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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 5, 1998
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Cross-Continent Auto Retailers, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
333-06585 75-2653095
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(Commission file number) (IRS Employer Identification Number)
1201 South Taylor Street, Amarillo, TX 79101
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(Address of principal executive offices) (Zip Code)
(806) 374-8653
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(Registrant's telephone number, including area code)
not applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On January 5, 1998, Cross-Continent Auto Retailers, Inc., a Delaware
corporation (the "Company") purchased all of the outstanding capital stock
(the "Dealership Shares") of JRJ Investments, Inc., a Nevada corporation,
d/b/a Chaisson Motor Cars and Chaisson BMW, from The Chaisson Family Trust
R-501 (the "Trust"). Chaisson Motor Cars is a franchised Volkswagen, Audi,
BMW, Land Rover, Jaguar, Rolls-Royce, and Bentley automobile dealership
operating in Las Vegas, Nevada. Chaisson BMW is a franchised BMW automobile
dealership operating in Henderson, Nevada.
The Dealership Shares were purchased in exchange for aggregate
consideration consisting of (a) 128,205 shares of restricted common stock of
the Company, par value $.01 per share (the "Common Stock") formerly held by
the Company as treasury stock; (b) cash in the amount of $13,564,994; and
(c) a promissory note in the principal amount of $2,760,000 from the Company
payable to the Trust. The cash portion of the purchase price was provided by
cash flows from continuing operations and $11,000,000 of borrowings evidenced
by a revolving line of credit the Company has established with Texas Commerce
Bank National Association.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
CROSS-CONTINENT AUTO RETAILERS, INC.
Date: January 22, 1998
By: /s/ James F. Purser
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Name: James F. Purser
Title: Chief Financial Officer
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EXHIBIT INDEX
2.1 Stock Purchase Agreement dated as of October 8, 1997, by and among
Cross-Continent Auto Retailers, Inc., The Chaisson Family Trust R-501,
and JRJ Investments, Inc. (previously filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, incorporated herein by reference).
2.2 Amendment to Stock Purchase Agreement dated as of October 14, 1997, by
and among Cross-Continent Auto Retailers, Inc., The Chaisson Family
Trust R-501, and JRJ Investments, Inc. (previously filed as an exhibit
to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, incorporated herein by reference).
2.3 Amended and Restated Stock Purchase Agreement dated as of November 1,
1997, by and among Cross-Continent Auto Retailers, Inc., The Chaisson
Family Trust R-501, and JRJ Investments, Inc. (omitting exhibits
thereto, which will be furnished supplementally to the Commission upon
request).
10.1 Unsecured Promissory Note, dated January 5, 1998, by Cross-Continent
Auto Retailers, Inc. to The Chaisson Family Trust R-501, in the
principal amount of $2,760,000.00.
10.2 Triple Net Lease Agreement covering 2333 South Decatur Boulevard, Las
Vegas, Nevada, by and between JRJ Properties and JRJ Investments, Inc.
dated November 1, 1997.
10.3 Triple Net Lease Agreement covering 261 and 251 Auto Mall Drive,
Henderson, Nevada, by and between The Chaisson Family Trust R-501 and
JRJ Investments, Inc. dated November 1, 1997.
10.4 Management Agreement by and among Cross-Continent Auto Retailers,
Inc., JRJ Investments, Inc., and The Chaisson Family Trust R-501 dated
as of November 1, 1997.
10.5 Management Agreement by and among Cross-Continent Auto Retailers,
Inc., JRJ Investments, Inc., and The Chaisson Family Trust R-501 dated
as of January 5, 1998.
10.6 Escrow Agreement by and among Cross-Continent Auto Retailers, Inc.,
The Chaisson Family Trust R-501, and United Title of Nevada, Inc.
dated as of January 5, 1997.
10.7 Employment Agreement between James J. Chaisson, Jr. and JRJ
Investments, Inc. dated as of November 1, 1997.
10.8 Employment Agreement between John P. Chaisson and JRJ Investments,
Inc. dated as of November 1, 1997.
10.9 Employment Agreement between Ryan A. Cook and JRJ Investments, Inc.
dated as of November 1, 1997.
10.10 Agreement Regarding Stock Options between James J. Chaisson, Jr.,
and Cross-Continent Auto Retailers, Inc. dated January 5, 1998.
10.11 Agreement Regarding Jaguar Assets by and among The Chaisson
Family Trust R-501, Chaisson Diversified Investments, Inc.,
Cross-Continent Auto Retailers, Inc., & JRJ Investments, Inc.
99.1 Copy of press release issued by Cross-Continent Auto Retailers, Inc.
on January 6, 1998.
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Exhibit 2.3
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (the "Agreement") is
made and entered into as of the 1st day of November, 1997, by and among
CROSS-CONTINENT AUTO RETAILERS, INC. ("Purchaser"), a Delaware corporation;
THE CHAISSON FAMILY TRUST R-501 (the "Seller"); and JRJ INVESTMENTS, INC.
(the "Company"), a Nevada corporation.
RECITALS
A. The Company owns and operates a dealership known as "Chaisson Motor
Cars," located at 2333 S. Decatur, Las Vegas, Nevada (the "Las Vegas
Dealership"), and a dealership known as "Chaisson BMW," located at 261 Auto
Mall Drive, Henderson, Nevada (the "Henderson Dealership"); hereinafter
referred to individually as a "Dealership" and collectively as the
"Dealerships."
B. The Company has been granted and operates the following new
automobile manufacturer's franchises at the Las Vegas Dealership:
1. Land Rover,
2. Jaguar,
3. Volkswagen,
4. Audi,
5. Bentley and Rolls Royce, and
6. BMW;
and has been granted a Satellite Location Addendum to its dealer agreement
with BMW to operate a BMW new automobile manufacturer's franchise at the
Henderson Dealership. Pursuant to the Satellite Location Addendum, the
Henderson Dealership is the primary BMW location and the Las Vegas Dealership
will be the satellite location.
C. The Company leases the premises (the "Las Vegas Premises") on which
the Las Vegas Dealership is located pursuant to a lease agreement with JRJ
Properties, a Nevada general partnership (the "Las Vegas Lease").
D. The Company leases the premises (the "Henderson Premises") on which
the Henderson Dealership is located pursuant to a lease agreement with the
Seller (the "Henderson Lease").
E. Seller owns a tract of approximately 2.5 acres (the "2.5 Acre
Tract") adjacent to the Henderson Premises and having an address of 251 Auto
Mall Drive.
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F. The Seller is the owner of all of the issued and outstanding shares
of capital stock of the Company (the "Shares").
G. The parties have renegotiated certain terms and conditions of the
Stock Purchase Agreement, dated October 8, 1997, as amended by an Amendment
to Stock Purchase Agreement, dated October 14, 1997, heretofore entered into
by the parties and wish to set forth in their entirety the renegotiated terms
and conditions and agreements of the Purchaser to purchase and receive from
the Seller and of the Seller to sell to the Purchaser all of the Shares, all
as set forth in this Amended and Restated Stock Purchase Agreement and the
other documents referred to herein.
AGREEMENT
In consideration of the mutual covenants, agreements, representations,
and warranties set forth in this Agreement, Purchaser, Seller, and the
Company agree as follows:
1. PURCHASE AND SALE OF THE SHARES. Subject to and upon the
terms and conditions of this Agreement, at the Closing (hereinafter defined)
Seller shall sell, transfer, convey, assign, and deliver to the Purchaser,
and Purchaser shall purchase, acquire and accept from Seller, all of the
Shares, free and clear of all security interests, liens, claims, agreements,
encumbrances, or restrictions of any kind, whether written or oral.
2. PURCHASE PRICE. The purchase price to be paid by Purchaser
to Sellers for the Shares shall be $18,335,000 (the "Purchase Price"),
subject to the adjustment set forth in Paragraph 3 of this Agreement.
3. ADJUSTMENT TO THE PURCHASE PRICE. In the event the Net Worth
(hereinafter defined) is more or less than $3,000,000, the Purchase Price
shall be increased or decreased by an amount equal to the difference between
$3,000,000 and the Net Worth. As used in this Agreement, the term "Net
Worth" shall mean the net worth of the Company as shown as total
shareholders' equity on the balance sheet of the Company in the Audited
Financial Statements (hereinafter defined) as of September 30, 1997, as
adjusted by the Net Worth Adjustments (hereinafter defined). Within a
reasonable period of time after the date of this Agreement, but no later than
November 30, 1997, Purchaser's accountants shall calculate adjustments to Net
Worth based on the books and records of the Company as of the close of
business on October 31, 1997, using the values for the New Vehicle Inventory
(hereinafter defined), the Used Vehicle Inventory (hereinafter defined), the
Parts and Accessories Inventory (hereinafter defined), and the Tangible
Personal Property (hereinafter defined), as determined in accordance with
subparagraph 12(c), and prepare a letter setting forth the unaudited
adjustments that should be made to the Net Worth (the "Net Worth
Adjustments").
4. PAYMENT OF PURCHASE PRICE. Subject to the provisions of
subparagraph 20(e), with respect to the Deposit Date (as defined in
subparagraph 20(e)) and the provisions of subparagraph
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20(g), with respect to the Closing (as defined in paragraph 5), Purchaser
shall pay the Purchase Price, as adjusted, as follows:
a. $13,575,000, plus or minus the amount of any increase or
reduction in the Purchase Price in accordance with paragraph
3 hereof, by cashier's check or other immediately available
funds (the "Cash");
b. Purchaser shall execute and deliver a promissory note to
Seller in the original principal amount of $2,760,000 (the
"Note"), bearing interest on the unpaid principal at eight
percent (8%) per annum, payable in sixty (60) equal monthly
installments of principal and interest in the amount of
$55,962 per month. The Note shall be in the form of Exhibit
"A" hereto.
c. Purchaser shall issue to Seller 128,205 shares of restricted
common stock (the "Restricted Stock"); provided, however,
that if the closing price for Purchaser's common stock on
the first anniversary of the Closing Date is less than
$15.60 per share, Purchaser shall either (i) issue to Seller
shares of its fully registered, unrestricted common stock
(the "Unrestricted Shares") so that the aggregate value of
the Restricted Shares and the Unrestricted Shares issued to
Seller (based on the closing price for Purchaser's common
stock on the first anniversary of the Closing Date) shall
equal $2,000,000, or (ii) pay to Seller in the form of a
cashier's check or other immediately available funds an
amount equal to the difference between $2,000,000 and the
product of the number of Restricted Shares that are required
to be issued to Seller on the Closing Date times the closing
price for Purchaser's common stock on the first anniversary
of the Closing Date.
Purchaser shall not issue any fractional shares and shall
pay Seller cash in lieu of any fractional shares based on a
price of $15.60 per share or the closing price of
Purchaser's common stock as quoted in THE WALL STREET
JOURNAL on the first anniversary of the Closing Date,
whichever date is applicable.
The certificates representing any Restricted Shares that are
issued to Seller shall bear a restrictive legend that the
stock has not been registered under applicable federal and
state securities laws. It is understood and agreed that,
other than as set forth in the Registration Rights Agreement
referenced in subparagraph 6(a)(viii), Purchaser has no
obligation to register the Restricted Shares that are to be
issued to Seller.
5. CLOSING. Subject to the terms and conditions set forth in
this Agreement, the Closing of the purchase and sale of the Shares shall take
place at the offices of Jones, Jones, Close & Brown, Chartered, 3773 Howard
Hughes Parkway, Third Floor South, Las Vegas, Nevada 89109, or at such other
place as may be mutually agreed upon by Purchaser and Seller, on January 5,
1998,
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subject to the mutual agreement of the parties to select another date. The
date on which the Closing is to occur is hereinafter referred to as the
"Closing Date."
6. TRANSACTIONS AT CLOSING. The following transactions shall
take place on or before the Closing:
a. DELIVERIES BY SELLER. The Seller shall deliver the
following to the Purchaser:
(i) Stock certificates representing the Shares in duly
transferrable form;
(ii) Such other documents and instruments as Purchaser may
reasonably request in order to vest in Purchaser good
and marketable title to the Shares and to any and all
right, title, interest or claim of any kind that
Seller may have in the properties, assets or business
of the Company;
(iii) A New Las Vegas Lease and a new Henderson Lease
(that includes the 2.5 Acre Track), in the forms of
Exhibits "B," and "C," hereto (collectively, the
"Leases");
(iv) Copies of resolutions of the Board of Directors of
the Company, duly certified by its Secretary, in form
reasonably satisfactory to Purchaser's counsel,
authorizing the execution, delivery and performance
of this Agreement and all other documents to which
the Company is a party as contemplated hereby, and
all actions to be taken by the Company hereunder and
thereunder;
(v) A Seller's certificate in the form of Exhibit "E"
hereto, duly executed by the Seller and the Company;
(vi) An opinion of counsel to the Seller, in the form of
Exhibit "F" hereto;
(vii) An Investment Letter executed by Seller, in the form
of Exhibit "G" hereto;
(viii) A Registration Rights Agreement (the "Registration
Rights Agreement") executed by Seller, in the form
of Exhibit "H" hereto;
(ix) The Management Agreements (referred to in
subparagraphs 20(f) and 20(g);
(x) The Escrow Agreement referenced in subparagraph
20(g);
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(xi) Any instruments and other documents specifically
required by this Agreement, to which Seller or the
Company is a party, that are not otherwise set
forth in this subparagraph 6(a); and
(xii) Any other instruments or documents deemed reasonably
necessary or desirable by the Purchaser in order to
consummate the transactions contemplated hereby.
b. DELIVERIES BY PURCHASER. The Purchaser shall deliver the
following to the Seller:
(i) Subject to the provisions of subparagraphs 20(e)
and 20(g), the Cash, the Note, and a stock
certificate representing the Restricted Shares;
(ii) Copies of resolutions of the Board of Directors of
the Purchaser, duly certified by its Secretary, in
form reasonably satisfactory to Seller's counsel,
authorizing the execution, delivery and performance
of this Agreement and all other documents to which
the Purchaser is a party as contemplated hereby, and
all action to be taken by Purchaser hereunder and
thereunder;
(iii) The Registration Rights Agreement executed by
Purchaser;
(iv) A Purchaser's Certificate in the form of Exhibit "I"
hereto, duly executed by the Purchaser;
(v) An opinion of counsel to the Purchaser, in the form
of Exhibit "J" hereto;
(vi) The Employment Agreements referenced in subparagraph
7(o);
(vii) Any instruments and other documents specifically
required by this Agreement, to which Purchaser is
a party, that are not otherwise set forth in this
subparagraph 6(b); and
(viii) Any other instruments or documents deemed reasonably
necessary or desirable by the Seller in order to
consummate the transactions contemplated hereby.
7. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY.
The Seller and the Company jointly and severally represent and warrant to
Purchaser, effective as of the date of this Agreement and again on the Closing
Date (unless another date is indicated), each of the following:
a. AUTHORITY AND BINDING AGREEMENT. Seller has the legal power
and capacity to enter into this Agreement and to perform its
obligations hereunder. This
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Agreement has been duly and validly executed and delivered
by Seller and the Company and is a valid and binding
obligation of Seller and the Company (relating to those
certain agreements of the Company contained in this
Agreement), enforceable against Seller and the Company
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). Seller has (i) good and marketable title to the
Shares, free and clear of any security interests, liens,
claims, agreements, encumbrances, or restrictions of any
kind, and (ii) the complete and unrestricted right, power,
and authority to sell, transfer, and assign the Shares in
accordance with this Agreement.
b. ORGANIZATION AND STANDING. Seller is duly formed, validly
existing, and in good standing under the laws of the State
of Nevada and has all necessary power and authority to own
the Shares. The Company is duly incorporated, validly
existing, and in good standing under the laws of the State
of Nevada and has all necessary power and authority to own,
lease, and operate its properties and assets and to conduct
its business as its business is now being conducted. Seller
has delivered to Purchaser complete and accurate copies of
the Company's articles of incorporation and bylaws,
including all amendments thereto and have made available to
Purchaser its minute book and stock records. At Closing,
Schedule 7(b) will set forth a complete and accurate list of
all officers, directors and assumed or fictitious names of
the Company as of the date of this Agreement. The Company
is qualified to do business and is in good standing in each
state in which it transacts business. The Company does not
have any subsidiaries nor any direct or indirect equity
interest in any corporation, partnership, or other entity.
The Company is a "small business corporation" and has
maintained a valid election to be an "S" corporation under
Subchapter S of the Internal Revenue Code of 1986, as
amended.
c. CAPITALIZATION. The authorized capital stock of the Company
consists of 2,500 shares of common stock, having no par
value. On the date hereof, Seller owns beneficially and of
record 100 shares of common stock of the Company, which
comprises the Shares. The Shares (i) constitute all of the
issued and outstanding shares of capital stock of the
Company, (ii) have been validly authorized and issued, (iii)
are fully paid and nonassessable, (iv) have not been issued
in violation of any preemptive rights or of any federal or
state securities laws, and (v) are not subject to any
agreement that relates to the voting or control of any of
the Shares. There are no outstanding subscriptions,
options, rights, warrants, convertible securities, or any
other agreements or commitments obligating the Company to
issue, deliver, or sell any additional shares of its capital
stock of any class or any other securities of any kind.
There are no bonds, debentures,
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notes, or other indebtedness or securities of the Company
having the right to vote on any matters on which the
shareholders of the Company may vote. There are no
outstanding rights, agreements, or arrangements of any
kind obligating the Company to repurchase, redeem, or
otherwise acquire any shares of capital stock or other
voting securities of the Company.
d. NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the fulfillment of or compliance with the
terms and provisions hereof will (i) violate, conflict with,
or result in a breach of the terms, conditions or provisions
of, or constitute a default or an event which, with notice
or lapse of time or both, would constitute a default under,
(y) the articles of incorporation or bylaws of the Company,
or (z) any contract, agreement, mortgage, deed of trust, or
other instrument or obligation to which the Seller or the
Company is a party or by which either of them is bound,
except for agreements between the Company and the respective
manufacturers (or the authorized sales/distributor entities
directly or indirectly owned by the respective
manufacturers) of Land Rover, Volkswagen, Audi, Bentley and
Rolls Royce or BMW (individually, a "Manufacturer" and
collectively, the "Manufacturers"), which require the
consent of the Manufacturer; (iii) other than with respect
to obtaining the consents referenced in subparagraph 7(e)(i)
and (iii), violate any provision of any applicable law or
regulation or of any order, decree, writ or injunction of
any court or governmental body, or (iv) result in the
creation or imposition of any lien, charge, restriction,
security interest or encumbrance of any kind whatsoever on
any property or asset of the Company or on the Shares.
e. CONSENTS. No consent or approval by, or any notification
of or filing with, any governmental entity or agency or any
other person or entity is required in connection with the
execution, delivery or performance of this Agreement by
Seller or the Company, other than consent from (i) the
Nevada Department of Motor Vehicles, (ii) the Manufacturers,
and (iii) if required, the Federal Trade Commission (the
"FTC") and the United States Department of Justice (the
"Justice Department") under the Hart-Scott-Rodino Act.
f. REAL PROPERTY. On the Deposit Date (as defined in
subparagraph 20(e), Schedule 7(f) will set forth a complete
and accurate (i) legal description of all real property
owned, or previously owned, by the Company, and (ii)
description of each lease or sublease of real property under
which the Company holds, or previously held, a leasehold
interest. Each of the leases and subleases and subleases
are in full force and effect and constitutes a legal, valid
and binding obligation of the parties thereto. The Company
has performed the covenants required to be performed by it
under each of the leases and subleases to which it is a
party and is not in default under any of the leases or
subleases to which it is a party. To the best of Seller's
and the Company's knowledge, the zoning of each tract of
real property owned, leased or otherwise utilized by the
Company
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permits the presently existing improvements and the
continuation of the business presently being conducted
on such real property. To the best of Seller's and the
Company's knowledge, there are no pending or proposed
changes to such zoning or of any pending or proposed
condemnation action, affecting any real property owned,
leased or otherwise utilized by the Company.
g. TANGIBLE PERSONAL PROPERTY. On the Deposit Date, Schedule
7(g) will set forth a complete and accurate description of
(i) all equipment, furniture, fixtures, and other tangible
personal property (other than inventory) owned by the
Company, and (ii) each lease of personal property under
which the Company holds a leasehold interest. Each of the
leases is in full force and effect and constitutes a legal,
valid, and binding obligation of the parties thereto. The
Company has performed the covenants required to be performed
by it under each of the leases to which it is a party and is
not in default under any of the leases to which it is a
party. To the best of Seller's and the Company's knowledge,
the Tangible Personal Property (hereinafter defined) is in
good repair and operating condition, has been regularly and
properly maintained and fully serviced, and is suitable for
the purposes for which it is presently being used. All
Tangible Personal Property described on Schedule 7(g) shall
be at one or the other of the Dealerships, in good working
order and condition, and free and clear of all liens and
other encumbrances. As used in this Agreement, the term
"Tangible Personal Property" shall mean all tangible
personal property that is listed on the appraisal of
Marshall & Stevens, dated February 14, 1997, together with
that certain schedule of Additions/Deductions to Marshall &
Stevens Appraisal previously agreed to by and between the
Company and Purchaser (the "Appraisal"), adjusted to include
those items of tangible personal property acquired by the
Company and to exclude those items of tangible personal
property disposed of by the Company, in the ordinary course
of business subsequent to the Appraisal, owned by the
Company on the Deposit Date.
h. INVENTORIES. On the Deposit Date, Schedule 7(h) will set
forth a complete and accurate description of the New Vehicle
Inventory (hereinafter defined), Used Vehicle Inventory
(hereinafter defined), and Parts and Accessories Inventory
(hereinafter defined). As used in this Agreement, the term
"New Vehicle Inventory" shall mean all new vehicles and
demonstrators having less than 6,000 miles on the odometer
owned by the Company on the Deposit Date; and the term "Used
Vehicle Inventory" shall mean all used vehicles and
demonstrators having 6,000 miles or more on the odometer
owned by the Company on the Deposit Date; and the term
"Parts and Accessories Inventory" shall mean all parts and
accessories purchased from the Manufacturers or other
reputable suppliers and owned by the Company on the Deposit
Date. To the best of Seller's and the Company's knowledge,
each inventory of the Company consists of goods of a
quality and in quantities that are saleable in the ordinary
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course of the Company's business with normal mark-up at
prevailing market prices. All parts and accessories in the
Parts and Accessories Inventory are in returnable condition,
are undamaged parts and accessories, are still in the
original, resalable merchandising package, are in unbroken
lots, are listed for sale in the current dealer parts and
accessories price schedule of each Manufacturer or other
supplier, and were purchased directly from the Manufacturers
or other reliable suppliers.
i. LICENSES AND PERMITS. On the Deposit Date, Schedule 7(i)
will set forth a complete and accurate description of all
permits, licenses, franchises, certificates, and similar
items and rights, owned or held by the Company (hereinafter
collectively referred to as the "Licenses and Permits").
The Licenses and Permits (i) are adequate for the operation
of the Company's business, and (ii) are valid and in full
force and effect, except as set forth on Schedule 7(i).
Other than with respect to obtaining the consents referenced
in subparagraph 7(e), no additional permit, license,
franchise, certificate, or similar item or right is required
by the Company for the operation of its business.
j. INTELLECTUAL PROPERTY. On the Deposit Date, Schedule 7(j)
will set forth a complete and accurate description of all
intellectual property presently in use by the Company, which
intellectual property includes (without limitation) software
patents, trademarks, trade names, service marks, copyrights,
trade secrets, customer lists, inventions, formulas,
methods, processes, advertising materials, Internet sites,
and any other proprietary information or property
("Intellectual Property"). There are no outstanding
licenses or consents to third parties granting the right to
use any Intellectual Property owned by the Company. To the
best of Seller's and the Company's knowledge, no
Intellectual Property used by the Company infringes on any
rights owned or held by any other person or entity, and no
person is infringing on the rights of the Company in any
Intellectual Property used by the Company. Any royalties or
fees payable by the Company to any third party by reason of
the use of any Intellectual Property by the Company is set
forth on Schedule 7(j). No additional Intellectual Property
is required by the Company for the continued operation of
its business, in the manner now conducted.
k. TITLE TO PROPERTIES AND ENCUMBRANCES. Other than with
respect to obtaining the consents referenced in subparagraph
7(e), the Company has good and marketable title to (or, (i)
in the case of leased property, valid and subsisting
leasehold interests in, and (ii) in the case of Intellectual
Property, a valid right to use) all of its properties and
assets, including (without limitation) the properties and
assets that will be listed on Schedules 7(f), 7(g), 7(h),
7(i) and 7(j). The properties and assets of the Company are
subject to no liens, deeds of trust, mortgages,
encumbrances, conditional sales agreements, security
interests, claims, or restrictions of any kind or character,
except for (i) the encumbrances
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that will be listed on Schedule 7(k) to which Purchaser
consents, and (ii) liens for current taxes not yet due and
payable or for taxes the validity of which are being
contested in good faith by appropriate proceedings.
l. FINANCIAL STATEMENTS. The Company has delivered to the
Purchaser copies of balance sheets for the Company dated
August 31, 1997 (the "Balance Sheet Date"), and statements
of income and retained earnings for the periods ending
August 31, 1997 (hereinafter collectively referred to as the
"Financial Statements"). The Financial Statements are
unaudited. To the best of Seller's and the Company's
knowledge, (i) the Financial Statements fairly present the
financial condition of the Company at the dates mentioned
and the results of its operations for the periods specified
and were prepared in accordance with its normal and
customary accounting procedures; and (ii) the balance sheet
in the Financial Statements (y) discloses all of the debts,
liabilities, and obligations of any nature (whether
absolute, accrued, contingent, or otherwise, and whether due
or to become due) of the Company as of the Balance Sheet
Date and (z) includes appropriate reserves for all taxes and
other liabilities accrued or due at such dates but not yet
paid.
m. INDEBTEDNESS FOR BORROWED MONEY AND GUARANTIES. On the
Deposit Date, Schedule 7(m) will set forth a complete and
accurate description of the Company's indebtedness for
borrowed money. Seller has delivered to the Purchaser
complete and accurate copies of all instruments evidencing
or relating to the Company's indebtedness for borrowed
money. To the best of Seller's and the Company's knowledge,
the Company is not in default or violation of any provision
of any agreement evidencing or relating to its indebtedness
for borrowed money. Schedule 7(m) will also set forth a
complete and accurate list of (i) all guaranties by the
Company of any obligation or liability of any person or
entity, including (without limitation) any guaranties of
installment sales contracts or leases, (ii) all warranties
on vehicles that have been sold by the Company for the last
three (3) years for which there is any contingency of
liability for the Company, and (iii) all loans from the
Company to any person or entity.
n. TAX MATTERS. To the best of Seller's and the Company's
knowledge, (i) the Company has filed or will file all
federal, state, local and foreign tax returns and tax
reports required to be filed by it for periods ending on or
prior to the Closing Date; (ii) all such returns and reports
are and will be correct and complete in all material
respects; and (iii) all federal, state, local, and foreign
income, profits, franchise, property, excise, sales, use,
occupation, payroll, employment, and other taxes and
assessments for periods ending on or prior to the Closing
Date that are or will be due and payable by the Company on
or before the Closing have been or will be properly
computed, duly reported, fully paid, and discharged. Seller
has no actual knowledge of any unpaid taxes that require
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payment by the Company, except for current taxes not yet due
and payable. To the best of Seller's and the Company's
knowledge, (i) no issues have been raised in writing with
the Company by the Internal Revenue Service or any other
taxing authority in connection with any tax return or tax
report filed by the Company, and (ii) the Company has not
executed any waiver of the statute of limitations on the
assessment or collection of any tax. Seller agrees to
indemnify and hold harmless the Purchaser with respect to
any income or other tax (and any penalties and interest
payable with respect thereto) reportable and payable by
Seller or the Company which arise from the operation of the
Company prior to the Deposit Date or otherwise payable by
Seller.
o. TRANSACTIONS SINCE THE BALANCE SHEET DATE. Since the
Balance Sheet Date, except as set forth on Schedule 7(o):
(i) other than negotiating three (3) year written employment
agreements to be executed on or before the Closing Date (the
"Employment Agreements") with each of James J. Chaisson,
Jr., John P. Chaisson, and Ryan A. Cook (individually, a
"Key Employee" and collectively, the "Key Employees"), the
Company has not incurred any debts, liabilities, or
obligations, except current liabilities in the ordinary
course of business; discharged or satisfied any liens or
encumbrances, or paid any debts, liabilities, or
obligations, except in the ordinary course of business;
mortgaged, pledged, or otherwise subjected to any lien or
other encumbrance any of its properties or assets; canceled
any debt or claim; sold or transferred any properties or
assets, except the Jaguar Assets (hereinafter defined) and
sales from inventory in the ordinary course of business; nor
entered into any transaction other than in the ordinary
course of business; (ii) other than with respect to the
Jaguar Assets, there has not been any material adverse
change in the business, operations, properties, assets,
revenues, earnings, liabilities, or condition (financial or
otherwise) of the Company; (iii) there has not been any
declaration, setting aside or payment of any dividend or
other distribution in respect of, or any direct or indirect
redemption, purchase or other acquisition of, any of the
capital stock of the Company; (iv) the Company has not
issued or sold or contracted to issue or sell any stock,
securities or options, of any nature whatsoever; (v) the
Company has not increased the compensation, commissions,
bonuses, or other remuneration payable to any officer,
director, employee, or to any other person or entity,
whether now or hereafter payable, including any increase
pursuant to any pension, profit-sharing or other plan or
commitment, (vi) there has not been any damage, destruction
or loss (whether or not covered by insurance) affecting any
asset or property of the Company; (vii) the Company has not
made any capital expenditure or capital expenditure
commitment, individually or in the aggregate, in excess of
$25,000.00; (viii) the Company has not made any loan or
advance to any person or entity or guaranteed any obligation
or liability of any person or entity, including (without
limitation) any guaranties of any installment sales
contracts or leases, other than as will be set forth on
Schedule 7(m); (ix) the Company has not given any
indemnifications to any person or
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entity; (x) the Company has not acquired any properties
or assets other than in the ordinary course of business;
(xi) the Company has not made any change in its method of
accounting or accounting practices, including (without
limitation) any change in depreciation or amortization
policies or rates; (xii) the Company has not granted any
waiver or release of any claim or right held by it;
(xiii) except for entering into the Leases, the Company
has not amended or terminated any material contract,
agreement, or license to which it is a party; (xiv) the
Company has not made any material write-down of the value
of any asset of the Company or any material write-off as
uncollectible of any account receivable or note receivable;
(xv) the Company has not changed its past practices in the
acquisition or sale of its new vehicle, used vehicle, or
parts and accessories inventories; and (xvi) the Company
has not agreed, in writing or otherwise, to do or permit
any of the foregoing;
p. LITIGATION. On the Deposit Date, Schedule 7(p) will set
forth a complete and accurate description of all actions,
suits, claims, investigations or legal, administrative or
arbitration proceedings, pending or threatened, whether at
law or in equity, involving the Company or any of its
properties, assets, or business, and all judgments, orders,
decrees, writs or injunctions of any court or governmental
department, commission, agency, instrumentality or
arbitrator applicable to Seller or to the Company. Neither
the Seller nor the Company has any actual knowledge of any
facts that might result in any other action, suit, claim,
investigation, or legal, administrative or arbitration
proceeding.
q. COMPLIANCE WITH LAWS.
(i) To the best of Seller's and the Company's knowledge,
the Company has complied and is in compliance in all
material respects with all federal, state, local and
foreign laws, ordinances, rules, codes, regulations,
and orders (including those related to environmental
protection and occupational safety and health)
applicable to the Company.
(ii) To the best of Seller's and the Company's knowledge,
there are no past or present events, conditions,
circumstances, activities, practices, incidents, plans
or actions, based on or resulting from the conduct of
the business of the Company, including the manufacture,
processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission,
discharge, release, or threatened release into the
environment, of any pollutant, contaminant, chemical,
or industrial toxic or hazardous material, substance or
waste, which violates any laws or the regulations
promulgated thereunder currently in effect relating to
pollution or protection of the environment (the
"Environmental Laws"), including (without limitation)
the Comprehensive Environmental Response, Compensation,
and Liability Act ("CERCLA"), or any plan,
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order, decree, judgment, injunction, notice or demand
letter from a governmental department, commission,
agency or instrumentality applicable to the Company,
or which could give rise to any common law or other
legal liability. To the best of Seller's and the
Company's knowledge, all real property currently or
formerly owned, leased or otherwise utilized by the
Company contains no spill, deposit, or discharge of
any hazardous substance (as that term is currently
defined under CERCLA or any applicable state law), for
which the Company could be liable.
(iii) On the Deposit Date, Schedule 7(q) will set forth a
complete and accurate description of each underground
storage tank of any kind or nature that is located on
any real property currently or formerly owned, leased
or otherwise utilized by the Company. Schedule 7(q)
will also set forth a complete history of each such
underground storage tank, including the dates and
types of all tests.
(iv) The Company has delivered to Purchaser copies of all
existing environmental site audits in the possession
of the Seller or the Company that cover any real
property currently or formerly owned, leased, or
otherwise utilized by the Company.
r. CONTRACTS AND AGREEMENTS. On the Deposit Date, Schedule
7(r) will set forth a complete and accurate description of
all material written or oral contracts and agreements to
which the Company is a party or by which it or any of its
property is bound, unless any such contract or agreement is
set forth on either Schedule 7(f), 7(g), 7(s), 7(t), 7(u) or
7(v). All such contracts and agreements are in full force
and effect and are binding upon the parties thereto, and,
other than with respect to obtaining the consents required
from the Manufacturers, none of the parties thereto are in
breach of any of the provisions thereof.
s. EMPLOYEE BENEFIT PLANS. On the Deposit Date, Schedule 7(s)
will set forth a complete and accurate description of all
pension, retirement, savings, deferred compensation, profit
sharing, stock option, bonus, incentive, severance,
retirement, health, insurance and other employee benefit
plans that are binding upon the Company. To the best of
Seller's and the Company's knowledge, there have been no
material defaults, breaches, or omissions by the Company or
any fiduciary under any of such plans.
t. INSURANCE. On the Deposit Date, Schedule 7(t) will set
forth a complete and accurate description of all insurance,
including (without limitation) property damage insurance,
general liability insurance, worker's compensation, and
group health insurance maintained by the Company and will
summarize the substantive terms of each of the insurance
policies, including (without
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limitation) whether the insurance policies are "claims
made" or "occurrence" policies. The Company is carrying
insurance that is reasonable in light of the risks
attendant to the business and activities in which the
Company is engaged. All of the insurance is in full
force and effect and will not be affected by, or
terminated or lapse by reason of, the transactions
contemplated by this Agreement.
u. PERSONNEL. On the Deposit Date, Schedule 7(u) will set
forth a complete and accurate list of (i) all current
employees of the Company and all independent contractors
regularly performing services on behalf of the Company,
(ii) their respective rates of compensation, including any
salary, bonus or other payment arrangement made with any of
them, and (iii) any accrued vacation of any employees of the
Company. Except as set forth on Schedule 7(u), the Company
does not have any employment agreements or contracts between
the Company and any person or entity. No employee of the
Company is represented by any union or collective bargaining
agent. The Company is not a party to or bound by any
collective bargaining agreement, nor has the Company
experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. The
Company has not, to the Seller's actual knowledge, committed
any unfair labor practice. Seller has no actual knowledge
of any organizational effort being made or threatened by or
on behalf of any labor union with respect to employees of
the Company within the past five (5) years. To the best of
Seller's and the Company's knowledge, the Company has (i)
paid or has made provision for the payment of all
compensation due any person or entity, (ii) complied in all
material respects with all applicable laws, rules, and
regulations relating to the employment of labor, including
those related to wages, hours, collective bargaining and the
payment and withholding of taxes, and (iii) withheld and
paid to the appropriate governmental authority, or is
holding for payment not yet due to such authority, all
amounts required by law or agreement to be withheld from the
compensation of its employees.
v. ACCOUNTS RECEIVABLE. On the Deposit Date, Schedule 7(v)
will set forth a complete and accurate list of all accounts
receivable and notes receivable of the Company and an aging
analysis of the accounts receivable. To the best of
Seller's and the Company's knowledge, except as set forth on
Schedule 7(v), (i) all accounts receivable and notes
receivable of the Company are valid and enforceable claims,
arose in the ordinary course of business, require no further
performance by the Company, and are collectible without
resort to litigation; and (ii) no material objection, claim,
or offset has been made regarding any of the accounts
receivable or notes receivable. There are and at Closing
there will be no payables or receivables due or owing
between Seller and the Company.
w. BROKERS. Other than Elysium Enterprises, Inc. (the
"Broker"), neither Seller nor the Company has employed,
directly or indirectly, any broker or finder, or
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incurred any liability for any brokerage fees, commissions,
or finder's fees, and other than the Broker, no broker or
finder has acted directly or indirectly for Seller or the
Company in connection with this Agreement or the
transactions contemplated by this Agreement.
x. DELIVERY OF DOCUMENTS. Complete and accurate copies of all
written instruments listed or described on the Schedules
referenced herein have been or will be furnished to
Purchaser. The Company will make available to Purchaser, to
the extent requested by Purchaser, all books, records, and
facilities of the Company.
y. BANK ACCOUNTS AND POWERS OF ATTORNEY. On the Deposit Date,
Schedule 7(y) will set forth a complete and accurate list of
(i) the names and addresses of all persons holding a power
of attorney on behalf of the Company, and (ii) the account
numbers and names of all banks or other financial
institutions in which the Company currently has an account,
deposit, or safe deposit box, with the names of all persons
authorized to draw on the accounts or deposits or to have
access to the boxes.
z. DISCLOSURE.
(i) To the best of Seller's and the Company's knowledge,
there have been no events, transactions or information
relating to the Company which, singly or in the
aggregate could reasonably be expected to have a
material adverse affect on the business, operations,
properties, assets, revenues, earnings, liabilities, or
condition (financial or otherwise) of the Company. To
the best of Seller's's and the Company's knowledge, no
representation or warranty by Seller or the Company in
this Agreement or in any of the exhibits attached
hereto, or other statement in any other writing
furnished or to be furnished to Purchaser by or on
behalf of Seller or the Company in connection with the
transactions contemplated by this Agreement, contains
or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact
necessary to make the statements contained herein not
misleading.
(ii) Except for the failure to obtain any consent set forth
in subparagraph 7(e), Seller has no actual knowledge,
(i) of any reason why the Company cannot continue its
business in the same manner following the execution of
this Agreement and the Closing as it has been operated
prior thereto, or (ii) at any time in the foreseeable
future the business of the Company shall be materially
adversely affected by any event, except to the extent
that the Purchaser causes the business of the Company
to change following the Deposit Date.
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<PAGE>
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to Seller, effective as of the date of this Agreement
and again at Closing, each of the following:
a. INCORPORATION. Purchaser is duly incorporated, is validly
existing, and is in good standing under the laws of the
State of Delaware and has all necessary power and authority
to own, lease, and operate its properties and assets and
to conduct its business as its business is now being
conducted. Purchaser has delivered to Seller complete and
accurate copies of Purchaser's articles of incorporation
and bylaws, including all amendments thereto. The Purchaser
is qualified to do business and is in good standing in each
state in which it transacts business.
b. AUTHORITY AND BINDING AGREEMENT. Purchaser has the
corporate power and authority to enter into this Agreement
and to perform its obligations hereunder. This Agreement
has been duly and validly executed and delivered by
Purchaser and is a valid and binding obligation of
Purchaser, enforceable against Purchaser 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).
c. NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated by this Agreement will (i) violate, conflict
with, or result in a breach of the terms, conditions or
provisions of, or constitute a default or an event which,
with notice or lapse of time or both, would constitute a
default under, (y) the articles of incorporation or bylaws
of the Purchaser, or (z) any contract, agreement, mortgage,
deed of trust, or other instrument or obligation to which
the Purchaser is a party or by which it is bound, (iii)
other than with respect to obtaining the consents referenced
in subparagraph 7(e)(i) and (iii), violate any provision of
any applicable law or regulation or of any order, decree,
writ or injunction of any court or governmental body, or
(iv) result in the creation or imposition of any lien,
charge, restriction, security interest or encumbrance of any
kind whatsoever on any property or asset of the Purchaser or
on the Restricted Shares.
d. BROKERS. Other than the Broker, the Purchaser has not
employed, directly or indirectly, any broker or finder, or
incurred any liability for any brokerage fees, commissions
or finders' fees, and other than the Broker, no broker or
finder has acted directly or indirectly for the Purchaser in
connection with this Agreement or the transactions
contemplated by this Agreement.
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e. LITIGATION. Purchaser is not a party to any pending or, to
its actual knowledge, any threatened claim, action, suit,
investigation or proceeding, or subject to any order,
judgment or decree, except for matters which in the
aggregate, will not have, or cannot reasonably be expected
to have, a materially adverse effect on the financial
condition of the Purchaser, and none that would affect the
Purchaser's ability to consummate the transactions and
perform its obligations contemplated hereby.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by the parties in this Agreement or in
any certificate, schedule, statement, document or instrument furnished
hereunder or in connection with the negotiation, execution and performance of
this Agreement shall survive the Closing for a period of three (3) years, and
any claim or cause of action for indemnification under subparagraph 15(a) or
subparagraph 16(a) for breaches of representations or warranties set forth in
this Agreement or in any exhibit or document furnished hereunder may be made
in respect of such matters within three (3) years after the Closing Date;
PROVIDED, HOWEVER, the parties expressly agree that the indemnification
provisions under subparagraph 15(b) and subparagraph 16(b) shall not be
subject to the three (3) year limitation set forth herein. Notwithstanding
any investigation or audit conducted before or after the Closing or the
decision of any party to complete the Closing, each party shall be entitled
to rely upon the representations and warranties set forth herein for the time
period set forth above.
10. SELLER'S OBLIGATIONS PRIOR TO CLOSING. Seller agrees to do
the following prior to the Deposit Date, and thereafter not do or cause the
Company to do any act that would be in violation of any of the following:
a. CONDUCT OF BUSINESS BY THE COMPANY PRIOR TO THE DEPOSIT
DATE. Seller shall cause the Company to conduct its
operations according to the ordinary and usual course of
business reasonably consistent with past and current
practices, to maintain and preserve its business
organization, assets and properties, and vendor and supplier
relationships, and to retain the services of its officers,
employees, agents, and independent contractors, and shall
not, without the prior written consent of Purchaser, allow
the Company 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,
Seller shall prohibit the Company, without the prior written
consent of Purchaser, from directly or indirectly taking any
of the actions described in subparagraph 7(o).
b. FULL ACCESS. Seller shall cause the Company to permit
Purchaser and representatives of the Purchaser 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 Company; the books,
records, properties, assets and operations of the Company.
Such examination shall include access to the officers,
directors, employees, agents and representatives of the
Company. Seller shall cause the Company to furnish to
Purchaser and representatives of
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<PAGE>
Purchaser with such financial, operating and other data
and information, and copies of documents with respect to
the Company, as Purchaser shall from time to time request.
Such access and information shall not in any way affect
or diminish any of the representations or warranties made
in this Agreement.
c. AUDIT. Seller shall cause the Company to permit the
completion of an audit (the "Audit") to be conducted under
generally accepted auditing standards, of the books,
records, and financial statements of the Company for 1996,
and through September 30, 1997, and any additional period
prior to the Deposit Date requested by the Purchaser or
required by applicable law, and shall cause Audited
Financial Statements (hereinafter defined) to be prepared in
accordance with generally accepted accounting principles,
which shall include reserves for any extended warranties,
charge-backs, inventory write downs, repossessions,
contracts in transit, and any other appropriate accruals and
reserves. As used in this Agreement, "Audited Financial
Statements" shall mean an audited (i) balance sheet, dated
September 30, 1997, for the Company, and (ii) income
statement for the nine (9) month period ending September 30,
1997, for the Company. The Audit will be conducted by
Purchaser's accountants, Price Waterhouse, LLP. Seller
agrees to cause the full cooperation of the officers,
directors, employees and accountants of the Company in the
Audit.
d. NOTICE OF ADVERSE CHANGES. Seller shall give prompt written
notice to Purchaser of any material adverse change in the
business, operations, properties, assets, revenues,
earnings, liabilities, or condition (financial or otherwise)
of the Company.
e. STANDSTILL. From the date hereof to the earlier of the
Closing Date or the date this Agreement expires or
terminates, Seller shall not, directly or indirectly,
through any officer, director, employee, or otherwise, (i)
solicit or initiate the submission of any proposal or offer
from any person or entity (including any officers or
employees of the Company) relating to any liquidation,
dissolution, recapitalization, merger, consolidation,
acquisition, or purchase of all or a material portion of the
assets and properties of the Company, or the acquisition or
purchase of any equity interest in the Company, or (ii)
participate in any negotiations regarding, or furnish to any
other person or entity any information with respect to, or
otherwise cooperate in any manner with, or assist or
participate in, facilitate or encourage, any effort or
attempt by any other person or entity to do or seek any of
the foregoing.
f. FURTHER ASSURANCES. Seller shall from time to time, upon
the request of Purchaser, execute and deliver to Purchaser
such further instruments and take such other action as
Purchaser may reasonably request, in order to consummate the
transactions contemplated by this Agreement in accordance
with its terms.
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g. INSURANCE AND RISK OF LOSS. Seller shall cause the Company
to maintain the insurance the Company is carrying in
connection with the operation of the Dealership, including
(without limitation) property damage insurance, general
liability insurance, worker's compensation, and group
health insurance. The Seller and the Company shall have the
risk of loss for damage by fire or other casualty to the
assets and properties of the Company before Closing. In the
event of any material loss or damage to the assets and
properties of the Company prior to Closing, Purchaser shall
have the option to terminate this Agreement.
11. PURCHASER'S OBLIGATIONS PRIOR TO CLOSING. Purchaser agrees to
do the following prior to Closing:
a. DUE DILIGENCE. Until the transactions contemplated by this
Agreement close or this Agreement expires or terminates,
Purchaser may conduct such investigations, reviews and
inspections of the business, operations, properties, assets,
revenues, earnings, liabilities, and condition (financial or
otherwise) of the Company as Purchaser and Purchaser's
representatives deem necessary or desirable to determine
whether a material adverse change in the Company has
occurred.
b. FURTHER ASSURANCES. Purchaser shall from time to time, upon
the request of the Seller, execute and deliver to Seller
such further instruments and take such further action as the
Seller may reasonably request, in order to consummate the
transactions contemplated by this Agreement in accordance
with its terms.
c. PURCHASER'S NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
REGARDING THE COMPANY. Purchaser acknowledges that it may
possibly have access to certain confidential information of
the Company, including (without limitation) lists of
accounts, operational policies, and pricing and costs
policies (the "Confidential Information"). The Purchaser
agrees that it will not disclose such Confidential
Information to any person or entity for any purpose or
reason whatsoever, except to employees and authorized
representatives of the Purchaser, or as required by law,
unless such Confidential Information becomes known to the
public generally through no fault of the Purchaser. In the
event of a breach or threatened breach by Purchaser of the
provisions of this subparagraph, the Seller and/or the
Company shall be entitled to temporary restraining order,
without bond, and an injunction restraining the Purchaser
from disclosing, in whole or in part, such Confidential
Information. Nothing herein shall be construed as
prohibiting the Seller and/or the Company from pursuing any
other available remedy for such breach or threatened breach,
including the recovery of damages.
(d) MANAGEMENT OF THE DEALERSHIPS. During any period of time
between the Deposit Date and the Closing that Purchaser is
managing the Dealerships
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pursuant to a management agreement,Purchaser will not,
and will not cause the Company to, do any act that would
cause the Seller or the Company to be in violation of any
of the provisions set forth in paragraph 10.
12. SELLER'S AND PURCHASER'S OBLIGATIONS PRIOR TO CLOSING.
a. ASSISTANCE. Seller and Purchaser agree to use their best
efforts to create a workable, smooth and orderly transition
of Purchaser's acquisition of the Company.
b. HART-SCOTT-RODINO NOTIFICATION. The parties shall, if and
to the extent required by law, prepare, and Purchaser shall
file, all reports or other documents required or requested
by the FTC or the Justice Department under the
Hart-Scott-Rodino Act, and all regulations promulgated
thereunder, concerning the transactions contemplated by
this Agreement, and comply promptly with any request by the
FTC or the Justice Department for additional information
concerning such transactions, so that the waiting period
specified in the Hart-Scott-Rodino Act will expire as soon
as reasonably possible after the execution and delivery of
this Agreement. The parties agree to furnish to one another
such information concerning the Purchaser, the Seller, and
the Company as the parties need to perform their obligations
hereunder. The Purchaser agrees to pay all filing fees and
costs due governmental agencies with regard to the
notification under and compliance with the Hart-Scott-Rodino
Act and all regulations promulgated thereunder.
c. PHYSICAL INVENTORIES. On or before the Deposit Date,
Purchaser and Seller shall conduct a physical inventory of
the New Vehicle Inventory, the Used Vehicle Inventory, the
Parts and Accessories Inventory, and the Tangible Personal
Property. The physical inventories shall be collectively
referred to in this Agreement as the "Physical Inventories."
The value of the New Vehicle Inventory, the Used Vehicle
Inventory, the Parts and Accessories Inventory, and the
Tangible Personal Property shall be determined as follows:
(i) Purchaser and Seller shall calculate the value of the
New Vehicle Inventory. The value of each new vehicle
shall be the cash sum equal to the factory invoice
price (excluding any Company internal profit) to the
Company, 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 Deposit Date, plus 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,
prior to the Deposit Date. Any demonstrator and rental
vehicle shall be valued for a cash sum equal to an
amount as calculated above, except demonstrators and
rental vehicles having 6,000
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miles or more on the odometer shall be treated as a
Used Vehicle. The value of any new vehicle shall be
decreased by an amount equal to the Company's cost
(excluding any internal profit) of repair for any
physically damaged vehicle. Seller agrees that all
factory rebates and other credits on any new vehicles
sold after the Deposit Date shall be retained by the
Company.
(ii) Purchaser and Seller shall agree to the value of the
Used Vehicle Inventory. Any demonstrators and rental
vehicles having less than 6,000 miles on the odometer
shall be treated as a New Vehicle.
(iii) Purchaser and Seller shall calculate the value of
the Parts and Accessories Inventory. The value of
the parts and accessories shall be the cost of the
parts and accessories set forth in the dealer
parts and accessories price schedule in effect on
the date of the inventory for the applicable
Manufacturer or other reliable supplier. The
Seller agrees that all rebates and credits on any
parts or accessories shall be retained by the
Company.
(iv) Purchaser and Seller shall calculate the value of the
Tangible Personal Property. The value of any item of
tangible personal property listed in the Appraisal
shall be the value of the property set forth in the
Appraisal, and the value of any item of tangible
personal property that is not listed in the Appraisal
shall be the Company's actual cost (excluding any
internal profit).
13. CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASER. The obligation
of Purchaser to consummate the transactions contemplated by this Agreement is
subject to the satisfaction on or prior to the Closing Date of the following
conditions, each of which may be waived by the Purchaser:
a. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations and warranties made by the Seller and the
Company in or pursuant to this Agreement shall be true and
correct in all material respects as of the Closing Date with
the same effect as though such representations and
warranties were made on the Closing Date, except to the
extent that such representations and warranties expressly
relate to any earlier date. Seller and the Company shall
have performed and complied with all the covenants and
agreements and satisfied all the conditions required by this
Agreement to be performed, complied with or satisfied by
Seller and the Company on or prior to the Closing Date.
Seller must have delivered to the Purchaser a certificate
dated as of the Closing Date certifying that this condition
has been fulfilled.
b. NO ADVERSE CHANGE. Purchaser shall have determined, to its
satisfaction, that as of the Closing Date, there has been no
material adverse change beyond the
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control of Purchaser in the business, operations,
properties, assets, revenues, earnings, liabilities
or condition (financial or otherwise) of the Company.
c. EXHIBITS. Purchaser shall have timely received all exhibits
to this Agreement.
d. TRANSFER OF SHARES. The certificate(s) representing the
Shares shall have been transferred and conveyed by Seller to
Purchaser in a manner and by instruments acceptable to
Purchaser and its counsel, free and clear of all liens,
claims, encumbrances, or restrictions of any kind.
Contemporaneously with the consummation of the transfer of
the Shares, Seller shall put Purchaser in full possession
and enjoyment of all properties and assets of the Company.
In addition, Purchaser shall have received the complete
stock ledgers, minute books and other corporate records of
the Company.
e. THIRD PARTY APPROVALS. This Agreement and the transactions
contemplated by this Agreement shall have received all
required approvals and consents from all persons and
entities from which such approvals or consents are required,
including (without limitation) (i) BMW of North America,
Inc. and Volkswagen of America, Inc., but not the other
Manufacturers (ii) the FTC and the Justice Department under
the Hart-Scott-Rodino Act and the regulations promulgated
thereunder, and (iii) the Nevada Department of Motor
Vehicles.
f. COMPLIANCE WITH SECURITIES LAWS. Purchaser shall have (i)
received the Investment Letter, (ii) received the
Registration Rights Agreement, and (iii) determined that all
state and federal securities laws have been fully satisfied
relating to the purchase of the Shares by Purchaser.
g. LEASES. The Purchaser shall have received the Leases,
executed by the respective landlords.
h. PHYSICAL INVENTORIES. Purchaser shall have conducted the
Physical Inventories.
i. APPROVAL OF DOCUMENTATION. The form and substance of all
opinions, certificates, instruments and other documents
delivered to Purchaser in connection with this Agreement
shall be satisfactory in all reasonable respects to
Purchaser and Purchaser's counsel.
j. CORPORATE DIRECTORS AND OFFICERS. The composition of the
directors and officers of the Company shall be as requested
by Purchaser, effective as of the Closing.
k. OPINION OF COUNSEL TO SELLER AND THE COMPANY. Seller and
the Company shall have delivered to Purchaser an opinion of
counsel reasonably satisfactory to Purchaser, dated as of
the Closing Date, that contains such opinions that are
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reasonably requested by Purchaser, including (without
limitation with respect to the Seller) an opinion that the
Shares were issued and will be transferred to Purchaser, in
compliance with all state securities laws.
l. HART-SCOTT-RODINO WAITING PERIOD. The applicable waiting
period under the Hart-Scott-Rodino Act, and the regulations
promulgated thereunder, shall have expired.
m. AUDIT. [INTENTIONALLY OMITTED]
n. ADDITIONAL INFORMATION. Seller and the Company shall have
furnished to Purchaser and Purchaser's counsel such
additional information, certificates, and other documents as
Purchaser shall have reasonably requested.
14. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER. The obligation of
Seller to consummate the transactions contemplated by this Agreement is subject
to the satisfaction on or prior to the Closing Date of the following conditions,
each of which may be waived by the Seller:
a. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations and warranties made by the Purchaser in or
pursuant to this Agreement shall be true and correct in all
material respects as of the Closing Date with the same
effect as though such representations and warranties were
made on the Closing Date, except to the extent that such
representations and warranties expressly relate to an
earlier date, and Purchaser shall have performed and
complied with all of the covenants and agreements and
satisfied all the conditions required by this Agreement to
be performed, complied with or satisfied by Purchaser on or
prior to the Closing Date. The Purchaser must have
delivered to the Sellers a certificate dated as of the
Closing Date certifying that this condition has been
fulfilled.
b. DELIVERY OF PURCHASE PRICE. Subject to the provisions of
subparagraphs 20(e) and 20(g), the Purchaser shall have
delivered (i) the Cash, (ii) the Note and (iii) the
Restricted Shares.
c. LEASES. Seller shall have received the Leases, executed by
the Company.
d. APPROVAL OF DOCUMENTATION. The form and substance of all
certificates and other documents required to be delivered to
Seller in connection with this Agreement shall be
satisfactory in all reasonable respects to Seller and
Seller's counsel.
e. ADDITIONAL INFORMATION. Purchaser shall have furnished to
Seller and Seller's counsel such additional information,
certificates, and other documents as Seller shall have
reasonably requested.
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15. SELLER'S OBLIGATIONS AFTER CLOSING.
a. GENERAL INDEMNITY. Seller shall indemnify, defend and hold
Purchaser and its successors and assigns (the "Purchaser
Indemnified Parties") harmless from and against any and all
liabilities, damages, losses, claims, costs and expenses,
including (without limitation) reasonable attorneys' fees,
arising from or related to (i) any breach of any
representation, warranty, covenant or agreement made by
Seller in this Agreement, or in any certificate or other
document delivered on behalf of Seller or the
nonperformance of any covenant or obligation of Seller
under this Agreement, (ii) any debts, liabilities, or
obligations of any nature (whether absolute, accrued,
contingent or otherwise and whether due or to become due) of
the Company at the Balance Sheet Date that are not reflected
in the Financial Statements, (iii) the conduct of the
business or other operations of the Company prior to the
Deposit Date, (iv) the failure of Seller or the Company to
comply with any federal, state, or local tax laws for any
matter occurring prior to the Deposit Date or otherwise
payable by Seller, and (v) any and all actions, suits,
proceedings, demands and judgments, arising from or related
to any of the matters set forth in this subparagraph 15(a)
occurring prior to the Deposit Date or as a result of the
conduct of the Seller following the Deposit Date.
b. ENVIRONMENTAL INDEMNIFICATION. With respect to any existing
or future liability arising out of any condition, activity
or event existing or occurring prior to the Closing Date
with respect to the Las Vegas Premises, the Henderson
Premises or the 2.5 Acre Tract (individually, a "Property"
and collectively, the "Properties") that violates or
violated any Environmental Laws or for which there may be
any environmental liability in tort, or otherwise (an
"Environmental Event"), the Seller agrees that it will
indemnify, defend and hold harmless the Purchaser
Indemnified Parties from and against all claims, damages,
actions, suits, proceedings, demands, assessments,
adjustments, costs, and expenses, including reasonable
attorneys' fees and expenses of investigation, incurred by
any Purchaser Indemnified Party as a result of the
Environmental Event, and further including, if necessary,
the costs and expenses of any remediation, transportation,
incineration, treatment, or other necessary and appropriate
disposition or mitigation of the Environmental Event.
Notwithstanding the preceding sentence, it is expressly
agreed by the parties that the indemnification provided for
therein shall not apply to any Environmental Event caused
(i) by contamination migrating into or onto a Property from
or through any other real property or (ii) as a result of
the conduct of the Purchaser following the Deposit Date.
c. SELLER'S NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
REGARDING THE COMPANY. Seller acknowledges that the Seller
has in the past, currently has, and in the future may
possibly have access to Confidential Information. Seller
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<PAGE>
agrees that the Seller will not disclose such Confidential
Information to any person or entity for any purpose or
reason whatsoever except to employees and authorized
representatives of the Purchaser, or as required by law,
unless the Confidential Information becomes known to the
public generally through no fault of the Seller. In the
event of a breach or threatened breach by the Seller of this
subparagraph, the Purchaser shall be entitled to a temporary
restraining order, without bond, and an injunction
restraining the Seller from disclosing, in whole or in part,
such Confidential Information. Nothing herein shall be
construed as prohibiting the Purchaser from pursuing any
other available remedy for such breach or threatened breach,
including the recovery of damages.
d. SELLER'S AND CHAISSON'S COVENANT NOT TO COMPETE. Both
Seller and James J. Chaisson, Sr. ("Chaisson") agree that
they will not, either directly or indirectly, alone or with
others, either as an employee, owner, partner, agent,
stockholder, member, director, officer or otherwise:
(i) enter into or engage in the business of operating a new
vehicle dealership, warranty repair business, or other
related new vehicle business with respect to any of
Land Rover, Volkswagen, Audi, Bentley and Rolls Royce
or BMW automobiles within the Las Vegas or Henderson,
Nevada metropolitan areas (the "Restricted Area") for a
term of three (3) years from the Closing Date (the
"Restricted Period"), unless the Purchaser shall not be
approved by the applicable Manufacturer as the owner of
the Company with respect to any of the listed brands of
automobiles, in which the case the limitation contained
herein shall not apply to such brand or brands.
(ii) Further, neither the Seller nor Chaisson will
individually, collectively or in conjunction with
others, directly or indirectly, within the Restricted
Period and Restricted Area, directly or indirectly,
solicit or hire any employee of the Company or
encourage any such employee to leave such employment
unless such employee's employment with the Company or
the Purchaser has been terminated. Seller and Chaisson
also agree that in the event of a breach of these
covenants, the Purchaser may protect its rights by
injunction or otherwise.
16. PURCHASER'S OBLIGATIONS AFTER CLOSING.
a. GENERAL INDEMNITY. Purchaser shall indemnify, defend and
hold Seller and its successors and assigns (the "Seller
Indemnified Parties") harmless from and against any and all
liabilities, damages, losses, claims, costs and expenses,
including (without limitation) reasonable attorneys' fees,
arising from or related to (i) any breach of any
representation, warranty, covenant or agreement made by
Purchaser in this Agreement, or in any certificate or other
document
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<PAGE>
delivered on behalf of Purchaser or the nonperformance
of any covenant or obligation of Purchaser under this
Agreement, (ii) any debts, liabilities, or obligations
of any nature (whether absolute, accrued, contingent
or otherwise and whether due or to become due) of the
Company accruing after the Deposit Date, (iii) the
conduct of the business or other operations of the Company
after the Deposit Date, (iv) the failure of Purchaser to
comply, or causing the Company to fail to comply, with any
federal, state, or local tax laws for any matter occurring
after the Deposit Date or applicable to the transactions
contemplated by this Agreement, and (v) any and all actions,
suits, proceedings, demands and judgments, arising from or
related to any of the matters set forth in this subparagraph
16(a), unless such matter has occurred as the result of the
conduct of Seller following the Deposit Date.
b. ENVIRONMENTAL INDEMNIFICATION. With respect to any future
liability arising out of any condition, activity or event,
caused by, or under the control of, the Purchaser or the
Company occurring after the Deposit Date with respect to any
of the Properties that violates any Environmental Laws or
for which there may be any liability for an Environmental
Event, the Purchaser agrees that it will indemnify, defend
and hold harmless the Seller Indemnified Parties from and
against all claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, costs, and expenses,
including reasonable attorneys' fees and expenses of
investigation, incurred by any Seller Indemnified Party as a
result of the Environmental Event, and further including, if
necessary, the costs and expenses of any remediation,
transportation, incineration, treatment, or other necessary
and appropriate disposition or mitigation of the
Environmental Event. Notwithstanding the preceding sentence,
it is expressly agreed by the parties that the
indemnification provided for therein shall not apply to any
Environmental Event caused (i) by contamination migrating
into or onto a Property from or through any other real
property or (ii) as a result of the conduct of the Seller
following the Deposit Date.
c. PRE-CLOSING PROFITS FROM OPERATIONS. In addition to payment
of the Purchase Price, Purchaser agrees that it will, or
will cause the Company to, pay to Seller an amount equal to
the net profits from the operation of the Company from
September 30, 1997, through the close of business on October
31, 1997 (the "Profits Distribution"). The Profits
Distribution shall be paid to Seller no later than twenty
days following the Deposit Date.
17. INFORMATION REGARDING THE PURCHASER.
a. INSIDER LIABILITY. Seller acknowledges that trading in the
Purchaser's securities by persons possessing material
non-public information may result in private lawsuits for
damages or to civil or criminal proceedings by the
Securities and Exchange Commission. Seller also
acknowledges that liability may be imposed on insiders who
privately disclose otherwise non-public material information
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<PAGE>
where such disclosure coincide with trading Purchaser's
securities by such insiders or by the recipients of such
information.
b. SELLER'S NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
REGARDING THE PURCHASER. Seller acknowledges that the
Seller may possibly have access to certain confidential
information of the Purchaser. Seller agrees that the
Seller will not disclose such confidential information to
any person or entity for any purpose or reason whatsoever
except as required by law, unless the confidential
information becomes known to the public generally through no
fault of the Seller. In the event of a breach or threatened
breach by the Seller of this subparagraph, the Purchaser
shall be entitled to a temporary restraining order, without
bond, and an injunction restraining the Seller from
disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as
prohibiting the Purchaser from pursuing any other available
remedy for such breach or threatened breach, including the
recovery damages.
18. TERMINATION.
a. MUTUAL CONSENT. This Agreement may be terminated by the
written consent of the parties.
b. BY THE PURCHASER. This Agreement may be terminated by
written notice of termination given by the Purchaser to
Seller if a material default should be made by Seller in the
observance of or in the due and timely performance by Seller
of any of the agreements and covenants of the Seller herein
contained, or if there shall have been a material breach by
Seller of any of the warranties and representations of the
Seller herein contained, or if the conditions of this
Agreement to be complied with or performed by Seller at or
before the Deposit Date or the Closing Date, as applicable,
shall not have been complied with or performed at the time
required for such compliance or performance and such
noncompliance or nonperformance shall not have been waived
by the Purchaser.
c. BY THE SELLER. This Agreement may be terminated by written
notice of termination given by the Seller to the Purchaser
if a material default should be made by the Purchaser in the
observance of or in the due and timely performance by the
Purchaser of any of the agreements and covenants of the
Purchaser herein contained, or if there shall have been a
material breach by the Purchaser of any of the warranties
and representations of the Purchaser, or if the conditions
of this Agreement to be complied with or performed by the
Purchaser at or before the Deposit Date or the Closing Date,
as applicable, shall not have been complied with or
performed at the time required for such compliance or
performance and such noncompliance or nonperformance shall
not have been waived by the Seller.
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19. SECTION 338(h)(10) ELECTIONS.
a. Seller agrees to make an election under Section 338(h)(10)
of the Internal Revenue Code and all comparable elections
under state and local tax law with respect to the Company.
b. Purchaser and Seller shall jointly file Form 8023-A with the
Internal Revenue Service in accordance with Section 338 of
the Internal Revenue Code and the regulations thereunder no
later than the 15th day of the ninth month beginning after
the month that includes the Closing Date in accordance with
Internal Revenue Code Section 338(g) and Treasury Regulation
Section 1.338(h)(10)-1(d)(2).
c. Purchaser and Seller shall allocate the Purchase Price to
the assets conveyed pursuant to this Agreement using a
reasonable asset valuation which will be agreed to by
Purchaser and Seller no later than ninety (90) days after
the Closing Date. In all events, however, Purchaser and
Seller agree to conformity of the treatment of all asset
allocations with respect to the Section 338(h)(10)
elections.
20. ADDITIONAL AGREEMENTS.
a. CHAISSON MOTORS CARS AND CHAISSON BMW NAMES. The Seller
consents for all purposes to the Purchaser's continued use
of the Chaisson Motor Cars, Chaisson BMW, and any other
names including the word "Chaisson" (collectively, the
"Chaisson Names") that are, or could be used, in connection
with the operation of the Dealerships within the Restricted
Area. Purchaser is not obligated to use any Chaisson Names.
Seller shall not be prohibited from using the name Chaisson
(i) in any non-competing business venture, (ii) in
connection with the operation of a new automobile dealership
for either of Land Rover, Audi, or Bentley and Rolls Royce
automobiles if Purchaser is not approved by the applicable
Manufacturer as the owner of the Company with respect to any
such brand or brands of automobiles, or (iii) from using any
Chaisson Name if Purchaser ceases using the name Chaisson in
connection with all of its automobile dealerships within the
Restricted Area. The parties acknowledge that the
Dealerships' television, radio and print advertisements
aimed at the Restricted Area may also be broadcast or
distributed outside the Restricted Area, and the Seller
agrees such advertisements shall not be a violation of this
Agreement, and
(i) No separate consideration, over and above the Purchase
Price, is owed by the Purchaser to the Seller for this
consent to use the Chaisson Names as provided herein.
(ii) As soon as practicable after the Closing, the Seller
and Purchaser agree to file any required certificates,
terminations or consents necessary to allow Purchaser
to use the Chaisson Names. The parties mutually agree
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to take other reasonable steps as from time to time may
be appropriate to avoid confusion and mistake by third
parties as to their respective corporate identities.
(iii) The Purchaser's right to use the Chaisson Names in
the Restricted Area shall be binding on the Seller
and on all of its successors, assigns,
transferees, and licensees, and every sale,
assignment, license or transaction entered into by
the Seller shall be expressly subject to the
Purchaser's continued right to use the Chaisson
Names in the Restricted Area as provided in this
Agreement.
(iv) Other provisions hereof to the contrary
notwithstanding, Purchaser's right to continued
use of the Chaisson Names shall absolutely
terminate on the first to occur of the termination
of this Agreement, the mutual agreement of the
Seller and the Purchaser after Closing, or the
Purchaser's cessation of use thereof in the
Restricted Area.
b. EMPLOYEE LIST. To the extent not set forth in Schedule
7(u), Seller agrees to provide, on or before the Deposit
Date, a list of all employees of the Company. Such list
shall contain the employee's name, employment description,
annual compensation or formula for computing such annual
compensation, accrued vacation pay, and tentative vacation
plans.
c. JAGUAR FRANCHISE. Notwithstanding any representation,
warranty or covenant of the Company or the Seller with
respect to the operation of the Dealerships or the
maintenance of the Company's assets prior to Closing,
Purchaser and Seller agree that Purchaser is not purchasing
the right to sell and service new Jaguar automobiles (the
"Franchise"), pursuant to a Jaguar Cars new automobile
dealer agreement (the "Franchise Dealer Agreement"),
including without limitation (i) the Franchise, (ii) all new
unregistered Jaguar automobiles, including demonstrators,
and optional equipment attached thereto (the "New Jaguar
Automobiles"), (iii) all service department tools, designed
for and used in the servicing of only Jaguar automobiles,
and parts and accessories manufactured for installation only
on Jaguar automobiles (collectively, the "Jaguar Parts"),
(iv) the goodwill with respect to the Franchise, together
with all right, title and interest of the Company in and to
all fictitious firm names, trade names, logos, service
marks, copyrighted materials, trade secrets, and other
proprietary rights uniquely relating to and used in
connection with only the Franchise (the "Jaguar Goodwill"),
and (v) all records in the possession of Company uniquely
pertaining to the sale and servicing of only Jaguar
automobiles (the "Jaguar Records"). The Franchise, the New
Jaguar Automobiles, the Jaguar Parts, the Jaguar Goodwill,
and the Jaguar Records are sometimes hereinafter referred to
collectively as the "Jaguar Assets." Prior to Closing, the
Company shall distribute the Jaguar Assets to Seller,
subject to Seller either paying in full or, with the consent
of the lien holder(s) and the release of the Company
therefrom, assuming the Company's floor plan liability
29
<PAGE>
secured by liens on such New Jaguar Automobiles. Seller
shall have until June 30, 1998, to relocate the Jaguar
Assets (whether by sale or otherwise). Prior to the
relocation of the Jaguar Assets, either the Purchaser or the
Company shall manage and operate the Jaguar Assets under a
Management Agreement as provided herein.
e. PARTIAL PAYMENT OF PURCHASE PRICE. On November 12, 1997
(the "Deposit Date"), Purchaser shall pay to Seller earnest
money in an amount equal to the Net Worth, plus $575,000,
plus $200,000 representing the Jaguar Deposit (as defined in
the Management Agreement referenced in subparagraph 20(f).
The Net Worth and the $575,000 are collectively referred to
hereinafter as the "Deposit." The Deposit shall be credited
to the Purchase Price at the Closing. If by the close of
business on December 31, 1997, either BMW of North America,
Inc. or Volkswagen of America, Inc. has not approved
Purchaser to acquire ownership of the Company, (i) this
Agreement shall terminate, unless the parties shall mutually
agree to extend the Closing Date, and (ii) the Seller and
the Company shall be jointly and severally obligated to, and
hereby agree to, refund the Deposit to Purchaser no later
than January 15, 1998.
f. MANAGEMENT AGREEMENT. Purchaser and Seller agree that
effective as of November 1, 1997, Purchaser shall manage the
Dealerships under a Management Agreement in the form of
Exhibit "K" hereto.
g. APPROVAL BY THE MANUFACTURERS. Notwithstanding anything
contained in this Agreement to the contrary, if by the close
of business on December 31, 1997, (i) both BMW of North
America, Inc. and Volkswagen of America, Inc. have approved
Purchaser to acquire ownership of the Company, (ii) any
other Manufacturer has not approved Purchaser to acquire
ownership of the Company, and (iii) all other conditions to
the obligations of the parties hereunder (other than those
requiring the taking of action at the Closing) have been
satisfied or waived, Purchaser and Seller shall conduct the
Closing of the transactions contemplated by this Agreement,
but shall place that portion of the Cash which equals the
amounts set forth on Schedule 20(g) for any Manufacturers
that have not given their approval into an interest bearing
account pursuant to an escrow agreement (the "Escrow
Agreement") between Purchaser and Seller. The Escrow
Agreement shall be in the form of Exhibit "L" hereto. The
Company shall manage the franchise for each Manufacturer
that has not given its approval by the Closing, under a
Management Agreement in the form of Exhibit "M" hereto.
21. 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
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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. EXHIBITS. Preliminary drafts of all Schedules and Exhibits
A through Fshall be prepared by the Seller on or before
November 7, 1997, and delivered to Purchaser for Purchaser's
review. Preliminary drafts of Exhibits G through L shall be
prepared by Purchaser on or before November 7, 1997, and
delivered to Seller for Seller's review. Final Schedules
and the forms of final Exhibits shall be prepared by the
party that prepared the preliminary drafts, initialed and
dated by the parties, and shall be deemed incorporated
herein even if not physically attached to this Agreement.
SCHEDULES (FOR REFERENCE ONLY):
Schedule 7(b) Officers, Directors, and Assumed Names
Schedule 7(f) Real Property
Schedule 7(g) Tangible Personal Property
Schedule 7(h) Inventories
Schedule 7(i) Licenses
Schedule 7(j) Intellectual Property
Schedule 7(k) Encumbrances
Schedule 7(m) Indebtedness and Guaranties
Schedule 7(p) Litigation
Schedule 7(o) Transactions Since the Balance Sheet Date
Schedule 7(q) Underground Storage Tanks
Schedule 7(r) Contracts and Agreements
Schedule 7(s) Employee Benefit Plans
Schedule 7(t) Insurance
Schedule 7(u) Personnel
Schedule 7(v) Accounts Receivable
Schedule 7(y) Bank Accounts and Powers of Attorney
Schedule 20(g) Manufacturer Allocation
EXHIBITS (FOR REFERENCE ONLY):
Exhibit "A" The Note
Exhibit "B" Las Vegas Lease
Exhibit "C" Henderson Lease
Exhibit "D" [Intentionally Omitted]
Exhibit "E" Seller's Certificate
Exhibit "F" Opinion of Sellers' Counsel
Exhibit "G" Investment Letter
Exhibit "H" Registration Rights Agreement
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Exhibit "I" Purchaser's Certificate
Exhibit "J" Opinion of Purchaser's Counsel
Exhibit "K" Pre-Closing Management Agreement
Exhibit "L" Escrow Agreement
Exhibit "M" Non-Approving Manufactures Management
Agreement
c. THIRD PARTY CONSENTS. The Seller and the Purchaser
mutually agree to cooperate and use their respective
reasonable, good faith efforts to prepare all documentation,
to effect all filings and to obtain all permits, consents,
approvals, and authorizations of all third parties and
governmental entities as may be necessary to consummate the
transactions contemplated by this Agreement.
d. 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 or other actions as such other
parties may reasonably deem necessary or desirable to
consummate the transactions contemplated by this Agreement.
e. PUBLICITY. The parties hereto agree that no public release
or announcement concerning the terms of the transactions
contemplated by this Agreement shall be issued by any party
without the prior written consent of the other parties
(which consent shall not be unreasonably withheld), except
as such release or announcement may be required by law, in
which case the party required to make the release or
announcement shall allow the other parties reasonable time
to comment on such release or announcement in advance of
such issuance.
f. AMENDMENT. This Agreement may not be amended, modified, or
terminated except by an instrument in writing signed by all
parties to this Agreement.
g. 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.
h. 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.
i. EXPENSES. Whether or not the transactions contemplated by
this Agreement are consummated, each of the parties to this
Agreement shall be responsible for its
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own costs and expenses incurred in connection with the
preparation and negotiation of this Agreement and with
the transactions contemplated hereby.
j. 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. Purchaser may
assign its rights under this Agreement to an affiliated
entity, and thereafter the Purchaser and its assignee shall
be fully obligated, responsible and liable for the
performance of the Purchaser's obligations hereunder.
Except for the obligation to deliver the Shares in
accordance with the terms hereof, Seller may assign its
rights under this Agreement to an entity wholly owned by
Seller, and thereafter the Seller and its assignee shall be
fully obligated, responsible and liable for the performance
of the Seller's obligations hereunder. Any assignment in
violation of this Agreement shall be void.
k. 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.
l. 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 PURCHASER:
Cross-Continent Auto Retailers, Inc.
1201 S. Taylor
P.O. Box 750
Amarillo, Texas 79105-0750
Attention: Robert W. Hall
(806) 374-8653
IF TO SELLER OR THE COMPANY:
James J. Chaisson, Sr.
40 Innisbrook
Las Vegas, Nevada 89113
33
<PAGE>
with a copy to:
Jones, Jones, Close & Brown, Chartered
3773 Howard Hughes Parkway, 3rd Floor South
Las Vegas, Nevada 89109
Attention: Douglas G. Crosby, 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.
m. DEFINITION OF KNOWLEDGE. As used in this Agreement, the
Seller's or the Company's "actual knowledge" or "knowledge"
shall include the knowledge of the Seller and the employees
and agents of the Company. Each representation and warranty
that is limited to the Seller's or the Company's "actual
knowledge" or "knowledge" is made with the understanding
that the Seller or the Company has made a good faith effort
to examine whatever sources of information as are in the
possession or control of the Seller or the Company in order
to verify the truth and accuracy of such representation and
warranty.
n. TIME IS OF THE ESSENCE. Time shall be of the essence with
respect to this Agreement and the consummation of the
transactions contemplated hereby.
o. REMEDIES. None of the remedies provided for in this
Agreement shall be the exclusive remedy of any party for a
breach of this Agreement. The parties hereto shall have the
right to seek any other remedy at law or in equity in lieu
of or in addition to any remedies provided for in this
Agreement.
p. SURVIVAL OF OBLIGATIONS. To the extent necessary to carry
out the terms and provisions of this Agreement, the
obligations and rights arising from or related to this
Agreement shall survive the Closing and shall not be merged
into the various documents executed and delivered at the
time of the Closing.
q. 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.
r. GOVERNING LAW. This Agreement shall be construed, enforced,
and governed in accordance with the laws of the State of
Nevada.
s. 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
34
<PAGE>
resolution procedure. The jurisdiction and venue for any
proceeding, whether by mediation, arbitration, litigation or
other dispute resolution procedure, shall be Clark County,
Nevada.
t. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute
one and the same instrument.
u. SUPERSEDING OF INITIAL STOCK PURCHASE AGREEMENT AND
AMENDMENT TO STOCK PURCHASE AGREEMENT. This Amended and
Restated Stock Purchase Agreement replaces and supersedes in
their entirety the Stock Purchase Agreement, dated October
8, 1997, and the Amendment to Stock Purchase Agreement,
dated October 14, 1997, by and among the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
PURCHASER: CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
By:
----------------------------------------------------
Bill Gilliland, Chairman and Chief Executive Officer
SELLER: THE CHAISSON FAMILY TRUST R-501
By:
----------------------------------------------------
James J. Chaisson, Sr., Trustee
COMPANY: JRJ INVESTMENTS, INC., a Nevada corporation
By:
----------------------------------------------------
James J. Chaisson, Sr., President
35
<PAGE>
Exhibit 10.1
UNSECURED PROMISSORY NOTE
January 5, 1998
Las Vegas, Nevada $2,760,000.00
The undersigned, for value received promises to pay to the order of the
Chaisson Family Trust R-501 ("Payee"), at C/O William Conway, CPA, Conway,
Stuart & Woodbury, 4021 Meadows Lane, Las Vegas, Nevada 89107, or at such
other place as Payee from time to time may designate in writing, the
principal sum of TWO MILLION SEVEN HUNDRED SIXTY THOUSAND AND NO/100 DOLLARS
(U.S.$2,760,000.00). The principal sum outstanding shall bear interest at the
rate of eight percent (8) per annum from the date hereof.
Principal and interest is payable in sixty (60) equal installments of
FIFTY FIVE THOUSAND NINE HUNDRED SIXTY TWO AND 85/100 DOLLARS
(U.S.$55,962.85), commencing on February 5, 1998, and the same day of each
consecutive month thereafter until paid in full.
Time is of the essence of payment. In the event of: (1) the failure of
the undersigned to make any payment within five (5) days of a due date as set
forth above, (2) the dissolution of the undersigned, (3) the filing of a
petition requesting that the undersigned be adjudged a bankrupt, which
petition remains undismissed for a period of thirty (30) days following its
filing, (4) the undersigned becoming insolvent or making a general assignment
for the benefit of creditors, (5) a receiver being appointed of the property
or assets of the undersigned, (6) the undersigned shall sell substantially
all of its assets, (7) the undersigned shall be merged into another entity,
or (8) the undersigned shall be a party to a share exchange resulting in the
undersigned becoming the subsidiary of another entity, the entire principal
and accrued interest shall at the option of the holder hereof become
immediately due and payable without prior demand or notice, which the
undersigned hereby waives. After maturity or default the rate of interest on
any unpaid balance of principal shall be increased by two percent (2%) per
annum above the rate of interest herein set forth until paid, both before and
after judgment.
This Note may be prepaid in full, but not in part, at any time without
premium or penalty.
The undersigned waives diligence, demand, presentment for payment,
protest, notice of protest, notice of dishonor, and notice of nonpayment. In
addition, the undersigned promises to pay reasonable attorneys' fees and
costs incurred in the collection of this Note or any part thereof without
suit, or in the event of a suit by the holder, such additional attorneys'
fees and costs of suit as the court may adjudge reasonable.
This Note shall be construed and governed by the laws of the State of
Nevada.
Cross-Continent Auto Retailers, Inc.
By:
---------------------------------
R. Wayne Moore, Secretary
<PAGE>
Exhibit 10.2
TRIPLE NET LEASE AGREEMENT
(2333 SOUTH DECATUR BOULEVARD)
BY AND BETWEEN
JRJ PROPERTIES,
A NEVADA GENERAL PARTNERSHIP
AND
JRJ INVESTMENTS, INC.
A NEVADA CORPORATION
DATED: NOVEMBER 1, 1997
<PAGE>
TABLE OF CONTENTS
1. LEASE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 LIMITATION ON USES. . . . . . . . . . . . . . . . . . . . . . 1
2.3 COMPLIANCE WITH PERMITS . . . . . . . . . . . . . . . . . . . 1
3. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3.1 COMMENCEMENT DATE . . . . . . . . . . . . . . . . . . . . . . 1
3.2 RENEWAL OPTIONS . . . . . . . . . . . . . . . . . . . . . . . 1
3.3 EXERCISE OF OPTIONS . . . . . . . . . . . . . . . . . . . . . 2
3.4 ACCEPTANCE OF PREMISES. . . . . . . . . . . . . . . . . . . . 2
4. BASE RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.1 INITIAL BASE RENT . . . . . . . . . . . . . . . . . . . . . . 2
4.2 RENT ESCALATIONS. . . . . . . . . . . . . . . . . . . . . . . 3
4.3 OPTION RENT . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.4 PARTIAL MONTHS. . . . . . . . . . . . . . . . . . . . . . . . 4
4.5 NO OFFSET . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . . . . 5
7. ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.1 RESTRICTION ON ALTERATIONS. . . . . . . . . . . . . . . . . . 5
7.2 REMOVAL AND SURRENDER OF FIXTURES AND TENANT ALTERATIONS. . . 6
8. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8.1 PERSONAL PROPERTY TAXES . . . . . . . . . . . . . . . . . . . 7
8.2 REAL PROPERTY TAXES . . . . . . . . . . . . . . . . . . . . . 7
9. INSURANCE; WAIVER OF SUBROGATION. . . . . . . . . . . . . . . . . . 7
9.1 LIABILITY INSURANCE . . . . . . . . . . . . . . . . . . . . . 7
9.2 PROPERTY INSURANCE. . . . . . . . . . . . . . . . . . . . . . 7
9.3 POLICY REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . 8
9.4 WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . . 8
10. FIRE OR CASUALTY. . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. EMINENT DOMAIN. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
i
<PAGE>
11.1 TAKING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11.2 TEMPORARY TAKING. . . . . . . . . . . . . . . . . . . . . . . 9
12. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . 9
12.1 PROHIBITION . . . . . . . . . . . . . . . . . . . . . . . . . 9
12.2 NO NOVATION . . . . . . . . . . . . . . . . . . . . . . . . . 10
12.3 JOINT AND SEVERAL OBLIGATIONS . . . . . . . . . . . . . . . . 10
13. LANDLORD'S RIGHT OF ENTRY . . . . . . . . . . . . . . . . . . . . . 10
14. INDEMNIFICATION AND LIMITATION ON LIABILITY . . . . . . . . . . . . 10
14.1 INDEMNITY BY TENANT . . . . . . . . . . . . . . . . . . . . . 10
14.2 LIMITATION ON LANDLORD'S LIABILITY. . . . . . . . . . . . . . 10
14.3 INDEMNITY BY LANDLORD . . . . . . . . . . . . . . . . . . . . 11
15. TRANSFER BY LANDLORD. . . . . . . . . . . . . . . . . . . . . . . . 11
16. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
16.1 SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . 11
16.2 ATTORNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 11
16.3 NOTICE FROM TENANT. . . . . . . . . . . . . . . . . . . . . . 11
17. ESTOPPEL CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . 12
18. SURRENDER OF PREMISES AND REMOVAL OF PROPERTY . . . . . . . . . . . 12
18.1 NO MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 12
18.2 SURRENDER OF PREMISES . . . . . . . . . . . . . . . . . . . . 12
18.3 DISPOSAL OF PROPERTY. . . . . . . . . . . . . . . . . . . . . 12
19. HOLDING OVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
20. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 13
20.1 DEFAULTS BY TENANT. . . . . . . . . . . . . . . . . . . . . . 13
20.2 LANDLORD'S REMEDIES . . . . . . . . . . . . . . . . . . . . . 14
20.3 RE-ENTRY NOT TERMINATION. . . . . . . . . . . . . . . . . . . 15
20.4 DEFINITION OF TENANT. . . . . . . . . . . . . . . . . . . . . 15
21. INTEREST ON TENANT'S OBLIGATIONS; LATE CHARGES. . . . . . . . . . . 15
21.1 INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
21.2 LATE CHARGE . . . . . . . . . . . . . . . . . . . . . . . . . 15
22. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ii
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23. SIGNAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
24. TENANT'S RECOURSE . . . . . . . . . . . . . . . . . . . . . . . . . 16
25. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . 16
25.1 NO WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . 16
25.2 LANDLORD'S RIGHT TO PERFORM . . . . . . . . . . . . . . . . . 16
25.3 TERMS; HEADINGS . . . . . . . . . . . . . . . . . . . . . . . 17
25.4 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 17
25.5 SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . 17
25.6 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
25.7 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . 18
25.8 TIME OF ESSENCE . . . . . . . . . . . . . . . . . . . . . . . 18
25.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 18
25.10 ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . . 18
iii
<PAGE>
LEASE SUMMARY
This lease summary is attached to the within lease for convenience of
reference only and shall in no way be considered a part of said lease or used in
the interpretation of any of the provisions contained therein.
DATE: November 1, 1997
LANDLORD: JRJ PROPERTIES
TENANT: JRJ INVESTMENTS, INC.
PREMISES: 2333 South Decatur Boulevard, Las Vegas, Nevada
TERM: Beginning on the Commencement Date and continuing for an
initial Lease Term of ten (10) years.
RENEWAL OPTIONS: Two (2) five (5)-year options.
COMMENCEMENT DATE: The date first set forth above.
BASE RENT (NET): Five Hundred Forty Thousand Dollars ($540,000) per annum.
RENT ESCALATIONS: CPI adjustments every two (2) years, with a maximum
adjustment of eight percent (8%) (i.e., four percent (4%)
per annum). On the first day of the first Option Term, Base
Rent is adjusted to the greater of (i) ten percent (10%) of
the fair market value of the Premises or (ii) the rent for
the last year of the initial Lease Term, increased by the
CPI adjustment.
LANDLORD'S ADDRESS: JRJ Properties
c/o Conway, Stuart & Woodbury
4021 Meadows Lane
Las Vegas, Nevada 89107
TENANT'S ADDRESS: 2333 South Decatur Boulevard
Las Vegas, Nevada 89102
Attn: President
iv
<PAGE>
TRIPLE NET LEASE AGREEMENT
THIS LEASE is made and entered into as of this 1st day of November, 1997,
by and between JRJ PROPERTIES, a Nevada general partnership (the "LANDLORD") and
JRJ INVESTMENTS, INC., a Nevada corporation (the "TENANT").
1. LEASE OF PREMISES.
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord,
that certain parcel of real property, consisting of approximately four and
83/100 (4.83) acres, located at 2333 South Decatur Boulevard, Las Vegas, Nevada
and specifically described in Exhibit "A" attached hereto and incorporated
herein by this reference, together with all improvements thereon and
appurtenances thereto (the "PREMISES"). The Premises do not include the signs
currently attached to or built on any part of the real property because such
signs have been purchased by, and remain the property of, Tenant.
2. PURPOSE.
2.1 USE. The use of the Premises shall be limited to the
operation of one or more motor vehicle dealerships with related amenities.
The Premises shall be used for no other purpose without the prior written
consent of Landlord, which consent shall not be unreasonably withheld.
2.2 LIMITATION ON USES. Tenant shall not use or occupy the
Premises, or permit the use or occupancy of the Premises, in any manner or
for any purpose which: (a) would violate any law or regulation of any
governmental authority, or the provisions of any applicable governmental
permit; or (b) would constitute waste or otherwise materially and adversely
affect the value of the Premises.
2.3 COMPLIANCE WITH PERMITS. Tenant shall procure and maintain
any license or permit required for the lawful conduct of its business or
other activity on the Premises, submit such license or permit for inspection
by Landlord, if so requested, and comply at all times with all terms and
conditions thereof. The lease of the Premises shall be subject to all
statutes, laws, ordinances and regulations applicable from time to time to
the use, occupancy or possession of the Premises.
3. TERM.
3.1 COMMENCEMENT DATE. The term of this Lease shall commence on
the date first set forth above (the "COMMENCEMENT DATE") and shall end on the
last day of the calendar month preceding the month in which the tenth annual
anniversary of the Commencement Date occurs, subject to the exercise of
Tenant's Renewal Options, unless sooner terminated pursuant hereto (the
"LEASE TERM").
<PAGE>
3.2 RENEWAL OPTIONS. Landlord hereby grants the Tenant two (2)
separate options (collectively "RENEWAL OPTIONS") to extend the Lease Term
for periods of five (5) years each (the "OPTION TERMS"), which options shall
be exercisable only by written notice delivered by Tenant to Landlord,
provided that as of the date of delivery of such notice and as of the last
day of the initial Lease Term (or first Option Term, as applicable), no
uncured Event of Default exists. In no event shall Tenant be entitled to
exercise the second Renewal Option unless Tenant has properly and timely
exercised the first Renewal Option and in no event shall Tenant be entitled
to extend the Lease Term beyond the second Option Term.
3.3 EXERCISE OF OPTIONS.
3.3.1 The first Renewal Option shall be exercised by
Tenant, if at all, only in the following manner: (i) Tenant may deliver
written notice ("INTEREST NOTICE") to Landlord not less than eight (8) months
prior to the expiration of the initial Lease Term stating that Tenant is
interested in exercising its option; (ii) Landlord, after receipt of the
Interest Notice (if such notice is given), shall deliver notice (the "FAIR
MARKET VALUE NOTICE") to Tenant on or before seven (7) months prior to the
expiration of the initial Lease Term, which Fair Market Value Notice shall
set forth Landlord's opinion of the Fair Market Value of the Premises, and
(iii) if Tenant wishes to exercise the first Renewal Option, Tenant shall, on
or before the date occurring six (6) months prior to the expiration of the
initial Lease Term, exercise the option by delivering written notice thereof
to Landlord, and upon, and concurrent with, such exercise, Tenant may, at its
option, object to the Fair Market Value contained in Landlord's Fair Market
Value Notice, in which case the parties shall follow the procedure, and the
Fair Market Value shall be determined, as set forth in Sections 4.3.1 and
4.3.2 below. If Tenant fails to provide the Interest Notice pursuant to (i)
above, Tenant shall not lose its rights pursuant to (iii) above and Landlord
shall not have to provide the Fair Market Value Notice pursuant to (ii)
above, and instead the Fair Market Value shall be determined pursuant to
Sections 4.3.1 and 4.3.2 below. If Tenant provides the Interest Notice and
Landlord responds with the Fair Market Value Notice and Tenant exercises the
Renewal Option but does not object to the Fair Market Value contained in
Landlord's Fair Market Value Notice as provided in Subsection 3.3.1(iii)
above, the Fair Market Value shall be as set forth in Landlord's Fair Market
Value Notice.
3.3.2 Tenant's second Renewal Option shall be exercised,
if at all, by written notice to Landlord not less than eight (8) months prior
to the expiration of the initial Option Term.
3.4 ACCEPTANCE OF PREMISES. By entering into possession of the
Premises or any part thereof, Tenant shall be presumptively deemed to have
accepted the Premises and to have agreed that the Premises are in
satisfactory condition and in full compliance with the requirements of this
Lease as of the date of such possession. Tenant acknowledges that neither
Landlord nor any agent of Landlord has made any representation or warranty
with respect to the Premises, including without limitation, any
representation or warranty with respect to the suitability or fitness of the
Premises for the conduct of Tenant's business.
2
<PAGE>
4. BASE RENT.
The basic annual rent payable to Landlord ("BASE RENT") shall be as
set forth in this Article 4.
4.1 INITIAL BASE RENT. Tenant shall pay Landlord Base Rent for
the Premises in the amount of Five Hundred Forty Thousand Dollars ($540,000)
per annum. Such initial Base Rent shall be payable in twelve (12) equal
monthly installments of Forty-Five Thousand Dollars ($45,000), each
installment being payable in advance on the first day of each calendar month
beginning on the Commencement Date and continuing throughout the term of this
Lease.
4.2 RENT ESCALATIONS. Beginning upon the first day of the
calendar month in which the second annual anniversary of the Commencement
Date occurs, and on the same date of every second year thereafter during the
Lease Term (subject to Section 4.3 below) (each such date being referred to
herein as an "ADJUSTMENT DATE"), the Base Rent shall be increased, but not
decreased, to reflect increases in the Consumer Price Index for All Urban
Consumers, all items, (1982-84=100), issued by the United States Department
of Labor for Los Angeles-Anaheim-Riverside, California, or any renamed local
index covering generally the same metropolitan area or any successor or
substitute index appropriately adjusted (hereinafter, the "INDEX"). Each
such increase pursuant to this Section 4.2 shall be calculated by multiplying
the initial Base Rent set forth in Section 4.1 above by a fraction, the
denominator of which shall be the Index for the month preceding the
Commencement Date (the "BASE INDEX") and the numerator of which shall be the
Index for the month preceding the Adjustment Date (the "ADJUSTMENT INDEX").
In no event shall Base Rent be increased pursuant to this Section 4.2 by more
than four percent (4%) per annum. Each adjustment hereunder shall be made as
soon as reasonably possible after the Adjustment Index becomes available
(provided that no delay in making any adjustment shall constitute a waiver of
Landlord's right to require that Tenant pay the adjusted Base Rent), and
Tenant shall begin paying the adjusted Base Rent upon the first regularly
scheduled rent payment date which is at least fifteen (15) days after notice
of the adjustment is given by Landlord. Tenant's first payment of the
adjusted Base Rent hereunder shall include any amounts which are necessary
to retroactively adjust Base Rent from the Adjustment Date through such first
date of payment.
4.3 OPTION RENT. The Base Rent payable by Tenant shall be
adjusted upon the commencement of the first Option Term to the greater of (i)
ten percent (10%) per annum of the then "FAIR MARKET VALUE" for the Premises
as of the commencement date of the first Option Term; or (ii) the Base Rent
which would otherwise be payable as a result of the adjustment required by
Section 4.2 above, with the commencement of the first Option Term being the
Adjustment Date for purposes of the computation of such adjustment. The term
"FAIR MARKET VALUE" for the purposes of this Lease shall mean the amount that
a willing seller would accept and a willing, unrelated buyer would pay for
the Premises, without taking into account the need for any repair or
restoration which is the obligation of Tenant pursuant to this Lease.
Beginning upon the second annual anniversary of the commencement of the first
Option Term, and every two (2) years thereafter throughout the first Option
Term and the second Option Term, if any, the Base Rent payable by Tenant
shall be
3
<PAGE>
adjusted in the manner described in Section 4.2 above.
4.3.1 DETERMINATION OF FAIR MARKET VALUE. In the event
Tenant timely and appropriately objects to the Fair Market Value Notice, or in
the event Tenant timely exercises its first Renewal Option without first
delivering an Interest Notice to Landlord, Landlord and Tenant shall attempt to
agree upon the Fair Market Value. If Landlord and Tenant fail to reach
agreement within thirty (30) days following Tenant's objection to the Fair
Market Value Notice or within thirty (30) days following Tenant's exercise of
the Renewal Option in the event Tenant does not deliver an Interest Notice (the
"OUTSIDE AGREEMENT DATE"), then each party shall place in a separate sealed
envelope their final proposal as to Fair Market Value and such determination
shall be submitted to arbitration in accordance with Section 4.3.2 below,
provided that Landlord's determination of Fair Market Value shall not be less
favorable to Tenant than that specified in Landlord's Fair Market Value Notice
(if applicable).
4.3.2 ARBITRATION.
(a) Landlord and Tenant shall meet with each other
within five (5) business days of the Outside Agreement Date and exchange the
sealed envelopes and then open such envelopes in each other's presence. If
Landlord and Tenant do not mutually agree upon the Fair Market Value within
five (5) business days of the exchange and opening of envelopes, then, within
ten (10) business days of such exchange Landlord and Tenant shall agree upon
and jointly appoint a single arbitrator who shall be an M.A.I. real estate
appraiser who shall have been active over the five year period ending on the
date of such appointment in the appraisal of commercial projects in the Las
Vegas Valley. Neither Landlord nor Tenant shall consult with such appraiser
as to his or her opinion as to Fair Market Value prior to the appointment.
The determination of the arbitrator shall be limited solely to the issue of
whether Landlord's or Tenant's submitted Fair Market Value for the Premises
is the closest to the actual Fair Market Value for the Premises as determined
by the arbitrator, taking into account the requirements of this Section 4.3
regarding the same. The arbitrator may hold such hearings and require such
briefs as the arbitrator, in his or her sole discretion, determines to be
necessary. In addition, Landlord or Tenant may submit to the arbitrator,
with a copy to the other party, within five (5) business days after the
appointment of the arbitrator, any market data and additional information
that such party deems relevant to the determination of the Fair Market Value
("FMV DATA") and the other party may submit a reply in writing within five
(5) business days after receipt of such FMV Data.
(b) The arbitrator shall, within thirty (30) days
of his or her appointment, reach a decision as to whether the parties shall
use Landlord's or Tenant's submitted Fair Market Value, and shall notify
Landlord and Tenant thereof.
(c) The decision of the arbitrator shall be binding
upon Landlord and Tenant.
(d) If Landlord and Tenant fail to agree upon and
appoint an
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arbitrator, then the appointment of the arbitrator shall be made by the
Presiding Judge of the District Court of Clark County, Nevada, or, if he or
she refuses to act, by any judge having jurisdiction over the parties.
(e) The cost of arbitration shall be paid by
Landlord and Tenant equally.
4.4 PARTIAL MONTHS. If the Term begins on a day other than the
first day of a calendar month, or ends on a day other than the last day of a
calendar month, Base Rent for such beginning or ending month shall be
prorated based upon the number of days in such month.
4.5 NO OFFSET. Base Rent, together with all other sums due
hereunder (herein called "ADDITIONAL RENT"), shall be paid to the Landlord
without deduction or offset of any kind, and in advance and without demand
(except as otherwise herein expressly provided) in lawful money of the United
States in care of Conway, Stuart & Woodbury, 4021 Meadows Lane, Las Vegas,
Nevada 89107 or such other location or to such other person as Landlord may
from time to time designate in writing. The Base Rent and Additional Rent
may sometimes be referred to herein collectively as the "RENT." Except as
specifically set forth in this Lease, (i) the rent shall be absolutely net to
Landlord, and (ii) under no circumstances or conditions shall Landlord be
expected or required to make any payment of any kind whatsoever or be under
any other obligation or liability hereunder.
5. UTILITIES.
Tenant shall be solely responsible for and promptly pay all charges
for telephone, electric, gas, sewer, water and all other services and utilities
used or consumed on the Premises. If any such charges are billed to the
Landlord, then Tenant shall make payment in the full amount billed to Landlord
within fifteen (15) days after written demand from Landlord.
6. MAINTENANCE AND REPAIRS.
Tenant shall, at Tenant's sole expense, keep the Premises and every
part thereof (including, without limitation, the roof and structural elements
of the Premises, plate glass, all electrical, plumbing, water, sewer and life
safety systems of the Premises, and the parking areas, driveways and
landscaping areas of the Premises) clean and in good condition and repair and
in compliance with all applicable laws and regulations, at all times during
the Lease Term. Except as specifically provided herein, Landlord shall have
no obligation to modify, alter, remodel, improve or repair the Premises or
any part thereof. Notwithstanding the foregoing, (i) Tenant's obligation with
respect to the roof, structural elements and parking areas of the Premises
shall be limited to maintenance and repair work, and, except as provided in
Article 10 (Fire or Casualty), Tenant shall have no obligation to replace
such items (such replacement, subject to Article 10, being the responsibility
of Landlord if and to the extent required); and (ii) Tenant shall be required
to alter the Premises to comply with applicable laws and regulations only to
the extent that the required
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alteration is not generally applicable to all similar structures within the
applicable jurisdiction but is instead made necessary by either (A) some
other alteration proposed by Tenant; or (B) Tenant's specific use of the
Premises. Any other alterations which are required by applicable law or
regulation shall be performed by Landlord, provided that the cost of such
work shall be amortized over the useful life of the alteration and that
portion of such amortized cost which is allocable to the Lease Term shall be
passed through to and paid by Tenant monthly as Additional Rent.
7. ALTERATIONS.
7.1 RESTRICTION ON ALTERATIONS. Tenant may make no alteration,
repairs, additions or improvements in, to or about the Premises
(collectively, "TENANT ALTERATIONS") without the prior written consent of
Landlord, and Landlord may impose as a condition to such consent such
reasonable requirements as Landlord may deem necessary or desirable (provided
that Landlord's consent shall not be required with respect to nonstructural
alterations costing less than Twenty-Five Thousand Dollars ($25,000)).
Tenant shall pay to Landlord, Landlord's reasonable charges for reviewing and
inspecting all Tenant Alterations to assure full compliance with all of
Landlord's requirements. Landlord does not expressly or implicitly covenant
or warrant that any plans or specifications submitted by Tenant are safe or
that the same comply with any applicable laws, ordinances, codes, rules or
regulations. Further, Tenant shall indemnify, protect, defend and hold
Landlord harmless from any loss, cost or expense, including attorneys' fees
and costs, incurred by Landlord as a result of any defects in design,
materials or workmanship resulting from Tenant Alterations. Tenant shall
promptly pay all costs incurred in connection with all Tenant Alterations and
shall not permit the filing of any mechanic's lien or other lien in
connection with any Tenant Alterations. If a mechanic's lien or other lien
is filed against the Premises, Tenant shall discharge or cause to be
discharged (by bond or otherwise) such lien within thirty (30) days after
Tenant receives notice of the filing thereof and shall not allow any such
lien to be foreclosed upon. Tenant shall have the right to contest any
mechanics' lien so long as Tenant posts the bond required to remove the lien
from the Premises within the aforementioned thirty (30) day period. If a
mechanic's lien or other lien is filed against the Premises and Tenant fails
to timely discharge (by bond or otherwise) such lien, Landlord may, without
waiving its rights and remedies based on such breach of Tenant and without
releasing Tenant from any of its obligations, cause such lien to be released
by any means it shall deem proper, including payment in satisfaction of the
claim giving rise to such lien. Tenant shall pay to Landlord within thirty
(30) days following notice by Landlord, any sum paid by Landlord to remove
such liens, together with interest at the Reference Rate, as defined in
Section 20.2 below, plus two percent (2%) per annum, from the date of such
payment by Landlord. Any increase in any tax, assessment or charge levied or
assessed as a result of any Tenant Alterations shall be payable by Tenant.
7.2 REMOVAL AND SURRENDER OF FIXTURES AND TENANT ALTERATIONS.
All Tenant Alterations and other work or improvements installed in the
Premises which are attached to, or built into the Premises so that the same
may not be removed without substantial damage to the Premises, including,
without limitation, floor coverings, wall coverings, paneling, molding, doors
(including garage doors), vaults, plumbing systems, electrical systems,
mechanical systems, lighting systems,
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built-in communication systems and cabling and outlets for the systems
mentioned above and for all telephone, radio, computer and television
purposes, and any special flooring or ceiling installations, shall become the
property of Landlord and shall be surrendered with the Premises, as a part
thereof, at the end of the Lease Term; provided that Landlord may, as a
condition to approving any proposed alteration, require that such alteration
be removed by Tenant upon the end of the Lease Term. Any articles of
personal property including business and trade fixtures not attached to, or
built into, the Premises, machinery and equipment, free-standing cabinet
work, and movable partitions, which were installed by Tenant in the Premises
at Tenant's sole expense and which were not installed in connection with a
credit or allowance granted by Landlord or in replacement for an item which
Tenant would not have been entitled to remove, shall be and remain the
property of Tenant and may be removed by Tenant at any time during the Lease
Term as long as Tenant is not in default hereunder and provided that Tenant
repairs any material damage to the Premises caused by such removal. For
purposes of the insurance requirements of Section 9.2, Tenant shall be deemed
to have an insurable interest in all Tenant Alterations in the Premises, as
between Landlord and Tenant, but the same shall be surrendered with the
Premises on termination of this Lease, as set forth above.
8. TAXES.
8.1 PERSONAL PROPERTY TAXES. At least ten (10) days prior to
delinquency, Tenant shall pay all taxes levied or assessed upon Tenant's
equipment, furniture, fixtures and other personal property located in or
about the Premises. If the assessed value of Landlord's property is
increased by the inclusion therein of a value placed upon Tenant's equipment,
furniture, fixtures or other personal property, Tenant shall pay Landlord,
upon written demand, the taxes so levied against Landlord, or the proportion
thereof resulting from said increase in assessment.
8.2 REAL PROPERTY TAXES. Tenant shall pay all real estate
taxes, assessments (special or otherwise) and charges levied upon or with
respect to the Premises; provided that any assessments shall be prorated so
that only that portion of the assessment that is properly allocable to the
Lease Term shall be payable by Tenant. Landlord, at Landlord's option, may
pay such taxes to the taxing authority, in which event Tenant shall reimburse
Landlord for all such payments within ten (10) days after written demand
therefor from Landlord, or Landlord may provide Tenant with the billing from
the taxing authority, in which event Tenant shall pay the taxes directly and
provided proof of such payment to Landlord not later than ten (10) days prior
to delinquency.
9. INSURANCE; WAIVER OF SUBROGATION.
9.1 LIABILITY INSURANCE. Tenant shall at all times during the
Lease Term and at its own cost and expense procure and continue workers'
compensation insurance and bodily injury liability and property damage
liability insurance adequate to protect Landlord against liability for injury
to or death of any person or damage to property in connection with the use,
operation or condition of the Premises. The limits of liability under the
workers' compensation insurance policy shall be at least equal to the
statutory requirements therefor and the limits of liability under the
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Employer's Liability Insurance policy carried by Tenant shall be at least One
Million Dollars ($1,000,000). The general liability insurance for
non-employees and for damage to property at all times shall be in an amount
of not less than Five Million Dollars ($5,000,000), Combined Single Limit,
for injuries to persons and property damage. Not more frequently than once
each two (2) years, if, in the opinion of Landlord or Landlord's lender(s),
the amount of public liability and property damage insurance coverage at that
time is not adequate, Tenant shall increase the insurance coverage as
reasonably required by either Landlord or Landlord's lender(s).
9.2 PROPERTY INSURANCE. Tenant, at its sole cost and expense,
shall at all times during the Lease Term maintain in effect policies of
insurance covering (i) the Premises and all improvements and fixtures thereto
(including plate glass), (ii) all leasehold improvements (including any
Tenant Alterations), and (iii) all trade fixtures, merchandise and other
personal property from time to time in, on or upon the Premises, all in an
amount not less than one hundred percent (100%) of their actual replacement
cost from time to time during the term of this Lease, providing protection
against any peril included within the classification "Fire and Extended
Coverage," together with insurance against sprinkler damage (if applicable),
vandalism and malicious mischief and water damage caused by plumbing leakage
or failure. Subject to the requirements of Landlord's lender(s), the
proceeds of such insurance, so long as this Lease remains in effect, shall be
used for the repair or replacement of the property so insured. The full
replacement cost of the items to be insured under this Section 9.2 shall be
determined by the company issuing the insurance policy at the time the policy
is initially obtained, and shall be increased as reasonably requested by
Landlord or Landlord's lender(s) from time to time.
9.3 POLICY REQUIREMENTS. All insurance required to be carried
by Tenant hereunder shall be issued by responsible insurance companies,
qualified to do business in the State of Nevada and reasonably acceptable to
Landlord. Insurance companies rated A-9 or better by Best's Insurance Reports
shall be deemed acceptable. Each policy shall have a deductible or
deductibles, if any, which are no greater than those maintained by similarly
situated tenants. Each liability policy shall name Landlord as additional
insured and each property insurance policy shall name Landlord and Landlord's
lender(s) as loss payee with respect to the Premises and all Tenant
Alterations and copies of all policies, together with certificates evidencing
the existence and amounts of such insurance, shall be delivered to Landlord
by Tenant at least five (5) days prior to Tenant's occupancy of any portion
of the Premises. No such policy shall be cancelable except after thirty (30)
days written notice to Landlord. Tenant shall, at least thirty (30) days
prior to the expiration of any such policy, furnish Landlord with renewals or
"binders" thereof, or Landlord may order such insurance and charge the cost
thereof to Tenant, which amount shall be paid by Tenant upon demand. Any
policy may be carried under so-called "blanket coverage" form of insurance
policies, provided any such blanket policy specifically provides that the
amount of insurance coverage required hereunder shall in no way be prejudiced
by other losses covered by the policy. Neither the issuance of any such
insurance policy nor the minimum limits specified in this Article 9 shall be
deemed to limit or restrict in any way Tenant's liability arising under or
out of this Lease.
9.4 WAIVER OF SUBROGATION. Landlord and Tenant waive their
respective right
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of recovery against the other for any direct or consequential damage to the
property of the other, including, without limitation, its interest in the
Premises, by fire or other casualty to the extent such damage is insured
against under a policy or policies of insurance. Each such insurance policy
carried by either Landlord or Tenant shall include such a waiver of the
insurer's rights of subrogation. Such waiver shall in no way be construed or
interpreted to limit or restrict any indemnity or other waiver made by Tenant
or Landlord under the terms of this Lease with respect to any uninsured loss.
10. FIRE OR CASUALTY.
(a) If any portion of the Premises is damaged by fire or other
casualty, and the insurance proceeds paid with respect to such fire or
casualty are made available to fund the cost of the restoration, Tenant shall
repair such damage with reasonable diligence and in a manner consistent with
the provisions of any Underlying Mortgage, as hereinafter defined. All such
insurance proceeds shall be held in a construction control account which is
acceptable to Landlord and to the holder of any Underlying Mortgage and shall
be disbursed to pay the costs of such repair.
(b) If the whole of the Premises, or such part thereof as shall
prevent Tenant's continuation of the operation of its business therein, shall
be damaged by fire or other casualty, and PROVIDED: (i) Tenant is not in
default beyond any cure period in any of its obligations hereunder, (ii) the
insurance proceeds paid with respect to such fire and casualty are not made
available to Tenant to fund the cost of the restoration, and (iii) Tenant
does not have "business interruption" or "business continuation" insurance,
Base Rent shall be abated until such time as Landlord completes the
restoration of the improvements to their condition immediately prior to the
fire or other casualty.
11. EMINENT DOMAIN.
11.1 TAKING. In case the whole of the Premises, or such part
thereof as shall substantially interfere with Tenant's use and occupancy
thereof, shall be taken by any lawful power or authority by exercise of the
right of eminent domain, or sold to prevent such taking, within sixty (60)
days of receipt of notice of such taking, either Tenant or Landlord may
terminate this Lease effective as of the date possession is required to be
surrendered to said authority. Tenant shall not because of such taking
assert any claim against Landlord for any compensation because of such
taking, and Landlord shall be entitled to receive the entire amount of any
award without deduction for any estate or interest of Tenant, provided,
however, that Tenant shall be entitled to seek a separate award from the
condemning authority to compensate Tenant for Tenant's moving expenses,
business dislocation damages, Tenant's personal property and fixtures and any
other award that would not reduce the award payable to Landlord.
11.2 TEMPORARY TAKING. If all or any portion of the Premises are
condemned or otherwise taken for public or quasi-public use for a limited
period of time of not more than six (6) months, this Lease shall remain in
full force and effect and Tenant shall continue to perform all of the terms,
conditions and covenants of this Lease, except that the Base Rent shall be
abated in proportion to the area of the Premises which is unusable by Tenant
during such temporary taking.
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Tenant shall be entitled to receive the entire award made in connection with
any temporary condemnation or other taking attributable to any period within
the Lease Term. Landlord shall be entitled to the entire award for any such
temporary condemnation or other taking which relates to a period after the
expiration of the Lease Term. If any such temporary condemnation or other
taking terminates prior to the expiration of the Lease Term, Tenant shall
restore the Premises as nearly as possible to the condition prior to the
condemnation or other taking, at Tenant's sole cost and expense; provided
that Tenant shall receive the portion of the award attributable to such
restoration.
12. ASSIGNMENT AND SUBLETTING.
12.1 PROHIBITION. Tenant acknowledges that the economic
concessions and rental rates set forth in this Lease were negotiated by
Landlord and Tenant in consideration of, and would not have been granted by
Landlord but for, the specific nature of the leasehold interest granted to
Tenant hereunder, as such interest is limited and defined by various
provisions throughout this Lease, including, but not limited to, the
provisions of this Article 12 which define and limit the transferability of
such leasehold interest. Tenant further acknowledges and agrees that the
leasehold estate granted to Tenant hereunder is not a transferable interest
in property, and Landlord hereby reserves the right to receive any increased
rental value of the Premises during the Lease Term as the same may be
realized by any transfer of said estate. Tenant shall not directly or
indirectly, voluntarily or involuntarily assign, mortgage or otherwise
encumber all or any portion of its interest in this Lease or in the Premises
(collectively, "ASSIGNMENT") or permit the Premises to be occupied by anyone
other than Tenant or Tenant's employees or sublet the Premises (collectively,
"SUBLEASE") or any portion thereof without obtaining the prior written
consent of Landlord, which consent shall not be unreasonably withheld, and
any such attempted assignment, subletting, mortgage or other encumbrance
without such consent shall be null and void and of no effect. The acceptance
of rent by Landlord from any other person shall not be deemed to be a waiver
by Landlord of any provision of this Lease or to be a consent to any
Assignment or Sublease. If Tenant is a corporation, an unincorporated
association, a limited liability company or a partnership, any transfer,
assignment or hypothecation of any stock or interest in such corporation,
association, limited liability company or partnership which results in a
change in the effective control of such entity (such as a change of the
general partner or a change in the ownership of the general partner of a
limited partnership), shall be deemed an Assignment of this Lease.
12.2 NO NOVATION. No Assignment or Sublease shall relieve Tenant
of its obligation to pay the rent and to perform all of the other obligations
to be performed by Tenant hereunder.
12.3. JOINT AND SEVERAL OBLIGATIONS. Each assignee shall assume
all obligations of Tenant under this Lease and shall be and remain liable
jointly and severally with Tenant for the payment of the rent, and for the
performance of all of the terms, covenants, conditions and agreements herein
contained on Tenant's part to be performed for the Lease Term, including any
Option Terms. No Assignment shall be binding on Landlord unless the assignee
or Tenant shall deliver to Landlord a counterpart of the Assignment which
contains a covenant of assumption by the
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assignee reasonably satisfactory in substance and form to Landlord consistent
with the requirements of this Article 12, but the failure of refusal of the
assignee to execute such instrument of assumption shall not release or
discharge the assignee from its liability as set forth above.
13. LANDLORD'S RIGHT OF ENTRY.
Landlord and its agents and representatives shall have the right,
at all reasonable times, but in such manner as to cause as little disturbance
to Tenant as reasonably practicable, to enter the Premises for purposes of
inspection, to post notices of non-responsibility and to otherwise protect
the interests of Landlord in the Premises.
14. INDEMNIFICATION AND LIMITATION ON LIABILITY.
14.1 INDEMNITY BY TENANT. As a material part of the
consideration to the Landlord for entering into this Lease, Tenant hereby
assumes all risk of, and Tenant shall indemnify, protect, defend and hold
harmless Landlord, its trustees, beneficiaries, agents and employees from and
against any and all claims, suits, demands, liability, damages and expenses,
including reasonable attorneys' fees and costs, arising from or in connection
with Tenant's use or alteration of the Premises or the conduct of its
business or from any activity performed or permitted by Tenant in or about
the Premises during the Lease Term or arising from any breach or default in
the performance of any obligation on Tenant's part to be performed under the
terms of this Lease, or from any other act, neglect, fault or omission of
Tenant or any of its officers, agents, directors, contractors, employees,
licensees or invitees.
14.2 LIMITATION ON LANDLORD'S LIABILITY. Except to the extent
caused by the negligent or wrongful acts of Landlord, in no event shall
Landlord be liable to Tenant for any injury to any person in or about the
Premises or damage to the Premises or for any loss, damage or injury to any
property of Tenant therein, including without limitation, any damage, injury
or loss caused by any malfunction of any utility or other equipment,
installation or system, or by the rupture, leakage or overflow of any
plumbing or other pipes, including without limitation, water, steam and
refrigeration lines, sprinklers, tanks, drains or similar cause in, about or
upon the Premises.
14.3 INDEMNITY BY LANDLORD. Landlord shall indemnify, protect,
defend and hold harmless Tenant and its officers, directors, shareholders,
agents and employees from and against any and all claims, suits, demands,
liability, damages and expenses, including attorneys' fees and costs, arising
from (i) Landlord's breach of its obligations under this Lease; or (ii) the
negligent or wrongful acts of Landlord or its agents or employees, whether
occurring during the Lease Term, prior to the Commencement Date, or after
the expiration or earlier termination of this Lease.
15. TRANSFER BY LANDLORD.
Landlord has the absolute right to transfer all or a part of its
interest in this Lease to any successor. In the event of any sale or other
transfer of Landlord's interest in the Premises, other
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than a transfer for security purposes only, Landlord shall be automatically
relieved of any and all obligations and liabilities on the part of Landlord
accruing from and after the date of such transfer; provided the transferee of
such interest assumes Landlord's obligations under this Lease.
16. SUBORDINATION.
16.1 SUBORDINATION. This Lease is subject and subordinate to all
mortgages, trust deeds and ground leases (the "UNDERLYING MORTGAGES") which
may now or hereafter be executed affecting the Premises and to all renewals,
modifications, consolidations, replacements and extensions of any such
Underlying Mortgages, provided that the subordination of this Lease to
Underlying Mortgages which are executed after the Commencement Date shall be
effective if, but only if, the holder of the Underlying Mortgage enters into
a commercially reasonable non-disturbance agreement in favor of Tenant.
Tenant shall execute promptly any certificate or document that Landlord may
reasonably request to effectuate, evidence or confirm such subordination.
16.2 ATTORNMENT. If Landlord's interest in the Premises is sold
or conveyed upon the exercise of any remedy provided for in any Underlying
Mortgage, or otherwise by operation of law then, subject to the terms of any
applicable non-disturbance agreement: (a) this Lease will not be affected in
any way and Tenant will attorn to and recognize the new owner as Tenant's
Landlord under this Lease, and Tenant will confirm such attornment in writing
within ten (10) days after request (Tenant's failure to do so will constitute
a material breach of this Lease); and (b) the new owner shall not be (i)
liable for damages for any act or omission of Landlord under this Lease
occurring prior to such sale or conveyance, or (ii) subject to any offset,
abatement or reduction of rent because of any default of Landlord under this
Lease occurring prior to such sale or conveyance, unless Tenant has given the
Lender written notice of such offset, abatement or reduction.
16.3 NOTICE FROM TENANT. Tenant shall give written notice to the
holder of any Underlying Mortgage whose name and address have been previously
furnished to Tenant of any act or omission by Landlord which Tenant asserts
as giving Tenant the right to terminate this Lease or to claim a partial or
total eviction or any other right or remedy under this Lease or provided by
law.
17. ESTOPPEL CERTIFICATES.
Landlord and Tenant shall at any time and from time to time upon
not less than fifteen (15) days prior notice by the other party, execute,
acknowledge and deliver to the requesting party a statement in writing
certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications), the dates to which the Base Rent and
other charges have been paid in advance, if any, stating whether or not to
the best knowledge of the certifying party, the requesting party is in
default in the performance of any covenant, agreement or condition contained
in this Lease and, if so, specifying each such default of which the
certifying party may have knowledge and containing any other information and
certifications which reasonably may be requested by the requesting party
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or the holder of any Underlying Mortgage. Any such statement delivered by
Tenant pursuant to this Article 17 may be relied upon by any prospective
purchaser of the fee of the Premises or any mortgagee, ground lessor or other
like encumbrancer thereof or any assignee of any such encumbrancer upon the
Premises.
18. SURRENDER OF PREMISES AND REMOVAL OF PROPERTY.
18.1 NO MERGER. The voluntary or other surrender of this Lease
by Tenant, a mutual cancellation or a termination hereof, shall not
constitute a merger, and shall, at the option of Landlord, terminate all or
any existing subleases or shall operate as an assignment to Landlord of any
or all subleases affecting the Premises.
18.2 SURRENDER OF PREMISES. Upon the expiration of the Lease
Term, or upon any earlier termination hereof, Tenant shall quit and surrender
possession of the Premises to Landlord in as good order and condition as the
Premises are now or hereafter may be improved by Landlord or Tenant,
reasonable wear and tear and casualty which is not to be restored by Tenant
pursuant to this Lease excepted, and shall, without expense to Landlord,
remove or cause to be removed from the Premises, all debris and rubbish, all
furniture, equipment, business and trade fixtures, free-standing cabinet
work, movable partitioning and other articles of personal property owned by
Tenant or installed or placed by Tenant at its expense in the Premises, and
all similar articles of any other persons claiming under Tenant unless
Landlord exercises its option to have any subleases or subtenancies assigned
to Landlord, and Tenant shall repair all material damage to the Premises
resulting from such removal.
18.3 DISPOSAL OF PROPERTY. In the event of the expiration of
this Lease or other re-entry of the Premises by Landlord as provided in this
Lease, any property of Tenant not removed by Tenant upon the expiration of
the term of this Lease, or within five (5) days after a termination by reason
of Tenant's default, shall be considered abandoned and Landlord may remove
any or all of such property and dispose of the same in any commercially
reasonable manner or store the same in a public warehouse or elsewhere for
the account of, and at the expense and risk of, Tenant. If Tenant shall fail
to pay the costs of storing any such property after it has been stored for a
period of thirty (30) days or more, Landlord may sell any or all of such
property at public or private sale, in such manner and at such places as
Landlord, in its reasonable discretion, may deem proper, with notice to
Tenant. In the event of such sale, Landlord shall apply the proceeds
thereof, first, to the cost and expense of sale, including reasonable
attorneys' fees; second, to the repayment of the cost of removal and storage;
third, to the repayment of any other sums which may then or thereafter be due
to Landlord from Tenant under any of the terms of this Lease; and fourth, the
balance, if any, to Tenant.
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19. HOLDING OVER.
In the event Tenant holds over after the expiration of the Lease
Term, with or without the express or implied consent of Landlord, such
tenancy shall be from month-to-month only, and not a renewal hereof or an
extension for any further term, and such month-to-month tenancy shall be
subject to each and every term, covenant and agreement contained herein;
provided, however, that Tenant shall pay as Base Rent during any holding over
period, an amount equal to one hundred fifty percent (150%) of the Base Rent
payable immediately preceding the expiration of the Lease Term. Nothing in
this Article 19 shall be construed as a consent by Landlord to any holding
over by Tenant and Landlord expressly reserves the right to require Tenant to
surrender possession of the Premises upon the expiration of the Lease Term or
upon the earlier termination hereof and to assert any remedy in law or equity
to evict Tenant and/or collect damages in connection with such holding over.
20. DEFAULTS AND REMEDIES.
20.1 DEFAULTS BY TENANT. The occurrence of any of the following
shall constitute a material default and breach of this Lease by Tenant:
(a) The failure by Tenant to pay the rent hereunder as and
when due where such failure continues for five (5) days after notice thereof
by Landlord to Tenant; provided, however, that such notice shall be in lieu
of and not in addition to any notice required under Nevada law.
(b) The abandonment or vacation of the Premises by Tenant.
(c) The failure by Tenant to provide estoppel certificates
as herein provided.
(d) The failure by Tenant to observe or perform any other
provision of this Lease where such failure continues for thirty (30) days
after notice thereof by Landlord to Tenant; provided, however, that if the
nature of such default is such that the same cannot reasonably be cured
within such thirty (30) day period, Tenant shall not be deemed to be in
default if Tenant shall within such period commence such cure and thereafter
diligently prosecute the same to completion.
(e) Any action taken by or against Tenant pursuant to any
statute pertaining to bankruptcy or insolvency or the reorganization of
Tenant (unless, in the case of a petition filed against Tenant, the same is
dismissed within ninety (90) days); the making by Tenant of any general
assignment for the benefit of creditors; the appointment of a trustee or
receiver to take possession of all or any portion of Tenant's assets located
at the Premises or of Tenant's interest in this Lease, where possession is
not restored to Tenant within ninety (90) days; or the attachment, execution,
or other judicial seizure of all or any portion of Tenant's assets located at
the Premises
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or of Tenant's interest in this Lease, where such seizure is not discharged
within ninety (90) days.
(f) Tenant's failure to vacate and surrender the Premises
as required by this Lease upon the expiration of the Lease Term or
termination of this Lease.
20.2 LANDLORD'S REMEDIES.
(a) In the event of any such default by Tenant, then, in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving Tenant fifteen (15) days written notice
of such election to terminate. In the event Landlord shall elect to so
terminate this Lease, Landlord may recover from Tenant:
(i) the worth at the time of award of any unpaid
rent which has been earned at the time of such termination; plus
(ii) the worth at the time of award of any amount by
which the unpaid rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of the award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided; plus
(iv) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom; and
(v) at Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time
by applicable law.
(b) All "rent" (as defined in Section 4.5) shall be
computed on the basis of the monthly amount thereof payable on the date of
Tenant's default, as the same are to be adjusted thereafter as contemplated
by this Lease. As used in paragraphs (i) and (ii) above, the "worth at the
time of award" is computed by allowing interest in the per annum amount equal
to the prime rate of interest or other equivalent reference rate from time to
time announced by the Bank of America National Trust and Savings Association
(the "REFERENCE RATE") plus two percent (2%), but in no event in excess of
the maximum interest rate permitted by law. As used in paragraph (iii)
above, the "worth at the time of award" is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at
the time of award plus one percent (1%).
(c) In the event of any such default by Tenant, Landlord
shall also have the right, with or without terminating this Lease, to
re-enter the Premises and remove all persons and
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property therefrom by summary proceedings or otherwise; such property may be
removed and stored in a public warehouse or elsewhere at the cost of and for
the account of Tenant.
(d) In the event of the vacation or abandonment of the
Premises by Tenant, or in the event that Landlord elects to re-enter as
provided in Paragraph (c) above or takes possession of the Premises pursuant
to legal proceeding or pursuant to any notice provided by law, and if
Landlord does not elect to terminate this Lease, then Landlord may from time
to time, without terminating this Lease, either recover all rent as it
becomes due or relet the Premises or any part thereof for such term or terms
and at such rent and upon such other terms and conditions as Landlord, in its
sole discretion, may deem advisable, with the right to make reasonable
alterations and repairs to the Premises. Nothing contained herein shall
affect Landlord's obligation under law to use its reasonable efforts to
mitigate its damages in the event of a default by Tenant.
(e) In the event that Landlord shall elect to so relet as
provided in Paragraph (d) above, then rentals received by Landlord from such
reletting shall be applied: First, to the payment of any indebtedness other
than rent due hereunder from Tenant to Landlord; second, to the payment of
any reasonable cost of such reletting; third, to the payment of the cost of
any alterations and repairs to the Premises; fourth, to the payment of rent
due and unpaid hereunder; and the remainder, if any, shall be held by
Landlord and applied in payment of future rent as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied to the payment of rent
hereunder, be less than the rent payable during that month by Tenant
hereunder, then Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any reasonable costs and expenses incurred
by Landlord in such reletting or in making such alterations and repairs not
covered by the rentals received from such reletting.
20.3 RE-ENTRY NOT TERMINATION. No re-entry or taking possession
of the Premises by Landlord pursuant to this Article 20 shall be construed as
an election to terminate this Lease unless a written notice of such intention
be given to Tenant or unless the termination thereof be decreed by a court of
competent jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any default of Tenant, Landlord may at any time after
such reletting elect to terminate this Lease for any such default.
20.4 DEFINITION OF TENANT. As used in this Article 20, the term
"TENANT" shall be deemed to include all persons or entities named as Tenant
under this Lease, or each and every one of them. If this Lease has been
assigned, the term "TENANT," as used in this Article 20, shall be deemed to
include both the assignee and the assignor.
21. INTEREST ON TENANT'S OBLIGATIONS; LATE CHARGES.
21.1 INTEREST. Any amount due from Tenant to Landlord which is
not paid when due shall bear interest at the lesser of two percent (2%) per
annum in excess of the Reference Rate (as defined in Paragraph 20.2(b) above)
or the maximum rate per annum which Landlord is
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permitted by law to charge, from the date such payment is due until paid, but
the payment of such interest shall not excuse or cure any default by Tenant
under this Lease.
21.2 LATE CHARGE. In the event Tenant is more than ten (10) days
late in paying any installment of rent due under this Lease, Tenant shall pay
Landlord a late charge equal to three percent (3%) of the delinquent
installment of rent. The parties agree that the amount of such late charge
represents a reasonable estimate of the cost and expense that would be
incurred by Landlord in processing each delinquent payment of rent by Tenant
and that such late charge shall be paid to Landlord as liquidated damages for
each delinquent payment, but the payment of such late charge shall not excuse
or cure any default by Tenant under this Lease. The parties further agree
that the payment of late charges and the payment of interest provided for in
Section 21.1 above are distinct and separate from one another in that the
payment of interest is to compensate Landlord for the use of Landlord's money
by Tenant, while the payment of a late charge is to compensate Landlord for
the additional administrative expense incurred by Landlord in handling and
processing delinquent payments.
22. QUIET ENJOYMENT.
Tenant, upon the paying of all rent hereunder and performing each
of the covenants, agreements and conditions of this Lease required to be
performed by Tenant, shall lawfully and quietly hold, occupy and enjoy the
Premises during the Lease Term without hindrance or molestation of anyone
lawfully claiming by, through or under Landlord, subject, however, to the
provisions set forth in this Lease.
23. SIGNAGE.
Subject to Article 7 above, Tenant, at Tenant's sole cost and
expense, shall have the right to place signage upon the Premises as Tenant
deems to be appropriate.
24. TENANT'S RECOURSE.
Anything in this Lease to the contrary notwithstanding, Tenant
agrees that it shall look solely to the estate and property of Landlord in
the land and buildings comprising the Premises (including any insurance
proceeds and/or condemnation awards paid to Landlord with respect to the
Premises), subject to prior rights of any mortgagee under an Underlying
Mortgage, and no other procedures for the satisfaction of Tenant's remedies.
Neither Landlord, nor any trustee or beneficiary thereof, shall have any
personal liability of any kind or nature, directly or indirectly under or in
connection with this Lease.
25. GENERAL PROVISIONS.
25.1 NO WAIVER. The waiver by Landlord of any breach of any
term, provision, covenant or condition contained in this Lease, or the
failure of Landlord to insist on the strict perfor-
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mance by Tenant, shall not be deemed to be a waiver of such term, provision,
covenant or condition as to any subsequent breach thereof or of any other
term, covenant or condition contained in this Lease. The acceptance of rents
hereunder by Landlord shall not be deemed to be a waiver of any breach or
default by Tenant of any term, provision, covenant or condition herein,
regardless of Landlord's knowledge of such breach or default at the time of
acceptance of rent.
25.2 LANDLORD'S RIGHT TO PERFORM. All covenants and agreements
to be performed by Tenant under any of the terms of this Lease shall be
performed by Tenant at Tenant's sole expense and without abatement of rent.
If Tenant shall fail to observe and perform any covenant, condition,
provision or agreement contained in this Lease or shall fail to perform any
other act required to be performed by Tenant, Landlord may, upon notice to
Tenant, without obligation, and without waiving or releasing Tenant from any
default or obligations of Tenant, make any such payment or perform any such
obligation on Tenant's part to be performed. All sums so paid by Landlord
and all costs incurred by Landlord, including attorneys' fees, together with
interest thereon in a per annum amount equal to two percent (2%) per annum in
excess of the Reference Rate, but not in excess of the maximum rate permitted
by law, shall be payable to Landlord on demand and Tenant covenants to pay
any such sums, and Landlord shall have (in addition to any other right or
remedy hereunder) the same rights and remedies in the event of the
non-payment thereof by Tenant as in the case of default by Tenant in the
payment of rent.
25.3 TERMS; HEADINGS. The words "Landlord" and "Tenant" as used
herein shall include the plural, as well as the singular. The words used in
neuter gender include the masculine and feminine and words in the masculine
or feminine gender include the neuter. If there is more than one tenant, the
obligations hereunder imposed upon Tenant shall be joint and several. The
headings or titles of this Lease shall have no effect upon the construction
or interpretation of any part hereof.
25.4 ENTIRE AGREEMENT. This instrument along with any exhibits
and attachments or other documents affixed hereto, or referred to herein,
constitutes the entire and exclusive agreement between Landlord and Tenant
with respect to the Premises and the estate and interest leased to Tenant
hereunder. This instrument and said exhibits and attachments and other
documents may be altered, amended, modified or revoked only by an instrument
in writing signed by both Landlord and Tenant. Landlord and Tenant hereby
agree that all prior or contemporaneous oral understandings, agreements or
negotiations relative to the leasing of the Premises are merged into and
revoked by this instrument.
25.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of
Article 12 relating to Assignment and Sublease, this Lease is intended to and
does bind the heirs, executors, administrators, successors and assigns of any
and all of the parties hereto.
25.6 NOTICES. All notices, consents, approvals, requests,
demands and other communications (collectively "NOTICES") which Landlord or
Tenant are required or desire to serve upon, or deliver to, the other shall
be in writing and mailed postage prepaid by certified or registered mail,
return receipt requested, or by personal delivery, or given by a nationally
recognized overnight
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delivery service (such as Federal Express) with all fees prepaid, to the
appropriate address indicated below, or at such other place or places as
either Landlord or Tenant may, from time to time, designate in a written
notice given to the other. If the term "Tenant" in this Lease refers to more
than one person or entity, Landlord shall be required to make service or
delivery, as aforesaid, to any one of said persons or entities only. Notices
shall be deemed sufficiently served or given at the time of delivery;
provided that refusal to accept delivery of a notice shall constitute
successful and effective delivery thereof. Any notice, request,
communication or demand by Tenant to Landlord shall be addressed to the
Landlord at:
c/o Conway, Stuart & Woodbury
4021 Meadows Lane
Las Vegas, NV 89107
With copies to:
James J. Chaisson, Sr.
40 Innisbrook
Las Vegas, NV 89113
Jack Hunter
8149 Pinnacle Peak Avenue
Las Vegas, NV 89113
Rick Starr
5400 South U.S. 1
Fort Pierce, FL 34982
and if requested in writing by the Landlord, given or served simultaneously
to the Landlord's mortgagee at the address specified in such request. Any
notice, request, communication or demand by Landlord to Tenant shall be
addressed to Tenant at:
2333 Decatur Blvd.
Las Vegas, NV 89102
Attn: President
Rejection or other refusal to accept a notice, request, communication or
demand or the inability to deliver the same because of a changed address of
which no notice was given shall be deemed to be receipt of the notice,
request, communication or demand sent.
25.7 SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material
benefit by either party hereunder, shall be held invalid or unenforceable to
any extent, the remaining terms, conditions and covenants of this Lease shall
not be affected thereby and each of said terms, covenants and conditions
shall be valid and
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enforceable to the fullest extent permitted by law.
25.8 TIME OF ESSENCE. Time is of the essence of this Lease and
each provision hereof in which time of performance is established.
25.9 GOVERNING LAW. This Lease shall be governed by, interpreted
and construed in accordance with the laws of the State of Nevada.
25.10 ATTORNEYS' FEES. If any action or proceeding is brought by
Landlord or Tenant to enforce its respective rights under this Lease, the
unsuccessful party therein shall pay all costs incurred by the prevailing
party therein, including reasonable attorneys' fees to be fixed by the court.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
date set forth in the first paragraph above.
LANDLORD:
JRJ PROPERTIES,
a Nevada general partnership
By:
---------------------------------------
James J. Chaisson, Sr., Partner
By:
---------------------------------------
Rick Starr, Partner
By:
---------------------------------------
Jack Hunter, Partner
TENANT:
JRJ INVESTMENTS, INC.,
a Nevada corporation
By:
---------------------------------------
Its: President
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EXHIBIT "A"
PREMISES
A-1
<PAGE>
EXHIBIT 10.3
TRIPLE NET LEASE AGREEMENT
(261 & 251 AUTO MALL DRIVE)
BY AND BETWEEN
THE CHAISSON FAMILY TRUST R-501
AND
JRJ INVESTMENTS, INC.
A NEVADA CORPORATION
DATED: NOVEMBER 1, 1997
<PAGE>
TABLE OF CONTENTS
1. LEASE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 LIMITATION ON USES. . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 COMPLIANCE WITH PERMITS . . . . . . . . . . . . . . . . . . . . . 1
3. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1 COMMENCEMENT DATE . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 RENEWAL OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.3 EXERCISE OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . 2
3.4 ACCEPTANCE OF PREMISES. . . . . . . . . . . . . . . . . . . . . . 3
4. BASE RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1 INITIAL BASE RENT . . . . . . . . . . . . . . . . . . . . . . . . 3
4.2 RENT ESCALATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 3
4.3 OPTION RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.4 PARTIAL MONTHS. . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.5 NO OFFSET . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . . . . . 5
7. ALTERATIONS; LANDLORD BUILD-OUT . . . . . . . . . . . . . . . . . . . 6
7.1 RESTRICTION ON ALTERATIONS. . . . . . . . . . . . . . . . . . . . 6
7.2 REMOVAL AND SURRENDER OF FIXTURES AND TENANT ALTERATIONS. . . . . 6
7.3 LANDLORD BUILD-OUT. . . . . . . . . . . . . . . . . . . . . . . . 7
8. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.1 PERSONAL PROPERTY TAXES . . . . . . . . . . . . . . . . . . . . . 8
8.2 REAL PROPERTY TAXES . . . . . . . . . . . . . . . . . . . . . . . 8
9. INSURANCE; WAIVER OF SUBROGATION. . . . . . . . . . . . . . . . . . . 9
9.1 LIABILITY INSURANCE . . . . . . . . . . . . . . . . . . . . . . . 9
9.2 PROPERTY INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . 9
9.3 POLICY REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . 9
9.4 WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . . . . 10
10. FIRE OR CASUALTY. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. EMINENT DOMAIN. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.1 TAKING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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11.2 TEMPORARY TAKING. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . 11
12.1 PROHIBITION. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12.2 NO NOVATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.3 JOINT AND SEVERAL OBLIGATIONS. . . . . . . . . . . . . . . . . . 12
13. LANDLORD'S RIGHT OF ENTRY . . . . . . . . . . . . . . . . . . . . . . 12
14. INDEMNIFICATION AND LIMITATION ON LIABILITY . . . . . . . . . . . . . 12
14.1 INDEMNITY BY TENANT. . . . . . . . . . . . . . . . . . . . . . . 12
14.2 LIMITATION ON LANDLORD'S LIABILITY . . . . . . . . . . . . . . . 13
14.3 INDEMNITY BY LANDLORD. . . . . . . . . . . . . . . . . . . . . . 13
15. TRANSFER BY LANDLORD. . . . . . . . . . . . . . . . . . . . . . . . . 13
16. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
16.1 SUBORDINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 13
16.2 ATTORNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
16.3 NOTICE FROM TENANT . . . . . . . . . . . . . . . . . . . . . . . 14
17. ESTOPPEL CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . 14
18. SURRENDER OF PREMISES AND REMOVAL OF PROPERTY . . . . . . . . . . . . 14
18.1 NO MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
18.2 SURRENDER OF PREMISES. . . . . . . . . . . . . . . . . . . . . . 14
18.3 DISPOSAL OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . 14
19. HOLDING OVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
20. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . 15
20.1 DEFAULTS BY TENANT . . . . . . . . . . . . . . . . . . . . . . . 15
20.2 LANDLORD'S REMEDIES. . . . . . . . . . . . . . . . . . . . . . . 16
20.3 RE-ENTRY NOT TERMINATION . . . . . . . . . . . . . . . . . . . . 17
20.4 DEFINITION OF TENANT . . . . . . . . . . . . . . . . . . . . . . 17
21. INTEREST ON TENANT'S OBLIGATIONS; LATE CHARGES. . . . . . . . . . . . 17
21.1 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
21.2 LATE CHARGE. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
22. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
23. SIGNAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
24. TENANT'S RECOURSE . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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25. CC&R'S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
26. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 19
26.1 NO WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
26.2 LANDLORD'S RIGHT TO PERFORM . . . . . . . . . . . . . . . . . . 19
26.3 TERMS; HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . 19
26.4 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . 19
26.5 SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . 19
26.6 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
26.7 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . 20
26.8 TIME OF ESSENCE . . . . . . . . . . . . . . . . . . . . . . . . 20
26.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 20
26.10 ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . . . 20
iii
<PAGE>
LEASE SUMMARY
This lease summary is attached to the within lease for convenience of
reference only and shall in no way be considered a part of said lease or used
in the interpretation of any of the provisions contained therein.
DATE: November 1, 1997
LANDLORD: CHAISSON FAMILY TRUST R-501
TENANT: JRJ INVESTMENTS, INC.
PREMISES: 261 & 251 Auto Mall Drive, Henderson, Nevada
TERM: Beginning on the Commencement Date and continuing for an
initial Lease Term of ten (10) years.
RENEWAL OPTIONS: Two (2) five (5)-year options.
COMMENCEMENT DATE: The date first set forth above.
BASE RENT (NET): Five Hundred Forty Thousand Dollars ($540,000) per
annum.
RENT ESCALATIONS: CPI adjustments every two (2) years, with a
maximum adjustment of eight percent (8%) (i.e.,
four percent (4%) per annum). On the first day of
the first Option Term, Base Rent is adjusted to
the greater of (i) ten percent (10%) of the fair
market value of the Premises or (ii) the rent for
the last year of the initial Lease Term, increased
by the CPI adjustment. Base Rent may also be
increased pursuant to Section 7.3(c).
CONSTRUCTION OF If Tenant wishes to construct improvements upon
IMPROVEMENTS: the portion of the Premises known as 251 Auto Mall
Drive and referred to herein as Parcel 4B,
Landlord has the first right to construct those
improvements.
LANDLORD'S ADDRESS: 40 Innisbrook Avenue
Las Vegas, Nevada 89113
Attn: Trustee
TENANT'S ADDRESS: 261 Auto Mall Drive
Henderson, Nevada 89014
Attn: President
iv
<PAGE>
TRIPLE NET LEASE AGREEMENT
THIS LEASE is made and entered into as of this 1st day of November 1997, by
and between the CHAISSON FAMILY TRUST R-501 (the "LANDLORD") and JRJ
INVESTMENTS, INC., a Nevada corporation (the "TENANT").
1. LEASE OF PREMISES.
Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, those certain parcels of real property, having a total of
approximately five and 31/100 (5.31) acres, located in the Valley Auto Mall,
Henderson, Nevada (consisting of: (A) 261 Auto Mall Drive, having
approximately two and 85/100 (2.85) acres, sometimes referred to herein as
"PARCEL 4A", and specifically described in Exhibit "A" attached hereto and
incorporated herein by this reference, and (B) 251 Auto Mall Drive, having
approximately two and 46/100 (2.46) acres, sometimes referred to herein as
"PARCEL 4B", and specifically described in Exhibit "B" attached hereto and
incorporated herein by this reference), together with all improvements
thereon and appurtenances thereto (collectively, the "PREMISES"). The
Premises do not include the signs currently attached to or built on any part
of Parcel 4A because such signs have been purchased by, and remain the
property of, Tenant.
2. PURPOSE.
2.1 USE. The use of the Premises shall be limited to the
operation of one or more motor vehicle dealerships with related amenities.
The Premises shall be used for no other purpose without the prior written
consent of Landlord, which consent shall not be unreasonably withheld.
2.2 LIMITATION ON USES. Tenant shall not use or occupy the
Premises, or permit the use or occupancy of the Premises, in any manner or
for any purpose which: (a) would violate any law or regulation of any
governmental authority, or the provisions of any applicable governmental
permit; (b) would violate the terms of or constitute a default under the Auto
Mall Declaration of Protective Covenants (recorded as Instrument No. 00779 in
Book 931027 in the Official Records of Clark County, Nevada), the Valley Auto
Mall Declaration of Covenants, Conditions and Restrictions (recorded as
Instrument No. 00280 in Book 950421 of such Official Records and amended
pursuant to a certain First Amendment (recorded as Instrument No. 00835 in
Book 950428 of such Official Records), a certain Second Amendment (recorded
as Instrument No. 00889 in Book 950616 of such Official Records), and a
certain Third Amendment (recorded as Instrument No. 01883 in Book 970827 of
such Official Records) or other similar restrictive covenants which may now
or hereafter burden the Premises (collectively, the "CC&R'S"); or (c) would
constitute waste or otherwise materially and adversely affect the value of
the Premises. Landlord agrees that it will not vote in favor of any future
amendment to the CC & R's or any new restrictive covenants burdening the
Premises without the consent of Tenant (which consent will not be
unreasonably withheld). Tenant acknowledges that the CC&R's may
never-the-less be amended, except with respect to Sections 5.05 and 9.02
thereof, without the approval of the Landlord.
2.3 COMPLIANCE WITH PERMITS. Tenant shall procure and maintain
any license or permit required for the lawful conduct of its business or
other activity on the Premises, submit
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such license or permit for inspection by Landlord, if so requested, and
comply at all times with all terms and conditions thereo f. The lease of the
Premises shall be subject to all statutes, laws, ordinances and regulations
applicable from time to time to the use, occupancy or possession of the
Premises.
3. TERM.
3.1 COMMENCEMENT DATE. The term of this Lease shall commence on
the date first set forth above (the "COMMENCEMENT DATE") and shall end on the
last day of the calendar month preceding the month in which the tenth annual
anniversary of the Commencement Date occurs, subject to the exercise of
Tenant's Renewal Options, unless sooner terminated pursuant hereto (the
"LEASE TERM").
3.2 RENEWAL OPTIONS. Landlord hereby grants the Tenant two (2)
separate options (collectively "RENEWAL OPTIONS") to extend the Lease Term
for periods of five (5) years each (the "OPTION TERMS"), which options shall
be exercisable only by written notice delivered by Tenant to Landlord,
provided that as of the date of delivery of such notice and as of the last
day of the initial Lease Term (or first Option Term, as applicable), no
uncured Event of Default exists. In no event shall Tenant be entitled to
exercise the second Renewal Option unless Tenant has properly and timely
exercised the first Renewal Option and in no event shall Tenant be entitled
to extend the Lease Term beyond the second Option Term.
3.3 EXERCISE OF OPTIONS.
3.3.1 The first Renewal Option shall be exercised by
Tenant, if at all, only in the following manner: (i) Tenant may deliver
written notice ("INTEREST NOTICE") to Landlord not less than eight (8) months
prior to the expiration of the initial Lease Term stating that Tenant is
interested in exercising its option; (ii) Landlord, after receipt of the
Interest Notice (if such notice is given), shall deliver notice (the "FAIR
MARKET VALUE NOTICE") to Tenant on or before seven (7) months prior to the
expiration of the initial Lease Term, which Fair Market Value Notice shall
set forth Landlord's opinion of the Fair Market Value of the Premises, and
(iii) if Tenant wishes to exercise the first Renewal Option, Tenant shall, on
or before the date occurring six (6) months prior to the expiration of the
initial Lease Term, exercise the option by delivering written notice thereof
to Landlord, and upon, and concurrent with, such exercise, Tenant may, at its
option, object to the Fair Market Value contained in Landlord's Fair Market
Value Notice, in which case the parties shall follow the procedure, and the
Fair Market Value shall be determined, as set forth in Sections 4.3.1 and
4.3.2 below. If Tenant fails to provide the Interest Notice pursuant to (i)
above, Tenant shall not lose its rights pursuant to (iii) above and Landlord
shall not have to provide the Fair Market Value Notice pursuant to (ii)
above, and instead the Fair Market Value shall be determined pursuant to
Sections 4.3.1 and 4.3.2 below. If Tenant provides the Interest Notice and
Landlord responds with the Fair Market Value Notice and Tenant exercises the
Renewal Option but does not object to the Fair Market Value contained in
Landlord's Fair Market Value Notice as provided in Subsection 3.3.1(iii)
above, the Fair Market Value shall be as set forth in Landlord's Fair Market
Value Notice.
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3.3.2 Tenant's second Renewal Option shall be exercised,
if at all, by written notice to Landlord not less than eight (8) months prior
to the expiration of the initial Option Term.
3.4 ACCEPTANCE OF PREMISES. By entering into possession of the
Premises or any part thereof, Tenant shall be presumptively deemed to have
accepted the Premises and to have agreed that the Premises are in
satisfactory condition and in full compliance with the requirements of this
Lease as of the date of such possession. Tenant acknowledges that neither
Landlord nor any agent of Landlord has made any representation or warranty
with respect to the Premises, including without limitation, any
representation or warranty with respect to the suitability or fitness of the
Premises for the conduct of Tenant's business.
4. BASE RENT.
The basic annual rent payable to Landlord ("BASE RENT") shall be as
set forth in this Article 4.
4.1 INITIAL BASE RENT. Tenant shall pay Landlord Base Rent for
the Premises in the amount of Five Hundred Forty Thousand Dollars ($540,000)
per annum. Such initial Base Rent shall be payable in twelve (12) equal
monthly installments of Forty-Five Thousand Dollars ($45,000), each
installment being payable in advance on the first day of each calendar month
beginning on the Commencement Date and continuing throughout the term of this
Lease.
4.2 RENT ESCALATIONS. Beginning upon the first day of the
calendar month in which the second annual anniversary of the Commencement
Date occurs, and on the same date of every second year thereafter during the
Lease Term (subject to Sections 4.3 and 7.3(c) below) (each such date being
referred to herein as an "ADJUSTMENT DATE"), the Base Rent shall be
increased, but not decreased, to reflect increases in the Consumer Price
Index for All Urban Consumers, all items, (1982-84=100), issued by the United
States Department of Labor for Los Angeles-Anaheim-Riverside, California, or
any renamed local index covering generally the same metropolitan area or any
successor or substitute index appropriately adjusted (hereinafter, the
"INDEX"). Each such increase pursuant to this Section 4.2 shall be
calculated by multiplying the initial Base Rent set forth in Section 4.1
above by a fraction, the denominator of which shall be the Index for the
month preceding the Commencement Date (the "BASE INDEX") and the numerator of
which shall be the Index for the month preceding the Adjustment Date (the
"ADJUSTMENT INDEX"). In no event shall Base Rent be increased pursuant to
this Section 4.2 by more than four percent (4%) per annum. Each adjustment
hereunder shall be made as soon as reasonably possible after the Adjustment
Index becomes available (provided that no delay in making any adjustment
shall constitute a waiver of Landlord's right to require that Tenant pay the
adjusted Base Rent), and Tenant shall begin paying the adjusted Base Rent
upon the first regularly scheduled rent payment date which is at least
fifteen (15) days after notice of the adjustment is given by Landlord.
Tenant's first payment of the adjusted Base Rent hereunder shall include any
amounts which are necessary to retroactively adjust Base Rent from the
Adjustment Date through such first date of payment.
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4.3 OPTION RENT. The Base Rent payable by Tenant shall be
adjusted upon the commencement of the first Option Term to the greater of (i)
ten percent (10%) per annum of the then "FAIR MARKET VALUE" for the Premises
as of the commencement date of the first Option Term; or (ii) the Base Rent
which would otherwise be payable as a result of the adjustment required by
Section 4.2 above, with the commencement of the first Option Term being the
Adjustment Date for purposes of the computation of such adjustment. The term
"FAIR MARKET VALUE" for the purposes of this Lease shall mean the amount that
a willing seller would accept and a willing, unrelated buyer would pay for
the Premises, without taking into account the need for any repair or
restoration which is the obligation of Tenant pursuant to this Lease.
Beginning upon the second annual anniversary of the commencement of the first
Option Term, and every two (2) years thereafter throughout the first Option
Term and the second Option Term, if any, the Base Rent payable by Tenant
shall be adjusted in the manner described in Section 4.2 above.
4.3.1 DETERMINATION OF FAIR MARKET VALUE. In the event
Tenant timely and appropriately objects to the Fair Market Value Notice, or
in the event Tenant timely exercises its first Renewal Option without first
delivering an Interest Notice to Landlord, Landlord and Tenant shall attempt
to agree upon the Fair Market Value. If Landlord and Tenant fail to reach
agreement within thirty (30) days following Tenant's objection to the Fair
Market Value Notice or within thirty (30) days following Tenant's exercise of
the Renewal Option in the event Tenant does not deliver an Interest Notice
(the "OUTSIDE AGREEMENT DATE"), then each party shall place in a separate
sealed envelope their final proposal as to Fair Market Value and such
determination shall be submitted to arbitration in accordance with Section
4.3.2 below, provided that Landlord's determination of Fair Market Value
shall not be less favorable to Tenant than that specified in Landlord's Fair
Market Value Notice (if applicable).
4.3.2 ARBITRATION.
(a) Landlord and Tenant shall meet with each other
within five (5) business days of the Outside Agreement Date and exchange the
sealed envelopes and then open such envelopes in each other's presence. If
Landlord and Tenant do not mutually agree upon the Fair Market Value within
five (5) business days of the exchange and opening of envelopes, then, within
ten (10) business days of such exchange Landlord and Tenant shall agree upon
and jointly appoint a single arbitrator who shall be an M.A.I. real estate
appraiser who shall have been active over the five year period ending on the
date of such appointment in the appraisal of commercial projects in the Las
Vegas Valley. Neither Landlord nor Tenant shall consult with such appraiser
as to his or her opinion as to Fair Market Value prior to the appointment.
The determination of the arbitrator shall be limited solely to the issue of
whether Landlord's or Tenant's submitted Fair Market Value for the Premises
is the closest to the actual Fair Market Value for the Premises as determined
by the arbitrator, taking into account the requirements of this Section 4.3
regarding the same. The arbitrator may hold such hearings and require such
briefs as the arbitrator, in his or her sole discretion, determines to be
necessary. In addition, Landlord or Tenant may submit to the arbitrator,
with a copy to the other party, within five (5) business days after the
appointment of the arbitrator, any market data and additional information
that such party deems relevant to the determination of the Fair Market Value
("FMV DATA") and the other party may submit a reply in writing within five
(5) business days after receipt of such FMV Data.
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(b) The arbitrator shall, within thirty (30) days of his
or her appointment, reach a decision as to whether the parties shall use
Landlord's or Tenant's submitted Fair Market Value, and shall notify Landlord
and Tenant thereof.
(c) The decision of the arbitrator shall be binding upon
Landlord and Tenant.
(d) If Landlord and Tenant fail to agree upon and
appoint an arbitrator, then the appointment of the arbitrator shall be made
by the Presiding Judge of the District Court of Clark County, Nevada, or, if
he or she refuses to act, by any judge having jurisdiction over the parties.
(e) The cost of arbitration shall be paid by Landlord
and Tenant equally.
4.4 PARTIAL MONTHS. If the Term begins on a day other than the
first day of a calendar month, or ends on a day other than the last day of a
calendar month, Base Rent for such beginning or ending month shall be
prorated based upon the number of days in such month.
4.5 NO OFFSET. Base Rent, together with all other sums due
hereunder (herein called "ADDITIONAL RENT"), shall be paid to the Landlord
without deduction or offset of any kind, and in advance and without demand
(except as otherwise herein expressly provided) in lawful money of the United
States at 40 Innisbrook Avenue, Las Vegas, Nevada 89113 or such other
location or to such other person as Landlord may from time to time designate
in writing. The Base Rent and Additional Rent may sometimes be referred to
herein collectively as the "RENT." Except as specifically set forth in this
Lease, (i) the rent shall be absolutely net to Landlord, and (ii) under no
circumstances or conditions shall Landlord be expected or required to make
any payment of any kind whatsoever or be under any other obligation or
liability hereunder.
5. UTILITIES.
Tenant shall be solely responsible for and promptly pay all charges
for telephone, electric, gas, sewer, water and all other services and
utilities used or consumed on the Premises. If any such charges are billed
to the Landlord, then Tenant shall make payment in the full amount billed to
Landlord within fifteen (15) days after written demand from Landlord.
6. MAINTENANCE AND REPAIRS.
Tenant shall, at Tenant's sole expense, keep the Premises and every
part thereof (including, without limitation, the roof and structural elements
of the Premises, plate glass, all electrical, plumbing, water, sewer and life
safety systems of the Premises, and the parking areas, driveways and
landscaping areas of the Premises) clean and in good condition and repair and
in compliance with all applicable laws and regulations, as well as in
compliance with the CC&R's, at all times during the Lease Term. Except as
specifically provided herein, Landlord shall have no obligation to modify,
alter, remodel, improve or repair the Premises or any part thereof.
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Notwithstanding the foregoing, (i) Tenant's obligation with respect to the
roof, structural elements and parking areas of the Premises shall be limited
to maintenance and repair work, and, except as provided in Article 10 (Fire
or Casualty), Tenant shall have no obligation to replace such items (such
replacement, subject to Article 10, being the responsibility of Landlord if
and to the extent required); and (ii) Tenant shall be required to alter the
Premises to comply with applicable laws and regulations only to the extent
that the required alteration is not generally applicable to all similar
structures within the applicable jurisdiction but is instead made necessary
by either (A) some other alteration proposed by Tenant; or (B) Tenant's
specific use of the Premises. Any other alterations which are required by
applicable law or regulation shall be performed by Landlord, provided that
the cost of such work shall be amortized over the useful life of the
alteration and that portion of such amortized cost which is allocable to the
Lease Term shall be passed through to and paid by Tenant monthly as
Additional Rent.
7. ALTERATIONS; LANDLORD BUILD-OUT.
7.1 RESTRICTION ON ALTERATIONS. Tenant may make no alteration,
repairs, additions or improvements in, to or about the Premises
(collectively, "TENANT ALTERATIONS") (i) without the prior written consent of
Landlord, and Landlord may impose as a condition to such consent such
reasonable requirements as Landlord may deem necessary or desirable (provided
that Landlord's consent shall not be required with respect to nonstructural
alterations costing less than Twenty-Five Thousand Dollars ($25,000)); and
(ii) without first obtaining such consents and approvals as may be required
by the CC&R's. Tenant shall pay to Landlord, Landlord's reasonable charges
for reviewing and inspecting all Tenant Alterations to assure full compliance
with all of Landlord's requirements. Landlord does not expressly or
implicitly covenant or warrant that any plans or specifications submitted by
Tenant are safe or that the same comply with any applicable laws, ordinances,
codes, rules or regulations or with the requirements of the CC&R's. Further,
Tenant shall indemnify, protect, defend and hold Landlord harmless from any
loss, cost or expense, including attorneys' fees and costs, incurred by
Landlord as a result of any defects in design, materials or workmanship
resulting from Tenant Alterations. Tenant shall promptly pay all costs
incurred in connection with all Tenant Alterations and shall not permit the
filing of any mechanic's lien or other lien in connection with any Tenant
Alterations. If a mechanic's lien or other lien is filed against the
Premises, Tenant shall discharge or cause to be discharged (by bond or
otherwise) such lien within thirty (30) days after Tenant receives notice of
the filing thereof and shall not allow any such lien to be foreclosed upon.
Tenant shall have the right to contest any mechanics' lien so long as Tenant
posts the bond required to remove the lien from the Premises within the
aforementioned thirty (30) day period. If a mechanic's lien or other lien is
filed against the Premises and Tenant fails to timely discharge (by bond or
otherwise) such lien, Landlord may, without waiving its rights and remedies
based on such breach of Tenant and without releasing Tenant from any of its
obligations, cause such lien to be released by any means it shall deem
proper, including payment in satisfaction of the claim giving rise to such
lien. Tenant shall pay to Landlord within thirty (30) days following notice
by Landlord, any sum paid by Landlord to remove such liens, together with
interest at the Reference Rate, as defined in Section 20.2 below, plus two
percent (2%) per annum, from the date of such payment by Landlord. Any
increase in any tax, assessment or charge levied or assessed as a result of
any Tenant Alterations shall be payable by Tenant.
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7.2 REMOVAL AND SURRENDER OF FIXTURES AND TENANT ALTERATIONS. All
Tenant Alterations and other work or improvements installed in the Premises
which are attached to, or built into the Premises so that the same may not be
removed without substantial damage to the Premises, including, without
limitation, floor coverings, wall coverings, paneling, molding, doors
(including garage doors), vaults, plumbing systems, electrical systems,
mechanical systems, lighting systems, built-in communication systems and
cabling and outlets for the systems mentioned above and for all telephone,
radio, computer and television purposes, and any special flooring or ceiling
installations, shall become the property of Landlord and shall be surrendered
with the Premises, as a part thereof, at the end of the Lease Term; provided
that Landlord may, as a condition to approving any proposed alteration,
require that such alteration be removed by Tenant upon the end of the Lease
Term. Any articles of personal property including business and trade
fixtures not attached to, or built into, the Premises, machinery and
equipment, free-standing cabinet work, and movable partitions, which were
installed by Tenant in the Premises at Tenant's sole expense and which were
not installed in connection with a credit or allowance granted by Landlord or
in replacement for an item which Tenant would not have been entitled to
remove, shall be and remain the property of Tenant and may be removed by
Tenant at any time during the Lease Term as long as Tenant is not in default
hereunder and provided that Tenant repairs any material damage to the
Premises caused by such removal. For purposes of the insurance requirements
of Section 9.2, Tenant shall be deemed to have an insurable interest in all
Tenant Alterations in the Premises, as between Landlord and Tenant, but the
same shall be surrendered with the Premises on termination of this Lease, as
set forth above.
7.3 LANDLORD BUILD-OUT.
(a) If Tenant wishes to improve Parcel 4B by the
construction of an automobile dealership and/or other buildings and related
improvements ("TENANT'S PROPOSED PROJECT"), then, without limiting the
foregoing terms and provisions of this Article 7, Tenant shall:
(i) so notify Landlord of its intent to construct
Tenant's Proposed Project;
(ii) provide Landlord with a complete set of construction
plans and specifications for Tenant's Proposed Project, prepared by a Nevada
licensed architect, stamped by a Nevada licensed structural engineer, and
approved in accordance with the CC&R's and by the City of Henderson, Nevada,
zoning and building departments ("TENANT'S CONSTRUCTION DRAWINGS");
(iii) provide Landlord with a proposed construction
contract (the "PROJECT CONTRACT"), between Landlord and a contractor holding
a valid Nevada unlimited general contractor's license (the "CONTRACTOR").
The Project Contract shall: (1) be subject to the reasonable approval of
Landlord, (2) include a proposed start and completion date for the
construction of Tenant's Proposed Project, and (3) include a requirement that
the Contractor provide a performance bond in the amount of the Project
Contract issued by a surety reasonably acceptable to Landlord. The
Contractor shall be subject to the reasonable approval of Landlord; and
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(iv) offer to Landlord the first opportunity to construct
Tenant's Proposed Project ("TENANT'S OFFER NOTICE").
(b) If Landlord elects to construct Tenant's Proposed
Project, Landlord shall so notify Tenant within thirty (30) days after
receiving Tenant's Offer Notice. If no such notice of acceptance is timely
given by Landlord, Landlord shall be deemed to have waived its right to
construct Tenant's Proposed Project and Tenant may proceed with the
construction of Tenant's Proposed Project by the Contractor in accordance
with Tenant's Construction Drawings and the Project Contract; PROVIDED,
HOWEVER, if construction of the structural elements Tenant's Proposed Project
(such as for example, the pouring of the floor slab for Tenant's Proposed
Project, but specifically excluding grading and other mere site preparation
work) is not commenced within two hundred ten (210) days after Tenant's Offer
Notice is given, Tenant shall, in accordance with the procedures set forth
herein, once again offer to Landlord the opportunity to construct Tenant's
Proposed Project.
(c) If Landlord elects to construct Tenant's Proposed
Project, (i) Landlord shall authorize the Contractor to commence construction
of Tenant's Proposed Project in accordance with Tenant's Construction
Drawings and the Project Contract upon (1) receipt of the performance bond
and (2) Tenant's assignment of Tenant's Construction Drawings to Landlord.
Upon the issuance of a certificate of occupancy by the City of Henderson,
Nevada, with respect to Tenant's Proposed Project, the monthly amount of Base
Rent payable by Tenant shall be increased by an amount equal to one percent
(1%) of the total out-of-pocket costs incurred by Landlord in the
construction of Tenant's Proposed Project, including, without limitation all
construction period interest charges and other fees and costs incurred in
connection with financing obtained by Landlord for the construction of
Tenant's Proposed Project. Such increased monthly Base Rent shall be subject
to further increases pursuant to Sections 4.2 and 4.3 above.
(d) Subject to the rental increase described in Paragraph
7.3(c), Landlord's construction of Tenant's Proposed Project shall be at
Landlord's cost and expense; provided that Tenant shall pay (i) all permit
fees and other costs of obtaining necessary governmental approvals; and (ii)
all costs of constructing, purchasing and installing any personal property
and trade fixtures and any other portion of Tenant's Proposed Project which
do not become Landlord's property pursuant to Section 7.2 above.
(e) Nothing contained in this Section 7.3 shall affect
Landlord's approval rights or the other terms, provisions or conditions of
Sections 7.1 and 7.2 above.
8. TAXES.
8.1 PERSONAL PROPERTY TAXES. At least ten (10) days prior to
delinquency, Tenant shall pay all taxes levied or assessed upon Tenant's
equipment, furniture, fixtures and other personal property located in or
about the Premises. If the assessed value of Landlord's property is
increased by the inclusion therein of a value placed upon Tenant's equipment,
furniture, fixtures or other personal property, Tenant shall pay Landlord,
upon written demand, the taxes so levied against Landlord, or the proportion
thereof resulting from said increase in assessment.
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8.2 REAL PROPERTY TAXES. Tenant shall pay all real estate taxes,
assessments (special or otherwise) and charges levied upon or with respect to
the Premises; provided that any assessments shall be prorated so that only
that portion of the assessment that is properly allocable to the Lease Term
shall be payable by Tenant. Landlord, at Landlord's option, may pay such
taxes to the taxing authority, in which event Tenant shall reimburse Landlord
for all such payments within ten (10) days after written demand therefor from
Landlord, or Landlord may provide Tenant with the billing from the taxing
authority, in which event Tenant shall pay the taxes directly and provided
proof of such payment to Landlord not later than ten (10) days prior to
delinquency.
9. INSURANCE; WAIVER OF SUBROGATION.
9.1 LIABILITY INSURANCE. Tenant shall at all times during the
Lease Term and at its own cost and expense procure and continue workers'
compensation insurance and bodily injury liability and property damage
liability insurance adequate to protect Landlord against liability for injury
to or death of any person or damage to property in connection with the use,
operation or condition of the Premises. The limits of liability under the
workers' compensation insurance policy shall be at least equal to the
statutory requirements therefor and the limits of liability under the
Employer's Liability Insurance policy carried by Tenant shall be at least One
Million Dollars ($1,000,000). The general liability insurance for
non-employees and for damage to property at all times shall be in an amount
of not less than Five Million Dollars ($5,000,000), Combined Single Limit,
for injuries to persons and property damage. Not more frequently than once
each two (2) years, if, in the opinion of Landlord or Landlord's lender(s),
the amount of public liability and property damage insurance coverage at that
time is not adequate, Tenant shall increase the insurance coverage as
reasonably required by either Landlord or Landlord's lender(s).
9.2 PROPERTY INSURANCE. Tenant, at its sole cost and expense,
shall at all times during the Lease Term maintain in effect policies of
insurance covering (i) the Premises and all improvements and fixtures thereto
(including plate glass), (ii) all leasehold improvements (including any
Tenant Alterations), and (iii) all trade fixtures, merchandise and other
personal property from time to time in, on or upon the Premises, all in an
amount not less than one hundred percent (100%) of their actual replacement
cost from time to time during the term of this Lease, providing protection
against any peril included within the classification "Fire and Extended
Coverage," together with insurance against sprinkler damage (if applicable),
vandalism and malicious mischief and water damage caused by plumbing leakage
or failure. Subject to the requirements of Landlord's lender(s), the
proceeds of such insurance, so long as this Lease remains in effect, shall be
used for the repair or replacement of the property so insured. The full
replacement cost of the items to be insured under this Section 9.2 shall be
determined by the company issuing the insurance policy at the time the policy
is initially obtained, and shall be increased as reasonably requested by
Landlord or Landlord's lender(s) from time to time.
9.3 POLICY REQUIREMENTS. All insurance required to be carried by
Tenant hereunder shall be issued by responsible insurance companies,
qualified to do business in the State of Nevada and reasonably acceptable to
Landlord. Insurance companies rated A-9 or better by Best's Insurance Reports
shall be deemed acceptable. Each policy shall have a deductible or
deductibles, if any, which are no greater than those maintained by similarly
situated tenants. Each
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liability policy shall name Landlord as additional insured and each property
insurance policy shall name Landlord and Landlord's lender(s) as loss payee
with respect to the Premises and all Tenant Alterations and copies of all
policies, together with certificates evidencing the existence and amounts of
such insurance, shall be delivered to Landlord by Tenant at least five (5)
days prior to Tenant's occupancy of any portion of the Premises. No such
policy shall be cancelable except after thirty (30) days written notice to
Landlord. Tenant shall, at least thirty (30) days prior to the expiration of
any such policy, furnish Landlord with renewals or "binders" thereof, or
Landlord may order such insurance and charge the cost thereof to Tenant,
which amount shall be paid by Tenant upon demand. Any policy may be carried
under so-called "blanket coverage" form of insurance policies, provided any
such blanket policy specifically provides that the amount of insurance
coverage required hereunder shall in no way be prejudiced by other losses
covered by the policy. Neither the issuance of any such insurance policy nor
the minimum limits specified in this Article 9 shall be deemed to limit or
restrict in any way Tenant's liability arising under or out of this Lease.
9.4 WAIVER OF SUBROGATION. Landlord and Tenant waive their
respective right of recovery against the other for any direct or
consequential damage to the property of the other, including, without
limitation, its interest in the Premises, by fire or other casualty to the
extent such damage is insured against under a policy or policies of
insurance. Each such insurance policy carried by either Landlord or Tenant
shall include such a waiver of the insurer's rights of subrogation. Such
waiver shall in no way be construed or interpreted to limit or restrict any
indemnity or other waiver made by Tenant or Landlord under the terms of this
Lease with respect to any uninsured loss.
10. FIRE OR CASUALTY.
(a) If any portion of the Premises is damaged by fire or other
casualty, and the insurance proceeds paid with respect to such fire or
casualty are made available to fund the cost of the restoration, Tenant shall
repair such damage with reasonable diligence and in a manner consistent with
the provisions of the CC&R's and any Underlying Mortgage, as hereinafter
defined. All such insurance proceeds shall be held in a construction control
account which is acceptable to Landlord and to the holder of any Underlying
Mortgage and shall be disbursed to pay the costs of such repair.
(b) If the whole of the improvements located on Parcel 4A, or such
part thereof as shall prevent Tenant's continuation of the operation of its
business therein, shall be damaged by fire or other casualty, and PROVIDED:
(i) Tenant is not in default beyond any cure period in any of its obligations
hereunder, (ii) the insurance proceeds paid with respect to such fire and
casualty are not made available to Tenant to fund the cost of the
restoration, (iii) Landlord has constructed a Tenant's Proposed Project on
Parcel 4B, and (iv) Tenant does not have "business interruption" or "business
continuation" insurance, Base Rent shall be reduced to the amount of Base
Rent calculated in accordance with Section 7.3(c) until such time as Landlord
completes the restoration of the improvements to their condition immediately
prior to the fire or other casualty.
(c) If the whole of the improvements located on Parcel 4A, or such
part thereof as shall prevent Tenant's continuation of the operation of its
business therein, shall be damaged by fire or other casualty, and PROVIDED:
(i) Tenant is not in default beyond any cure period in any of its obligations
hereunder, (ii) the insurance proceeds paid with respect to such fire and
casualty are not
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made available to Tenant to fund the cost of the restoration, (iii) Landlord
has not constructed a Tenant's Proposed Project on Parcel 4B, and (iv) Tenant
does not have "business interruption" or "business continuation" insurance,
Base Rent shall be abated until such time as Landlord completes the
restoration of the improvements to their condition immediately prior to the
fire or other casualty.
(d) If the whole of a constructed Tenant's Proposed Project on
Parcel 4B, or such part thereof as shall prevent Tenant's continuation of the
operation of its business therein, shall be damaged by fire or other
casualty, and PROVIDED: (i) Landlord has constructed the Tenant's Proposed
Project, (ii) Tenant is not in default beyond any cure period in any of its
obligations hereunder, (iii) the insurance proceeds paid with respect to such
fire and casualty are not made available to Tenant to fund the cost of the
restoration, and (iv) Tenant does not have "business interruption" or
"business continuation" insurance, Base Rent shall be reduced to the amount
being paid by Tenant immediately prior to the increase thereof in accordance
with Section 7.3(c) until such time as Landlord completes the restoration of
Tenant's Proposed Project at which time Base Rent shall again increase to the
amount Tenant would be paying had the damage not occurred.
11. EMINENT DOMAIN.
11.1 TAKING. In case the whole of the Premises, or such part
thereof as shall substantially interfere with Tenant's use and occupancy
thereof, shall be taken by any lawful power or authority by exercise of the
right of eminent domain, or sold to prevent such taking, within sixty (60)
days of receipt of notice of such taking, either Tenant or Landlord may
terminate this Lease effective as of the date possession is required to be
surrendered to said authority. Tenant shall not because of such taking
assert any claim against Landlord for any compensation because of such
taking, and Landlord shall be entitled to receive the entire amount of any
award without deduction for any estate or interest of Tenant, provided,
however, that Tenant shall be entitled to seek a separate award from the
condemning authority to compensate Tenant for Tenant's moving expenses,
business dislocation damages, Tenant's personal property and fixtures and any
other award that would not reduce the award payable to Landlord.
11.2 TEMPORARY TAKING. If all or any portion of the Premises are
condemned or otherwise taken for public or quasi-public use for a limited
period of time of not more than six (6) months, this Lease shall remain in
full force and effect and Tenant shall continue to perform all of the terms,
conditions and covenants of this Lease, except that the Base Rent shall be
abated in proportion to the area of the Premises which is unusable by Tenant
during such temporary taking. Tenant shall be entitled to receive the entire
award made in connection with any temporary condemnation or other taking
attributable to any period within the Lease Term. Landlord shall be entitled
to the entire award for any such temporary condemnation or other taking which
relates to a period after the expiration of the Lease Term. If any such
temporary condemnation or other taking terminates prior to the expiration of
the Lease Term, Tenant shall restore the Premises as nearly as possible to
the condition prior to the condemnation or other taking, at Tenant's sole
cost and expense; provided that Tenant shall receive the portion of the award
attributable to such restoration.
12. ASSIGNMENT AND SUBLETTING.
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12.1 PROHIBITION. Tenant acknowledges that the economic
concessions and rental rates set forth in this Lease were negotiated by
Landlord and Tenant in consideration of, and would not have been granted by
Landlord but for, the specific nature of the leasehold interest granted to
Tenant hereunder, as such interest is limited and defined by various
provisions throughout this Lease, including, but not limited to, the
provisions of this Article 12 which define and limit the transferability of
such leasehold interest. Tenant further acknowledges and agrees that the
leasehold estate granted to Tenant hereunder is not a transferable interest
in property, and Landlord hereby reserves the right to receive any increased
rental value of the Premises during the Lease Term as the same may be
realized by any transfer of said estate. Tenant shall not directly or
indirectly, voluntarily or involuntarily assign, mortgage or otherwise
encumber all or any portion of its interest in this Lease or in the Premises
(collectively, "ASSIGNMENT") or permit the Premises to be occupied by anyone
other than Tenant or Tenant's employees or sublet the Premises (collectively,
"SUBLEASE") or any portion thereof without obtaining the prior written
consent of Landlord, which consent shall not be unreasonably withheld, and
any such attempted assignment, subletting, mortgage or other encumbrance
without such consent shall be null and void and of no effect. The acceptance
of rent by Landlord from any other person shall not be deemed to be a waiver
by Landlord of any provision of this Lease or to be a consent to any
Assignment or Sublease. If Tenant is a corporation, an unincorporated
association, a limited liability company or a partnership, any transfer,
assignment or hypothecation of any stock or interest in such corporation,
association, limited liability company or partnership which results in a
change in the effective control of such entity (such as a change of the
general partner or a change in the ownership of the general partner of a
limited partnership), shall be deemed an Assignment of this Lease.
12.2 NO NOVATION. No Assignment or Sublease shall relieve Tenant
of its obligation to pay the rent and to perform all of the other obligations
to be performed by Tenant hereunder.
12.3 JOINT AND SEVERAL OBLIGATIONS. Each assignee shall assume all
obligations of Tenant under this Lease and shall be and remain liable jointly
and severally with Tenant for the payment of the rent, and for the
performance of all of the terms, covenants, conditions and agreements herein
contained on Tenant's part to be performed for the Lease Term, including any
Option Terms. No Assignment shall be binding on Landlord unless the assignee
or Tenant shall deliver to Landlord a counterpart of the Assignment which
contains a covenant of assumption by the assignee reasonably satisfactory in
substance and form to Landlord consistent with the requirements of this
Article 12, but the failure of refusal of the assignee to execute such
instrument of assumption shall not release or discharge the assignee from its
liability as set forth above.
13. LANDLORD'S RIGHT OF ENTRY.
Landlord and its agents and representatives shall have the right,
at all reasonable times, but in such manner as to cause as little disturbance
to Tenant as reasonably practicable, to enter the Premises for purposes of
inspection, to post notices of non-responsibility and to otherwise protect
the interests of Landlord in the Premises.
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14. INDEMNIFICATION AND LIMITATION ON LIABILITY.
14.1 INDEMNITY BY TENANT. As a material part of the consideration
to the Landlord for entering into this Lease, Tenant hereby assumes all risk
of, and Tenant shall indemnify, protect, defend and hold harmless Landlord,
its trustees, beneficiaries, agents and employees from and against, any and
all claims, suits, demands, liability, damages and expenses, including
reasonable attorneys' fees and costs, arising from or in connection with
Tenant's use or alteration of the Premises or the conduct of its business or
from any activity performed or permitted by Tenant in or about the Premises
during the Lease Term or arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the
terms of this Lease, or arising from any breach or default in the performance
of any obligations arising under or pursuant to the CC&R's or from any other
act, neglect, fault or omission of Tenant or any of its officers, agents,
directors, contractors, employees, licensees or invitees.
14.2 LIMITATION ON LANDLORD'S LIABILITY. Except to the extent
caused by the negligent or wrongful acts of Landlord, in no event shall
Landlord be liable to Tenant for any injury to any person in or about the
Premises or damage to the Premises or for any loss, damage or injury to any
property of Tenant therein, including without limitation, any damage, injury
or loss caused by any malfunction of any utility or other equipment,
installation or system, or by the rupture, leakage or overflow of any
plumbing or other pipes, including without limitation, water, steam and
refrigeration lines, sprinklers, tanks, drains or similar cause in, about or
upon the Premises.
14.3 INDEMNITY BY LANDLORD. Landlord shall indemnify, protect,
defend and hold harmless Tenant and its officers, directors, shareholders,
agents and employees from and against any and all claims, suits, demands,
liability, damages and expenses, including attorneys' fees and costs, arising
from (i) Landlord's breach of its obligations under this Lease; or (ii) the
negligent or wrongful acts of Landlord or its agents or employees, whether
occurring during the Lease Term, prior to the Commencement Date, or after the
expiration or earlier termination of this Lease.
15. TRANSFER BY LANDLORD.
Landlord has the absolute right to transfer all or a part of its
interest in this Lease to any successor. In the event of any sale or other
transfer of Landlord's interest in the Premises, other than a transfer for
security purposes only, Landlord shall be automatically relieved of any and
all obligations and liabilities on the part of Landlord accruing from and
after the date of such transfer; provided the transferee of such interest
assumes Landlord's obligations under this Lease.
16. SUBORDINATION.
16.1 SUBORDINATION. This Lease is subject and subordinate to all
mortgages, trust deeds and ground leases (the "UNDERLYING MORTGAGES") which
may now or hereafter be executed affecting the Premises and to all renewals,
modifications, consolidations, replacements and extensions of any such
Underlying Mortgages, provided that the subordination of this Lease to
Underlying Mortgages which are executed after the Commencement Date shall be
effective if, but only if, the holder of the Underlying Mortgage enters into
a commercially reasonable non-
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disturbance agreement in favor of Tenant. Tenant shall execute promptly any
certificate or document that Landlord may reasonably request to effectuate,
evidence or confirm such subordination.
16.2 ATTORNMENT. If Landlord's interest in the Premises is sold or
conveyed upon the exercise of any remedy provided for in any Underlying
Mortgage, or otherwise by operation of law then, subject to the terms of any
applicable non-disturbance agreement: (a) this Lease will not be affected in
any way and Tenant will attorn to and recognize the new owner as Tenant's
Landlord under this Lease, and Tenant will confirm such attornment in writing
within ten (10) days after request (Tenant's failure to do so will constitute
a material breach of this Lease); and (b) the new owner shall not be (i)
liable for damages for any act or omission of Landlord under this Lease
occurring prior to such sale or conveyance, or (ii) subject to any offset,
abatement or reduction of rent because of any default of Landlord under this
Lease occurring prior to such sale or conveyance, unless Tenant has given the
Lender written notice of such offset, abatement or reduction.
16.3 NOTICE FROM TENANT. Tenant shall give written notice to the
holder of any Underlying Mortgage whose name and address have been previously
furnished to Tenant of any act or omission by Landlord which Tenant asserts
as giving Tenant the right to terminate this Lease or to claim a partial or
total eviction or any other right or remedy under this Lease or provided by
law.
17. ESTOPPEL CERTIFICATES.
Landlord and Tenant shall at any time and from time to time upon
not less than fifteen (15) days prior notice by the other party, execute,
acknowledge and deliver to the requesting party a statement in writing
certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications), the dates to which the Base Rent and
other charges have been paid in advance, if any, stating whether or not to
the best knowledge of the certifying party, the requesting party is in
default in the performance of any covenant, agreement or condition contained
in this Lease and, if so, specifying each such default of which the
certifying party may have knowledge and containing any other information and
certifications which reasonably may be requested by the requesting party or
the holder of any Underlying Mortgage. Any such statement delivered by
Tenant pursuant to this Article 17 may be relied upon by any prospective
purchaser of the fee of the Premises or any mortgagee, ground lessor or other
like encumbrancer thereof or any assignee of any such encumbrancer upon the
Premises.
18. SURRENDER OF PREMISES AND REMOVAL OF PROPERTY.
18.1 NO MERGER. The voluntary or other surrender of this Lease by
Tenant, a mutual cancellation or a termination hereof, shall not constitute a
merger, and shall, at the option of Landlord, terminate all or any existing
subleases or shall operate as an assignment to Landlord of any or all
subleases affecting the Premises.
18.2 SURRENDER OF PREMISES. Upon the expiration of the Lease Term,
or upon any earlier termination hereof, Tenant shall quit and surrender
possession of the Premises to Landlord
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in as good order and condition as the Premises are now or hereafter may be
improved by Landlord or Tenant, reasonable wear and tear and casualty which
is not to be restored by Tenant pursuant to this Lease excepted, and shall,
without expense to Landlord, remove or cause to be removed from the Premises,
all debris and rubbish, all furniture, equipment, business and trade
fixtures, free-standing cabinet work, movable partitioning and other articles
of personal property owned by Tenant or installed or placed by Tenant at its
expense in the Premises, and all similar articles of any other persons
claiming under Tenant unless Landlord exercises its option to have any
subleases or subtenancies assigned to Landlord, and Tenant shall repair all
material damage to the Premises resulting from such removal.
18.3 DISPOSAL OF PROPERTY. In the event of the expiration of this
Lease or other re-entry of the Premises by Landlord as provided in this
Lease, any property of Tenant not removed by Tenant upon the expiration of
the term of this Lease, or within five (5) days after a termination by reason
of Tenant's default, shall be considered abandoned and Landlord may remove
any or all of such property and dispose of the same in any commercially
reasonable manner or store the same in a public warehouse or elsewhere for
the account of, and at the expense and risk of, Tenant. If Tenant shall fail
to pay the costs of storing any such property after it has been stored for a
period of thirty (30) days or more, Landlord may sell any or all of such
property at public or private sale, in such manner and at such places as
Landlord, in its reasonable discretion, may deem proper, with notice to
Tenant. In the event of such sale, Landlord shall apply the proceeds
thereof, first, to the cost and expense of sale, including reasonable
attorneys' fees; second, to the repayment of the cost of removal and storage;
third, to the repayment of any other sums which may then or thereafter be due
to Landlord from Tenant under any of the terms of this Lease; and fourth, the
balance, if any, to Tenant.
19. HOLDING OVER.
In the event Tenant holds over after the expiration of the Lease
Term, with or without the express or implied consent of Landlord, such
tenancy shall be from month-to-month only, and not a renewal hereof or an
extension for any further term, and such month-to-month tenancy shall be
subject to each and every term, covenant and agreement contained herein;
provided, however, that Tenant shall pay as Base Rent during any holding over
period, an amount equal to one hundred fifty percent (150%) of the Base Rent
payable immediately preceding the expiration of the Lease Term. Nothing in
this Article 19 shall be construed as a consent by Landlord to any holding
over by Tenant and Landlord expressly reserves the right to require Tenant to
surrender possession of the Premises upon the expiration of the Lease Term or
upon the earlier termination hereof and to assert any remedy in law or equity
to evict Tenant and/or collect damages in connection with such holding over.
20. DEFAULTS AND REMEDIES.
20.1 DEFAULTS BY TENANT. The occurrence of any of the following
shall constitute a material default and breach of this Lease by Tenant:
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(a) The failure by Tenant to pay the rent hereunder as and
when due where such failure continues for five (5) days after notice thereof
by Landlord to Tenant; provided, however, that such notice shall be in lieu
of and not in addition to any notice required under Nevada law.
(b) The abandonment or vacation of the Premises by Tenant.
(c) The failure by Tenant to provide estoppel certificates as
herein provided.
(d) The failure by Tenant to observe or perform any other
provision of this Lease where such failure continues for thirty (30) days
after notice thereof by Landlord to Tenant; provided, however, that if the
nature of such default is such that the same cannot reasonably be cured
within such thirty (30) day period, Tenant shall not be deemed to be in
default if Tenant shall within such period commence such cure and thereafter
diligently prosecute the same to completion.
(e) Any action taken by or against Tenant pursuant to any
statute pertaining to bankruptcy or insolvency or the reorganization of
Tenant (unless, in the case of a petition filed against Tenant, the same is
dismissed within ninety (90) days); the making by Tenant of any general
assignment for the benefit of creditors; the appointment of a trustee or
receiver to take possession of all or any portion of Tenant's assets located
at the Premises or of Tenant's interest in this Lease, where possession is
not restored to Tenant within ninety (90) days; or the attachment, execution,
or other judicial seizure of all or any portion of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where such seizure is not
discharged within ninety (90) days.
(f) Tenant's failure to vacate and surrender the Premises as
required by this Lease upon the expiration of the Lease Term or termination
of this Lease.
20.2 LANDLORD'S REMEDIES.
(a) In the event of any such default by Tenant, then, in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving Tenant fifteen (15) days written notice
of such election to terminate. In the event Landlord shall elect to so
terminate this Lease, Landlord may recover from Tenant:
(i) the worth at the time of award of any unpaid rent
which has been earned at the time of such termination; plus
(ii) the worth at the time of award of any amount by
which the unpaid rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
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(iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of the award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided; plus
(iv) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would
be likely to result therefrom; and
(v) at Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time
by applicable law.
(b) All "rent" (as defined in Section 4.5) shall be computed
on the basis of the monthly amount thereof payable on the date of Tenant's
default, as the same are to be adjusted thereafter as contemplated by this
Lease. As used in paragraphs (i) and (ii) above, the "worth at the time of
award" is computed by allowing interest in the per annum amount equal to the
prime rate of interest or other equivalent reference rate from time to time
announced by the Bank of America National Trust and Savings Association (the
"REFERENCE RATE") plus two percent (2%), but in no event in excess of the
maximum interest rate permitted by law. As used in paragraph (iii) above,
the "worth at the time of award" is computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).
(c) In the event of any such default by Tenant, Landlord
shall also have the right, with or without terminating this Lease, to
re-enter the Premises and remove all persons and property therefrom by
summary proceedings or otherwise; such property may be removed and stored in
a public warehouse or elsewhere at the cost of and for the account of Tenant.
(d) In the event of the vacation or abandonment of the
Premises by Tenant, or in the event that Landlord elects to re-enter as
provided in Paragraph (c) above or takes possession of the Premises pursuant
to legal proceeding or pursuant to any notice provided by law, and if
Landlord does not elect to terminate this Lease, then Landlord may from time
to time, without terminating this Lease, either recover all rent as it
becomes due or relet the Premises or any part thereof for such term or terms
and at such rent and upon such other terms and conditions as Landlord, in its
sole discretion, may deem advisable, with the right to make reasonable
alterations and repairs to the Premises. Nothing contained herein shall
affect Landlord's obligation under law to use its reasonable efforts to
mitigate its damages in the event of a default by Tenant.
(e) In the event that Landlord shall elect to so relet as
provided in Paragraph (d) above, then rentals received by Landlord from such
reletting shall be applied: First, to the payment of any indebtedness other
than rent due hereunder from Tenant to Landlord; second, to the payment of
any reasonable cost of such reletting; third, to the payment of the cost of
any alterations and repairs to the Premises; fourth, to the payment of rent
due and unpaid hereunder; and the remainder, if any, shall be held by
Landlord and applied in payment of future rent as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied to the payment of rent
hereunder, be less than the rent payable during that month by Tenant
hereunder, then Tenant shall pay such deficiency to Landlord.
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Such deficiency shall be calculated and paid monthly. Tenant shall also pay
to Landlord, as soon as ascertained, any reasonable costs and expenses
incurred by Landlord in such reletting or in making such alterations and
repairs not covered by the rentals received from such reletting.
20.3 RE-ENTRY NOT TERMINATION. No re-entry or taking possession of
the Premises by Landlord pursuant to this Article 20 shall be construed as an
election to terminate this Lease unless a written notice of such intention be
given to Tenant or unless the termination thereof be decreed by a court of
competent jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any default of Tenant, Landlord may at any time after
such reletting elect to terminate this Lease for any such default.
20.4 DEFINITION OF TENANT. As used in this Article 20, the term
"TENANT" shall be deemed to include all persons or entities named as Tenant
under this Lease, or each and every one of them. If this Lease has been
assigned, the term "TENANT," as used in this Article 20, shall be deemed to
include both the assignee and the assignor.
21. INTEREST ON TENANT'S OBLIGATIONS; LATE CHARGES.
21.1 INTEREST. Any amount due from Tenant to Landlord which is not
paid when due shall bear interest at the lesser of two percent (2%) per annum
in excess of the Reference Rate (as defined in Paragraph 20.2(b) above) or
the maximum rate per annum which Landlord is permitted by law to charge, from
the date such payment is due until paid, but the payment of such interest
shall not excuse or cure any default by Tenant under this Lease.
21.2 LATE CHARGE. In the event Tenant is more than ten (10) days
late in paying any installment of rent due under this Lease, Tenant shall pay
Landlord a late charge equal to three percent (3%) of the delinquent
installment of rent. The parties agree that the amount of such late charge
represents a reasonable estimate of the cost and expense that would be
incurred by Landlord in processing each delinquent payment of rent by Tenant
and that such late charge shall be paid to Landlord as liquidated damages for
each delinquent payment, but the payment of such late charge shall not excuse
or cure any default by Tenant under this Lease. The parties further agree
that the payment of late charges and the payment of interest provided for in
Section 21.1 above are distinct and separate from one another in that the
payment of interest is to compensate Landlord for the use of Landlord's money
by Tenant, while the payment of a late charge is to compensate Landlord for
the additional administrative expense incurred by Landlord in handling and
processing delinquent payments.
22. QUIET ENJOYMENT.
Tenant, upon the paying of all rent hereunder and performing each
of the covenants, agreements and conditions of this Lease required to be
performed by Tenant, shall lawfully and quietly hold, occupy and enjoy the
Premises during the Lease Term without hindrance or molestation of anyone
lawfully claiming by, through or under Landlord, subject, however, to the
provisions set forth in this Lease.
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23. SIGNAGE.
Subject to Article 7 above, Tenant, at Tenant's sole cost and
expense, shall have the right to place signage upon the Premises as Tenant
deems to be appropriate so long as such signage conforms to the requirements
of the CC&R's.
24. TENANT'S RECOURSE.
Anything in this Lease to the contrary notwithstanding, Tenant
agrees that it shall look solely to the estate and property of Landlord in
the land and buildings comprising the Premises (including any insurance
proceeds and/or condemnation awards paid to Landlord with respect to the
Premises), subject to prior rights of any mortgagee under an Underlying
Mortgage, and no other procedures for the satisfaction of Tenant's remedies.
Neither Landlord, nor any trustee or beneficiary thereof, shall have any
personal liability of any kind or nature, directly or indirectly under or in
connection with this Lease.
25. CC&R'S.
Tenant acknowledges that this Lease and Tenant's rights hereunder
are subject and subordinate to the CC&R's. Tenant shall comply with the
CC&R's in all respects in its occupancy, alteration and use of the Premises.
Without limiting the foregoing, Tenant shall pay all assessments which are
made against the Premises pursuant to the CC&R's and all other amounts which
may be due pursuant to the terms of the CC&R's not later than five (5) days
prior to the date upon which the same are due (provided that such assessments
and other amounts shall be reasonably prorated by Landlord so that Tenant
shall pay those amounts which are properly allocable to the Lease Term), and
Landlord agrees to provide Tenant with a copy of any assessment notice
promptly after Landlord receives such notice from the assessing authority.
26. GENERAL PROVISIONS.
26.1 NO WAIVER. The waiver by Landlord of any breach of any term,
provision, covenant or condition contained in this Lease, or the failure of
Landlord to insist on the strict performance by Tenant, shall not be deemed
to be a waiver of such term, provision, covenant or condition as to any
subsequent breach thereof or of any other term, covenant or condition
contained in this Lease. The acceptance of rents hereunder by Landlord shall
not be deemed to be a waiver of any breach or default by Tenant of any term,
provision, covenant or condition herein, regardless of Landlord's knowledge
of such breach or default at the time of acceptance of rent.
26.2 LANDLORD'S RIGHT TO PERFORM. All covenants and agreements to
be performed by Tenant under any of the terms of this Lease shall be
performed by Tenant at Tenant's sole expense and without abatement of rent.
If Tenant shall fail to observe and perform any covenant, condition,
provision or agreement contained in this Lease or shall fail to perform any
other act required to be performed by Tenant, Landlord may, upon notice to
Tenant, without obligation, and without waiving or releasing Tenant from any
default or obligations of Tenant, make any such payment or perform any such
obligation on Tenant's part to be performed. All sums so paid by
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Landlord and all costs incurred by Landlord, including attorneys' fees,
together with interest thereon in a per annum amount equal to two percent
(2%) per annum in excess of the Reference Rate, but not in excess of the
maximum rate permitted by law, shall be payable to Landlord on demand and
Tenant covenants to pay any such sums, and Landlord shall have (in addition
to any other right or remedy hereunder) the same rights and remedies in the
event of the non-payment thereof by Tenant as in the case of default by
Tenant in the payment of rent.
26.3 TERMS; HEADINGS. The words "Landlord" and "Tenant" as used
herein shall include the plural, as well as the singular. The words used in
neuter gender include the masculine and feminine and words in the masculine
or feminine gender include the neuter. If there is more than one tenant, the
obligations hereunder imposed upon Tenant shall be joint and several. The
headings or titles of this Lease shall have no effect upon the construction
or interpretation of any part hereof.
26.4 ENTIRE AGREEMENT. This instrument along with any exhibits and
attachments or other documents affixed hereto, or referred to herein,
constitutes the entire and exclusive agreement between Landlord and Tenant
with respect to the Premises and the estate and interest leased to Tenant
hereunder. This instrument and said exhibits and attachments and other
documents may be altered, amended, modified or revoked only by an instrument
in writing signed by both Landlord and Tenant. Landlord and Tenant hereby
agree that all prior or contemporaneous oral understandings, agreements or
negotiations relative to the leasing of the Premises are merged into and
revoked by this instrument.
26.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of Article
12 relating to Assignment and Sublease, this Lease is intended to and does
bind the heirs, executors, administrators, successors and assigns of any and
all of the parties hereto.
26.6 NOTICES. All notices, consents, approvals, requests, demands
and other communications (collectively "NOTICES") which Landlord or Tenant
are required or desire to serve upon, or deliver to, the other shall be in
writing and mailed postage prepaid by certified or registered mail, return
receipt requested, or by personal delivery, or given by a nationally
recognized overnight delivery service (such as Federal Express) with all fees
prepaid, to the appropriate address indicated below, or at such other place
or places as either Landlord or Tenant may, from time to time, designate in a
written notice given to the other. If the term "Tenant" in this Lease refers
to more than one person or entity, Landlord shall be required to make service
or delivery, as aforesaid, to any one of said persons or entities only.
Notices shall be deemed sufficiently served or given at the time of delivery;
provided that refusal to accept delivery of a notice shall constitute
successful and effective delivery thereof. Any notice, request,
communication or demand by Tenant to Landlord shall be addressed to the
Landlord at 40 Innisbrook Avenue, Las Vegas, Nevada 89113, Attention:
Trustee, and if requested in writing by the Landlord, given or served
simultaneously to the Landlord's mortgagee at the address specified in such
request. Any notice, request, communication or demand by Landlord to Tenant
shall be addressed to the Tenant at 2333 South Decatur Boulevard, Las Vegas,
Nevada 89102. Rejection or other refusal to accept a notice, request,
communication or demand or the inability to deliver the same because of a
changed address of which no notice was given shall be deemed to be receipt of
the notice, request, communication or demand sent.
20
<PAGE>
26.7 SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material
benefit by either party hereunder, shall be held invalid or unenforceable to
any extent, the remaining terms, conditions and covenants of this Lease shall
not be affected thereby and each of said terms, covenants and conditions
shall be valid and enforceable to the fullest extent permitted by law.
26.8 TIME OF ESSENCE. Time is of the essence of this Lease and
each provision hereof in which time of performance is established.
26.9 GOVERNING LAW. This Lease shall be governed by, interpreted
and construed in accordance with the laws of the State of Nevada.
26.10 ATTORNEYS' FEES. If any action or proceeding is brought by
Landlord or Tenant to enforce its respective rights under this Lease, the
unsuccessful party therein shall pay all costs incurred by the prevailing
party therein, including reasonable attorneys' fees to be fixed by the court.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the date set forth in the first paragraph above.
LANDLORD: TENANT:
CHAISSON FAMILY TRUST R-501 JRJ INVESTMENTS, INC.,
a Nevada corporation
By: By:
---------------------------------- ------------------------------------
James J. Chaisson, Trustee Its:
-----------------------------------
EXHIBIT "A"
PARCEL 4A
THAT PORTION OF LOT 4 OF "GIBSON WARM SPRINGS, A COMMERCIAL SUBDIVISION" AS
SHOWN BY MAP THEREOF ON FILE IN BOOK 58, PAGE 82 OF PLATS IN THE CLARK COUNTY
RECORDER'S OFFICE, CLARK COUNTY, NEVADA, LYING WITHIN SECTION 11, TOWNSHIP 22
SOUTH, RANGE 62 EAST, M.D.M., CITY OF HENDERSON, CLARK COUNTY, NEVADA AND
DESCRIBED AS FOLLOWS:
COMMENCING AT THE INTERSECTION OF THE CENTERLINE OF AUTO MALL DRIVE (51.00
FEET WIDE) WITH THE INTERSECTION OF THE CENTERLINE OF VALLEY MESA DRIVE
(60.00 FEET WIDE) AS SHOWN BY "CERTIFICATE OF AMENDMENT" RECORDED AUGUST 3,
1995 IN BOOK 950803 OF OFFICIAL RECORDS AS INSTRUMENT NO. 01798 IN THE CLARK
COUNTY RECORDER'S OFFICE, CLARK COUNTY, NEVADA; THENCE ALONG SAID CENTERLINE
OF VALLEY MESA DRIVE, SOUTH 75DEG. 05'54" WEST, 70.99 FEET; THENCE SOUTH
14DEG. 54'06" EAST, 30.00 FEET TO THE POINT OF BEGINNING ON THE SOUTHERLY
RIGHT-OF-WAY LINE OF VALLEY MESA DRIVE; THENCE ALONG SAID RIGHT-OF-WAY LINE,
NORTH 75DEG. 05'54" EAST, 15.49 FEET; THENCE ALONG SAID
A-1
<PAGE>
RIGHT-OF-WAY LINE, CURVING TO THE RIGHT ALONG THE ARC OF A 30.00 FOOT RADIUS
CURVE, CONCAVE SOUTHWESTERLY, THROUGH A CENTRAL ANGLE OF 90DEG. 00'00", AN
ARC LENGTH OF 47.12 FEET TO A POINT ON THE WESTERLY RIGHT-OF-WAY LINE OF AUTO
MALL DRIVE; THENCE ALONG SAID RIGHT-OF-WAY LINE, SOUTH 14DEG. 54'06" EAST,
253.41 FEET; THENCE SOUTH 75DEG. 05'54" WEST, 430.50 FEET TO A POINT ON THE
EASTERLY RIGHT-OF-WAY LINE OF VALLEY MESA DRIVE; THENCE ALONG SAID
RIGHT-OF-WAY LINE, THE FOLLOWING FOUR (4) COURSES: NORTH 14DEG. 54'06" WEST,
132.47 FEET; THENCE CURVING TO THE RIGHT ALONG THE ARC OF A 180.00 FOOT
RADIUS CURVE, CONCAVE EASTERLY, THROUGH A CENTRAL ANGLE OF 13DEG. 18'42", AN
ARC LENGTH OF 41.82 FEET; THENCE NORTH 01DEG. 35'24" WEST, 120.78 FEET;
THENCE CURVING TO THE RIGHT ALONG THE ARC OF A 30.00 FOOT RADIUS CURVE,
CONCAVE SOUTHEASTERLY, THROUGH A CENTRAL ANGLE OF 87DEG. 41'34", AN ARC
LENGTH OF 45.92 FEET TO A POINT OF REVERSE CURVATURE ON THE AFOREMENTIONED
SOUTHERLY RIGHT-OF-WAY LINE OF VALLEY MESA DRIVE THROUGH WHICH A RADIAL LINE
BEARS NORTH 03DEG. 53'50" WEST; THENCE ALONG SAID RIGHT-OF-WAY LINE, CURVING
TO THE LEFT ALONG THE ARC OF A 1663.00 FOOT RADIUS CURVE, CONCAVE
NORTHWESTERLY, THROUGH A CENTRAL ANGLE OF 11DEG. 00'16", AN ARC LENGTH OF
319.40 FEET TO THE POINT OF BEGINNING.
CONTAINING 2.85 ACRES
A-2
<PAGE>
EXHIBIT "B"
PARCEL 4B
ALL OF LOT FOUR (4) OF "GIBSON/WARM SPRINGS, A COMMERCIAL SUBDIVISION" AS
SHOWN BY MAP THEREOF ON FILE IN BOOK 58, PAGE 82 OF PLATS AND AMENDED BY THAT
CERTAIN CERTIFICATE OF AMENDMENT RECORDED AUGUST 3, 1995, IN BOOK 950803 AS
DOCUMENT NO. 01798 IN THE CLARK COUNTY RECORDER'S OFFICE, CLARK COUNTY,
NEVADA.
AND EXCEPTING THEREFROM:
THAT PORTION OF LOT 4 OF "GIBSON WARM SPRINGS, A COMMERCIAL SUBDIVISION" AS
SHOWN BY MAP THEREOF ON FILE IN BOOK 58, PAGE 82 OF PLATS IN THE CLARK COUNTY
RECORDER'S OFFICE, CLARK COUNTY, NEVADA, LYING WITHIN SECTION 11, TOWNSHIP 22
SOUTH, RANGE 62 EAST, M.D.M., CITY OF HENDERSON, CLARK COUNTY, NEVADA AND
DESCRIBED AS FOLLOWS:
COMMENCING AT THE INTERSECTION OF THE CENTERLINE OF AUTO MALL DRIVE (51.00
FEET WIDE) WITH THE INTERSECTION OF THE CENTERLINE OF VALLEY MESA DRIVE
(60.00 FEET WIDE) AS SHOWN BY "CERTIFICATE OF AMENDMENT" RECORDED AUGUST 3,
1995 IN BOOK 950803 OF OFFICIAL RECORDS AS INSTRUMENT NO. 01798 IN THE CLARK
COUNTY RECORDER'S OFFICE, CLARK COUNTY, NEVADA; THENCE ALONG SAID CENTERLINE
OF VALLEY MESA DRIVE, SOUTH 75DEG. 05'54" WEST, 70.99 FEET; THENCE SOUTH
14DEG. 54'06" EAST, 30.00 FEET TO THE POINT OF BEGINNING ON THE SOUTHERLY
RIGHT-OF-WAY LINE OF VALLEY MESA DRIVE; THENCE ALONG SAID RIGHT-OF-WAY LINE,
NORTH 75DEG. 05'54" EAST, 15.49 FEET; THENCE ALONG SAID RIGHT-OF-WAY LINE,
CURVING TO THE RIGHT ALONG THE ARC OF A 30.00 FOOT RADIUS CURVE, CONCAVE
SOUTHWESTERLY, THROUGH A CENTRAL ANGLE OF 90DEG. 00'00", AN ARC LENGTH OF
47.12 FEET TO A POINT ON THE WESTERLY RIGHT-OF-WAY LINE OF AUTO MALL DRIVE;
THENCE ALONG SAID RIGHT-OF-WAY LINE, SOUTH 14DEG. 54'06" EAST, 253.41 FEET;
THENCE SOUTH 75DEG. 05'54" WEST, 430.50 FEET TO A POINT ON THE EASTERLY
RIGHT-OF-WAY LINE OF VALLEY MESA DRIVE; THENCE ALONG SAID RIGHT-OF-WAY LINE,
THE FOLLOWING FOUR (4) COURSES: NORTH 14DEG. 54'06" WEST, 132.47 FEET;
THENCE CURVING TO THE RIGHT ALONG THE ARC OF A 180.00 FOOT RADIUS CURVE,
CONCAVE EASTERLY, THROUGH A CENTRAL ANGLE OF 13DEG. 18'42", AN ARC LENGTH OF
41.82 FEET; THENCE NORTH 01DEG. 35'24" WEST, 120.78 FEET; THENCE CURVING TO
THE RIGHT ALONG THE ARC OF A 30.00 FOOT RADIUS CURVE, CONCAVE SOUTHEASTERLY,
THROUGH A CENTRAL ANGLE OF 87DEG. 41'34", AN ARC LENGTH OF 45.92 FEET TO A
POINT OF REVERSE CURVATURE ON THE AFOREMENTIONED SOUTHERLY RIGHT-OF-WAY LINE
OF VALLEY MESA DRIVE THROUGH WHICH A RADIAL LINE BEARS NORTH 03DEG. 53'50"
WEST; THENCE ALONG SAID RIGHT-OF-WAY LINE, CURVING TO THE LEFT ALONG THE ARC
OF A 1663.00 FOOT RADIUS CURVE, CONCAVE NORTHWESTERLY, THROUGH A CENTRAL
ANGLE OF 11DEG. 00'16", AN ARC LENGTH OF 319.40 FEET TO THE POINT OF
BEGINNING.
CONTAINING 2.46 ACRES
B-1
<PAGE>
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 Chaisson 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
"Chaisson Motor Cars", located at 2333 South Decatur Boulevard, Las Vegas,
Nevada, and a new automobile dealership known as "Chaisson BMW", located at
261 Auto Mall Drive, Henderson, Nevada, 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
<PAGE>
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 James J. Chaisson, Sr., 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
James J. Chaisson, Sr. 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
2
<PAGE>
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
3
<PAGE>
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
4
<PAGE>
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.
1201 S. Taylor
5
<PAGE>
P.O. Box 750
Amarillo, Texas 79105-0750
Attention: Robert W. Hall
(806) 374-8653
IF TO SELLER OR THE COMPANY:
James J. Chaisson, Sr.
40 Innisbrook
Las Vegas, Nevada 89113
with a copy to:
Jones, Jones, Close & Brown, Chartered
3773 Howard Hughes Parkway, 3rd Floor South
Las Vegas, Nevada 89109
Attention: Douglas G. Crosby, 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 Clark 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
6
<PAGE>
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:
----------------------------------------
Bill Gilliland, Chairman and Chief
Executive Officer
SELLER: THE CHAISSON FAMILY TRUST R-501
By:
----------------------------------------
James J. Chaisson, Sr., Trustee
COMPANY: JRJ INVESTMENTS, INC., a Nevada corporation
By:
----------------------------------------
James J. Chaisson, Sr., President
7
<PAGE>
Exhibit 10.5
MANAGEMENT AGREEMENT
This Management Agreement (the "Agreement") is made and entered into as
of January 5, 1998, by and among JRJ Investments, Inc., a Nevada corporation,
(the "Company"), the Chaisson Family Trust R-501, u/a/d October 23, 1985 (the
"Seller"), and Chaisson Diversified Investments, Inc., a Nevada corporation
wholly owned by the Seller ("CDI").
RECITALS
A. The Company owns and operates a new automobile dealership known as
"Chaisson Motor Cars", located at 2333 South Decatur Boulevard, Las Vegas,
Nevada (the "Dealership"), pursuant to automobile dealer agreements with the
manufacturers (individually, a "Manufacturer" and collectively, the
"Manufacturers") of Land Rover and Rolls Royce and Bentley new automobiles
(individually, a "Franchise" and collectively, the "Franchises") which were
issued to Seller, as the approved owner of the Company.
B. Pursuant to the terms and conditions of that certain Amended and
Restated Stock Purchase Agreement, dated as of November 1, 1997 (the
"Purchase Agreement"), Cross-Continent Auto Retailers, Inc., a Delaware
Corporation ("C-Car"), has purchased from Seller all of the issued and
outstanding capital stock of the Company (the "Acquisition").
C. The Purchase Agreement provided that if , at the time of Closing
(as defined in the Purchase Agreement), C-Car had not received the approval
for the Acquisition from any of the Manufacturers: (i) a portion of the
Purchase Price (as defined in the Purchase Agreement) allocated to each
Franchise would be placed in escrow, pursuant to an escrow agreement (the
"Escrow Agreement"), pending the approval of the Acquisition by the
respective Manufacturers, and (ii) the Company, for the benefit of the
Seller, would manage any such Franchise with respect to which the Acquisition
has not been approved by the applicable Manufacturer (individually, a
"Managed Franchise" and collectively, the "Managed Franchises"), pursuant to
the terms and conditions of this Agreement.
D. In accordance with the provisions of subparagraph 20(c) of the
Purchase Agreement, the Jaguar Assets (as defined in the Purchase Agreement)
have been distributed, at the direction of the Seller, by the Company to CDI.
E. Seller desires that the Company manage and the Company desires to
manage each Managed Franchise, and if the Jaguar Assets are still owned by
CDI, CDI desires that the Company manage and the Company desires to manage
the Jaguar Assets, for the consideration and upon the terms and conditions
set forth in this Agreement.
AGREEMENT
<PAGE>
In consideration of the mutual agreements set forth in this Agreement,
the Company, the Seller, and CDI agree as follows:
1. MANAGEMENT OF THE MANAGED FRANCHISES AND THE JAGUAR ASSETS. The
Seller and CDI, if it owns the Jaguar Assets on the Effective Date
(hereinafter defined), respectively, hereby engage the Company as an
independent contractor to manage the Managed Franchises for the Seller and
the Jaguar Assets for CDI at the Dealership. The Company shall assume
management responsibilities under this Agreement effective January 5, 1998
(the "Effective Date"). Subject to paragraph 3 of this Agreement, the
Company shall be responsible for (a) managing and supervising the Managed
Franchises and the Jaguar Assets, and (b) making all management and operating
decisions, including without limitation, decisions concerning sales
practices, inventory management and personnel matters.
2. TERM. The term of this Agreement shall begin on the Effective Date
and shall terminate: (a) with respect to each Managed Franchise on the
earlier of (i) the date the applicable Manufacturer approves the Acquisition,
or (ii) the date following March 1, 1998, that Seller, at its sole
discretion, elects to terminate this Agreement; and (b) with respect to the
Jaguar Assets, on the date that Seller, at its sole discretion, elects to
terminate this Agreement (each of the foregoing being hereinafter a
"Termination Date").
3. CONDUCT OF THE BUSINESS OF THE MANAGED FRANCHISES AND THE JAGUAR
ASSETS. During the term of this Agreement, the Company shall manage each of
the Managed Franchises and, if applicable, the Jaguar Assets in such manner
as to conduct their operations according to the ordinary and usual course of
business reasonably consistent with past and current practices and to
maintain and preserve their assets, customer relationships and vendor and
supplier relationships.
4. MANAGEMENT FEE. As consideration for the Company managing the
Managed Franchises and the Jaguar Assets during the term of this Agreement,
the Seller, with respect to the Managed Franchises, and CDI, with respect to
the Jaguar Assets, shall pay the Company a fee in cash (the "Management Fee")
in an amount equal to the monthly gross profit, resulting from the business
and operations of the Managed Franchises and the Jaguar Assets, as the case
may be. Notwithstanding anything contained in this Agreement to the contrary,
with respect to each Managed Franchise and the Jaguar Assets, as the case may
be: (i) any income, costs or expenses that are not directly related to the
operation of a Managed Franchise or the Jaguar Assets, (ii) any deferred
income, costs or expenses of operating the Dealerships that were earned,
accrued or incurred prior to November 1, 1997, that were not included in the
calculation of Net Worth Adjustments (as defined in the Purchase Agreement),
and (iii) any income, costs or expenses with respect a Managed Franchise or
the Jaguar Assets that are accrued or incurred after the applicable
Termination Date, shall be excluded from the calculation of the Management
Fee. The Management Fee for any partial month shall be prorated. The Seller
and CDI, as applicable, shall pay the Company 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.
2
<PAGE>
5. CONSULTING FEE. The Company shall pay (a) to Seller a monthly
consulting fee in an amount equal to nine percent (9%) per annum on the funds
held in the escrow pursuant to the Escrow Agreement, and (b) to CDI the sum
of $20,000 (collectively, the "Consulting Fees"). In addition, for so long
as any part of the Consulting Fees are payable to either Seller or CDI, the
Company will continue James J. Chaisson, Sr., and his eligible dependents, on
the Company's medical and health insurance policy. In consideration of the
payment of the Consulting Fees, each of Seller and CDI shall cause James J.
Chaisson, Sr. to make himself available at reasonable intervals and for
reasonable periods of time to assist, if requested, the Company in the
performance of its duties hereunder. The Consulting Fees shall be payable by
the Company: (i) to Seller until the Termination Date with respect to all of
the Managed Franchises and (ii) to CDI until the Termination Date with
respect to the Jaguar Assets (the "Jaguar Termination Date"). The Consulting
Fees for any partial month shall be prorated. Consulting Fees shall be paid
to Seller and to CDI for each month, or partial month, up to the applicable
Termination Date within fifteen (15) days after the end of such month or
partial month.
6. JAGUAR ASSETS. On the Effective Date, the Company shall pay to
CDI, the sum of $200,000 as a deposit for the Company's performance of its
obligations to fully cooperate with CDI in allowing the Jaguar Assets to be
inventoried and removed from the Company's possession on the Jaguar
Termination Date (the "Jaguar Deposit"). Seller and CDI, jointly and
severally, covenant and agree to repay, on the Jaguar Termination Date, to
the Company such portion of the Jaguar Deposit, but not in excess of the
Jaguar Deposit, that equals $200,000 less the difference between (a) the
value of the Jaguar Parts (as defined in subparagraph 20(c) of that certain
Amended and Restated Stock Purchase Agreement (the "Purchase Agreement")
dated as of November 1, 1997, by and among Cross-Continent Auto Retailers,
Inc., the Seller and the Company) owned by the Company at the close of
business of the Dealerships (as defined in the Purchase Agreement) on October
31, 1997, and (b) the value of the Jaguar Parts (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) in the
possession of the Company at the close of business of the Dealership on the
business day preceding the Jaguar Termination 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 Jaguar
Termination Date, Seller further covenants and agrees that on the Jaguar
Termination Date, Seller will cause CDI to: (A) pay to the Company 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 Jaguar Termination 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, if any, secured
by liens on such New Jaguar Automobiles. If the Deductions exceed the
Add-Ons, CDI may deduct the amount thereof from the amount of the Jaguar
Deposit otherwise payable to C-Car.
3
<PAGE>
7. LICENSES OF THE COMPANY. The Company's management and supervision of
the Managed Franchises and the Jaguar Assets shall be conducted utilizing the
Company's dealer numbers, dealer licenses and dealer tags.
8. COOPERATION. Each of the Company, the Seller and CDI mutually agree
to cooperate and use their respective reasonable good faith efforts to enable
the Managed Franchises and the Jaguar Assets to be managed and operated by the
Company in accordance with the standards set forth in this Agreement.
9. CORPORATE EXISTENCE OF THE COMPANY. The Company shall maintain its
corporate existence in good standing in the State of Nevada.
10. INDEMNIFICATION BY THE COMPANY. The Company shall indemnify,
defend and hold the Seller, and its trustees and beneficiaries, and CDI, and
its officers, directors, 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 breach of this Agreement, or
otherwise caused, by the Company during the term of this Agreement with
respect to the operation of the Managed Franchises or the Jaguar Assets.
11. INDEMNIFICATION BY THE SELLER AND CDI. The Seller and CDI 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 out of, or based upon any act, omission, or event occurring
with respect to each Managed Franchise and the Jaguar Assets: (a) prior to
November 1, 1997, with respect to each Managed Franchise or the Jaguar
Assets, (b) during the term of this Agreement with respect to the operation
of each Managed Franchise or the Jaguar Assets if caused by the negligence or
willful misconduct of the Seller or CDI, (c) during the term of this
Agreement with respect to each Managed Franchise or the Jaguar Assets other
than matters related to the operation thereof, and (d) following the
Termination Date with respect to either Managed Franchise or the Jaguar
Assets.
12. AUTHORIZATION AND VALIDITY. Each of the Company, Seller and CDI,
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. The Company shall permit the Seller and CDI, and their
respective
4
<PAGE>
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 Dealership, the books, records, properties,
assets, and operations of the Dealership relating to the Managed Franchises
and the Jaguar Assets.
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 the Company, the
Seller, and CDI.
(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 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. The Company may not assign its rights
5
<PAGE>
or obligations under this Agreement without the written consent of
the Seller and CDI. 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 THE COMPANY:
2333 South Decatur Boulevard
Las Vegas, Nevada 89102
Attention: Robert W. Hall
(702) 871-1010
IF TO SELLER OR CDI:
James J. Chaisson, Sr.
40 Innisbrook
Las Vegas, Nevada 89113
with a copy to:
Jones, Jones, Close & Brown, Chartered
3773 Howard Hughes Parkway, 3rd Floor South
Las Vegas, Nevada 89109
Attention: Douglas G. Crosby, 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
6
<PAGE>
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 Clark 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 continue to cause its insurance
policies to name the Seller and CDI as additional insureds during the
term of this Agreement and provide Seller and CDI with evidence of
having done so.
IN WITNESS WHEREOF, the parties have executed this Management Agreement as
of the date first written above.
COMPANY: JRJ INVESTMENTS, INC., a Nevada corporation
By:
-------------------------------------
R. Wayne Moore, Secretary
SELLER: THE CHAISSON FAMILY TRUST R-501
By:
-------------------------------------
James J. Chaisson, Sr., Trustee
CDI: CHAISSON DIVERSIFIED INVESTMENTS, INC.
By:
-------------------------------------
James J. Chaisson, Sr., President
7
<PAGE>
Exhibit 10.6
ESCROW NO. 97115582-076
------------
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is made and entered into as of the
5th day of January, 1998, by and among Cross-Continent Auto Retailers, Inc.,
a Delaware corporation (the "Purchaser"), the Chaisson Family Trust R-501
(the "Seller") and United Title of Nevada, Inc., a Nevada corporation (the
"Escrow Agent").
RECITALS
WHEREAS, in accordance with the terms and provisions of that certain
Amended and Restated Stock Purchase Agreement dated November 1, 1997 (the
"Purchases Agreement"), by and among the Purchaser, the Seller, and JRJ
Investments, Inc. (the "Company"), C-CAR has on the date hereof purchased
from the Seller all of the issued and outstanding shares of capital stock of
the Company (the "Company Shares").
WHEREAS, pursuant to subparagraph 20(g) of the Purchase Agreement and
subject to the terms and conditions of this Agreement, the Purchaser has
deposited in escrow with the Escrow Agent a portion of the purchase price for
the Company Shares in the aggregate amount reflected in Exhibit "A" attached
hereto and by this reference made a part hereof (the "Escrowed Funds"),
pending the approval from each of the respective manufacturers (or the
authorized sales/distributor entities directly or indirectly owned by the
respective manufacturers) of Bentley and Rolls Royce, or Land Rover
automobiles (individually, a "Manufacturer" and collectively the
"Manufacturers") of the Purchaser, as the owner of the Company, as an
authorized new automobile dealer for each respective Manufacturer in Las
Vegas, Nevada.
AGREEMENT
1. The Escrow Agent is hereby authorized and directed to relinquish
possession of the Escrowed Funds only in accordance with (a) the instructions
set forth herein, or (b) joint written instructions executed by the Purchaser
and the Seller.
2. The Purchaser agrees that upon notification from each of the
respective Manufacturers of its approval of the Purchaser, as the owner of
the Company, as an authorized new automobile dealer for such Manufacturer in
Las Vegas, Nevada, it will forthwith execute and deliver (either by personal
delivery or by telecopy) to the Escrow Agent written authorization
(referencing the above Escrow No.) to release to Seller such portion of the
Escrowed Funds as indicated in Exhibit A relating to such approving
Manufacturer. The Escrow Agent shall, within twenty four (24) hours of its
receipt of such notice from the Purchaser, or as soon as is otherwise
practicable, release such applicable portion of the Escrowed Funds to the
Seller.
3. Where directions or instructions from both the Purchaser and the
Seller are required, Escrow Agent shall accept such directions or
instructions given in counterpart instruments. Either
<PAGE>
the Purchaser and the Seller may act hereunder through an agent or
attorney-in-fact provided satisfactory written evidence of authority is first
furnished to the Escrow Agent.
4. The undersigned agree that this Agreement and the following
provisions shall control with respect to the rights, duties and liabilities
of the Escrow Agent:
A. The Escrow Agent is not a party to, and is not bound by, any agreement
out of which this escrow may arise, nor shall Escrow Agent be required
to construe any contract or instrument deposited herewith, or to observe
any terms thereof or of any other agreement even though same may purport
to set forth, as between the Purchaser and the Seller, the terms of this
escrow; but to the contrary, the terms of this Agreement, as between
Escrow Agent, the Purchaser and the Seller, supersede any other contract
with reference to this escrow and may be relied upon by the Escrow Agent
absolutely and to the exclusion of any and all other agreements, and
this Agreement shall not be affected in any manner by any provision not
expressly set forth herein.
B. The Escrow Agent acts hereunder as a depository only, and is not
responsible or liable in any manner whatever for the sufficiency,
correctness, genuineness, value (or any increase or decrease therein),
loss, the collection or collectibility, payment of taxes on, or validity
of the Escrowed Funds, or any part thereof, or for the form or execution
thereof, for the automatic renewal of any maturing securities, or to
collect any interest or redeem any coupons or reinvest the earnings from
any securities held (unless it receives written instructions from the
Purchaser and agrees in writing to so renew, collect, redeem or
reinvest), nor shall Escrow Agent be liable for the lapse of any rights
under any statute of limitations, laches, or other rule of law or equity
in respect to any Escrowed Funds, or for the identity or authority of
any person executing or depositing all or any part of the Escrowed Funds
or any other instrument received by Escrow Agent in connection herewith.
C. In the event Escrow Agent should in good faith initiate an action in the
nature of an interpleader (and express authority to do so is hereby
given), or in the event Escrow Agent in any other manner becomes
involved in litigation in connection with this escrow, the Purchaser and
the Seller jointly and severally agree to indemnify and save Escrow
Agent harmless of and from any and all liability, claims, demands or
causes of action of any nature whatsoever and by whomsoever asserted,
arising or to arise therefrom (save and except only liability solely
caused by or resulting from Escrow Agent's own gross negligence or
willful misconduct, and not otherwise) and from all loss, cost, damages,
costs and expenses, including (without limitation) reasonable attorneys'
fees suffered or incurred by the Escrow Agent as a result thereof. This
and all other obligations of the Purchaser and the Seller shall be
payable on demand and shall be performable and payable at the Escrow
Agent's office set forth below the Escrow Agent's signature hereon.
2
<PAGE>
D. The Escrow Agent shall be privileged to act and protected in acting upon
any written instructions, notice, request, waiver, consent, certificate,
receipt, authorization, power of attorney or other instrument or
document which the Escrow Agent in good faith believes to be genuine and
what it purports to be, and without any obligation upon Escrow Agent to
inquire into the authority of the individual or entity executing or
delivering same to Escrow Agent.
E. The Escrow Agent shall not be liable for anything which it may do or
refrain from doing in connection herewith, except its own gross
negligence or willful misconduct, and all risk of damage or loss from
any other cause whatever shall be upon undersigned.
F. The Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the construction of any of the provisions
hereof or its duties hereunder, and it shall incur no liability and
shall be fully protected in acting and absolutely privileged to act in
accordance with the reasonable opinion and instructions of such counsel,
and any costs incurred by Escrow Agent shall be deemed to be proper
charges to be paid by the Purchaser and the Seller to Escrow Agent,
failing which Escrow Agent may withhold same from any funds on deposit.
G. Escrow Agent may, prior to relinquishing possession of any portion of
the Escrowed Funds, demand of the recipient thereof execution of a
receipt and release in the form attached hereto as Exhibit "B." In the
event of any disagreement between any of the parties to this agreement,
or between them or either or any of them and any other person,
resulting, or which could result, in adverse claims or demands being
made in connection with the Escrowed Funds, or in the event that the
Escrow Agent, in good faith, is in doubt as to what action it should
take hereunder, the Escrow Agent may, at its option, refuse to comply
with any claims or demands on it, or refuse to take any other action
hereunder, so long as such disagreement shall continue or such doubt
shall exist, and in any such event, the Escrow Agent shall not be or
become liable in any way or to any person for its failure or refusal to
act, and the Escrow Agent shall be entitled to continue so to refrain
from acting until (1) the rights of all parties shall have been fully
and finally adjudicated by a court of competent jurisdiction, or (2) all
differences shall have been adjusted and all doubts resolved by
agreement among all of the interested persons, and the Escrow Agent
shall have been notified thereof in writing signed by all such persons.
The rights of the Escrow Agent under this paragraph are in addition to
all other rights which it may have by law or otherwise.
H. This Agreement shall be binding upon the parties hereto, their
successors, heirs, administrators, executors, successors and assigns,
and any authority herein given to the Escrow Agent shall not lapse by
reason of the supervening incompetence of any party hereto.
3
<PAGE>
I. Compensation for the normal services of the Escrow Agent (in the amounts
set forth in Schedule I attached hereto) and a reasonable charge for any
extra services performed by the Escrow Agent shall be paid one-half
(1/2) each by the Purchaser and the Seller.
J. Escrow Agent agrees to place the Escrowed Funds into a demand
interest-bearing account as directed by the Purchaser, and all
interest that accrues thereon shall be payable to the Purchaser at
such times as the Purchaser and the Escrow Agent mutually agree, but
no later than the date this Agreement is terminated.
EXECUTED as of the date first above written.
CROSS-CONTINENT AUTO RETAILERS, INC.
By:
----------------------------------------
Bill Gilliland, Chairman and CEO
Address: 1201 S. Taylor
Amarillo, Texas 79101
Federal Tax ID# 75-2653095
Telephone: 806-374-8653
Telecopy: 806-374-3818
THE CHAISSON FAMILY TRUST R-501
By:
----------------------------------------
James J. Chaisson, Sr., Trustee
Address: c/o James J. Chaisson Sr.
40 Innisbrook
Las Vegas, Nevada 89113
Federal Tax ID# ###-##-####
Telephone: 702-364-8080
Telecopy: 702-227-0171
4
<PAGE>
Escrow Agent hereby acknowledges receipt of the Escrowed Funds as
described in the foregoing Agreement and hereby agrees to serve as the Escrow
Agent thereunder, subject to the terms and conditions therein set out.
EXECUTED as of the date first above written.
UNITED TITLE OF NEVADA, INC.
By:
--------------------------------------
Its:
--------------------------------------
Address: 3980 Howard Hughes Parkway
Las Vegas, Nevada 89109
Telephone: 702-836-8120
Telecopy: 702-836-8122
5
<PAGE>
EXHIBIT "A"
Bentley and Rolls Royce $ 345,201.00
Land Rover $1,133,780.00
-------------
Total $1,478,981.00
6
<PAGE>
EXHIBIT "B"
FORM OF RECEIPT AND RELEASE
The undersigned hereby acknowledges receipt, from United Title of
Nevada, Inc., as Escrow Agent, of the amount of $ _____________
(constituting all/part of the Escrowed Funds) pursuant to the terms and
conditions of that certain Escrow Agreement (Escrow No.97115582-076). The
undersigned acknowledges a faithful and proper performance by the Escrow
Agent of its duties under the Escrow Agreement, and in consideration of such
delivery of Escrowed Funds to the undersigned, the undersigned hereby
releases and discharges the Escrow Agent from all further responsibility or
liability as Escrow Agent under the Escrow Agreement with respect to the
Escrowed Funds received by the undersigned.
EXECUTED this ______ day of ____________________, 1998.
[Name of Recipient]
By:
---------------------------------------
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<PAGE>
Exhibit 10.7
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of November 1, 1997, by and between JAMES J. CHAISSON, JR. ("Employee") and
JRJ INVESTMENTS, INC. ("Employer").
AGREEMENT
IN CONSIDERATION of the mutual covenants hereinafter made by each party
to the other, the Employer and the Employee agree as follows:
1. EMPLOYMENT. Employer agrees to employ Employee, and Employee
agrees to accept employment with Employer, in accordance with the terms and
provisions of this Agreement.
2. TERM OF EMPLOYMENT. The term of this Agreement shall commence on
November 1, 1997, and shall end on October 31, 2000, unless sooner terminated
in accordance with the terms and provisions of this Agreement.
3. SCOPE OF EMPLOYMENT AND COMPENSATION. Employee will be employed
by Employer as the General Manager of the dealerships located at 2333 S.
Decatur Blvd., Las Vegas, Nevada (the "Las Vegas Dealership") and at 261 Auto
Mall Drive, Henderson, Nevada (the "Henderson Dealership", and together with
the Las Vegas Dealership, the "Dealerships"). As the General Manager of the
Dealerships, Employee will have supervision over, and be responsible for, the
day-to-day operations of the Dealerships.
As compensation for the performance of his duties, Employee shall receive
from Employer base compensation ("Base Compensation") of $42,000.00 per year
($3,500.00 per month), to be paid in equal installments consistent with
Employer's established payroll frequency for all employees, during the term
of this Agreement. Additionally, Employee shall receive a monthly bonus (the
"Bonus Compensation") as follows:
(a) for the period of the Agreement ending on December 31, 1997, Bonus
Compensation shall be an amount equal to the greater of: (i) ten percent
(10%) of the Monthly Net Earnings (hereinafter defined) of the Las Vegas
Dealership, or (ii) nine percent (9%) of the aggregate Monthly Net Earnings
of the Dealerships. During said period ending on December 31, 1997, the
$25,000.00 of Cross-Continent Auto Retailer, Inc.'s (the "Parent")
corporate overhead included in the definition of Monthly Net Earnings shall
be allocated to the Las Vegas Dealership in the same proportion as the
Gross Revenues (hereinafter defined) of the Las Vegas Dealership bears to
the Gross Revenues of the Dealerships; and
(b) for the period of the Agreement commencing on January 1, 1998, Bonus
Compensation shall be an amount equal to nine percent (9%) of the aggregate
Monthly Net Earnings of the Dealerships;
provided, however, that Employee shall be guaranteed compensation of at least
$15,000.00 per month. Employee's monthly Bonus Compensation or guaranteed
compensation in excess
1
<PAGE>
of his Base Compensation, whichever shall be greater, shall be paid within
fifteen (15) days after the end of the month for which such Bonus
Compensation is due.
4. NET EARNINGS. "Monthly Net Earnings" shall mean, on a monthly basis:
(a) gross revenues from all sources relating to the operation of the respective
Dealerships ("Gross Revenues"), less (b) all cost of sales; general and
administrative expenses; salaries, bonuses, commissions, and other
compensation; depreciation; amortization; interest; dealership overhead; and the
allocated portion of the $25,000.00 per month as and for the portion of the
Parent's corporate overhead charged to the Dealerships; but before income taxes.
Monthly Net Earnings shall be calculated on the accrual method of accounting and
determined by the Parent's's accounting staff in accordance with generally
accepted accounting principles.
5. COMPENSATION PRORATIONS. For purposes of calculating the compensation
set forth in Paragraph 3, all such amounts shall be prorated for any partial
calendar month or year during the term of this Agreement.
6. EMPLOYEE BENEFITS. In addition to the compensation set forth in
Paragraph 3, Employer shall:
(a) grant Employee twenty (20) working days of paid vacation during each
twelve (12) calendar month period of the term of this Agreement;
(b) provide Employee with the use of two (2) new demonstrator vehicles in
accordance with the customary practice of the Employer immediately prior to the
date of this Agreement; and
(c) provide Employee and his spouse and dependent children, either through
direct premium payment or through additional compensation to enable Employee to
pay for such coverage, with hospital, surgical and medical insurance coverage no
less favorable than such coverage provided to Employee by Employer immediately
prior to the date of this Agreement; provided, however, that if such direct
premium payment or additional compensation exceeds the amount otherwise payable
by Employer to provide such benefits to all employees of Employer, Employee
shall recognize and report for federal income tax purposes such excess, with
such excess being subject to all applicable federal income tax and social
security and medicare premium withholding requirements.
Employee shall be eligible to participate in the Employer's retirement plan
after one year from the date of this Agreement.
7. REIMBURSEMENT OF BUSINESS EXPENSES. Employee is authorized to incur
reasonable business expenses for promoting the business of Employer, and for
performing the duties contemplated by this Agreement, including, but not limited
to, expenditures for business entertainment and business travel. Employer shall
reimburse Employee for all such reasonable expenditures upon Employee's
presentation of an itemized account of and receipts for the expenditures. An
itemized account will be submitted by Employee to Employer on a monthly basis.
8. TIME. The Employee agrees to devote his full time, energies,
abilities and attention to the performance of his obligations and
responsibilities under this Agreement.
9. NONDISCLOSURE OF CONFIDENTIAL INFORMATION AND TRADE SECRETS. During
the term of this Agreement, Employee will have access to and become familiar
with various trade
2
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secrets, consisting of formulas, compilations of information, records and
other information owned by Employer and regularly used in the operation of
the business of Employer. Employee must not disclose any such trade secrets,
directly or indirectly, nor use them in any way, either during the term of
this Agreement or for a term of one (1) year from the date this Agreement
expires or is terminated, except as required in the course of his employment
with Employer; provided, however, that the prohibition provided in this
clause shall not apply to any such information or knowledge thereof that is
otherwise common knowledge in the new automobile dealership industry.
10. EMPLOYER'S PROPERTY. All files, records, documents, equipment, and
other property of Employer used by Employee in the performance of his
obligations and responsibilities under this Agreement, whether or not prepared
by Employee, will remain the exclusive property of Employer and must not be
removed from the premises of Employer under any circumstances, other than in
connection with Employee's employment or otherwise contemplated by this
Agreement, without the prior written consent of Employer. Upon the expiration
or termination of this Agreement, Employee must immediately deliver to Employer
all property belonging to Employer in Employee's possession, or under Employee's
control, in good condition, ordinary wear and tear excepted.
11. INDEMNIFICATION OF EMPLOYEE. Employer shall indemnify Employee for
all losses sustained by Employee as a direct result of the discharge of his
duties required by this Agreement, except for losses caused by Employee's
willful misconduct or gross negligence. "Gross Negligence," as used in this
Agreement, shall mean an act or omission that involves an intentional disregard
or failure to perform any job duty or function in reckless disregard of the
consequences whether or not those consequences were foreseeable.
12. OFFICE AND CLERICAL SERVICES. Employer will provide Employee with an
office and such clerical services as are reasonably necessary for Employee to
perform his obligations and responsibilities under this Agreement.
13. TERMINATION OF EMPLOYEE FOR CAUSE. If Employee is terminated for
cause by Employer, Employee shall be entitled to his Base Compensation and Bonus
Compensation, prorated to the date of termination, and Employer shall be
relieved of its obligation to pay Employee any remaining Base Compensation or
Bonus Compensation that would thereafter be due under Paragraph 3 of this
Agreement. In addition, if Employee is terminated for cause by Employer,
Employee shall be bound by the non-compete provisions of Paragraph 19 of this
Agreement.
14. DEFINITION OF "FOR CAUSE." The term "for cause," as used in this
Agreement, shall mean (a) a conviction of a felony, (b) commitment of fraud, (c)
theft of any property of Employer or Employer's customers, (d) reporting to work
under the influence of alcohol or controlled substances (other than prescription
medication which is possessed and being taken pursuant to a current and valid
physician's prescription), or (e) repeated failure on the part of Employee to
perform his duties in the usual and customary manner that such duties are
performed in the automobile business.
15. TERMINATION OF EMPLOYEE WITHOUT CAUSE. If Employee is terminated by
Employer without cause or this Agreement is terminated due to the Employer
selling or otherwise ceasing to own and operate the Dealerships, Employee shall
be entitled to the greater of (a) an amount equal to his Base Compensation and
his Bonus Compensation for the period of twelve (12) months prior to the date of
termination, or (b) his guaranteed monthly compensation for a twelve (12) month
period. If Employee is terminated by Employer without
3
<PAGE>
cause, the non-compete provisions of Paragraph 19 of this Agreement shall
immediately be null and void. It is understood and agreed by the parties that
the voiding of Paragraph 19 shall not otherwise affect the validity, legality
or enforceability of the remaining provisions of this Agreement.
16. VOLUNTARY TERMINATION BY EMPLOYEE. If Employee voluntarily terminates
his employment with Employer, Employee shall be entitled to his Base
Compensation and Bonus Compensation, prorated to the date of termination, and
Employer shall be relieved of its obligation to pay Employee any remaining Base
Compensation or Bonus Compensation that would thereafter be due under Paragraph
3 of this Agreement. In addition, if Employee voluntarily terminates his
employment with Employer, Employee shall be bound by the non-compete provisions
of Paragraph 19 of this Agreement.
17. NOTICE OF TERMINATION. The Employee and the Employer understand and
agree that (a) each has the right, upon thirty (30) days written notice
(hereinafter referred to as the "Notice Period"), to terminate the employment
relationship, and (b) Employer may terminate the employment relationship
immediately for cause.
18. NOTICE PERIOD. The Employer agrees to continue in effect during
the Notice Period the compensation and benefits to which the Employee may be
otherwise entitled under this Agreement. The Employee agrees that during the
Notice Period, he will cooperate fully with the Employer in all matters
relating to the winding up of any pending work and the orderly transfer to
other employees of Employer of the work for which he has most recently been
responsible. The Employee understands and agrees that, at or about the
expiration of the Notice Period, or upon the immediate termination of
Employee, the Employer may convene an exit interview to review the status of
work for which the Employee has most recently been responsible; to review the
status of Employee's compensation, benefits, and obligations under this
Agreement; and to confirm that the Employee clearly understands the nature
and scope of his post-employment rights and obligations.
19. COVENANT NOT TO COMPETE. Employee agrees that he will not, either
directly or indirectly, alone or with others, either as an employee, owner,
partner, agent, stockholder, member, director, officer or otherwise enter
into or engage in the business of operating a new vehicle dealership,
warranty repair business, or other related new automobile business with
respect to any of the Audi, BMW, Land Rover, Rolls-Royce, Bentley, or
Volkswagen franchises, within the Las Vegas or Henderson, Nevada
metropolitan areas (the "Restricted Area") for a term of three (3) years from
the date of this Agreement (the "Restrictive Period").
20. NON-SOLICITATION. Employee will not individually, collectively, or
in conjunction with others, directly or indirectly, within the Restrictive
Period and Restricted Area, directly or indirectly solicit or hire any employee
of Employer or encourage any such employee to leave such employment unless such
employee has already terminated such employment with Employer or Employer and
the Employee have mutually agreed in advance to the solicitation or employment.
21. REMEDIES. The breach of or failure to perform any term of this
Agreement may be enforced by an action for injunctive relief, which may be
brought in any court of competent jurisdiction in Clark County, Nevada. None
of the remedies provided for in this Agreement shall be the exclusive remedy
of either party for a breach of this Agreement. The parties hereto shall
have the right to seek any other remedy at law or in equity in lieu of or in
addition to any remedies provided for in this Agreement.
4
<PAGE>
22. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
23. INVALID PROVISIONS. 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.
24. AMENDMENT. This Agreement may not be amended or modified except by a
written instrument executed by both Employer and Employee.
25. ATTORNEYS' FEES. In the event of the breach of this Agreement by
either party, the prevailing party shall be entitled to reimbursement by the
non-prevailing party of any attorneys' fees and costs incurred in enforcing the
party's rights hereunder.
26. INCONSISTENCY. To the extent that this Agreement is inconsistent
with any Employer policies or any agreements between the parties, this Agreement
shall prevail.
27. PARAGRAPH HEADINGS. The paragraph 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.
28. 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.
DATED AND EFFECTIVE as of November 1, 1997.
EMPLOYER: JRJ INVESTMENTS, INC.
By:
------------------------------
Its:
------------------------------
EMPLOYEE:
----------------------------------
JAMES J. CHAISSON, JR.
5
<PAGE>
Exhibit 10.8
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of November 1, 1997, by and between JOHN P. CHAISSON ("Employee") and JRJ
INVESTMENTS, INC. ("Employer").
AGREEMENT
IN CONSIDERATION of the mutual covenants hereinafter made by each party
to the other, the Employer and the Employee agree as follows:
1. EMPLOYMENT. Employer agrees to employ Employee, and Employee
agrees to accept employment with Employer, in accordance with the terms and
provisions of this Agreement.
2. TERM OF EMPLOYMENT. The term of this Agreement shall commence on
November 1, 1997, and shall end on October 31, 2000, unless sooner terminated
in accordance with the terms and provisions of this Agreement.
3. SCOPE OF EMPLOYMENT AND COMPENSATION. Employee will be employed
by Employer as the Parts and Service Director of the dealerships located at
2333 S. Decatur Blvd., Las Vegas, Nevada, and 261 Auto Mall Drive, Henderson,
Nevada (collectively, the "Dealerships"). As the Parts and Service Director
of the Dealerships, Employee will be responsible for the supervision of the
parts department, the service department and the body shop.
As compensation for the performance of his duties, Employee shall receive
from Employer base compensation ("Base Compensation") of $60,000.00 per year
($5,000.00 per month), to be paid in equal installments consistent with
Employer's established payroll frequency for all employees during the term of
this Agreement. Additionally, Employee shall receive a monthly bonus (the
"Bonus Compensation") of the sum of (a) three percent (3%) of BMW, one
percent (1%) of Jaguar, and one percent (1%) of Land Rover, parts, service,
and body shop net income, as reflected on the respective monthly
Manufacturer's dealership statements, of the Dealerships so long as the
respective BMW, Jaguar, and Land Rover CSI is equal to or greater than the
regional average, and (b) two percent (2%) of the monthly Net Earnings of the
Dealerships. Employee's monthly Bonus Compensation shall be paid within
fifteen (15) days after the end of the month for which such Bonus
Compensation is due.
4. NET EARNINGS. "Monthly Net Earnings" shall mean (a) gross revenues
from all sources relating to the operation of the Dealerships ("Gross
Revenues"), less (b) all cost of sales; general and administrative expenses;
salaries, bonuses, commissions, and other compensation; depreciation;
amortization; interest; dealership overhead; and the sum of $25,000.00 per
month as and for the portion of Cross-Continent Auto Retailers, Inc.'s (the
"Parent") corporate overhead charged to the Dealerships; but before income
taxes. Monthly Net Earnings shall be calculated on the accrual method of
accounting and determined by the Parent's accounting staff in accordance with
generally accepted accounting principles.
1
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5. COMPENSATION PRORATIONS. For purposes of calculating the
compensation set forth in Paragraph 3, all such amounts shall be prorated for
any partial calendar month or year during the term of this Agreement.
6. EMPLOYEE BENEFITS. In addition to the compensation set forth in
Paragraph 3, Employer shall:
(a) grant Employee fifteen (15) working days of paid vacation during
each twelve (12) calendar month period of the term of this Agreement;
(b) provide Employee with the use of two (2) new demonstrator vehicles
in accordance with the customary practice of the Employer immediately prior
to the date of this Agreement; and
(c) provide Employee and his spouse and dependent children, either
through direct premium payment or through additional compensation to enable
Employee to pay for such coverage, with hospital, surgical and medical
insurance coverage no less favorable than such coverage provided to Employee
by Employer immediately prior to the date of this Agreement; provided,
however, that if such direct premium payment or additional compensation
exceeds the amount otherwise payable by Employer to provide such benefits to
all employees of Employer, Employee shall recognize and report for federal
income tax purposes such excess, with such excess being subject to all
applicable federal income tax and social security and medicare premium
withholding requirements.
Employee shall be eligible to participate in the Employer's retirement plan
after one year from the date of this Agreement.
7. REIMBURSEMENT OF BUSINESS EXPENSES. Employee is authorized to
incur reasonable business expenses for promoting the business of Employer,
and for performing the duties contemplated by this Agreement, including, but
not limited to, expenditures for business entertainment and business travel.
Employer shall reimburse Employee for all such reasonable expenditures upon
Employee's presentation of an itemized account of and receipts for the
expenditures. An itemized account will be submitted by Employee to Employer
on a monthly basis.
8. TIME. The Employee agrees to devote his full time, energies,
abilities and attention to the performance of his obligations and
responsibilities under this Agreement.
9. NONDISCLOSURE OF CONFIDENTIAL INFORMATION AND TRADE SECRETS.
During the term of this Agreement, Employee will have access to and become
familiar with various trade secrets, consisting of formulas, compilations of
information, records and other information owned by Employer and regularly
used in the operation of the business of Employer. Employee must not
disclose any such trade secrets, directly or indirectly, nor use them in any
way, either during the term of this Agreement or for a term of one (1) year
from the date this Agreement expires or is terminated, except as required in
the course of his employment with Employer; provided, however, that the
prohibition provided in this clause shall not apply to any such information
or knowledge thereof that is otherwise common knowledge in the new automobile
dealership industry.
10. EMPLOYER'S PROPERTY. All files, records, documents, equipment,
and other property of Employer used by Employee in the performance of his
obligations and responsibilities under this Agreement, whether or not
prepared by Employee, will remain the
2
<PAGE>
exclusive property of Employer and must not be removed from the premises of
Employer under any circumstances, other than in connection with Employee's
employment or otherwise contemplated by this Agreement, without the prior
written consent of Employer. Upon the expiration or termination of this
Agreement, Employee must immediately deliver to Employer all property
belonging to Employer in Employee's possession, or under Employee's control,
in good condition, ordinary wear and tear excepted.
11. INDEMNIFICATION OF EMPLOYEE. Employer shall indemnify Employee for
all losses sustained by Employee as a direct result of the discharge of his
duties required by this Agreement, except for losses caused by Employee's
willful misconduct or gross negligence. "Gross Negligence," as used in this
Agreement, shall mean an act or omission that involves an intentional
disregard or failure to perform any job duty or function in reckless
disregard of the consequences whether or not those consequences were
foreseeable.
12. OFFICE AND CLERICAL SERVICES. Employer will provide Employee with
an office and such clerical services as are reasonably necessary for Employee
to perform his obligations and responsibilities under this Agreement.
13. TERMINATION OF EMPLOYEE FOR CAUSE. If Employee is terminated for
cause by Employer, Employee shall be entitled to his Base Compensation and
Bonus Compensation, prorated to the date of termination, and Employer shall
be relieved of its obligation to pay Employee any remaining Base Compensation
or Bonus Compensation that would thereafter be due under Paragraph 3 of this
Agreement. In addition, if Employee is terminated for cause by Employer,
Employee shall be bound by the non-compete provisions of Paragraph 19 of this
Agreement.
14. DEFINITION OF "FOR CAUSE." The term "for cause," as used in this
Agreement, shall mean (a) a conviction of a felony, (b) commitment of fraud,
(c) theft of any property of Employer or Employer's customers, (d) reporting
to work under the influence of alcohol or controlled substances (other than
prescription medication which is possessed and being taken pursuant to a
current and valid physician's prescription), or (e) repeated failure on the
part of Employee to perform his duties in the usual and customary manner that
such duties are performed in the automobile business.
15. TERMINATION OF EMPLOYEE WITHOUT CAUSE. If Employee is terminated
by Employer without cause or this Agreement is terminated due to the Employer
selling or otherwise ceasing to own and operate the Dealerships, Employee
shall be entitled to the greater of (a) an amount equal to his Base
Compensation and his Bonus Compensation for the period of twelve (12) months
prior to the date of termination, or (b) his monthly Base Compensation for a
twelve (12) month period. If Employee is terminated by Employer without
cause, the non-compete provisions of Paragraph 19 of this Agreement shall
immediately be null and void. It is understood and agreed by the parties that
the voiding of Paragraph 19 shall not otherwise affect the validity, legality
or enforceability of the remaining provisions of this Agreement.
16. VOLUNTARY TERMINATION BY EMPLOYEE. If Employee voluntarily
terminates his employment with Employer, Employee shall be entitled to his
Base Compensation and Bonus Compensation, prorated to the date of
termination, and Employer shall be relieved of its obligation to pay Employee
any remaining Base Compensation or Bonus Compensation that would thereafter
be due under Paragraph 3 of this Agreement. In addition, if Employee
voluntarily terminates his employment with Employer, Employee shall be bound
by the non-compete provisions of Paragraph 19 of this Agreement.
3
<PAGE>
17. NOTICE OF TERMINATION. The Employee and the Employer understand
and agree that (a) each has the right, upon thirty (30) days written notice
(hereinafter referred to as the "Notice Period"), to terminate the employment
relationship, and (b) Employer may terminate the employment relationship
immediately for cause.
18. NOTICE PERIOD. The Employer agrees to continue in effect during
the Notice Period the compensation and benefits to which the Employee may be
otherwise entitled under this Agreement. The Employee agrees that during the
Notice Period, he will cooperate fully with the Employer in all matters
relating to the winding up of any pending work and the orderly transfer to
other employees of Employer of the work for which he has most recently been
responsible. The Employee understands and agrees that, at or about the
expiration of the Notice Period, or upon the immediate termination of
Employee, the Employer may convene an exit interview to review the status of
work for which the Employee has most recently been responsible; to review the
status of Employee's compensation, benefits, and obligations under this
Agreement; and to confirm that the Employee clearly understands the nature
and scope of his post-employment rights and obligations.
19. COVENANT NOT TO COMPETE. Employee agrees that he will not, either
directly or indirectly, alone or with others, either as an employee, owner,
partner, agent, stockholder, member, director, officer or otherwise enter
into or engage in the business of operating a new vehicle dealership,
warranty repair business, or other related new automobile business with
respect to any of the Audi, BMW, Land Rover, Rolls-Royce, Bentley, or
Volkswagen franchises within the Las Vegas or Henderson, Nevada metropolitan
areas (the "Restricted Area") for a term of three (3) years from the date of
this Agreement (the "Restrictive Period").
20. NON-SOLICITATION. Employee will not individually, collectively,
or in conjunction with others, directly or indirectly, within the Restrictive
Period and Restricted Area, directly or indirectly solicit or hire any
employee of Employer or encourage any such employee to leave such employment
unless such employee has already terminated such employment with Employer or
Employer and the Employee have mutually agreed in advance to the solicitation
or employment.
21. REMEDIES. The breach of or failure to perform any term of this
Agreement may be enforced by an action for injunctive relief, which may be
brought in any court of competent jurisdiction in Clark County, Nevada. None
of the remedies provided for in this Agreement shall be the exclusive remedy
of either party for a breach of this Agreement. The parties hereto shall
have the right to seek any other remedy at law or in equity in lieu of or in
addition to any remedies provided for in this Agreement.
22. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada.
23. INVALID PROVISIONS. 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.
24. AMENDMENT. This Agreement may not be amended or modified except
by a written instrument executed by both Employer and Employee.
4
<PAGE>
25. ATTORNEYS' FEES. In the event of the breach of this Agreement by
either party, the prevailing party shall be entitled to reimbursement by the
non-prevailing party of any attorneys' fees and costs incurred in enforcing
the party's rights hereunder.
26. INCONSISTENCY. To the extent that this Agreement is inconsistent
with any Employer policies or any agreements between the parties, this
Agreement shall prevail.
27. PARAGRAPH HEADINGS. The paragraph 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.
28. 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.
DATED AND EFFECTIVE as of November 1, 1997.
EMPLOYER: JRJ INVESTMENTS, INC.
By:
------------------------------
Its:
------------------------------
EMPLOYEE:
----------------------------------
JOHN P. CHAISSON
5
<PAGE>
Exhibit 10.9
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
November 1, 1997, by and between RYAN A. COOK ("Employee") and JRJ INVESTMENTS,
INC. ("Employer").
AGREEMENT
IN CONSIDERATION of the mutual covenants hereinafter made by each party
to the other, the Employer and the Employee agree as follows:
1. EMPLOYMENT. Employer agrees to employ Employee, and Employee
agrees to accept employment with Employer, in accordance with the terms and
provisions of this Agreement.
2. TERM OF EMPLOYMENT. The term of this Agreement shall commence on
November 1, 1997, and shall end on October 31, 2000, unless sooner terminated
in accordance with the terms and provisions of this Agreement.
3. SCOPE OF EMPLOYMENT AND COMPENSATION. Employee will be employed by
Employer as the General Sales Manager of the Volkswagen and Audi franchises
and their related used car departments at the dealership located at 2333 S.
Decatur Blvd., Las Vegas, Nevada (the "Dealership"). As the General Sales
Manager of the Volkswagen and Audi franchises at the Dealership, Employee
will perform such duties as are usual and customary for a general sales
manager in the automobile dealership industry.
As compensation for the performance of his duties, Employee shall receive
from Employer base compensation ("Base Compensation") of $30,000.00 per year
($2,500.00 per month), to be paid in equal installments consistent with
Employer's established payroll frequency for all employees during the term of
this Agreement. Additionally, Employee shall receive a monthly commission
(the "Commission") calculated on the monthly gross profit, as reflected in
the respective monthly Manufacturer's dealership statements, from sales, F&I,
manufacturers' sales incentives, and CSI bonuses for the Volkswagen and Audi
franchises and their related used car departments at the Dealership ("Gross
Profit") as follows: (a) if Gross Profit is less than $100,000 a five (5)
percent Commission on Gross Profit, (b) if Gross Profit exceeds $100,000,
but is less than $150,000 a six (6) percent Commission on total Gross Profit,
or (c) if Gross Profit exceeds $150,000 a seven (7) percent Commission on
total Gross Profit; provided that Employee shall be guaranteed compensation
of at least $7,500.00 per month. Employee's monthly Commission shall be paid
within fifteen (15) days after the end of the month for which such Commission
is due.
4. [INTENTIONALLY OMITTED]
5. COMPENSATION PRORATIONS. For purposes of calculating the
compensation set forth in Paragraph 3, all such amounts shall be prorated for
any partial calendar month or year during the term of this Agreement.
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<PAGE>
6. EMPLOYEE BENEFITS. In addition to the compensation set forth in
Paragraph 3, Employer shall:
(a) grant Employee fifteen (15) working days of paid vacation during
each twelve (12) calendar month period of the term of this Agreement.
(b) provide Employee with the use of two (2) new demonstrator vehicles
in accordance with the customary practice of the Employer immediately prior
to the date of this Agreement; and
(c) provide Employee and his spouse and dependent children, either
through direct premium payment or through additional compensation to enable
Employee to pay for such coverage, with hospital, surgical and medical
insurance coverage no less favorable than such coverage provided to Employee
by Employer immediately prior to the date of this Agreement; provided,
however, that if such direct premium payment or additional compensation
exceeds the amount otherwise payable by Employer to provide such benefits to
all employees of Employer, Employee shall recognize and report for federal
income tax purposes such excess, with such excess being subject to all
applicable federal income tax and social security and medicare premium
withholding requirements.
7. REIMBURSEMENT OF BUSINESS EXPENSES. Employee is authorized to
incur reasonable business expenses for promoting the business of Employer,
and for performing the duties contemplated by this Agreement, including, but
not limited to, expenditures for business entertainment and business travel.
Employer shall reimburse Employee for all such reasonable expenditures upon
Employee's presentation of an itemized account of and receipts for the
expenditures. An itemized account will be submitted by Employee to Employer
on a monthly basis.
8. TIME. The Employee agrees to devote his full time, energies,
abilities and attention to the performance of his obligations and
responsibilities under this Agreement.
9. NONDISCLOSURE OF CONFIDENTIAL INFORMATION AND TRADE SECRETS.
During the term of this Agreement, Employee will have access to and become
familiar with various trade secrets, consisting of formulas, compilations of
information, records and other information owned by Employer and regularly
used in the operation of the business of Employer. Employee must not
disclose any such trade secrets , directly or indirectly, nor use them in any
way, either during the term of this Agreement or for a term of one (1) year
from the date this Agreement expires or is terminated, except as required in
the course of his employment with Employer; provided, however, that the
prohibition provided in this clause shall not apply to any such information
or knowledge thereof that is otherwise common knowledge in the new automobile
dealership industry.
10. EMPLOYER'S PROPERTY. All files, records, documents, equipment,
and other property of Employer used by Employee in the performance of his
obligations and responsibilities under this Agreement, whether or not
prepared by Employee, will remain the exclusive property of Employer and must
not be removed from the premises of Employer under any circumstances, other
than in connection with Employee's employment or otherwise contemplated by
this Agreement, without the prior written consent of Employer. Upon the
expiration or termination of this Agreement, Employee must immediately
deliver to Employer all property belonging to Employer in Employee's
possession, or under Employee's control, in good condition, ordinary wear and
tear excepted.
2
<PAGE>
11. INDEMNIFICATION OF EMPLOYEE. Employer shall indemnify Employee for
all losses sustained by Employee as a direct result of the discharge of his
duties required by this Agreement, except for losses caused by Employee's
willful misconduct or gross negligence. "Gross Negligence," as used in this
Agreement, shall mean an act or omission that involves an intentional
disregard or failure to perform any job duty or function in reckless
disregard of the consequences whether or not those consequences were
foreseeable.
12. OFFICE AND CLERICAL SERVICES. Employer will provide Employee with
an office and such clerical services as are reasonably necessary for Employee
to perform his obligations and responsibilities under this Agreement.
13. TERMINATION OF EMPLOYEE FOR CAUSE. If Employee is terminated for
cause by Employer, Employee shall be entitled to his Base Compensation and
Commission, prorated to the date of termination, and Employer shall be
relieved of its obligation to pay Employee any remaining Base Compensation or
Commission that would thereafter be due under Paragraph 3 of this Agreement.
In addition, if Employee is terminated for cause by Employer, Employee shall
be bound by the non-compete provisions of Paragraph 19 of this Agreement.
14. DEFINITION OF "FOR CAUSE." The term "for cause," as used in this
Agreement, shall mean (a) a conviction of a felony, (b) commitment of fraud,
(c) theft of any property of Employer or Employer's customers, (d) reporting
to work under the influence of alcohol or controlled substances (other than
prescription medication which is possessed and being taken pursuant to a
current and valid physician's prescription), or (e) repeated failure on the
part of Employee to perform his duties in the usual and customary manner that
such duties are performed in the automobile business.
15. TERMINATION OF EMPLOYEE WITHOUT CAUSE. If Employee is terminated
by Employer without cause or this Agreement is terminated due to the Employer
selling or otherwise ceasing to own and operate the Dealership, Employee
shall be entitled to the greater of (a) an amount equal to his Base
Compensation and his Commission for the period of twelve (12) months prior to
the date of termination, or (b) his guaranteed monthly compensation for a
twelve (12) month period. If Employee is terminated by Employer without
cause, the non-compete provisions of Paragraph 19 of this Agreement shall
immediately be null and void. It is understood and agreed by the parties that
the voiding of Paragraph 19 shall not otherwise affect the validity, legality
or enforceability of the remaining provisions of this Agreement.
16. VOLUNTARY TERMINATION BY EMPLOYEE. If Employee voluntarily
terminates his employment with Employer, Employee shall be entitled to his
Base Compensation and Commission, prorated to the date of termination, and
Employer shall be relieved of its obligation to pay Employee any remaining
Base Compensation or Commission that would thereafter be due under Paragraph
3 of this Agreement. In addition, if Employee voluntarily terminates his
employment with Employer, Employee shall be bound by the non-compete
provisions of Paragraph 19 of this Agreement.
17. NOTICE OF TERMINATION. The Employee and the Employer understand
and agree that (a) each has the right, upon thirty (30) days written notice
(hereinafter referred to as the "Notice Period"), to terminate the employment
relationship, and (b) Employer may terminate the employment relationship
immediately for cause.
18. NOTICE PERIOD. The Employer agrees to continue in effect during
the Notice Period the compensation and benefits to which the Employee may be
otherwise entitled under this Agreement. The Employee agrees that during the
Notice Period, he will cooperate fully
3
<PAGE>
with the Employer in all matters relating to the winding up of any pending
work and the orderly transfer to other employees of Employer of the work for
which he has most recently been responsible. The Employee understands and
agrees that, at or about the expiration of the Notice Period, or upon the
immediate termination of Employee, the Employer may convene an exit interview
to review the status of work for which the Employee has most recently been
responsible; to review the status of Employee's compensation, benefits, and
obligations under this Agreement; and to confirm that the Employee clearly
understands the nature and scope of his post-employment rights and
obligations.
19. COVENANT NOT TO COMPETE. Employee agrees that he will not, either
directly or indirectly, alone or with others, either as an employee, owner,
partner, agent, stockholder, member, director, officer or otherwise enter
into or engage in the business of operating a new vehicle dealership,
warranty repair business, or other related new automobile business with
respect to any of the Audi, BMW, Land Rover, Rolls-Royce, Bentley, or
Volkswagen franchises within the Las Vegas or Henderson, Nevada metropolitan
areas (the "Restricted Area") for a term of three (3) years from the date of
this Agreement (the "Restrictive Period").
20. NON-SOLICITATION. Employee will not individually, collectively,
or in conjunction with others, directly or indirectly, within the Restrictive
Period and Restricted Area, directly or indirectly solicit or hire any
employee of Employer or encourage any such employee to leave such employment
unless such employee has already terminated such employment with Employer, or
Employer and the Employee have mutually agreed in advance to the solicitation
or employment.
21. REMEDIES. The breach of or failure to perform any term of this
Agreement may be enforced by an action for injunctive relief, which may be
brought in any court of competent jurisdiction in Clark County, Nevada. None
of the remedies provided for in this Agreement shall be the exclusive remedy
of either party for a breach of this Agreement. The parties hereto shall
have the right to seek any other remedy at law or in equity in lieu of or in
addition to any remedies provided for in this Agreement.
22. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada.
23. INVALID PROVISIONS. 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.
24. AMENDMENT. This Agreement may not be amended or modified except
by a written instrument executed by both Employer and Employee.
25. ATTORNEYS' FEES. In the event of the breach of this Agreement by
either party, the prevailing party shall be entitled to reimbursement by the
non-prevailing party of any attorneys' fees and costs incurred in enforcing
the party's rights hereunder.
26. INCONSISTENCY. To the extent that this Agreement is inconsistent
with any Employer policies or any agreements between the parties, this
Agreement shall prevail.
4
<PAGE>
27. PARAGRAPH HEADINGS. The paragraph 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.
28. 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.
DATED AND EFFECTIVE as of November 1, 1997.
EMPLOYER: JRJ INVESTMENTS, INC.
By:
------------------------------
Its:
------------------------------
EMPLOYEE:
----------------------------------
RYAN A. COOK
5
<PAGE>
Exhibit 10.10
AGREEMENT REGARDING STOCK OPTIONS
This Agreement Regarding Stock Options (the "Agreement") is made and
entered into this 5th day of January, 1998, by and between James J. Chaisson,
Jr. ("Chaisson") and Cross-Continent Auto Retailers, Inc. ("C-CAR").
RECITALS
A. The Board of Directors of C-CAR has determined that the interests of
C-CAR are advanced by encouraging and enabling certain employees of its
subsidiaries to acquire an equity interest in C-CAR, thus providing a closer
identification of their interests with those of C-CAR.
B. The Board of Directors of C-CAR has authorized C-CAR to grant certain
stock options to Chaisson if the dealerships owned by JRJ Investments, Inc.
(the "Dealerships") earn certain levels of net income during the period of
Chaisson's employment as general manager of the Dealerships (the "Employment
Period").
C. Chaisson and C-CAR desire to evidence their agreement concerning
C-CAR's granting of stock options to Chaisson for the performance of the
Dealerships during the Employment Period.
AGREEMENT
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
is hereby acknowledged, Chaisson and C-CAR agree as follows:
1. C-CAR shall grant to Chaisson a non-qualified option to acquire the
number of shares of C-CAR's common stock that are set forth below opposite
the respective amount of Net Earnings (hereinafter defined) earned by the
Dealerships during any calendar year that begins and ends during the
Employment Period:
Net Earnings Number of Shares
------------ ----------------
Less than $3,000,000 0
$3,000,000 5,000
$3,500,000 10,000
$4,000,000 15,000
$4,500,000 20,000
$5,000,000 or more 25,000
As used in this Agreement, the term "Net Earnings" shall mean, on an
annual basis:
(a) gross revenues from all sources relating to the
operation of the Dealerships, less
1
<PAGE>
(b) all cost of sales; general and administrative expenses;
salaries, bonuses, commissions, and other compensation;
depreciation; amortization; interest; dealership
overhead; and $25,000 per month as and for the portion
of C-CAR's corporate overhead charged to the
Dealerships; but before income taxes.
Net Earnings shall be calculated on the accrual method of accounting and
determined by C-CAR's accounting staff in accordance with generally accepted
accounting principles.
2. In addition, C-CAR shall grant to Chaisson a non-qualified option to
acquire the number of shares of C-CAR's common stock that are set forth below
opposite the respective amount of Net Earnings earned by the Dealerships
during the period from November 1, 1997 to December 31, 1997 (the "1997
Period"):
Net Earnings Number of Shares
------------ ----------------
Less than $500,000 0
$500,000 833
$583,333 1,667
$666,667 2,500
$750,000 3,333
$833,333 or more 4,167
3. If Chaisson has earned an option for the 1997 Period or for any
calendar year during the Employment Period, the option shall be granted as of
December 31 of such year, with a purchase price equal to the closing price
for C-CAR's common stock quoted in THE WALL STREET JOURNAL for the last
trading day of such year.
4. Each option shall expire ten (10) years after the date of grant, unless
terminated earlier in accordance with the stock option agreement to be
entered into by and between Chaisson and C-CAR at the time the option is
granted to Chaisson.
5. Twenty percent (20%) of each option granted to Chaisson shall vest when
granted and twenty percent (20%) of the option shall vest December 31 of each
year thereafter during the Employment Period, provided that if Chaisson is
general manager of the Dealerships on October 31, 2000, but is not the
general manager of the Dealerships on December 31, 2000, twenty percent (20%)
of each option that has been granted to Chaisson shall vest on October 31,
2000.
6. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware.
7. This Agreement shall be binding upon and shall inure the benefit of the
parties hereto and their respective heirs, administrators, executors,
successors and assigns.
2
<PAGE>
8. Each option granted to Chaisson under the terms and provisions of this
Agreement shall be subject to the terms and provisions of (a) C-CAR's stock
option plan then in effect, and (b) the stock option agreement to be entered
into by and between Chaisson and C-CAR at the time the option is granted to
Chaisson. Each stock option agreement entered into by and between Chaisson
and C-CAR at the time an option is granted to Chaisson shall be substantially
in the form of C-CAR's then standard stock option agreement.
--------------------------------------------
James J. Chaisson Jr.
CROSS-CONTINENT AUTO RETAILERS, INC.
By:
---------------------------------------
R. Wayne Moore, Secretary
3
<PAGE>
Exhibit 10.11
AGREEMENTS REGARDING JAGUAR ASSETS
This Agreement Regarding Jaguar Assets (the "Agreement") is made and
entered into as of January 4, 1998, by and among the Chaisson Family Trust
R-501, u/a/d October 23, 1985 (the "Seller"), Chaisson Diversified
Investments, Inc., a Nevada corporation ("CDI"), Cross-Continent Auto
Retailers, Inc., a Delaware corporation ("C-Car"), and JRJ Investments, Inc.,
a Nevada corporation (the "Company").
RECITALS
A. Pursuant to paragraph 20(c) of that certain Amended and Restated
Stock Purchase Agreement, dated as of November 1, 1997, by and among Seller,
C-Car and the Company (the "Purchase Agreement"), the Company is, on the date
hereof, distributing the Jaguar Assets (as defined in the Purchase Agreement)
to CDI, a corporation wholly owned by Seller, (the "Jaguar Distribution"); and
B. Pursuant to that certain Management Agreement, dated as of
November 1, 1997, by and among C-Car, the Company and the Seller (the
"Pre-Closing Management Agreement"), C-Car has been managing the Dealerships
(as defined in the Purchase Agreement), including the Jaguar Assets; and
C. Seller, CDI and the Company have agreed to enter into a Management
Agreement, to be dated January 5, 1998 (the "Post-Closing Management
Agreement"), providing for the Company to manage: (1) any Franchise (as
defined in the Post-Closing Management Agreement), other than the Jaguar
Franchise, which was issued to Seller, as the approved owner of the Company,
and for which C-Car has not received approval from the respective
Manufacturer as the owner of a Franchise (the "Managed Franchises"), and (b)
the Jaguar Assets; and
D. Seller, CDI, C-Car and the Company desire to enter into certain
agreements with respect to the Pre-Closing Management Agreement and the
Post-Closing Management Agreement relating to the Jaguar Assets.
AGREEMENTS
In consideration of the mutual agreements set forth in this Agreement,
the Seller, CDI, C-Car and the Company agree as follows:
1. With respect to the Pre-Closing Management Agreement, from this
date until its Termination Date (as defined in the Pre-Closing Management
Agreement): (a) the Seller and CDI will be jointly referred to as the Seller,
and (b) the Jaguar Assets shall remain subject to the Pre-Closing Management
Agreement and managed by C-Car.
2. With respect to the provisions of paragraph 20(c) requiring that
Seller 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 the New Jaguar Automobiles (as defined in paragraph 20(c)
of the Purchase Agreement (the "Floor Plan Liability"), the parties agree
that:
<PAGE>
(a) so long as the Jaguar Assets are being managed by either C-Car,
pursuant to the Pre-Closing Management Agreement, or by the Company,
pursuant to the Post-Closing Management Agreement, C-Car and the Company,
respectively: (i) waive the aforesaid requirement regarding the payment or
assumption of the Floor Plan Liability by Seller and/or CDI, and (ii) agree
to pay in full all liabilities secured by liens on New Jaguar Automobiles
in accordance with the terms of any applicable floor plan agreement, and
(b) immediately upon the occurrence of the Jaguar Termination Date (as
defined in the Post-Closing Management Agreement) Seller and CDI, jointly
and severally agree to, or cause any purchaser of the Jaguar Assets to,
fully comply with the requirement relating to the Floor Plan Liability.
3. Notwithstanding the provisions of paragraph 6 of the Pre-Closing
Management Agreement relating to the repayment, on either the Distribution Date
or the Termination Date (as each phrase is defined in the Pre-Closing Management
Agreement), of all, or the applicable portion of, the Jaguar Deposit (as defined
in the Pre-Closing Management Agreement) paid by C-Car to the Seller, the
parties agree that: (a) the applicable portion of the Jaguar Deposit need not
be repaid by Seller to C-Car, and (b) the Jaguar Deposit shall be deemed to have
been paid by the Company to CDI as contemplated by, and governed by, paragraph 6
of the Post-Closing Management Agreement, with the repayment of the applicable
portion thereof to be paid in accordance with said paragraph 6 of the
Post-Closing Management Agreement.
4. Except as specifically set forth herein, all other provisions of the
Purchase Agreement and the Pre-Closing Management Agreement remain in full force
and effect.
SELLER: C-CAR:
Chaisson Family Trust R-501 Cross-Continent Auto Retailers, Inc.
By: By:
--------------------------------- -----------------------------------
James J. Chaisson, Sr., Trustee R. Wayne Moore, Secretary
CDI: THE COMPANY:
Chaisson Diversified Investments, Inc. JRJ Investments, Inc.
By: By:
----------------------------------- -----------------------------------
James J. Chaisson, Sr., President James J. Chaisson, Sr., President
<PAGE>
Exhibit 99.1
FOR FURTHER INFORMATION CONTACT:
John Gaines
Vice President-Finance
(806) 374-8653
FOR IMMEDIATE RELEASE
CROSS-CONTINENT COMPLETES ACQUISITION OF
CHAISSON DEALERSHIPS IN LAS VEGAS
AMARILLO, TEXAS, JANUARY 6, 1998 -- CROSS-CONTINENT AUTO RETAILERS, INC.
(NYSE: XC), today announced that it has completed the previously announced
acquisition of Chaisson Motor Cars and Chaisson BMW, a multiple franchise
dealership group operating in Las Vegas and Henderson, Nevada.
The purchase price approximated $18 million and consisted of $13.3 million in
cash which was provided under the company's revolving line of credit, $2.0
million in Cross-Continent common stock and $2.7 million in notes payable to
the sellers. The transaction will be accounted for as a purchase.
Chaisson Motor Cars operates a total of three new car facilities in Las Vegas
and Henderson, Nevada. Chaisson is the exclusive dealership for BMW,
Volkswagen, Audi, Land Rover and other specialty luxury vehicles in the Las
Vegas market. Chaisson BMW commenced operations in a recently completed
state-of-the-art facility located at the Henderson Auto Mall in May 1997.
For the eleven month period ended November 30, 1997, total revenue for the
Chaisson dealerships approximated $85 million. The dealerships sold 1,331
new units, 593 used retail units and 513 wholesale units.
Total revenues were $70 million for the year ended December 31, 1996. In
1996 the dealerships sold 1,228 new units, 477 used retail units and 360 used
wholesale units. Reported revenue and unit sales for 1996 do not include
Chaisson BMW, in Henderson, Nevada, which commenced business in May 1997.
Bill Gilliland, chairman and chief executive officer of Cross-Continent, said
"the addition of the Chaisson dealerships complements our strategy of
acquiring high-quality, profitable dealerships in selected markets and
enhances our market share in one of the fastest growing markets in the United
States."
Gilliland noted the acquisition is a nice strategic fit for Cross-Continent
in the Las Vegas market since Chaisson's facilities are located near the
recently acquired Toyota and Nissan dealerships. "The close proximity of the
dealerships will enable the company to expand our
-more-
<PAGE>
used vehicle sales operations, and will allow us to realize other benefits
from such a tight cluster of operations in the Las Vegas market."
Following the completion of the Chaisson acquisition, Cross-Continent will
represent nine different manufacturers in the Las Vegas market, which
according to recent publications ranks as one of the nations fastest growing
metropolitan areas.
The transaction represents the company's fourth acquisition following its
initial public offering on September 24, 1996. On October 1, 1996, the
company completed the acquisition of Lynn Hickey Dodge, in Oklahoma City. On
April 10, 1997, the company completed the acquisition of two Toyota
dealerships located in Las Vegas, Nevada and Denver, Colorado. On July 1,
1997, the company completed the acquisition of Sahara Nissan, Inc. which
operates a Nissan dealership in Las Vegas, Nevada under the trade name Nissan
West.
Cross-Continent Auto Retailers, Inc. owns and operates a group of franchised
automobile dealerships in Texas, Oklahoma, Colorado and Nevada. Through
these dealerships, the company sells new and used cars and light trucks,
arranges related financing and insurance, sells replacement parts and
provides vehicle maintenance and repair services.
Cross-Continent Auto Retailers, Inc. is listed on the New York Stock Exchange
under the symbol XC.
CROSS-CONTINENT AUTO RETAILERS, INC. BELIEVES ITS SHAREHOLDERS BENEFIT FROM
THE VIEWS OF MANAGEMENT ABOUT THE FUTURE OF THE COMPANY'S BUSINESS. INCLUDED
HEREIN ARE FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS WITH RESPECT TO
ANTICIPATED REVENUE GROWTH, ACQUISITIONS AND PROFITABILITY. THERE ARE MANY
FACTORS WHICH AFFECT MANAGEMENT'S VIEWS ABOUT FUTURE EVENTS AND TRENDS OF THE
COMPANY'S BUSINESS. THESE FACTORS INVOLVE RISK AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS OR TRENDS TO DIFFER MATERIALLY FROM MANAGEMENT'S VIEW,
INCLUDING WITHOUT LIMITATION ECONOMIC CONDITIONS, RISKS ASSOCIATED WITH
ACQUISITIONS AND THE RISK FACTORS SET FORTH FROM TIME TO TIME IN THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
