAMPLE
Showroom and Sales Facility for smart USA Passenger Cars located at:

         
Address: EXAMPLE
       
City:        EXAMPLE
  State: EXAMPLE   Zip: EXAMPLE

Service and Parts Facility for smart USA Passenger Cars located at:

         
Address: EXAMPLE
       
City:        EXAMPLE
  State: EXAMPLE   Zip: EXAMPLE

Facilities for the display and sale of pre-owned smart USA Vehicles located at:

         
Address: EXAMPLE
       
City:        EXAMPLE
  State: EXAMPLE   Zip: EXAMPLE

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the XXh day of XXXXXXXX, 20XX at smart center EXAMPLE — EXAMPLE CITY, EXAMPLE
STATE XXXXX. This Agreement shall have a term commencing on its effective date
and continuing until XXXXXXXX XX, 20XX.

                      Dealer:       smart USA Distributor LLC    
 
                   
By:
          By:        
 
 
 
Dealer Signature          
 
XXXXX XXXXXXX, President    
 
                   
Name:
          By:        
 
 
 
Print Name          
 
XXXXX XXXXXXX, Vice President    
 
                   
Title:
                   
 
 
 
               
 
                   
Attested by:
                   
 
 
 
               

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smart USA DISTRIBUTOR LLC
smart USA PASSENGER CAR DEALER AGREEMENT
STANDARD PROVISIONS

I.  
ACQUISITION, DELIVERY AND INVENTORY OF smart USA PASSENGER CAR PRODUCTS

  A.  
PRICES AND TERMS OF SALE

Distributor shall offer to sell to Dealer and Dealer shall have the right to
purchase from Distributor smart USA Passenger Car Products in accordance with
the provisions of this Agreement and the prices and other terms of sale that
Distributor shall establish and revise from time to time. Such revised prices or
terms shall apply to any smart USA Passenger Car Product not invoiced to Dealer
by Distributor at the time the notice of such changes is given to Dealer (in the
case of smart USA Passenger Cars), or upon issuance of a new or modified parts
prices list or through change notices, letters, bulletins or revision sheets (in
the case of Genuine smart USA Passenger Car Parts and Accessories), or at such
other times as may be designated electronically or in writing by Distributor.

  B.  
AVAILABILITY AND ALLOCATION OF PRODUCTS

Distributor will allocate smart USA Passenger Car Products among its passenger
car dealers in a fair and equitable manner. Distributor will, upon Dealer’s
request, explain the considerations and method used to allocate smart USA
Passenger Car Products to Dealer.

  C.  
DELIVERY OF PRODUCTS

Distributor will ship smart USA Passenger Car Products to Dealer by whatever
mode of transportation, by whatever route, and from whatever point Distributor
may select. Dealer shall pay Distributor such charges as Distributor in its sole
discretion establishes for such transportation services.

  D.  
PASSAGE OF TITLE

Title to each smart USA Passenger Car Product shall pass from Distributor to
Dealer, or to the financial institution designated by Dealer, upon Distributor’s
receipt of payment for said Product and upon the earlier of delivery of said
Product to Dealer or to a carrier for transportation to Dealer.

  E.  
RISK OF DAMAGE OR LOSS

Dealer shall bear the risk of damage to or loss of smart USA Passenger Car
Products during transportation from the point of shipment; however, Distributor
will, if requested by Dealer assign any claims and rights to Dealer that
Distributor may have against the responsible carrier for damage to or loss of
smart USA Passenger Car during said transportation for and on behalf of Dealer.
To the extent required by law, Dealer shall notify the purchaser of a vehicle of
any damage sustained by such vehicle prior to sale.

  F.  
DELAY OR FAILURE OF DELIVERY

Distributor shall not be liable for delay or failure to deliver smart USA
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
Distributor, 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, acts of terrorism, embargoes, blockades, or delay or failure of DAG or
its affiliates to deliver smart USA Passenger Car Products.

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  G.  
DIVERSION AND STORAGE CHARGES

Dealer shall be responsible for and shall pay all charges for demurrage, storage
and other expense accruing after shipment to Dealer or to a carrier for
transportation to Dealer. If diversions of shipments are made upon Dealer’s
request or are made by Distributor as a result of Dealer’s failure or refusal to
accept shipments made pursuant to Dealer’s orders, Dealer shall pay all
additional charges and expenses incident to such diversions.

  H.  
SECURITY INTEREST

  1.  
Grant of Security Interest

As a security for the full payment of all sums from time to time owed by Dealer
to Distributor under this Agreement, whether such sums are now or hereafter
become due and owing, Dealer hereby grants to Distributor a security interest in
the following items for which Distributor has not received payment (collectively
referred to as “Collateral”):

  (i)  
All Genuine smart USA Passenger Car Products, and other related items delivered
by Distributor to Dealer 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 destruction of any Item of Inventory;
and all accounts and chattel paper of Dealer 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 Dealer relating thereto.

  2.  
Default in Payment

Dealer shall be in default of this Agreement if: (i) Dealer 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 Dealer; or (iii) a proceeding is commenced
by or against Dealer under any bankruptcy or insolvency or similar statute or
regulation or Dealer makes an assignment for the benefit of creditors or becomes
insolvent; and, in any such case, Distributor may declare all sums secured by
this Section I.H immediately due and payable and Distributor 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

Dealer shall, if requested by Distributor upon the occurrence of any default
under Section I.H.2, assemble the Collateral and make it available to
Distributor at a place or places designated by Distributor. Dealer also shall
pay all costs of Distributor, including without limitation, attorneys fees
incurred with respect to the enforcement of any of Distributor rights under this
Section I.H.

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  4.  
Recording and Further Assurances

Dealer shall provide any assistance necessary in the preparation of financing
statements and such other instruments or documents and take any other action as
Distributor may request in order to create or maintain the security interest
intended to be created by this Section I.H., or to enable Distributor 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

Dealer shall keep accurate records itemizing and describing the kind, type and
quantity of Inventory and shall furnish to Distributor within five (5) days of
receipt of Distributor’s request therefore, a current schedule of inventory in
form and substance satisfactory to Distributor (“Schedule of Inventory”), which
shall be true and accurate in all respects. A physical inventory shall be
conducted by Dealer no less than annually in connection with preparation of
year-end financial statements of Dealer and, at Distributor’s request, a report
of such inventory shall be promptly provided to Distributor.

  I.  
CHANGES OF DESIGN, SPECIFICATIONS OR OPTIONS

Distributor may change the design or specifications of any smart USA Passenger
Car Product or the options in any smart USA Passenger Car Product and shall be
under no obligation to provide notice of same or to make any similar change to
smart USA Passenger Car Products previously purchased by or shipped to Dealer.
No change shall be considered a model year change unless so specified by
Distributor.

  J.  
DISCONTINUANCE OF MANUFACTURE OR IMPORTATION

DAG and/or Distributor may discontinue the manufacture, importation or
distribution of all or part of any smart USA Passenger Car Product, whether
passenger car parts, options or accessories, including any model, series or body
style of any smart USA Passenger Car at any time without any obligation or
liability.

  K.  
MINIMUM VEHICLE INVENTORIES

Dealer agrees that it shall, at all times, maintain in showroom ready condition
at least the minimum inventory of smart USA Passenger Cars that may be
established by Distributor from time to time.

  L.  
PRODUCT MODIFICATIONS

Dealer agrees that it will not install aftermarket accessories, equipment, or
make any modifications to smart USA Passenger Cars that may impair or adversely
affect their safety, emissions, structural integrity, performance or original
vehicle warranty applicability.

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II.  
DEALER’S MARKETING AND SALES OF smart USA PASSENGER CAR PRODUCTS

  A.  
DEALER’S GENERAL RESPONSIBILITIES

Dealer recognizes that customer satisfaction and the successful promotion and
sale of smart USA Passenger Car Products are significantly dependent on Dealer’s
advertising and sales promotion activities. Therefore, Dealer at all times
shall:

  1.  
Actively and effectively promote and sell new and used smart USA Passenger Car
Products to customers located within its Area of Responsibility:
    2.  
Advertise and merchandise smart USA Passenger Car Products, and use current
smart USA 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
Distributor, and, at Dealer’s expense, have such personnel as are appropriate
attend all training courses prescribed by Distributor;
    4.  
Comply with the Communications Guidelines and Graphic Standards, maintain a high
standard of ethics in advertising, promoting and selling smart USA Passenger Car
Products, and avoid engaging in any misrepresentation or unfair or deceptive
practices. Dealer shall discontinue any advertising the Distributor considers
injurious to Distributor’s or DAG’s business or reputation or to the smart Marks
or smart USA Marks, or that are likely to be violative of applicable laws or
regulations; and
    5.  
Accurately represent to customers the total selling price of smart USA Passenger
Car Products. Dealer agrees to explain to customers of smart USA Passenger Car
Products the items that make up the total selling price and to give the
customers itemized invoices and all other information required by law. Dealer
understands and hereby acknowledges that it may sell smart USA Passenger Car
Products at whatever price Dealer desires, but not in excess of its MSRP
established by Distributor and communicated to Dealer by Distributor in writing
and/or electronically.

  B.  
EXPORT POLICY

Dealer is authorized to sell smart USA Passenger Cars only to customers residing
in the United States of America and Puerto Rico. Dealer agrees that it will not
sell smart USA Passenger Cars for resale or use outside the United States of
America and Puerto Rico. Dealer agrees to be bound by and comply with any export
policy established by Distributor.

  C.  
smart USA DEALER ASSOCIATION

Distributor considers participation by smart USA Passenger Car dealers in smart
USA Passenger Car Dealer Advertising Associations to be a fundamental part of an
overall marketing strategy for their businesses and smart USA Passenger Car
Products. Distributor urges Dealer to cooperate in the establishment of such an
association and to fund its fair share of advertising and merchandising programs
undertaken by the association.

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  D.  
PRE-OWNED VEHICLES

Dealer agrees to display and sell pre-owned smart USA vehicles distributed only
by Distributor at the Approved Location(s). Dealer shall participate in programs
as specified by Distributor for the sale of such vehicles, and shall maintain
the minimum reasonable inventory established by Distributor from time to time
for such operations. Dealer shall conduct its pre-owned smart USA vehicle
operations in conformance with all standards set forth in this Agreement.

  E.  
DEALER MARKET AREA

Distributor will assign to Dealer a geographic area consisting of a collection
of zip codes or census tracts that is called an Area of Responsibilities
(“AOR”). The AOR is a tool used by Distributor to evaluate Dealer’s performance
of its primary obligations hereunder. Dealer agrees that it has no right or
interest in any AOR, including rights of exclusivity, and Dealer acknowledges
that the Distributor reserves the right to appoint additional smart USA Dealers,
whether located near Dealer’s location or elsewhere, as the Distributor in its
sole discretion deems necessary or appropriate and that Distributor may change
or alter Dealer’s AOR at any time. If a decision is made by Distributor to
change or alter Dealer’s AOR, Distributor will provide Dealer no less than
thirty (30) days written notice of such decision. Distributor may, directly or
indirectly, offer and sell smart USA Passenger Car Products in Dealer’s AOR to
the following:

  1.  
Governmental or Municipal Authorities
    2.  
Certain Multi-national Fleet customers of DAG or a DAG group company
    3.  
Customers who refuse to purchase from Dealer

  F.  
EVALUATION OF DEALER’S MARKETING AND SALES PERFORMANCE

Distributor will periodically evaluate Dealer’s sales and marketing performance
under this Agreement. Dealer’s evaluation will be based on such reasonable
criteria as Distributor may establish, including without limitation:
(i) Dealer’s reasonable sales objectives that may be established by Distributor;
(ii) Dealer’s sales of smart USA Passenger Cars as a percentage of registrations
of smart USA Passenger Cars or Competitive Vehicles in Dealer’s AOR; (iii) the
registrations of smart USA Passenger Cars as a percentage of registrations of
Competitive Vehicles in Dealer’s AOR; (iv) Dealer’s sales or registrations of
smart USA Passenger Cars as compared to sales or registrations of smart USA
Passenger Cards by authorized smart USA passenger car dealers in other areas,
including but not limited to the metropolitan area, market and/or region in
which Dealer is located; and (v) Dealer’s performance in building and
maintaining consumer satisfaction with Dealer and smart USA Passenger Car
Products. Distributor will review such evaluations with Dealer, and Dealer shall
take prompt corrective action if required to improve its performance.

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III.  
DEALER’S SERVICE OBLIGATIONS

  A.  
CUSTOMER SERVICE STANDARDS

Dealer and Distributor agree that customer satisfaction and the future growth of
their respective businesses is substantially dependent upon the ability of
owners of smart USA Passenger Cars to obtain high-quality servicing from Dealer.
Therefore, Dealer agrees to:

  1.  
Provide prompt, efficient and courteous service of the highest quality for all
smart USA Passenger Cars, regardless of where purchased and whether or not under
warranty.
    2.  
Provide prompt, efficient and courteous service of the highest quality for all
versions of smart passenger cars equal to smart USA Passenger Cars not intended
for sale in the United States of America and Puerto Rico (“Equal smart Passenger
Cars”), which are then under DAG warranty;
    3.  
Accurately diagnose and advise customers of the necessary repairs, and obtain
their consent prior to the initiation of such repairs;
    4.  
Professionally perform the necessary repairs; and
    5.  
Treat customers fairly at all times.

  B.  
DEALER’S SPECIFIC SERVICE OBLIGATIONS

  1.  
Pre-Delivery Inspections and Service

Dealer shall perform pre-delivery inspections and service on each smart USA
Passenger Car prior to sale and delivery thereof by Dealer in accordance with
the Warranty Manual.

  2.  
Warranty Repairs and Policy Service

Dealer shall promptly, courteously and efficiently perform (i) warranty repairs
on each smart USA Passenger Car Product and Equal smart Passenger Car that
qualifies for such repairs under the provisions of any warranty furnished
therewith by Distributor or DAG, and (ii) such other inspections, repairs or
corrections on smart USA Passenger Car Products as may be approved or authorized
by Distributor to be made at Distributor’s expense (hereinafter “policy
service”). Dealer shall perform such repairs and service on each such smart USA
Passenger Car Product and Equal smart Passenger Car as and when requested by
owner or user (or in the case of policy service when requested by Distributor),
without regard to where such smart USA Passenger Car was purchased and in
accordance with the Warranty Manual. Distributor agrees to compensate Dealer for
all warranty repairs and policy service, including labor, diagnosis and Genuine
smart USA Passenger Car Parts and Accessories, in accordance with procedures and
at rates to be established from time to time by Distributor. Unless otherwise
approved in advance by Distributor, Dealer shall use only genuine smart USA
Passenger Car Parts and Accessories when performing smart USA warranty repairs
and policy service. Warranty repairs and policy service are provided for the
benefit of customers, and Dealer agrees that the customer shall not be obligated
to pay any charges for such work or any other services for which Dealer is
reimbursed by Distributor, except as required by law.

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  3.  
Service / Recall Campaign Inspections and Corrections

Dealer agrees to perform service/retail campaign inspections and/or corrections
for owners or users of all smart USA Passenger Car Products and Equal smart
Passenger Cars that qualify for such inspections and/or corrections in
accordance with Distributor’s directives and the applicable procedures in the
Warranty Manual. Distributor agrees to reimburse Dealer for all replacement
parts and/or other materials required and used in connections with such work and
for labor according to such directives and the applicable provisions of the
Warranty Manual.

  4.  
Roadside Assistance Program

Dealer agrees to participate in the smart USA Roadside Assistance Program as
specified by Distributor.

  C.  
USE OF PARTS AND ACCESSORIES IN NON-WARRANTY SERVICE

Subject to the provisions of Sections I.L and III.B.2, Dealer has the right to
sell, install or use for making non-warranty repair products that are not
Genuine smart USA Passenger Car Parts and Accessories.

  1.  
Quality Standards

Dealer Acknowledges, however, that its customers expect that any parts or
accessories that Dealer sells, installs or uses in the sale, repair or servicing
of smart USA Passenger Cars are, or meet the high quality standards of, Genuine
smart USA Passenger Cars Parts and Accessories. Dealer agrees that in sales,
repairs or servicing where Dealer does not use genuine smart USA Passenger Car
Parts and Accessories, Dealer will utilize only such other parts or accessories
as:

  (i)  
Will not adversely affect the safety, structural integrity, performance,
mechanical operation or emissions of the smart USA Passenger Car being sold,
repaired or serviced; and
    (ii)  
Are equivalent in quality and design to Genuine smart USA Passenger Car Parts
and Accessories.

Dealer 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 Distributor

  2.  
Dealer’s Disclosures as to Use of and Warranties for Non-Genuine Parts and
Accessories

In order to avoid confusion and to minimize potential customer dissatisfaction,
in any non-warranty instance where Dealer sells, installs or uses non-Genuine
smart USA Passenger Car Parts or Accessories, Dealer shall disclose such fact to
the customer and shall advise the customer that the item is not included in
warranties furnished by Distributor or DAG. Such disclosure shall be written,
conspicuous and stated on the customer’s copy of the service or repair order or
sale document. In addition, Dealer will clearly explain to the customer the
extent of any warranty covering the parts or accessories involved and will
deliver a copy of the warranty to the customer.

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  D.  
COMPLIANCE WITH SAFETY AND EMISSION CONTROL REQUIREMENTS

Dealer agrees to comply and operate consistently with all applicable provisions
of 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 there under, and all other applicable federal, state, and local motor
vehicle safety and emission control statutes, rules, and regulations.
In event that the laws of the state in which Dealer is located require motor
vehicle dealers 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 DAG, then Dealer, prior to the sale of any smart USA
passenger car on which such installations are required, shall properly install
such devices or equipment on such smart USA Passenger Cars. Dealer shall comply
at its expense with state and local laws pertaining to the installation and
reporting of such equipment.
In the interest of motor vehicle safety and emission control, Distributor and
Dealer 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.
Dealer further agrees that should Distributor place any new smart USA Passenger
Cars in Dealer’s stock on retail hold pending the resolution of any federal or
state regulatory compliance issue, Distributor may, but shall not be required
to, elect to repurchase said retail held smart USA Passenger Cars. Should
Distributor so elect, Dealer agrees that it shall immediately sell the smart USA
Passenger Cars back to Distributor and withhold from retail sale all such smart
USA Passenger Cars still in its inventory at the time of said election as
Distributor may reasonably determine. In the event of such a repurchase, the
price to be paid by Distributor to Dealer shall be only the price paid by the
Dealer to Distributor for said smart USA Passenger Car. Distributor shall not be
obligated to reimburse any other costs to Dealer with respect to Dealer’s
purchase or Distributor’s repurchase of the smart USA Passenger Cars.
Distributor shall make payment to the Dealer immediately upon transfer of title
to the smart USA Passenger Car to Distributor. During the period from
Distributor’s repurchase of smart USA Passenger Cars until the smart USA
Passenger Cars resale to Dealer, the subject smart USA Passenger Cars shall
remain in the possession, custody and control of Dealer as bailee of
Distributor. Upon the occurrence of the resolution of the event requiring the
issuance of the retail hold and smart USA Passenger Car repurchase via the
issuance of appropriate repair instructions to the Dealer, Distributor shall
resell those smart USA Passenger Cars to Dealer and Dealer hereby agrees to
accept those smart USA Passenger Cars and further agrees that it will only
retail sell the smart USA Passenger Cars upon completion of the work by dealer
required to bring the smart USA Passenger Car into regulatory compliance.

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  E.  
COMPLIANCE WITH CONSUMER PROTECTION STATUTES, RULES AND REGULATIONS

Dealer agrees to comply and operate consistently with all applicable provisions
of consumer protection statutes, rules and regulation (hereinafter “consumer
protection laws”). Because certain customer complaints may impose liability upon
distributor under consumer protection laws, Dealer agrees to provide prompt
notice to Distributor to such complaints and take such other steps as
Distributor may require. Dealer also agrees to provide applicable required
customer notifications and disclosures as prescribed by consumer protection
laws. Dealer will do nothing to affect adversely Distributor’s rights under
consumer protection laws.

  F.  
INSURANCE REQUIREMENTS

Dealer shall maintain, at Dealer’s expense, adequate fire, general liability,
garage keepers liability, product liability, completed operations liability,
automobile liability, workers compensation and casualty insurance issued by an
insurer of recognized responsibility satisfactory to Distributor with coverage
for each occurrence and in an aggregate amount acceptable to Distributor, and
providing coverage for, among other things, death, bodily injury, property
damage and loss of income claims that might arise under the doctrine of products
liability and any other claims that might arise in connection with the
dealership operations. All insurance shall be placed with a reputable insurance
company having a Financial Size Category equal to or greater than 1x and
Policyholders Rating of ‘A+’ or ‘A-’ (Excellent) as assigned by Alfred M. Best
and Company, Inc., or any other insurance company approved by Distributor. Each
insurance policy shall list Distributor as an additional insured, shall provide
for thirty (30) day’s notice to Distributor prior to cancellation of such
insurance, and shall give Distributor the right to pay any premium due to avoid
cancellation of such insurance. The Dealer shall reimburse Distributor
immediately upon demand for any amount paid by Distributor on behalf of the
Dealer to maintain an insurance policy. Upon request, Dealer shall furnish
Distributor with certificates of insurance, proof of payment of premiums and
copies of insurance policies which evidence the Dealer’s compliance with the
requirements of this paragraph. Prior to the expiration of any existing policy,
the Dealer shall provide proof of the renewal of such policy or the acquisition
of a replacement or substitute policy. In addition, the Dealer shall provide
proof of insurance within five (5) days of any request by Distributor. Such
insurance shall be maintained in full force and effect at Dealer’s sole cost
throughout the term of this Agreement (and throughout any period during which
Distributor has permitted Dealer to continue any of the dealership operations
despite the expiration or termination of this Agreement).

IV.  
DEALER’S SERVICE AND PARTS ORGANIZATION

  A.  
ORGANIZATION AND STANDARDS

Dealer 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 Distributor. Dealer’s personnel
will meet the educational, management and technical training standards
reasonably established by Distributor and, at Dealer’s expense, will complete
all service, parts and customer satisfaction training courses prescribed by
Distributor.

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  B.  
SERVICE EQUIPMENT AND SPECIAL TOOLS

Anything herein to the contrary notwithstanding, if Distributor determines that
Dealer requires smart USA Special Tools and Service Equipment to service a model
of smart USA Passenger Cars, Dealer acknowledges that it has no right to
purchase such model from Distributor unless and until it has acquired all such
smart USA Special Tools and Service Equipment and completed all related training
courses prescribed by Distributor.

  1.  
smart USA Special Tools

Dealer agrees to purchase from Distributor all smart USA Special Tools as may be
reasonably required by Distributor and which are the minimum required for the
service, maintenance, and repair of smart USA Passenger Cars regardless of size.
Delivery of smart USA Special Tools by Distributor to Dealer will be automatic
and via a timetable determined appropriate by Distributor in its reasonable
discretion. Dealer may also acquire, at its own discretion, smart USA Special
Tools for larger scale repairs.
Dealer agrees to maintain all smart USA Special Tools in operational condition
and in calibration as designated by Distributor. Dealer will manage the
inventory of smart USA Special Tools using a storage and inventory management
system specified by Distributor. Dealer agrees that such inventory and/or
physical inventory documentation will be subject to periodic inspection by
Distributor.
In the event a dealer utilizes its own body shop, dealer agrees to acquire smart
USA Special Tools for use in the repair of smart USA Passenger Cars as specified
by the smart USA repair procedure. A Dealer that sublets body shop repairs shall
use its best efforts to monitor, advise, and ensure that these locations are
equipped with the necessary smart USA tools, repair instructions, and training
support to perform the repairs.

  2.  
smart USA Service Equipment

Dealer agrees to acquire approved Service Equipment designated as Basic
Equipment (“BE”) pursuant to the Distributor Standard Service Equipment Program.
Dealer agrees to maintain this equipment in operational condition and in
calibration as designated by Distributor. Dealer agrees that such equipment and
physical inventory documentation will be subject to periodic inspection by
Distributor.

  C.  
PARTS STOCKING AND SERVICE LEVELS

Dealer agrees to maintain its parts stock at minimum stocking and service levels
reasonably established by Distributor.

  D.  
AFTER-HOURS DELIVERY

Dealer agrees to provide Distributor, upon request, access to a secure area for
after-hours parts or passenger car delivery.

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  E.  
ASSISTANCE PROVIDED BY DISTRIBUTOR

  1.  
Service Manuals and Materials

Distributor agrees to make available to Dealer copies of such service manuals
and bulletins, publications, computer software and technical data as Distributor
shall deem to be necessary for the needs of Dealer’s service and parts
organization. Dealer shall be responsible for keeping such manuals and materials
current and available for consultation by its employees.

  2.  
Field Personnel Assistance

To assist Dealer in handling its responsibilities under this Agreement,
Distributor agrees to make available, as determined by Distributor in its
reasonable discretion, qualified field personnel who will, from time to time,
advise and counsel Dealer on service-related subjects determined by Distributor
in its reasonable discretion, including service policies, product and technical
adjustments, repair and replacement of product components, customer relations,
warranty administration, service and parts merchandising, and
personnel/management training.

  F.  
EVALUATION OF DEALER’S SERVICE AND PARTS PERFORMANCE

Distributor will periodically evaluate Dealer’s: (i) service performance in
areas such as dealer’s service of smart USA Passenger Cars as a percentage of
registrations of smart USA Passenger Cars in Dealer’s AOR, customer
satisfaction, warranty administration, service repairs, service management,
facilities, operating procedures and new vehicle pre-delivery service; and
(ii) parts purchases, sales, operations, facilities, tools and equipment.
Distributor will review such evaluations with Dealer, and Dealer shall take
prompt action to improve the service and parts performance to satisfactory
levels as Distributor may require. Such action shall, if requested by
Distributor, include an action plan by Dealer for improvement of service and
parts performance within a specific time period approved by Distributor,
including but not limited to the establishment of additional space, facilities
or locations for such operations.

  G.  
ADDITIONAL FACILITIES OR LOCATIONS

If, with Distributor’s prior written consent, Dealer establishes additional
facilities or locations for its service and parts operations, Dealer shall meet
the facilities, identification, organizational, equipment, parts stocking and
other standards reasonably established by Distributor from time to time for such
facilities or locations.

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V.  
CUSTOMER SATISFACTION RESPONSIBILITIES

Distributor and Dealer intend to conduct their respective businesses in a manner
with a goal of achieving the highest levels of customer satisfaction by
marketing the finest products and providing the best service in the automotive
industry.

  A.  
DEALER’S CUSTOMER SATISFACTION OBLIGATIONS

Dealer will be responsible for satisfying smart USA customers in all matters
except those that are directly related to product design and manufacturing.
Dealer will take all reasonable steps to ensure that each customer is completely
satisfied with smart USA Passenger Car Products and the services and practices
of Dealer. Dealer will not engage in any practice or method of operation if its
nature or quality may impair the reputation of Distributor or smart USA
Passenger Car Products or DAG.

  1.  
Dealer’s Customer Satisfaction Plan

Upon Distributor’s request. Dealer shall provide a detailed plan of Dealer’s
customer satisfaction program to Distributor and shall implement such program on
a continuous basis. This plan shall include an ongoing system for emphasizing
customer satisfaction to all Dealers’ employees, for training Dealer employees
and for conveying to customers that Dealer is committed to the highest possible
level of customer satisfaction.

  2.  
Employee Training

Dealer agrees to participate and to have its employees participate, at Dealer’s
expense, in smart USA customer satisfaction training as required by Distributor.

  3.  
Customer Assistance Response System

Dealer agrees to implement a system approved by Distributor that will respond
immediately to requests for customer assistance from Distributor.

  B.  
EVALUATION OF DEALER’S CUSTOMER SATISFACTION PERFORMANCE

Distributor periodically will evaluate Dealer’s customer satisfaction
performance based on the following considerations and efforts by Dealer.

  1.  
Distributor will provide Dealer with Customer Relationship Index reports or such
other equivalent data as will permit Dealer to access its performance and
maintain the highest level of customer satisfaction. Dealer agrees to review
with its employees on a regular basis the results of the customer satisfaction
reports or other data it receives.

  2.  
Dealer shall continuously develop and implement specific action plans to improve
its customer satisfaction performance and results. The plans are to be reviewed
with Distributor on a basis that Distributor deems appropriate. Dealer will
respond on a timely basis to requests from Distributor to take action on
unsatisfactory customer satisfaction matters and to commit necessary resources
to remedy deficiencies reasonably specified by Distributor.

VI.  
DEALERSHIP FACILITIES AND IDENTIFICATION

  A.  
LOCATION AND FACILITIES

Dealer shall provide Dealership Facilities at the Approved Location(s) that
(i) will enable Dealer 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 Retail Capacity Addendum, Dealership Facility Planning & Corporate
Identification Manual, and such other standards as Distributor may establish
from time to time. Dealer shall conduct its Dealership Operations only from the
Approved Location(s). If the Approved Location(s) is of more than one place of
business, Dealer shall use each such place of business only for the purposes
specified therefore in Paragraph E and the Final Paragraph of this Agreement
and, if applicable, in the Retail Capacity Addendum.

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  B.  
CHANGES AND ADDITIONS

Dealer shall not move, relocate or change the designated usage or function of
the Approved Location(s) or any of the Dealership Facilities, or substantially
modify any of the Dealership Facilities, nor shall Dealer 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 smart USA
Passenger Car Products or for the conduct of any other of the Dealership
Operations contemplated by this Agreement, without the prior written consent of
Distributor. Any changes in the Approved Location(s) or the Dealership
Facilities that may be agreed to by Distributor and Dealer may be reflected in a
new Agreement or in a new Retail Capacity Addendum.
In particular, Dealer acknowledges that the addition of sales, service or parts
operations for another line of vehicles to the Dealership Facilities or at the
Approved Location(s) could adversely affect Dealer’s sales, service and parts
performance with respect to smart USA Passenger Car Products. Accordingly, to
give Distributor an adequate opportunity to evaluate the effect of such a
proposed addition and to determine whether or not to consent thereto, Dealer
agrees to notify Distributor in writing at least sixty (60) days before Dealer
enters into any agreement or letter of intent with respect to the addition of
such sales, service or parts operations to the Dealership Facilities or at the
Approved Location(s).

  C.  
DEALER’S OPERATING HOURS

Dealer agrees to conduct Dealership Operations during all days and hours that
are customary and lawful for such operations in the community or locality in
which Dealer is located and in accordance with industry standards. In addition,
when necessary to accommodate customer needs, Dealer shall extend its operating
hours.

  D.  
CORPORATE IDENTITY

Subject to applicable governmental statutes, ordinances and regulations, Dealer
agrees to erect, display and maintain, at Approved Location(s) only and at
Dealer’s sole expense, such standard authorized product and service signs and
other corporate identity elements as specified in the Dealership Facility
Planning & Corporate Identification Manual or otherwise required by Distributor
from time to time.

  E.  
EVALUATION OF DEALERSHIP FACILITIES

Distributor will periodically evaluate the Dealership Facilities. In making such
evaluations, Distributor may consider, among other things: the actual building
and land provided by Dealer for the performance of its responsibilities under
this Agreement; compliance with Distributor’s current requirements for
Dealership Operations; the appearance, condition, layout and signage of the
Dealership Facilities; and such other factors as in Distributor’s opinion may
relate to Dealer’s performance of its responsibilities under this Agreement.
Distributor will discuss such evaluations with Dealer, and Dealer shall take
prompt action to comply with Distributor’s recommendations and minimum facility
standards.

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  F.  
OWNERSHIP AND USE OF smart MARKS AND smart USA MARKS

  1.  
Validity and Exclusive Ownership of smart Marks and smart USA Marks

Dealer acknowledges the validity and DAG’s exclusive ownership of the smart
Marks and smart USA Marks, and agrees not to contest the same during the term of
the Agreement or at any time thereafter. Dealer and Distributor agree to
cooperate with each other in preventing any acts of trademark infringement or
unfair competition with respect to any smart Mark or smart USA Mark, but DAG or
Distributor shall have sole control over all actions and legal proceedings to
redress infringement of or any unfair competition with respect to any smart Mark
or smart USA Mark.

  2.  
Use by Dealer

Distributor grants Dealer a non-exclusive license to use the smart Marks and
smart USA Marks subject to the terms and conditions of the Agreement and the
Dealership Facility Planning & Corporate Identification Manual. Dealer agrees
that it will use the smart Marks and smart USA Marks only in connection with the
sale and servicing of smart USA Passenger Car Products and only in such manner,
at such location, to such extent, and for such purposes as Distributor may
specify from time to time. Dealer shall promptly change or discontinue its use
of any smart Marks or smart USA Marks upon Distributor’s request. Dealer shall
not use the smart Marks or smart USA Marks as part of its corporate or business
name without Distributor’s prior written consent.

  3.  
Discontinuance of Use

Upon termination of this Agreement, Dealer agrees that it shall immediately:

  (i)  
Discontinue the use of the words smart or smart USA and the smart Marks and
smart USA 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 smart or smart USA or bearing any smart Mark or smart
USA Marks;

  (ii)  
Discontinue the use of the word smart, smart USA and “smart Center” or the smart
Marks or smart USA 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;

  (iii)  
Remove all product signs bearing said word(s) or smart Marks or smart USA Marks
at Dealer’s sole cost and expense;

  (iv)  
Cease representing itself as an authorized smart USA Passenger Car Dealer; and

  (v)  
Refrain from any action, including without limitation, any advertising, stating
or implying that it is authorized to sell or distribute smart USA Passenger Car
Products.

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  4.  
Enforcement

In the event Dealer fails to comply with the terms and conditions of this
Section VI.F, Distributor shall have the right, in its sole discretion, to
effect compliance through litigation and/or to enter upon Dealer’s premises and
remove, without liability, all such product signs and identification bearing the
word smart or smart USA or any smart Mark or smart USA Mark. Dealer agrees that
it shall reimburse Distributor for any costs and expenses incurred in such
litigation and/or removal, including reasonable attorney fees and expenses.

VII.  
WARRANTIES

The only warranties of Distributor or DAG applicable to smart USA Passenger Car
Products shall be the New Vehicle Limited Warranty or such other written
warranties that may be expressly furnished by Distributor or DAG. Except for its
express limited liability under such written warranties, Distributor and DAG do
not assume any additional warranty obligations or liabilities in connection with
any smart USA Passenger Car Products. Dealer is not authorized to assume any
additional obligations or liabilities on behalf of Distributor or DAG. Any such
additional obligations assumed by Dealer shall be the sole responsibility of
Dealer.
Dealer shall expressly incorporate in full and without modification any warranty
furnished by Distributor or DAG with a smart USA Passenger Car as a conspicuous
part of each order form or other contact for the sale of such a smart USA
Passenger Car by Dealer to any buyer. Dealer shall make available to the buyer
of each smart USA Passenger Car Product prior to purchase of such smart USA
Passenger Car Product, copies of such applicable warranties as maybe furnished
by Distributor or DAG. Dealer shall also provide to the buyer of each smart USA
Passenger Car Product, in full and without modification, any owner’s manual,
warranty booklet or other owner information which Distributor or DAG may provide
to Dealer for delivery with such smart USA Product. Dealer agrees to abide by
and implement in all other respects Distributor’s warranty procedures then in
effect.

VII.  
CAPITAL, CREDIT, RECORDS AND UNIFORM SYSTEMS

  A.  
NET WORKING CAPITAL

Dealer agrees to establish and maintain actual net working capital in an amount
not less than the minimum net working capital specified by Distributor.
Distributor will have the right to modify the amount of net working capital
required, and Dealer agrees promptly to establish and maintain the required
amount.

  B.  
FLOORING AND LINES OF CREDIT

Dealer 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 Distributor to enable Dealer to perform its obligations pursuant
to this Agreement.
Distributor may increase the required amounts of flooring or lines of credit,
and Dealer agrees promptly to establish and maintain the increased amount.
Subject to the foregoing obligations, Dealer 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.

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  C.  
PAYMENT TERMS

All monies or accounts due Dealer from Distributor will be considered net of
Dealer’s indebtedness to Distributor. Distributor may deduct or offset any
amounts due or to become due from Dealer to Distributor, or any amounts held by
Distributor, from or against any sums or accounts due or to become due from
Dealer to Distributor. Payments by Dealer to Distributor shall be made in such a
manner as prescribed by Distributor and shall be applied against Dealer’s
indebtedness in accordance with Distributor’s policies and practices. If Dealer
disputes any deduction or offset imposed by Distributor pursuant to this
Section VII.C, it shall provide written notice of such dispute to Distributor
within ninety (90) days of the date on which Distributor imposed such deduction
or offset. If Dealer fails to provide such written notice to Distributor within
that 90-day period, it shall be deemed to have waived any right that it may have
to challenge such deduction or offset before any court, administrative agency or
governmental body.

  D.  
UNIFORM ACCOUNTING SYSTEM

Dealer agrees to maintain its financial books and record in accordance with the
smart USA Accounting Requirements, as amended from time to time by Distributor.
In addition, Dealer shall furnish to Distributor 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 Dealer’s business.
Dealer shall promptly furnish to Distributor 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 Dealer to
Distributor via Distributor’s electronic communications network and in such
format and at such times as prescribed by Distributor. If requested by
Distributor, Dealer shall furnish to Distributor an audited annual financial
statement.

  E.  
RECORDS MAINTENANCE

Dealer agrees to keep complete, accurate and current records regarding its sale,
leasing and servicing of smart USA Car Products for a minimum of seven
(7) years, exclusive of any retention period required by any government entity.
Dealer shall prepare, keep current and retain records in support of requests for
reimbursement for warranty and policy work performed by Dealer in accordance
with the Warranty Manual.

  F.  
EXAMINATION OF DEALERSHIP ACCOUNTS AND RECORDS

Distributor shall have the right at all reasonable times and during regular
business hours to inspect the Dealership Facilities and to examine, audit and
reproduce all records, accounts and supporting data relating to all dealership
operations for any line of vehicles conducted in the Dealership Facilities or at
the Approved Location(s), including without limitation, sales reporting, service
and repair of smart USA Passenger Car Products by Dealer.

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  G.  
TAXES

Dealer 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 purchases or sale of smart USA Passenger Car Products by Dealer, and shall
maintain accurate records of the same.

  H.  
CONFIDENTIALITY

Distributor agrees that it shall not provide any data or documents submitted to
it by Dealer to any third party, other than DAG, unless authorized by Dealer,
required by law, or required to generate composite or comparative data for
analytic purposes. Dealer agrees to keep confidential and not to disclose,
directly or indirectly, any information that Distributor designates as
confidential. In addition, Dealer agrees to comply with all applicable laws
relating to the handling, security, and sharing of lead and customer data
provided by Distributor or DAG.

  I.  
smart USA COMMUNICATIONS SYSTEM AND PROPRIETARY MANUFACTURER SYSTEMS

Distributor has established the smart USA Dealer Communications System (“DCS”)
to retrieve information from and disseminate information to Dealer. The DCS
collects parts, warranty and financial data from Dealer, and provides access to
various reports, data bases and administrative messages to Dealer. Dealer shall
utilize the DCS to provide such information to Distributor as Distributor shall
specify from time to time. Dealer shall acquire, install and maintain at its
expense the necessary equipment and systems compatible with the DCS, as well as
other proprietary manufacturer systems, which are deemed necessary by
Distributor and DAG to transact business and serve customers in the most
efficient manner.

  J.  
SALES REPORTING

Dealer agrees to accurately report to Distributor, with such relevant
information as Distributor may reasonably require, the delivery of each smart
USA Passenger Car and pre-owned smart USA vehicle to an ultimate consumer, and
to furnish Distributor with such other reports as Distributor may reasonable
require in accordance with Distributor’s Ultimate Consumer RDR Provision or such
other sales reporting requirements (i.e. reporting of sales, customer traffic,
and customer order banks) as Distributor may establish from time to time. All
new car vehicles must be reported no later than 48 hours after delivery.

IX.  
TRANSFERS

  A.  
SALE OF ASSETS OR OWNERSHIP INTEREST

This is a personal service agreement that Distributor has entered into in
reliance upon personal qualifications, reputation, integrity, expertise and
commitment of Owners and Dealer Operator. For this reason, Dealer agrees to
obtain Distributor’s prior written consent to any proposed sale or transfer of
Dealer’s principal assets or any ownership interest of Owner, which consent
shall not be unreasonably withheld.
Distributor shall not be obligated to execute a new Agreement with a proposed
transferee of such assets or ownership interest unless Dealer first makes
arrangements acceptable to Distributor to satisfy any outstanding indebtedness
to Distributor.

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  B.  
RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE

  1.  
Rights Granted

If a proposal to sell Dealer’s principle assets to transfer the majority
ownership interest in Dealer is submitted by Dealer to Distributor, or in the
event of the death of the majority Owner of Dealer, Distributor has the right of
first refusal or option to purchase such assets or ownership interest, including
any leasehold interest or reality. Distributor’s exercise of its right or option
under this Section IX.B supersedes Dealer’s right to transfer its interest in,
or ownership of, the dealership. Distributor’s right or option may be assigned
by it to any third party and Distributor hereby guarantees the full payment to
Dealer of the purchase price assigned to such assignee. Distributor may disclose
the terms of any pending buy/sell agreement and any other relevant dealership
performance information to any potential assignee. Distributor’s rights under
this section IX.B will be binding on and enforceable against any assignee or
successor in interest of Dealer or purchaser of Dealer’s assets. In the event
the proposed sale of assets or transfer in majority interest (“Proposed Sale”)
includes assets or interests that are not related to Dealer’s smart franchise,
the right of first refusal shall apply only to portions of the Proposed Sale
that relates to the smart franchise. If the buy/sell agreement does not
specifically reference the portion of the purchase price of the Proposed Sale
that relates to the smart franchise then Distributor shall reasonably determine
the purchase price of the smart related portion of the Proposed Sale. In the
event of a transfer of majority ownership interest in a dealership entity which
holds both smart and non-smart related assets and liabilities, Dealer shall
transfer all non-smart related assets and liabilities from the dealership entity
prior to the closing of the transaction so that at the closing Distributor or
its assignee is acquiring the ownership interest of an entity that holds only
smart related assets and liabilities.
Anything herein to the contrary notwithstanding, Distributor shall not have a
right of first refusal or option to purchase Dealer’s principle assets or the
majority interest in Dealer 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
Distributor in qualifying owners of smart USA Passenger Car dealers. If the
proposed transferee fails to meet such criteria due to insufficient personal
qualifications or expertise, Distributor may, in its sole discretion, approve
the transfer subject to the proposed transferee’s successful completion of such
training as Distributor may require. If the proposed transferee fails to
complete such training successfully or otherwise fails to meet the criteria then
currently used by Distributor in qualifying such owners within the time period
prescribed by Distributor, Distributor may thereafter exercise its right of
first refusal or option to purchase under this section IX.B.

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  2.  
Exercise of Distributor’s Rights

Distributor shall have sixty (60) days from the following events within which to
exercise its option to purchase or right of first refusal: (i) Distributor’s
receipt of all data and documentation customarily required by it to evaluate a
proposed transfer of ownership; (ii) Distributor’s receipt of notice from Dealer
of the death of the majority Owner of Dealer, or (iii) Distributor’s disapproval
of any application submitted by Owner’s heirs pursuant to Section X.
Distributor’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 Dealer has entered into a bona fide written buy/sell agreement for its
dealership business or assets, Distributor’s right under this Section IX.B is a
right of first refusal, enabling Distributor to assume the buyer’s rights and
obligations under such buy/sell agreement, and to cancel this Agreement and all
rights granted Dealer. Upon Distributor’s request, Dealer agrees to provide
other documents relating to the proposed transfer and any other information
which Distributor deems appropriate, including, but not limited to, those
reflecting other agreements or understandings between the parties to the
buy/sell agreement. If Dealer 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 Dealer withdraws its
proposal in writing within ten (10) days following Dealer’s receipt of
Distributor’s notice exercising its right of first refusal, such right shall be
null and void.

  4.  
Option to Purchase

In the event of the death of the majority Owner of if Dealer submits a proposal
which Distributor determines is not bona fide or in good faith, Distributor has
the option to purchase the principal assets of Dealer utilized in Dealership
Operations, including real estate and leasehold interest, and to cancel this
Agreement and the rights granted Dealer hereunder. The purchase price of the
dealership assets will be determined by good faith negotiations between the
parties.

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  5.  
Dealer’s Obligations

Upon Distributor’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, Dealer 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 of recording, and Dealer shall deliver complete possession of the
property and deed at the time of closing. Dealer shall also furnish to
Distributor all copies of any easements, licenses, or other documents affecting
the property or Dealership Operations and shall assign any permits or license
that are necessary or desirable for the use of or appurtenant to the property of
the conduct of such operations. Dealer also agrees to execute and deliver to
Distributor instruments satisfactory to Distributor conveying title to all
personal property, including leasehold interests, involved in the transfer or
sale to Distributor. If any personal property is subject to any lien or charge
of any kind, Dealer agrees to procure the discharge and satisfaction thereof
prior to the closing of the sale of such property to the Distributor.

X.  
SUCCESSION RIGHTS UPON DEATH OR INCAPACITY

  A.  
SUCCESSION TO OWNERSHIP AFTER DEATH OF OWNER

In the event that an Owner dies and his or her interest in Dealer passes
directly to any person or persons (“Heirs”) who wish to succeed to Owner’s
interest, then Owner’s legal representative must notify Distributor 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 Dealer
Operator for Distributor’s approval. The effect of such notice from Owner’s
legal representative will be to suspend any notice of termination provided for
in Section X.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 Dealer Operator to submit an application and to provide
all personal and financial information that Distributor may reasonably and
customarily require in connection with its review of such applications. All
requested information must be provided promptly to Distributor and in no case
later than thirty (30) days after receipt of such request from Owner’s legal
representative. Distributor 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 Distributor in qualifying owners
and/or dealer operators of smart USA passenger car dealers, and (ii) either
approve or disapprove the application(s). If all requested information is not
received by Distributor within thirty (30) days of Owner’s legal
representative’s request, Distributor shall have no obligation to review and
approve or disapprove such application(s). If Distributor approves the
application(s), it shall offer to enter into a new smart USA Passenger Car
Dealer Agreement with Owner’s Heir(s) in the form then currently in use, subject
to such additional conditions and for such term as Distributor deems
appropriate.

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In the event that Distributor does not approve the designated Heir(s) or
designated candidate for Dealer 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 Dealer Operator fails to
timely provide the required information, Distributor may reinstate or issue a
notice of termination. This Section X.A. is subject to, and shall not be deemed
to waive, Distributor’s right to exercise its option to purchase as set forth in
Section IX.
If Distributor has notified Dealer that it does not plan to continue to have a
smart USA passenger car dealer in Dealer’s AOR, Distributor shall have no
obligation to execute a new smart USA Passenger Car Dealer 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 Distributor’s opinion, adversely affects an Owner’s
ability to meet his or her obligations under this Agreement. Distributor may
terminate this Agreement when an incapacitated Owner also is the Dealer Operator
identified herein.
Prior to the effective date of any notice of termination, an incapacitated Owner
who is also the Dealer Operator, or his or her legal representative, may propose
a new candidate for the position of Dealer Operator. Such proposal shall be in
writing and shall suspend any pending notice of termination until Distributor
advises Dealer of its approval or disapproval of the new candidate. Upon receipt
of such notice, Distributor and Dealer 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 Dealer’s stock may nominate a candidate to assume
ownership and/or position of Dealer Operator of the dealership upon his or her
death or incapacity.
As soon as practicable after such nomination, Distributor will request such
personal financial information from the nominated Owner and/or Dealer Operator
candidate as it reasonably and customarily may require in evaluating such
candidates. Distributor shall apply criteria then currently used by Distributor
in qualifying owners and/or dealer operators of smart USA passenger car dealers.
Upon receipt of all requested information, Distributor shall either approve or
disapprove such candidate. If 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 Distributor in qualifying such candidates. If
Distributor does not initially qualify the candidate, Distributor 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 Distributor has previously qualified
said candidate.

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XI.  
TERMINATION

  A.  
VOLUNTARY TERMINATION BY DEALER

Dealer shall have the right to terminate this Agreement at any time by sending
notice of such termination to smart USA, by certified mail, return receipt
requested, telegram, or overnight mail service at least sixty (60) days in
advance of the effective date thereof.

  B.  
TERMINATION FOR CAUSE

  1.  
Immediate Termination

Dealer and Distributor agree that the following conduct is within Dealer’s
control and is so contrary to the goals, purposes and objectives of this
Agreement as to warrant its immediate termination. Accordingly, Dealer agrees
that if it engages in any of the following types of conduct, Distributor shall
have the right to terminate this Agreement immediately:

  (i)  
Any attempted or actual sale, transfer or assignment by Dealer of this Agreement
or any of the rights granted Dealer hereunder, or any attempted or actual
transfer, assignment or delegation by Dealer of any of the responsibilities
assumed by it under this Agreement, without prior written consent of
Distributor;

  (ii)  
Subject to the provisions of Section IX, a change by operation of law or
otherwise in the direct or indirect ownership of Dealer, whether voluntary of
involuntary, from that set forth in the Final Paragraph of this Agreement,
except as expressly permitted herein, without the prior written consent of
Distributor;

  (iii)  
Removal, resignation, withdrawal or elimination from Dealer for any reason of
the Dealer Operator; provided, however, Distributor shall give Dealer a
reasonable period of time within which to replace such person with a Dealer
Operator satisfactory to Distributor;

  (iv)  
The failure of Dealer to conduct all Dealership Operations required by this
Agreement during and for not less than the customary and lawful hours of 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 Dealer,
such as strikes, civil war, riots, fires, floods, earthquakes, or other acts of
God;

  (v)  
Any undertaking by Dealer to conduct, directly or indirectly, any of the
Dealership Operations at a location or facility other than those specified in
Paragraph E and the Final Paragraph of this Agreement for that Dealership
Operation;

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  (vi)  
Insolvency of Dealer; voluntary institution by Dealer of any proceeding under
the federal bankruptcy laws or under any state insolvency law; institution
against dealer 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 office having
similar powers for Dealer or Dealer’s business, provided such appointment is not
vacated within thirty (30) days of the date of such appointment; execution by
Dealer 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 Dealer necessary for
the performance of Dealer’s responsibilities under this Agreement or to the
operation or ownership of Dealer, which is not within thirty (30) days from the
date of such levy vacated or removed by payment or bonding;

  (vii)  
Any material misrepresentation by Dealer or any person named in the Final
Paragraph of this Agreement as to any fact relied on by Distributor in entering
into, amending or continuing with this Agreement, including without limitation
any representation concerning the ownership, management, or capitalization of
Dealer;

  (viii)  
The conviction in a court of original jurisdiction of Dealer or Owner of a crime
affecting the Dealership Operations or of any felony, or any willful failure to
Dealer to comply with the provisions of any laws, ordinances, rules,
regulations, or orders relating to the conduct of Dealership Operations;

  (ix)  
The failure of Dealer to obtain or maintain any license, permit or authorization
necessary for the conduct by Dealer of Dealership Operations pursuant to this
Agreement, or the suspension or revocation of such license, permit or
authorization.

  1A.  
Submission by Dealer to Distributor 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 Distributor, whether or
not Dealer offers or makes restitution;

  (iii)  
False financial information;

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  (iv)  
False sales reporting data; or

  (v)  
Any false report of statement relating to pre-delivery inspection, testing,
warranties, service, repair or maintenance required to the performed by Dealer;
or

  2.  
Termination Upon Sixty Days of Notice

The following conduct violates the terms and conditions of this Agreement and,
if Dealer engages in such conduct, Distributor shall have the right to terminate
this Agreement upon sixty (60) days notice if Dealer fails to cure such conduct
within the sixty-day period provided in such notice:

  (i)  
Failure of Dealer to pay Distributor for any smart USA Passenger Car Products;

  (ii)  
Failure of Dealer to establish or maintain the required net working capital or
adequate flooring and lines of credit;

  (iii)  
Any dispute, disagreement or controversy among managers, officers or Owners of
Dealer that, in the reasonable opinion of Distributor, adversely affects the
ownership, operation, management, business, reputation or interests of Dealer or
Distributor;

  (iv)  
Impairment of the reputation or financial standing of Dealer subsequent to the
execution of this Agreement;

  (v)  
Refusal to permit Distributor to examine or audit Dealer’s accounting records as
provided herein upon receipt by Dealer from Distributor of written notice
requesting such permission or information;

  (vi)  
Failure by Dealer to timely furnish accurate sales or financial information and
related supporting data; or

  (vii)  
Breach or violation by Dealer of any other term or provision of this Agreement.

  3.  
Termination for Failure of Performance

If, upon evaluation of Dealer’s performance pursuant to Sections II.F, IV.F, V.B
or VI.E herein, Distributor concludes that Dealer has failed to perform
adequately its marketing and sales, service or customer satisfaction
responsibilities or to provide adequate dealership facilities, Distributor shall
issue to Dealer a Dealer Improvement Addendum notifying it of such failure(s).
Distributor will endeavor to review promptly with Dealer the nature and extent
of such failure(s) and will grant Dealer one hundred eighty (180) days or such
other period as may be required by law to correct such failure(s). If Dealer
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, Distributor
may terminate this Agreement upon sixty (60) days notice or such other notice as
may be required by law.

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  4.  
Termination Upon Death or Incapacity

Subject to certain exceptions identified in Section X, Distributor may terminate
this Agreement in the event of the death or an Owner or upon in the incapacity
of any 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

Distributor may terminate this Agreement at any time by written notice to
Dealer, such termination to be effective thirty (30) days after receipt of
notice by Dealer unless otherwise mutually agreed in writing, if any licensing
or distribution agreement pursuant to which Distributor is distributor for smart
USA Passenger Car Products in the United States of America and Puerto Rico shall
terminate or be terminated.

  D.  
TERMINATION FOR FAILURE OF DISTRIBUTOR TO BE LICENSED

If Distributor fails to obtain or maintain any license, permit, or authorization
necessary for Distributor’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.

  E.  
TERMINATION UPON OFFERING TO ENTER INTO A NEW OR AMENDED PASSENGER CAR DEALER
AGREEMENT

Distributor may terminate this Agreement at any time on or after the expiration
of the period commencing on the effective date of this Agreement and ending
three (3) years thereafter by giving Dealer ninety (90) days prior notice
thereof and offering to enter into a new or amended form of Passenger Car Dealer
Agreement with Dealer in a form being offered generally to smart USA passenger
car dealers.

  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. Distributor shall state the grounds on which it relies in its
termination of Dealer, and shall have the right to amend such notice as
appropriate. Distributor’s failure to refer to additional grounds for
termination shall not constitute a waver of its right later to rely upon such
grounds.

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  G.  
CONTINUANCE OF BUSINESS RELATIONS

Upon receipt of any notice of termination, Dealer agrees to conduct itself and
its operation until the effective date of termination in a manner that will not
injure the reputation or goodwill of the smart Marks or smart USA Marks or
Distributor or DAG.

  H.  
REPURCHASE PROVISIONS

  1.  
Distributor’s Obligations

Upon the termination of this Agreement, Distributor shall have the right to
cancel any and all shipments of smart USA Passenger Car Products scheduled for
delivery to Dealer, and Distributor shall repurchase from Dealer the following:

  (i)  
New, unused, unmodified and undamaged smart USA Passenger Cars then unsold in
Dealer’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 Dealer, less all prior refunds or other allowances made by
Distributor to Dealer with respect thereto.

  (ii)  
New, unused and undamaged Genuine smart USA Passenger Car Parts and Accessories
then unsold in Dealer’s inventory that are in good and saleable condition and
are listed in the current parts catalog. The prices for such parts and
accessories shall be the prices last established by Distributor for the sale of
the identical parts or accessories to smart USA passenger car dealers in the
area in which Dealer is located less any discounts, allowances or prior refunds
provided by Distributor to Dealers.

  (iii)  
Special service tools recommended by Distributor for then owned smart USA
Passenger Cars. The prices for such special service tools will be the price paid
by Dealer less depreciation calculated on a straight-line basis over a
three-year period, or such other price as the parties may negotiate.

  (iv)  
Signs that Distributor has recommended for identification of Dealer. The price
of such signs shall be the price paid by Dealer less appropriate depreciation
calculated on a straight-line basis over a three-year period, or such other
price as the parties may negotiate.

  2.  
Dealer’s Responsibilities

Distributor’s obligations to repurchase the items set forth in this Section XI.H
are contingent upon Dealer fulfilling all of the following obligations:

  (i)  
Within thirty (30) days after the effective date of termination of this
Agreement, Dealer shall deliver or mail to Distributor a detailed inventory of
all items referred to in this Section XI.H that it requests Distributor
repurchase and shall certify that such list is true and accurate.

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  (ii)  
Dealer shall be entitled to request repurchase of only those items that it
purchased from Distributor, unless Distributor agrees otherwise.

  (iii)  
Dealer will deliver to Distributor at Distributor’s place of business and at
Dealer’s expense all smart USA Passenger Car Products and special service tools
to be repurchased by Distributor. If Dealer fails to do so, Distributor may
transfer such items and deduct the cost therefore from the repurchase price.

  (iv)  
Dealer will execute and deliver to Distributor instruments satisfactory to
Distributor conveying good and marketable title to the aforesaid items to
Distributor. If such items are subject to any lien or charge of any kind, Dealer
will procure the discharge in satisfaction thereof prior to their repurchase by
Distributor. Dealer will comply with the requirements of any state or federal
laws that relate to the repurchase, including bulk sales or transfer laws.

  (v)  
Dealer will provide to Distributor in writing the names and addresses of all of
its smart USA Passenger Car service customers.

  (vi)  
Dealer will deliver to Distributor at Distributor’s place of business or to a
third party designated by the Distributor and at the Dealer’s expense any and
all sales instruction manuals, promotional materials, technical or service
literature, advertising and other printed materials, computer hardware and
software or other media relating to smart USA Passenger Car Products then in
Dealer’s possession and that were acquired or obtained by Dealer from
Distributor.

  (vii)  
Dealer will remove, at its own expense, all signage and corporate identification
from Dealer’s Approved Location(s), including all smart Marks and smart USA
Marks, before it is eligible for payment hereunder.

  3.  
Payment by Distributor

Distributor will pay Dealer for such items as Dealer may request be repurchased
and that quantity hereunder as soon as practicable upon Dealer’s compliance with
all of the obligations set forth herein and upon computation of any outstanding
indebtedness of Dealer to Distributor.
Distributor shall have the right to offset from any amounts to Dealer hereunder
the total sum of Dealer’s outstanding indebtedness to Distributor.
If Dealer disagrees with Distributor’s valuation of any item herein, and Dealer
and Distributor have not resolved their disagreement within ninety (90) days of
the effective date of termination of this Agreement, Distributor shall pay to
Dealer the amount of which it reasonably believes Dealer is entitled.

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XII.  
DEFENSE AND INDEMNIFICATION

  A.  
DEFENSE AND INDEMNIFICATION BY DISTRIBUTOR

Distributor agrees to assume the defense of Dealer and to indemnify and hold
Dealer harmless in any lawsuit naming Dealer as a defendant and involving any
smart USA 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 smart USA Passenger Car Product, provided that the defect could
not reasonably have been discovered by Dealer during the pre-delivery
inspections and service of the smart USA Passenger Car Product or otherwise;

  2.  
Any misrepresentation or misleading statement or unfair or deceptive trade
practice of Distributor; or

  3.  
Any substantial damage to a smart USA Passenger Car Product purchased by Dealer
from Distributor that was repaired by Distributor and where Dealer had not been
notified of such damage in writing prior to the delivery of the subject
passenger car, part or accessory to a retail customer; and

Provided:

  4.  
That Dealer delivers to Distributor, in a manner to be designated by
Distributor, 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 XII.D below);

  5.  
That the complaint does not involve allegations of dealer misconduct, including
but not limited to, improper or unsatisfactory service or repair,
misrepresentation, or any claim of Dealer’s unfair or deceptive trade practice;

  6.  
That the smart USA Passenger Car Product which is the subject of the lawsuit was
not altered by or for Dealer;

  7.  
That Dealer agrees to cooperate fully in the defense of such action as
Distributor may reasonably require; and

  8.  
That Dealer agrees that Distributor may offset any recovery on Dealer’s behalf
against any indemnification that may be required hereunder.

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  B.  
DEFENSE AND INDEMNIFICATION BY DEALER

Dealer agrees to assume the defense of Distributor or DAG and to indemnify and
hold them harmless in any lawsuit naming Distributor or DAG as a defendant when
the lawsuit involves allegations of

  1.  
Dealer’s failure to comply, in whole or in part, with any obligation assumed by
Dealer under this Agreement;

  2.  
Dealer’s negligent or improper inspection, preparation, repair or servicing of a
new or used smart USA Passenger Car Product, or such other motor vehicles or
equipment as may be sold or serviced by Dealer;

  3.  
Dealer’s alleged breach of any contract or warranty other than that provided by
Distributor or DAG;

  4.  
Dealer’s alleged misleading statements, misrepresentations, or deceptive or
unfair trade practices;

  5.  
Any modification or alteration made by or on behalf of Dealer to a smart USA
Passenger Car Product, except those made pursuant to the express written
instruction or with the express written approval of Distributor;

  6.  
Any change in the employment status or in the terms or conditions of employment
of any officer, employee, or agent of Dealer or of any Owner or the Dealer
Operator, including but not limited to claims for breach of employment contact,
wrongful termination or discharge, tortuous interference with contract or
economic advantage, and similar claims; and

Provided:

  7.  
That Distributor delivers to Dealer, 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 XII.D
below);

  8.  
That Distributor agrees to cooperate fully in the defense of such action such as
Dealer may reasonably require; and

  9.  
That the complaint does not involve allegations of liability premised upon
Distributor’s separate conduct or omissions.

  C.  
CONDITIONAL DEFENSE AND/OR INDEMNIFICATION

In agreeing to defend and/or indemnify each other, Dealer and Distributor may
make their agreement conditional on the continued existence of that 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 Dealer or Distributor to refuse such request.

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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 to
withdrawal.

  D.  
THE EFFECT OF SUBSEQUENT DEVELOPMENTS

In the event that subsequent developments in a case make clear that the
allegations which initially precluded 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 to the other party and the non-tendering party
shall be required to agree to such subsequent request for a defense and/or
indemnification where the non-tendering party would not be unduly prejudiced by
such delay.

  E.  
TIME TO RESPOND AND RESPONSIBILITIES OF THE PARTIES

Dealer and Distributor 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 for such request, the requesting party
shall take all steps necessary, including obtaining counsel, to protect its own
interest in the lawsuit until Dealer or Distributor assumes the requested
defense and/or indemnification. In the event that Dealer and Distributor 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 XII.D above, shall have the
obligations to reimburse the requesting party for all reasonable costs and
expenses including actual attorneys’ fees, incurred prior to such assumption.

XIII.  
NOTICE OF BREACH OR FAILURE TO ACT IN GOOD FAITH

In the interest of maintaining a harmonious relationship between Distributor and
Dealer, if the Dealer believes that Distributor has breached this Agreement or
has failed to act in good faith toward Dealer, Dealer shall report its belief
and the bases therefore promptly, in writing, to the President of Distributor.
For the purposes of this Section XII, the term “good faith” shall mean
Distributor and its representatives acting in a fair, honest, commercially
reasonable, equitable, and impartial manner toward Dealer. It is the intention
of the parties that the purpose of the requirement of such notification by
Dealer is to afford Distributor sufficient opportunity to consider the claim of
Dealer and if, in the sole determination of Distributor, such claim is found to
be meritorious, to undertake such measures as may be necessary to correct the
condition of which Dealer complains.

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XIV.  
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.  
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 smart USA
Passenger Car Products, except as otherwise specifically provided for or
referred to in this Agreement. Dealer acknowledges that no representations or
statements other than those expressly set forth therein were made by Distributor
or any officer, employee, agent, or representative thereof, or were relied upon
by Dealer in entering into this Agreement.

  D.  
DEALER NOT AN AGENT OR REPRESENTATIVE

Dealer is an independent business. This Agreement does not constitute Dealer the
agent or legal representative of Distributor or DAG for any purposes whatsoever.
Dealer is not granted any express or implied right or authority to assume or
create any obligation on behalf of or in the name of Distributor or DAG or to
bind Distributor or DAG 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, by the
Dealer without the prior written consent of Distributor. Any attempted transfer,
assignment or sale without Distributor’s prior written consent will be void and
not binding upon Distributor.

  F.  
NO FRANCHISE FEE

Dealer warrants that it has paid no fee, nor has it provided any goods or
services in lieu of same, to Distributor in consideration of entering into this
Agreement. The sole consideration for Distributor’s entering into or continuing
this Agreement is Owner’s and Dealer Operator’s ability, integrity, assurance of
personal services, and expressed intention of deal fairly and equitably with
Distributor and the public.

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  G.  
BENEFIT

This Agreement is entered into by and between Distributor and Dealer 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.  
MICHIGAN LAW

This Agreement shall be deemed to have been entered into in the State of
Michigan, 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 Michigan, including, without limitation, its
statutes of limitations.

XV.  
DEFINITIONS

As used in this Agreement, the parties agree that the following terms shall be
defined exclusively as set forth below.

  A.  
DEALER: The natural person or entity that executes the Agreement and is
authorized by Distributor to sell and service smart USA Passenger Car Products
as defined herein.
    B.  
OWNER: The persons identified in Paragraph D and the Final Paragraph of this
Agreement.
    C.  
DEALER OPERATOR: The person identified in Paragraph D and the Final Paragraph of
this Agreement.
    D.  
DEALERSHIP FACILITIES: The buildings, improvements, fixtures and equipment
situated at the Approved Location(s) and identified in Paragraph E and the Final
Paragraph of this Agreement.
    E.  
APPROVED LOCATION(S): The location(s) and any facilities thereon designated in
Paragraph E and the Final Paragraph of this Agreement that Distributor has
approved for the Dealership Operation(s) specified therein.
    F.  
DEALERSHIP OPERATIONS: All dealer functions contemplated by this Agreement
including, without limitation, sale and servicing of smart USA Passenger Car
Products, use and display of smart Marks or smart USA Marks and smart USA
Passenger Car Products, rental and leasing of smart USA Passenger Car, sale of
pre-owned smart USA Vehicles, body shop work, financing or insurance services
and any other activities undertaken by Dealer in connection with smart USA
Passenger Car Products whether conducted directly or indirectly by Dealer.
    G.  
DAG: Daimler Aktiengesellschaft, a corporation of the Federal Republic of
Germany and the manufacturer of smart USA Passenger Cars, and any successor
thereto.

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  H.  
smart or smart USA MARKS: The various smart and smart USA trademarks, service
marks, names, logos, and designs that Dealer is authorized to use in the sale
and servicing of smart USA Passenger Car Products.
    I.  
smart USA PASSENGER CARS: All new smart USA passenger cars that Distributor is
authorized to sell to smart USA passenger car dealers in the United States of
America and Puerto Rico pursuant to a written distributor agreement between DAG
and Distributor, and that Distributor, in its sole discretion, sells to Dealer
for resale.
    J.  
GENUINE smart USA PASSENGER CAR PARTS AND ACCESSORIES: All smart USA passenger
car parts and accessories manufactured by or on behalf of Distributor or DAG and
such other parts and accessories specifically approve by DAG for use in
servicing smart USA Passenger Cars that Distributor sells to Dealer for resale.
    K.  
smart USA PASSENGER CAR PRODUCTS: All smart USA Passenger Cars and Genuine smart
USA Passenger Car Parts and Accessories that Distributor sells to Dealer for
resale.
    L.  
COMPETITIVE VEHICLES: Those new vehicles that are considered by Distributor to
be directly competitive with smart USA Passenger Cars.
    M.  
WARRANTY MANUAL: The smart USA Warranty Policies and Procedures Manual.

XVI.  
ADDITIONAL PROVISIONS

In consideration of Distributor’s agreement to appoint dealer as a smart USA
Passenger Car dealer, Dealer further agrees:
All terms and conditions in this Agreement inconsistent with the laws and rules
of the State in which Dealer’s smart USA dealership facilities specified in this
Agreement are located are of no force and effect.
If any provision herein contravenes the laws or regulations of any state or
other jurisdiction wherein this agreement is to be performed, or denies access
to the procedures, forums, or remedies provided for by such laws or regulations,
such provision shall be deemed to be modified to conform to such laws or
regulations, and all other terms and provisions shall remain in full force.

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