Exhibit 10.31
MANAGEMENT AGREEMENT
This Management Agreement (the "Agreement") is entered into effective as of
the 1st day of June, 1997, by and among CROSS-CONTINENT AUTO RETAILERS, INC., a
Delaware corporation ("C-CAR"); PERFORMANCE NISSAN, INC., an Oklahoma
corporation ("Performance Nissan"); PERFORMANCE DODGE, INC., an Oklahoma
corporation ("Performance Dodge"); and XXXXXX X. XXXX, XX. ("Xxxx").
RECITALS
A. Performance Nissan owns and operates a Nissan franchised automobile
dealership located at 0000 X.X. 00xx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxx 00000.
B. Performance Dodge owns and operates a Dodge franchised automobile
dealership located at 0000 X.X. 00xx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxx 00000.
C. The dealerships that are owned and operated by Performance Nissan and
Performance Dodge shall hereinafter be individually referred to as a
"Dealership" and collectively as the "Dealerships."
D. Performance Nissan and Performance Dodge desire for Rice to manage the
Dealerships, and Rice desires to manage the Dealerships, for the consideration
and upon the terms set forth in this Agreement.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, C-CAR, Performance Nissan, Performance Dodge, and Rice
agree as follows:
1. MANAGEMENT OF THE DEALERSHIPS. Performance Nissan and Performance
Dodge hereby engage Rice as an independent contractor to manage the Dealerships.
Rice shall assume management responsibilities of the Dealerships effective as
of June 1, 1997 (the "Effective Date").
2. TERM. The term of this Agreement shall begin on the Effective Date
and shall terminate (the "Termination Date") upon the earlier of (a) the final
closing of the transaction contemplated by that certain Stock Purchase Agreement
dated June 20, 1997, by and between Cross-Continent Auto Retailers, Inc. and
Benji Investments, Ltd. (the "Stock Purchase Agreement"), or (b) the termination
of the Stock Purchase Agreement.
3. CONDUCT OF THE BUSINESS OF THE DEALERSHIPS. Rice shall conduct the
Dealerships' business according to the ordinary and usual course of the
Dealerships' business reasonably consistent with past and current practices;
shall maintain and preserve the Dealerships' assets, properties, insurance
policies, and business relationships; and shall not allow the Dealerships to
engage in any practice, take any action, or enter into any transaction outside
of the ordinary course of business. C-CAR authorizes Xx. Xxxx to endorse aged
contracts in transit of Performance Nissan and Performance Dodge without
recourse, and with recourse with the prior written consent of C-CAR. Xx. Xxxx
is authorized to endorse (on behalf of Performance Nissan and Performance Dodge)
the contracts in transit of Performance Nissan and Performance Dodge (a) without
recourse, and (b) with recourse if Xx. Xxxx obtains C-CAR's prior written
consent.
4. MANAGEMENT FEE. As consideration for Rice managing the Dealerships
during the term of this Agreement, Rice shall be entitled to any net income
before income taxes ("Net Income") resulting from the business and operation of
the Dealerships during the term of this Agreement; provided that Rice shall be
liable for any net loss before income taxes ("Net Loss") resulting from the
business and operation of the Dealerships during the term of this Agreement.
Net Income and Net Loss shall be calculated (a) on a calendar month basis
(prorated for any partial calendar month), and (b) on a consolidated basis for
both Dealerships. It is understood and agreed that Performance Nissan and
Performance Dodge shall not pay Rice any Net Income for any month or partial
month nor shall Rice pay Performance Nissan and Performance Dodge for any Net
Loss for any month or partial month, until after the Termination Date. If the
final closing of the transaction contemplated by the Stock Purchase Agreement
does not occur, Performance Nissan and Performance Dodge shall pay Rice the
amount by which the Net Income made during the term of this Agreement exceeds
the Net Losses incurred during the term of this Agreement, or Rice shall pay
Performance Nissan and Performance Dodge the amount by which the Net Losses
incurred during the term of this Agreement exceed the Net Income made during the
term of this Agreement, within fifteen (15) days after the Stock Purchase
Agreement terminates.
5. C-CAR EXPENSES. Notwithstanding anything contained in this Agreement
to the contrary, the parties to this Agreement agree that none of the following
items shall be charged to Performance Nissan or Performance Dodge in determining
Net Income or Net Loss:
(a) any fee for C-CAR corporate overhead, including any C-CAR
management fees;
(b) any expenses for airplane use by C-CAR or any of its affiliates
(other than expenses incurred by Performance Nissan or
Performance Dodge);
(c) any travel or entertainment expense for C-CAR or any of its
affiliates (other than expenses incurred by Performance Nissan or
Performance Dodge);
(d) any depreciation or interest expense related to the real property
on which Performance Dodge is located;
(e) any interest expense related to the GMAC capital related loans;
(f) any expense related to the Xxxxxxxx UPS 72;
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(g) any legal or accounting expenses for C-CAR or any of its
affiliates (other than expenses incurred by Performance Nissan or
Performance Dodge);
(h) any expenses for insurance for C-CAR or any of its affiliates
(other than insurance expenses directly attributable to
Performance Nissan or Performance Dodge).
Notwithstanding anything contained in this Agreement to the contrary, the
parties to this Agreement agree that $21,114,89 per month (the lease payment)
shall be charged to Performance Dodge in determining Net Income or Net Loss.
6. LICENSES OF THE DEALERSHIPS. The Dealerships agree to allow Rice to
use the Dealerships' dealer numbers, dealer licenses, and dealer tags.
7. COOPERATION. Performance Nissan and Performance Dodge shall cause
the Dealerships to fully cooperate with Rice in connection with Rice's operation
of the Dealerships.
8. CORPORATE EXISTENCE OF THE DEALERSHIPS. C-CAR shall maintain the
existence of Performance Nissan and Performance Dodge in good standing in the
state of Oklahoma.
9. INDEMNIFICATION BY RICE. Rice shall indemnify, defend and hold
harmless C-CAR, Performance Nissan and Performance Dodge from and against all
claims, damages, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses, including reasonable attorneys' fees, arising out of, or
occasioned by, any act, omission or event occurring during the term of this
Agreement with respect to the operation, condition, or ownership of the
Dealerships, unless caused by the negligence or willful misconduct of C-CAR.
10. INDEMNIFICATION BY C-CAR. C-CAR shall indemnify, defend and hold
harmless Rice from and against all claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses, including reasonable
attorneys' fees, arising out of, or occasioned by, any act, omission, or event
occurring during the term of this Agreement with respect to the operation,
condition, or ownership of the Dealerships that is caused by the negligence or
willful misconduct of C-CAR.
11. ASSISTANCE BY C-CAR. C-CAR shall assist Xx. Xxxx in (a) collecting
on the contracts in transit of Performance Nissan and Performance Dodge that
were executed prior to the Effective Date, and (b) dealing with any insurance
company of Performance Nissan or Performance Dodge in order to obtain the
insurance company's defense of any claims made against Performance Dodge or
Performance Nissan.
12. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Oklahoma.
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(b) LITIGATION. If this Agreement or any term or provision hereof
becomes the subject of litigation, the prevailing party in such litigation shall
be entitled to recover from the non-prevailing party court costs and reasonable
attorneys' fees.
(c) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect to the transaction contemplated
herein and supersedes all prior agreements, arrangements and understandings,
whether written or oral, relating to the subject matter hereof.
(d) INVALIDITY. If any provision contained in this Agreement shall
for any reason be held to be invalid, illegal, or unenforceable in any respect,
such provision shall be deemed modified so as to constitute a provision
conforming as nearly as possible to such invalid, illegal, or unenforceable
provision while still remaining valid and enforceable; and the remaining terms
and provisions contained herein shall not be affected thereby.
(e) ASSIGNMENT. Rice shall not be allowed to assign this Agreement
and its duties hereunder without the prior written consent of Performance
Nissan, Performance Dodge, and C-CAR.
(f) AMENDMENT. This Agreement may not be amended by any oral
agreement or understanding, but only by an amendment in writing, executed by the
parties hereto.
(g) BINDING AGREEMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
(h) ACCOUNTING TERMS. The terms "cost of sales," "operating
expenses," "costs or expenses of operating," "net income before income taxes,"
and "net loss before income taxes," as used in this Agreement, shall have the
meanings given such terms under generally accepted accounting principles, except
as modified hereby. Only those income taxes which are the direct legal
obligation of the Dealerships resulting from operations are included in the
determination of "net income before income taxes" and "net loss before income
taxes".
(i) INSURANCE. Performance Nissan and Performance Dodge will name
Xx. Xxxx as additional named insured under all of its liability, casualty or any
other insurance policies.
PERFORMANCE NISSAN, INC.
By: /s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx, President
PERFORMANCE DODGE, INC.
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By: /s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx, President
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx, Chairman and
Chief Executive Officer
/s/ Xxxxxx X. Xxxx, Xx.
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XXXXXX X. XXXX, XX.
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