§ 40-20-120 — Repurchase obligations of supplier on cancellation or discontinuance of dealer agreement

(a) Whenever any dealer enters into a dealer agreement
with a supplier and either the supplier or the dealer desires to
cancel, not renew or otherwise discontinue the dealer agreement,
the supplier shall pay to the dealer or credit to the dealer's
account, if the dealer has outstanding any sums owing the
supplier, unless the dealer should desire to keep the equipment
or repair parts:
(i) A sum equal to one hundred percent (100%) of the
net equipment cost of all new, unsold, undamaged equipment, one
hundred percent (100%) of the net equipment cost of all unsold,
undamaged demonstrators, less a downward adjustment to reflect a
reasonable allowance for depreciation due to usage of the
demonstrators, which adjustment shall be based on published
industry rental rates to the extent such rates are available and
ninety-five percent (95%) of the current net parts prices on
new, unsold, undamaged repair parts that had previously been
purchased from the supplier and held by the dealer on the date
the dealer agreement terminates or expires. Demonstrators with
less than fifty (50) hours of use for machines with hour meters,
shall be considered new, unsold or undamaged equipment subject
to repurchase under this paragraph;
(ii) A sum equal to five percent (5%) of the current
net parts price of all repair parts returned to compensate the
dealer for the handling, packing and loading of the repair parts
for return to the supplier. The five percent (5%) shall not be
paid or credited to the dealer if the supplier elects to perform
the handling, packing and loading of the repair parts;
(iii) The fair market value of any specific data
processing hardware or software the supplier required the dealer
to acquire or purchase to satisfy the requirements of the
supplier, including computer equipment required and approved by
the supplier to communicate with the supplier. Fair market
value of property subject to repurchase pursuant to this
paragraph shall be deemed to be the acquisition cost, including
any shipping, handling and setup fees, less straight line
depreciation of the acquisition cost over three (3) years. If
the dealer purchased data processing hardware or software that
exceeded the supplier's minimum requirements, the acquisition
cost of the data processing hardware or software shall be deemed
to be the acquisition cost of hardware or software of similar
quality that did not exceed the minimum requirements of the
supplier;
(iv) A supplier shall repurchase specialized repair
tools at a price equal to seventy-five percent (75%) of the
total invoice amount charged by the supplier to the dealer.
(b) Upon the payment or allowance of credit to the
dealer's account of the sums required by this section, the title
to all inventory purchased hereunder shall pass to the supplier
making the payment and the supplier shall be entitled to the
possession of the inventory. All payments or allowances of
credit due dealers shall be paid or credited within ninety (90)
days after receipt by the supplier of property required to be
repurchased. Any payments or allowances of credit due dealers
that are not paid within the ninety (90) day period shall accrue
interest at the maximum rate allowed by law. The supplier may
withhold payments due under this subsection during the period of
time in which the dealer fails to comply with its contractual
obligations to remove any signage indicating the dealer is an
authorized dealer of the supplier.
(c) If any supplier refuses to repurchase any inventory
covered under the provisions of this chapter after cancellation,
nonrenewal or discontinuance of the dealer agreement, the
supplier shall be civilly liable to the dealer for one hundred
ten percent (110%) of the amount that would have been due for
the inventory if the supplier had timely complied with this
chapter, any freight charges paid by the dealer, interest
accrued and the dealer's actual costs of any court or
arbitration proceeding, including costs for attorney fees and
costs of arbitrators.
(d) The supplier and dealer shall each pay fifty percent
(50%) of the costs of freight, at truckload rates, to ship any
equipment or repair parts returned to the supplier pursuant to
this chapter.
(e) Notwithstanding any provision to the contrary in the
uniform commercial code adopted by this state, the dealer shall
retain a first and prior lien against all inventory returned by
the dealer to the supplier under the provisions of this chapter
until the dealer is paid all amounts owed by the supplier for
the repurchase of the inventory required under the provisions of
this chapter. The dealer's lien under this subsection shall
constitute a perfected security interest for a period of six (6)
years without the filing of a financing statement.
(f) The provisions of this section shall not be construed
to affect in any way any security interest which the supplier
may have in the inventory of the dealer, and any repurchase
hereunder shall not be subject to the provisions of the bulk
sales law or to the claims of any secured or unsecured creditors
of the supplier or any assignee of the supplier until the time
the dealer has received full payment or credit, as applicable.