[EXHIBIT 20.3]
MANAGEMENT AGREEMENT
This Management Agreement ("Agreement") is made and entered
into this __ day of April, 2004 (the "Effective Date") by and
between King's Motorsports Inc. d/b/a Chicago Cycle, an Illinois
corporation ("King's") and Giant Motorsports, Inc., a Nevada
corporation ("Manager").
RECITALS
A. On the Effective Date, Manager purchased from King's
certain assets of King's associated with the operation of the
King's retail motorcycle, all terrain vehicles and off-road
vehicle dealership business located at 0000 X. Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx (the "Business") pursuant to the terms of a
certain Asset Purchase Agreement (the "Purchase Agreement")
entered into by Manager, King's and certain other parties on even
date herewith.
B. Manager is required to apply for and receive dealership
franchise approvals and the ability to finance the floor plan
either through manufacturer approved floor plans or a third party
floor plan (the "Manufacturer Approvals") from the motorcycle,
all terrain vehicle manufacturers listed on Exhibit "A", attached
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hereto and incorporated by reference herein (the "Manufacturers")
to independently operate parts of the Business.
C. From the Effective Date until the date that all of the
Manufacturer Approvals are obtained, the parties desire to have
Manager operate the Business in accordance with the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in order to induce the parties to enter into
the Purchase Agreement and to consummate the transactions
contemplated thereby and in consideration of the foregoing
recitals, the agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
TERMS AND CONDITIONS
l. Definitions. Unless otherwise indicated, all
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capitalized terms contained herein shall have the same meaning as
defined in the Purchase Agreement.
2. Term. Unless otherwise mutually agreed in writing by
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the parties, the term of this Agreement (the "Term") shall
commence upon the Effective Date and shall terminate upon the
earlier of the following:
(a) The date upon which Manager notifies King's in
writing that Manager has obtained the Manufacturer Approvals;
(b) The date four (4) months after the Effective Date;
or
(c) The date upon which Manager notifies King's in
writing that Manager is unable to obtain the Manufacturer
Approvals.
Notwithstanding the foregoing, if Manager has received
conditional approval from each of the Manufacturers within four
(4) months of the Effective Date then the Term will continue
until such conditions are satisfied or until the parties hereto
agree that such conditions cannot be satisfied in a reasonable
period of time.
If Manager has not received all required Manufacturer Approvals
prior to the end of the Term, Manager will have the right to
terminate this Agreement and require King's to repurchase the
Business (the "Repurchase"). The Manager shall effectuate the
Repurchase by providing written notice of the same to King's (the
"Repurchase Notice"). King's shall repurchase all of the
Acquired Assets for the Purchase Price set forth in the Purchase
Agreement less One Million Two Hundred-Fifty Thousand Dollars
($1,250,000) (the "Repurchase Price"). The Closing on the
Repurchase shall occur within thirty (30) days of King's receipt
of the Repurchase Notice. The Repurchase Price shall be paid to
Manager by (i) terminating the Note (as defined in Purchase
Agreement); and (ii) the remainder of the Repurchase Price shall
be paid in cash or otherwise immediately available funds at the
closing of the Repurchase. In addition, King's and Manager
covenant to the other that the Non-Competition Agreement between
Manager and Xxxxx Xxxxxxx, the Employment Agreement between
Manager and Xxxxx Xxxxx and the Lease entered into by Manager
shall be terminated. Upon completion of the Repurchase and the
full repayment of the Repurchase Price, all rights and
obligations of Manager, King's and the other parties thereto
under the Purchase Agreement shall be deemed terminated.
3. Manager's Duties. As of the Effective Date, Manager
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will be granted possession of all of the Acquired Assets and the
authority to operate, and will be responsible for, all phases of
the Business, including, without limitation, the hiring and
discharge of all employees, employee compensation, determination
of the selling prices of all products and services and the
determination of the products and services to be sold, the
identity of the suppliers from whom Manager will purchase its
inventories and supplies and the prices at which such inventories
and supplies will be purchased, credit terms, marketing and
advertising activities and the payment of all liabilities.
Manager shall pay all expenses in connection with the operation
of the Business, including, without limitation, rent, utilities,
insurance premiums, sales taxes and license fees, withholding,
personal property and income taxes. Manager shall secure and
maintain all required licenses and permits necessary to operate
the Business. Except for Manager's use of King's dealership
license registrations and Manufacturer floor-plan financing
arrangements in accordance with the terms of the Agreement,
Manager shall not make purchases on credit in King's' name.
Manager shall not use the floor-plan financing provided by the
Manufacturers or the Bank of Waukegan (collectively, the "Floor
Plan Lenders") and which is personally guaranteed by Xxxxx
Xxxxxxx or Xxxxx Xxxxx to purchase any inventory other than
inventory sold in the ordinary course of business at the
Business. Manager shall have full power and authority to take all
actions to bring about and maintain the Business, as determined
in the sole discretion of the Manager.
4. Manager's Obligations. Manager shall be the exclusive
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manager of the Business and shall provide King's with the
services customarily provided in such Business, including the
following:
(a) Manager shall conduct the Business in a reputable
manner in keeping with good practices in the industry, including
but not limited to, remitting any payment due to a floor plan
lender or a Manufacturer, as required in the ordinary course of
business.
(b) Manager shall keep all accounts and supervise all
audits and bookkeeping.
(c) Manager shall be responsible for the negotiation,
execution, monitoring and handling of all Contracts required for
the operation of the Business.
(d) Manager shall maintain, at its expense, an
adequate staff sufficient at all times to operate the Business
and shall have exclusive authority to determine all terms and
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conditions of the employment of such personnel, including, but
not limited to, any hiring and firing decisions and the amount of
compensation to be paid to such employees.
(e) Manager shall prepare and file all federal, state
and local tax returns, including sales tax returns, incident to
the operation of the Business, and shall pay all taxes due
thereon, together with interest and penalties, if any.
5. Income and Expenses. Except as otherwise provided in
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the Purchase Agreement, Manager shall be responsible for paying
all costs, damages and expenses associated with the Business and
shall be entitled, as its salary for providing its management
services hereunder, to all income derived from the operation of
the Business during the Term.
6. Insurance. Manager will maintain all insurance
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coverage in amounts reasonably acceptable to King's during the
term hereof and will cause King's to be named as an additional
insured on all of its liability insurance policies until
expiration or termination of this Agreement.
7. Indemnification. Manager will indemnify and hold
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harmless King's against any and all claims, liabilities, losses,
costs or expenses, including, reasonable attorneys' fees and
court costs, resulting from Manager's operation of the Business
during the term hereof, except that Manager is not required to
indemnify King's if any of the foregoing is attributable to (i)
wrongful actions or omissions of King's, or (ii) any matter with
respect to which King's has agreed to indemnify Manager under the
terms of the Purchase Agreement.
8. Cooperation. King's shall during the term hereof use
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its best efforts to cooperate with Manager in the use and
maintenance of King's' agreements with the Manufacturers and
shall undertake such reasonable filings, at no expense to King's,
as are necessary with respect thereto or are reasonably requested
by Manager. In addition, King's shall cooperate in good faith
and use their best efforts to transition the ownership and
operation of the Business to Manager. During such transition
period, Xxxxx Xxxxxxx shall have commercially reasonable access
to the premises and the Business. In the event of a Repurchase
pursuant to a termination of this Agreement, King's and Manager
shall cooperate in good faith and use their best effort to
transition the ownership and operation of the Business back to
King's. To the extent that Manager receives payment for any of
the Excluded Assets, Manager promptly shall remit such payments
to King's. All dealer incentives, spiffs, rebates, holdbacks and
any and all other manufacturer incentives of any kind
(collectively, the "Incentives") accrued by King's during the
Term shall be immediately paid by King's to Manager on the date
that the Manager receives new dealer numbers from the
Manufacturers; provided, however, that if this Agreement is
terminated without Manager having received a dealer number from a
Manufacturer, King's shall be entitled to retain the Incentives
received from such Manufacturer during the Term. Manager shall,
within 14 days, notify all vendors of the change in all billing
accounts from King's to Manager.
9. Notices. All notices, requests, consents and other
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communications hereunder shall be in writing and shall be deemed
to have been duly given (i) when received personally delivered or
sent by facsimile, or (ii) within one business day after being
sent by recognized overnight delivery service, and in each case
addressed as follows:
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(a) if to Manager to: Xxxxxxx Xxxxx
c/o Yukon Int'l, Inc.
00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
with a copy to: Xxxxxxx X. Xxxxxxxxx, Esq.
Benesch, Friedlander, Xxxxxx &
Xxxxxxx, LLP
0000 XX Xxxxx
Xxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
(b) if to King's, to: 0000 X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx
Attention: Xxxxx Xxxxxxx
with a copy to: Xxxxxx X. Xxxxxxxxx
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Any party by written notice to the other party may change the
address or the persons to whom notices thereof shall be directed.
10. Miscellaneous. This Agreement constitutes the entire
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agreement of the parties with respect to the subject matter
hereof and supersedes all prior agreements relating thereto.
This Agreement is governed by the laws of the State of Illinois
other than those relating to conflicts of laws. Each of the
parties irrevocably submits to the jurisdiction and venue of the
federal and state courts located in the county of Xxxx, Chicago,
Illinois. A party to this Agreement will not be bound by a
waiver of any right or remedy that inures to the party's benefit
under this Agreement, or an amendment to this Agreement, unless
the waiver or amendment is in writing signed by the party. Each
party is represented by counsel and the preparation of this
Agreement was the result of the mutual drafting of their counsel
and it may not be construed for or against any party. A party
does not breach this Agreement because of a delay or failure
attributable to a cause beyond the reasonable control of the
party and which could not have been reasonably avoided. The
unenforceability of a provision of this Agreement will not affect
the enforceability of any other provision of this Agreement.
[Signature Page Follows]
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INTENDING TO BE LEGALLY BOUND, the parties have executed
this Agreement as of the day and year first above written.
"MANAGER"
Giant Motorsports, Inc.
By:_______________________________
Its:______________________________
"KING'S MOTORSPORTS"
King's Motorsports, Inc.
By:_______________________________
Its:______________________________
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EXHIBIT "A"
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MANUFACTURERS
Ducati
Honda
Suzuki
Yamaha
