MANAGMENT AGREEMENT
THIS MANAGEMENT AGREEMENT, made this 3rd day of March, 1997 by and between:
FIDELITY HOLDINGS, INC., a Nevada corporation having its principal office
located at 00-00 Xxx Xxxxxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxx Xxxx 00000
(hereinafter "FIDELITY")
AND
XXXXX XXXXXXX and XXXXXX XXXXXXX, adult individuals with primary business
offices located at 00-00 Xxxxxxxx Xxxxxxxxx, Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
(hereinafter jointly "MANAGERS")
WITNESSETH THAT:
WHEREAS, FIDELITY' s wholly-owned subsidiary, Major Acquisition Corp., has
contracted to acquire ownership of various automobile dealerships, including:
Major Chevrolet, Inc.; Xxxxx Xxxxx, Inc.; Major Subaru, Inc. ; and Major
Chrysler, Plymouth, Jeep, Eagle, Inc., subject to, inter alia, manufacturers'
approvals;
WHEREAS, FIDELITY will place its ownership of such dealerships into a new
division, under a newly-organized, wholly-owned subsidiary named "Major
Automotive Group, Inc.";
WHEREAS, the Management of FIDELITY has no experience in the management of
automobile dealerships or the purchasing, selling, financing, leasing, or
otherwise dealing in or with motor vehicles, but desires to maintain continuity
of the existing management of such dealerships by securing the managerial
services of MANAGERS, who have been the managers of such dealerships prior to
their acquisition by FIDELITY;
NOW, THEREFORE, intending to be legally bound, and in consideration of the
mutual promises and covenants contained herein, the parties agree as follows:
1. ENGAGEMENT. (a) For purposes of this Management Agreement, the acquired
automobile dealerships, including but not limited to, Major Chevrolet, Inc.,
Xxxxx Xxxxx, Inc., Major Subaru, Inc., and Major Chrysler, Plymouth, Jeep,
Eagle, Inc., motor vehicle
disabled or is otherwise unable to serve, resigns, or retires or otherwise
withdraws from the management hereunder, the other manager shall be the
successor manager. In the event that both MANAGERS die, become permanently
disabled or otherwise unable to serve, resign, or retire or otherwise withdraw
from the management hereunder, the successor manager(s) named or appointed in
any socalled "Successor Addendum" for each dealership shall become the
manager(s) for that dealership. If no successor manager(s) have been named or
appointed, FIDELITY shall name such successor manager(s) subject to obtaining
any required manufacturer approvals.
(c) In managing the operations, MANAGERS shall have the sole right to:
(i) Communicate with and make all decisions in connection with, all
manufacturers, wholesalers, distributors, and suppliers;
(ii) Establish, continue, maintain, replace, refinance, and utilize various
manufacturer, bank and financial institution lines of credit, floor plan
financing, purchase and lease financing, and other sources of credit used in the
division operations;
(iii) Obtain, continue, maintain, amend, and interpret all agreements,
franchises, licenses, and arrangements with manufacturers, franchisors, and
distributors of motor vehicles; and
(iv) Conduct day-to-day operations, including hiring and firing personnel,
setting salary and wage rates, setting commission rates, determining business
hours, setting and enforcing personnel policies, setting sales, leasing and
general business policies, establishing operating methods and systems, selecting
advertising agencies and media, approving customer credit, etc.
(d) MANAGERS shall not have any authority, in the absence of prior approval of
the Board of Directors of FIDELITY, to:
(i) Pledge the credit of FIDELITY;
(ii) Sell, pledge, hypothecate or dispose of any of the shares of any of the
dealerships; or
(iii) Acquire, contract to acquire, dispose of, contract to dispose of,
pledge, hypothecate, or otherwise deal in or
3
with the dealerships within the Major Automotive Group, Inc. division
or with outside dealerships desiring to become affiliated.
(e) In no event shall the management of the respective dealerships change
without the consent of the applicable manufacturer if such consent is required.
3. TERM. (a) The initial term of this Management Agreement shall commence
contemporaneously with the date of the Closing of the Plan and Agreement of
Reorganization between FIDELITY's wholly-owned subsidiary, Major Acquisition
Corp., and Xxxxx Xxxxxxx for the acquisition of the dealerships by FIDELITY and,
unless extended as provided below in (b) or (c), shall end on December 31, 2002.
(b) In the event that on December 31, 2002 FIDELITY, directly or indirectly,
retains ownership of the dealerships, this Management Agreement shall continue
upon the unilateral decision of the affected MANAGER or MANAGERS.
(c) Upon the mutual agreement of the parties, this Management Agreement may be
extended for such term as the parties may then determine, subject to such
amendments, if any, as the parties may then agree upon.
4. LICENSE(S) . Each of the dealerships has obtained such licenses and
regulatory authorizations as required by governmental agencies to engage in the
motor vehicle operations as presently conducted. MANAGERS shall conduct all
motor vehicle operations in strict accordance with the regulatory requirements
of such licensing agencies and shall maintain such licenses and/or
authorizations in good standing. MANAGERS shall obtain any licenses which may be
required now or hereafter, relating to operations as they may then be conducted,
and shall maintain all such licenses in good
5. FACTORY APPROVALS. MANAGERS shall communicate with the manufacturers of the
motor vehicles and their distributors and shall maintain all existing
relationships in good standing. MANAGERS shall obtain all approvals which may be
required from time to time from any such manufacturers or
4
