Exhibit 10.4
MANAGEMENT AGREEMENT
This Management Agreement (the "Agreement") is made and entered into as
of November 1, 1997, by and among Cross-Continent Auto Retailers, Inc., a
Delaware corporation, ("C-Car"), JRJ Investments, Inc., a Nevada corporation
(the "Company"), and the Xxxxxxxx Family Trust R-501, u/a/d October 23, 1985,
the sole stockholder of the Company (the "Seller").
RECITALS
A. The Company owns and operates a new automobile dealership known as
"Xxxxxxxx Motor Cars", located at 0000 Xxxxx Xxxxxxx Xxxxxxxxx, Xxx Xxxxx,
Xxxxxx, and a new automobile dealership known as "Xxxxxxxx BMW", located at
000 Xxxx Xxxx Xxxxx, Xxxxxxxxx, Xxxxxx, hereinafter individually referred to
as a "Dealership" and collectively as the "Dealerships."
B. C-Car, the Company and the Seller have entered into that certain
Amended and Restated Stock Purchase Agreement, dated as of November 1, 1997
(the "Purchase Agreement"). The Purchase Agreement provides for, subject to
the conditions stated therein, the sale by the Seller and the purchase by
C-Car of all of the issued and outstanding capital stock of the Company. The
Purchase Agreement further provides that at any time, at the discretion of
the Company, prior to the Closing (as defined in the Purchase Agreement), the
Company intends to distribute to the Seller certain assets of the Company
relating to the sale and servicing of new Jaguar automobiles (such assets are
described and defined in paragraph 20(d) of the Purchase Agreement as the
"Jaguar Assets").
C. Pending the satisfaction of certain conditions precedent to the
Closing, the Seller and the Company desire that C-Car manage the Dealerships,
and C-Car desires to manage the Dealerships, including, for such time as the
Company continues to own the Jaguar Assets, for the consideration and upon
the terms and conditions set forth in this Agreement.
AGREEMENT
In consideration of the mutual agreements set forth in this Agreement,
C-Car, the Company and the Seller agree as follows:
1. MANAGEMENT OF THE DEALERSHIPS. The Seller and the Company hereby
engage C-Car as an independent contractor to manage the Dealerships. C-Car
shall assume management responsibilities of the Dealerships effective
November 1, 1997 (the "Effective Date"). Subject to paragraph 3 of this
Agreement, C-Car shall be responsible for: (a) managing and supervising the
daily operations of the Dealerships, and (b) making all management and
operating decisions, including without limitation, decisions concerning sales
practices and inventory management.
2. TERM. The term of this Agreement shall begin on the Effective Date
and shall terminate on January 5, 1998, unless the Purchase Agreement is
earlier terminated in which case this
Agreement shall terminate at the same time as the Purchase Agreement (the
"Termination Date").
3. CONDUCT OF THE BUSINESS OF THE DEALERSHIPS. During the term of
this Agreement, C-Car shall manage the Dealerships in such manner as to
conduct their operations according to the ordinary and usual course of
business reasonably consistent with past and current practices, to maintain
and preserve their business organization, assets and properties, and vendor
and supplier relationships, and to retain the services of their employees,
agents, and independent contractors, and shall not, without the prior written
consent of Seller, cause the Dealerships to engage in any practice, take any
action, or enter into any transaction outside of the ordinary course of
business. Without limiting the generality of the foregoing, C-Car shall not
cause the Dealerships, without the prior written consent of the Seller, from
directly or indirectly taking any actions that would result in any of the
representations and warranties set forth in subparagraph 7(o) of the Purchase
Agreement to be untrue as of the Termination Date.
4. MANAGEMENT FEE. As consideration for C-Car managing the
Dealerships during the term of this Agreement, the Company shall pay C-Car a
fee in cash (the "Management Fee") in an amount equal to the monthly net
income, before depreciation, amortization, income taxes and other non-cash
charges, resulting from the business and operations of the Dealership.
Notwithstanding anything contained in the Agreement to the contrary: (i) any
income, costs or expenses that are not directly related to the operation of
the Dealerships, (ii) any deferred income, costs or expenses of operating the
Dealerships that were earned, accrued or incurred prior to the Effective Date
that were not included in the calculation of Net Worth Adjustments (as
defined in the Purchase Agreement), (iii) the net proceeds from the sale of
any Used Vehicle (as defined in the Purchase Agreement) that is omitted from
Net Worth as of the Deposit Date (as defined in the Purchase Agreement), and
(iv) any income, costs or expenses of operating the Dealerships that are
accrued or incurred after the Termination Date, shall be excluded from the
calculation of the Management Fee. The Management Fee for any partial month
shall be prorated. The Company shall pay C-Car the Management Fee for each
month or partial month during the term of this Agreement within fifteen (15)
days after the end of such month or partial month.
5. CONSULTING FEE. C-Car shall pay to Seller a monthly consulting fee
in the amount of $20,000 (the "Consulting Fee"). In addition, C-Car shall
allow the Company to continue Xxxxx X. Xxxxxxxx, Xx., and his eligible
dependents, on the Company's medical and health insurance policy. In
consideration of the payment of the Consulting Fee, the Seller shall cause
Xxxxx X. Xxxxxxxx, Xx. to make himself available at reasonable intervals and
for reasonable periods of time to assist, if requested, C-Car in the
performance of its duties hereunder. The consulting Fee shall be payable by
C-Car until the earlier of (i) the Company's distribution of the Jaguar
Assets to Seller, or Seller's designee (the "Distribution Date"), or (ii) the
Termination Date. The Consulting Fee for any partial month shall be
prorated. C-Car shall pay Seller the Consulting Fee for each month, or
partial month, up to the Distribution Date or the Termination Date within
fifteen (15) days after the end of such month or partial month.
6. JAGUAR ASSETS. C-Car agrees that: (i) at the discretion of the
Company, the Company
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has the absolute right, at any time, to distribute the Jaguar Assets to the
Seller, or Seller's designee, and (ii) if the Distribution Date occurs prior
to the Termination Date, it will fully cooperate with the Seller and the
Company in allowing the Jaguar Assets to be inventoried and distributed. The
Seller: (y) acknowledges that it has received $200,000 from C-Car as a
deposit for C-Car's performance of its obligations to fully cooperate with
the Seller and the Company in allowing the Jaguar Assets to be inventoried
and distributed (the "Jaguar Deposit") and (z) covenants and agrees that it
will repay, on the Distribution Date, to C-Car such portion of the Jaguar
Deposit, but not in excess of the Jaguar Deposit, that equals the Jaguar
Parts (as defined in subparagraph 20(d) of the Purchase Agreement), (that are
in returnable condition, undamaged, still in the original, resalable
merchandising package, in unbroken lots, listed for sale in the then current
dealer parts and accessories price schedule of Jaguar Cars or other supplier,
and were purchased directly from Jaguar Cars or other reliable suppliers)
owned by the Company at the close of business of the Dealerships on the
business day preceding the Distribution Date. The value of the Jaguar Parts
shall be determined in the manner provided in subparagraph 12(c)(iii) of the
Purchase Agreement. With respect to the New Jaguar Automobiles purchased by
the Company between the Effective Date and the Distribution Date, Seller
further covenants and agrees that on the Distribution Date, Seller will: (A)
pay to C-Car an amount equal to performed PDI at the Company's cost
(excluding any internal profit), options added at the Company's cost
(excluding any internal profit), and any freight and handling charges paid by
the Company ("Add Ons"), LESS any factory holdback rebate and any other
factory rebate or incentive, advertising credits and interest credits which
the Company may have received prior to the Distribution Date ("Deductions")
and (B) either pay in full or, with the consent of the lien holder(s) and the
release of the Company therefrom, assume the Company's floor plan liability
secured by liens on such New Jaguar Automobiles. If the Deductions exceed
the Add-Ons, Seller may deduct the amount thereof from the amount of the
Jaguar Deposit otherwise payable to C-Car. The Seller shall not be required
to pay any amount for the Jaguar Goodwill or the Jaguar Records (each as
defined in subparagraph 20(d) of the Purchase Agreement).
7. LICENSES OF THE DEALERSHIPS. C-Car's management and supervision of
the Dealerships shall be conducted utilizing the Company's dealer numbers,
dealer licenses and dealer tags; PROVIDED, HOWEVER, that Seller may continue
to utilize a reasonable number of dealer tags.
8. COOPERATION. Each of C-Car, the Company and the Seller mutually
agree to cooperate and use their respective reasonable good faith efforts to
enable the Dealerships to be managed and operated by C-Car in accordance with
the standards set forth in paragraph 3 above.
9. CORPORATE EXISTENCE OF THE COMPANY. The Company shall maintain its
corporate existence in good standing in the State of Nevada.
10. INDEMNIFICATION BY C-CAR. C-Car shall indemnify, defend and hold
the Company and its officers, directors, stockholders, employees, agents and
representatives harmless from and against any and all losses, damages,
claims, actions, suits, proceedings, liabilities, obligations, costs and
expenses, including reasonable attorneys' fees, arising our of, or based
upon, any breach of this Agreement, or otherwise caused, by C-Car during the
term of this Agreement with respect to the
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operation of the Dealerships.
11. INDEMNIFICATION BY THE COMPANY. The Seller and the Company shall
indemnify, defend, and hold C-Car and its officers, directors, stockholders,
employees, agents and representatives harmless from and against any and all
losses, damages, claims, actions, suits, proceedings, liabilities,
obligations, costs and expenses, including reasonable attorneys' fees,
arising out of, or based upon any act, omission, or event occurring: (a)
during the term of this Agreement with respect to the operation of the
Dealerships if caused by the negligence or willful misconduct of the Seller
or the Company, (b) during the term of this Agreement with respect to the
Dealerships other than matters related to the operation of the Dealerships,
(c) prior to the Effective Date with respect to the Dealerships, and (d)
after the Termination Date with respect to the Dealerships if the
transactions contemplated by the Purchase Agreement are not consummated.
12. AUTHORIZATION AND VALIDITY. Each of the Company and C-Car,
respectively, represent and warrant to the other that (i) it has the power
and authority to make, execute, deliver and perform its obligations under
this Agreement and all such action has been duly authorized by all necessary
proceedings on its part, and (ii) this Agreement has been duly and validly
executed and delivered by it and constitutes the valid and legally binding
obligations of it, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to the enforcement
of creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
13. ACCESS. C-Car shall permit the Seller and the Company, and their
respective representatives to have full access to, and to examine, at all
reasonable times and places, and in a manner so as not to interfere with the
normal business operations of the Dealerships, the books, records,
properties, assets, and operations of the Dealership.
14. GENERAL PROVISIONS.
(a) ENTIRE AGREEMENT. This Agreement contains and constitutes the entire
agreement between the parties regarding the subject matter hereof and
supersedes all prior agreements and understandings between the parties
relating to the subject matter of this Agreement. Other than as
referenced herein, there are no agreements, understandings,
restrictions, warranties or representations between the parties
relating to the subject matter hereof other than those set forth in
this Agreement. This Agreement is not intended to have any legal
effect whatsoever, or to be a legally binding agreement, or any
evidence thereof, until it has been signed by Seller, the Company,
and the Purchaser.
(b) FURTHER ACTIONS. From time to time, as and when requested by any
parties hereto, the other parties shall execute and deliver, or cause
to be executed and delivered, all such documents and instruments and
shall take, or cause to be taken, all such further
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or other actions as such other parties may reasonably deem necessary
or desirable to consummate the transactions contemplated by this
Agreement.
(c) AMENDMENT. This Agreement may not be amended, modified, or
terminated except by an instrument in writing signed by all parties
to this Agreement.
(d) CONSTRUCTION. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter gender thereof or
to the plurals of each, as the identity of the person or persons or
the context may require. The descriptive headings contained in this
Agreement are for reference purposes only and are not intended to
describe, interpret, define or limit the scope, extent or intent of
this Agreement or any provision contained in this Agreement.
(e) INVALIDITY. If any provision contained in this Agreement shall for
any reason be held to be invalid, illegal, void 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, void or unenforceable provision while still
remaining valid and enforceable; and the remaining terms or provisions
contained herein shall not be affected thereby.
(f) BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective heirs, administrators, executors, successors and permitted
assigns. Neither the Company or C-Car may assign its rights or
obligations under this Agreement without the written consent of the
other party. Any assignment in violation of this Agreement shall be
void.
(g) ATTORNEYS' FEES. In the event any party instigates litigation to
enforce or protect its rights under this Agreement, the party
prevailing in any such litigation shall be entitled, in addition to
all other relief, to reasonable attorneys' fees, out-of-pocket costs
and disbursements relating to such litigation.
(h) NOTICES. All notices and other communications hereunder shall be (i)
in writing, dated with the current date of such notice, and signed by
the party giving such notice, and (ii) mailed, postpaid, registered or
certified, return receipt requested, addressed to the party to be
notified, or delivered by personal delivery or by overnight courier.
Notice shall be deemed given when received by the party to be notified
or when the party to be notified refuses to accept delivery of the
notice. The initial addresses of the parties shall be as follows:
IF TO C-CAR:
Cross-Continent Auto Retailers, Inc.
0000 X. Xxxxxx
0
X.X. Xxx 000
Xxxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxx
(000) 000-0000
IF TO SELLER OR THE COMPANY:
Xxxxx X. Xxxxxxxx, Xx.
40 Innisbrook
Las Vegas, Nevada 89113
with a copy to:
Jones, Jones, Close & Xxxxx, Chartered
0000 Xxxxxx Xxxxxx Xxxxxxx, 0xx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
The parties hereto shall have the right from time to time to
change their respective addresses by not less than ten (10) days
prior written notice to the other parties.
(i) WAIVER. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or similar nature.
(j) GOVERNING LAW. This Agreement shall be construed, enforced, and
governed in accordance with the laws of the State of Nevada.
(k) MEDIATION AND VENUE. If a dispute arises out of or relates to this
Agreement, or the breach thereof, and if the dispute cannot be settled
through negotiation, the parties agree first to try in good faith to
settle the dispute by mediation administered by the American
Arbitration Association under its Commercial Mediation Rules before
resorting to arbitration, litigation, or some other dispute resolution
procedure. The jurisdiction and venue for any proceeding, whether by
mediation, arbitration, litigation or other dispute resolution
procedure, shall be Xxxxx County, Nevada.
(l) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the
same instrument.
(m) INSURANCE POLICIES. The Company shall, as soon as is practicable,
cause its insurance policies to be modified to name C-Car as an
additional insured during the
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term of this Agreement and provide C-Car with evidence of having
done so.
IN WITNESS WHEREOF, the parties have executed this Management Agreement
as of the date first written above.
C-CAR: CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
By:
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Xxxx Xxxxxxxxx, Chairman and Chief
Executive Officer
SELLER: THE XXXXXXXX FAMILY TRUST R-501
By:
----------------------------------------
Xxxxx X. Xxxxxxxx, Xx., Trustee
COMPANY: JRJ INVESTMENTS, INC., a Nevada corporation
By:
----------------------------------------
Xxxxx X. Xxxxxxxx, Xx., President
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