<PAGE> 1
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):
OCTOBER 24, 1997
WHEELS SPORTS GROUP, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 0-22321 56-2007717
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
1368 SALISBURY ROAD
MOCKSVILLE, NORTH CAROLINA 27028
(Address of principal executive offices)
(704) 634-3000
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 24, 1997, Wheels Sports Group, Inc. (the "Company") entered
into an Agreement and Plan of Reorganization (the "Agreement") with High
Performance Sports Marketing, Inc., a North Carolina corporation ("High
Performance"). The Agreement provides for the merger of High Performance with
and into a wholly-owned subsidiary of the Company formed for the sole purpose
of completing the merger (the "HP Subsidiary"). The merger was completed on
October 24, 1997, on the terms set forth below (substantially as disclosed in
the Company's Form 8-K as filed on October 17, 1997).
The consideration paid by the Company pursuant to the Agreement
consisted of cash in the amount of $1,672,000 (the "Initial Cash Payment");
444,445 shares of the Company's Common Stock; and promissory notes in the
aggregate principal amount of $1 million (the "Notes"). The Company is
obligated to make an additional cash payment of $3.25 million on or before
November 28, 1997 (the "Final Cash Payment").
All principal and accrued interest under the Notes are due on October
24, 1998, subject to prepayment at the Company's option. The Notes are
unsecured and bear interest at the rate of 10% per annum. The shares of Common
Stock were issued without registration under the Act, and the Company granted
"piggyback" registration rights to the holders of the Common Stock. The Company
has entered into employment agreements with two High Performance officers,
Randy C. Baker and David W. Dupree. In addition, Mr. Baker was appointed to the
Company's Board of Directors effective as of the closing.
In order to fund the Initial Cash Payment, the Company obtained a
$1,672,000 unsecured bank loan on October 24, 1997. The loan bears interest at
the lender's prime rate and is due and payable on December 1, 1997. The Company
intends to obtain long-term financing in order to refinance the short-term bank
loan and to fund the Final Cash Payment. Morgan Keegan & Company, Memphis,
Tennessee, is serving as an advisor to the Company in its efforts to obtain the
financing required in connection with the High Performance merger. However,
there can be no assurance that the Company will obtain the financing required
to fund the Final Cash Payment or to refinance the short-term bank debt. The
Agreement provides that in the event the Company fails to make the Final Cash
Payment on or before November 28, 1997, the High Performance shareholders shall
have a right to return the 444,445 shares of Common Stock, the Initial Cash
Payment and the Notes to the Company in exchange for all of the issued and
outstanding capital stock of the HP Subsidiary. In such event, the High
Performance shareholders would also be entitled to be reimbursed by the Company
for costs and expenses incurred by them in connection with the Agreement.
2
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FORWARD LOOKING STATEMENTS
The statements contained in this report that are not purely historical
are forward looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
including statements regarding the Company's expectations, hopes, intentions or
strategies regarding the future. Forward looking statements include
expectations of trends to continue through the remainder of the forthcoming
year. Forward looking statements involve a number of risks and uncertainties.
Among other factors that would cause actual results to differ materially are
the following: the inability to obtain the long-term financing described above;
the inability to close other acquisitions which may be undertaken by the
Company, including but not limited to the previously announced acquisition of
Press Pass Partners; business conditions and growth in the markets for
collectible sports trading cards and other NASCAR related merchandise;
competitive factors, such as the entry of new competitors into the NASCAR
trading card and merchandise markets; the loss of license agreements with
certain NASCAR drivers or team owners; inventory risks due to shifts in market
demand; changes in product mix; and the risk factors listed from time to time
in the Company's SEC reports, including but not limited to the Company's
reports on Form 10-QSB, 8-K, 10-KSB, Annual Reports to Shareholders, and
reports or other documents filed pursuant to the Securities Act of 1933 or the
Securities Exchange Act of 1934. All forward looking statements included herein
are based on information available to the Company on the date hereof, and the
Company assumes no obligation to update any such forward looking statements. It
is important to note that the Company's actual results could differ materially
from those in such forward looking statements due to the factors cited above.
As a result of these factors, there can be assurance the Company will not
experience material fluctuations in future operating results on a quarterly or
annual basis, which would materially and adversely affect the Company's
business, financial condition and results of operations.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Not applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) It is impracticable to provide the required financial
statements for High Performance Sports Marketing, Inc. at this time. In
accordance with Item 7(a)(1) of Form 8-K, the Company will file the required
financial statements as an amendment to this Form 8-K as soon as practicable,
but not later than 60 days after the date on which this report on Form 8-K must
be filed.
(b) It is impracticable to provide the required pro forma
financial information for High Performance Sports Marketing, Inc. and the
Company at this time. In accordance with Item 7(b)(2) of Form 8-K, the Company
will file the required pro forma financial information as an amendment to this
Form 8-K as soon as practicable, but not later than 60 days after the date on
which this report on Form 8-K must be filed.
(c) The following exhibits are furnished herewith in
accordance with the provisions of Item 601 of Regulation S-K:
<TABLE>
<CAPTION>
Reg. S-K
Exhibit No. Description Item No.
- ----------- ----------- --------
<S> <C> <C>
* 2.4 Agreement and Plan of Reorganization among Wheels 2
Sport Group, Inc., High Performance Acquisition
Company, High Performance Sports Marketing, Inc.,
Randy C. Baker and David W. Dupree dated October 3,
1997.
2.5 First Amendment to Agreement and Plan of Reorganization 2
among Wheels Sport Group, Inc., High Performance Acquisition
Company, High Performance Sports Marketing, Inc., Randy C.
Baker and David W. Dupree dated October 24, 1997.
10.1.8 Employment Agreement dated October 3, 1997, by and between 10
Randy C. Baker and the Company.
10.1.9 Employment Agreement dated October 3, 1997, by and between 10
David W. Dupree and the Company.
10.9.4 Lease Agreement dated March 1, 1997, by and between 10
Beale Street Realty, LLC as landlord and High
Performance Sports Marketing, Inc. as tenant.
10.15.1 Promissory Note in the principal amount of $850,000 dated 10
October 3, 1997, from the Company to Randy C. Baker.
10.15.2 Promissory Note in the principal amount of $150,000 dated 10
October 3, 1997, from the Company to David W. Dupree.
10.15.3 Promissory Note in the principal amount of $1,672,000 from the 10
Company to Peoples Bank.
</TABLE>
4
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* Previously filed with the Company's Form 8-K filed on October 17, 1997.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
WHEELS SPORTS GROUP, INC.
Date: November 7, 1997 By: /s/ Howard L. Correll, Jr.
----------------------------
Howard L. Correll, Jr., Chairman
of the Board, Chief Executive
Officer and President
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<TABLE>
<CAPTION>
EXHIBIT INDEX
Reg. S-K
Exhibit No. Description Item No.
- ----------- ----------- --------
<S> <C> <C>
* 2.4 Agreement and Plan of Reorganization among Wheels 2
Sport Group, Inc., High Performance Acquisition Company,
High Performance Sports Marketing, Inc., Randy C. Baker
and David W. Dupree dated October 3, 1997.
2.5 First Amendment to Agreement and Plan of Reorganization 2
among Wheels Sport Group, Inc., High Performance Acquisition
Company, High Performance Sports Marketing, Inc., Randy C.
Baker and David W. Dupree dated October 24, 1997.
10.1.8 Employment Agreement dated October 3, 1997, by and between 10
Randy C. Baker and the Company.
10.1.9 Employment Agreement dated October 3, 1997, by and between 10
David W. Dupree and the Company.
10.9.4 Lease Agreement dated March 1, 1997, by and between 10
Beale Street Realty, LLC as landlord and High
Performance Sports Marketing, Inc. as tenant.
10.15.1 Promissory Note in the principal amount of $850,000 dated 10
October 3, 1997, from the Company to Randy C. Baker.
10.15.2 Promissory Note in the principal amount of $150,000 dated 10
October 3, 1997, from the Company to David W. Dupree.
10.15.3 Promissory Note in the principal amount of $1,672,000 from the 10
Company to Peoples Bank.
</TABLE>
* Previously filed with the Company's Form 8-K filed on October 17, 1997.
<PAGE> 1
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION (the
"First Amendment") is made and entered into effective as of October 24, 1997,
by and among WHEELS SPORTS GROUP, INC., a North Carolina corporation
("Parent'), HP ACQUISITION COMPANY, a North Carolina corporation ("HPAC"), HIGH
PERFORMANCE SPORTS MARKETING, INC., a North Carolina corporation ("High
Performance"), RANDY C. BAKER and DAVID W. DUPREE (collectively,
"Shareholders").
Statement of Purpose
Parent, HPAC, High Performance and the Shareholders are parties to
that certain Agreement and Plan of Reorganization dated as of October 3, 1997
(the "Agreement") and desire to enter into this First Amendment to amend
certain provisions of the Agreement. All capitalized terms used and not
otherwise defined in this First Amendment have the meanings assigned to them in
the Agreement.
Therefore, the parties hereto agree as follows:
A. Amendments to Agreement. The following amendments to the
Agreement are effective as of the date of this First Amendment:
1. Decrease in Amount of Additional Cash Consideration; Increase in
Amount of Bonus. The following amendments are made to (i) decrease the amount
of the Additional Cash Consideration by $328,000 form $2,000,000 to $1,672,000;
(ii) decrease the amount of the Merger Consideration by $328,000 from
$10,250,000 to $9,922,000; and (iii) increase the amount of the bonus to be
paid to David W. Dupree prior to Closing by $328,000 from $58,000 to $368.000.
(a) The amount of the Merger Consideration (as set forth
in Article 2.6 of the Agreement) is hereby reduced by $9,922,000.
(b) The amount of the Additional Cash Consideration (as
set forth in Article 2.6(d) of the Agreement) is hereby reduced to
$1,672,000.
(c) In Article 3.17, the amount of the bonus to be paid
to David Dupree prior to Closing is hereby increased to $386,000.
(d) In Article 5.7, the amount of the bonus to be paid to
David Dupree prior to Closing is hereby increased to $386,000.
(d) In Article 11.3(a), the amount of the Additional
Cash Consideration to be delivered to Acquirors is hereby reduced to
$1,672,000.
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2. Additional Covenant of Acquirors. The following is hereby
added to the Agreement as Article 6.2:
6.2 GUARANTIES OF SHAREHOLDERS. Acquirors covenant and agree
that they shall use their best efforts promptly after Closing to cause
Shareholders to be relieved and fully released from any personal
obligations either Shareholder may have pursuant to guaranties
executed by either Shareholder in connection with any contractual or
financial commitments of High Performance (other than obligations of
High Performance of Shareholders under this Agreement).
B. Miscellaneous.
1. Ratification of Agreement. Other than as expressly modified
by this First Amendment, all terms of the Agreement are hereby affirmed and
ratified.
2. Counterparts. The First Amendment may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3. Governing Law. This First Amendment shall be governed by the
laws of the State of North Carolina applicable to agreements made and to be
performed entirely within North Carolina.
The parties have executed and delivered this First Amendment as of the
date first written above.
WHEELS SPORTS GROUP, INC.
By: /s / Howard L. Correll
----------------------------
Howard L. Correll, CEO
HP ACQUISITION COMPANY
By: /s/ Howard L. Correll
----------------------------
Howard L. Correll, CEO
HIGH PERFORMANCE SPORTS MARKETING, INC.
By: /s/ Randy C. Baker
-----------------------------
Randy C. Baker, President
/s/ Randy C. Baker
-----------------------------
RANDY C. BAKER
/s/ David W. Dupree
-----------------------------
DAVID W. DUPREE
<PAGE> 1
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT effective October 3, 1997 (the
"Agreement") by and between WHEELS SPORTS GROUP, INC. (the "Company") with
principal offices located at 1368 Salisbury Road, Mocksville, North Carolina
27028 and RANDY C. BAKER, (the "Executive").
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive in the
position described on Schedule 1 hereto as an executive officer of the Company.
The Executive accepts such employment and agrees to perform the duties and
responsibilities assigned to him pursuant to this Agreement. The Company will
also appoint the Executive to serve on the Company's Board of Directors
effective as of the date of this Agreement, and during the term of this
Agreement the Board of Directors will use its best efforts (consistent with
their fiduciary duties) to cause Executive to be retained on the Board.
2. Position and Responsibilities. The Executive shall hold the
position with the Company which is specified on Schedule 1, which is attached
hereto and incorporated herein by reference. The Executive shall exert his best
efforts and devote such time and attention to the affairs of the Company as
necessary to fulfill his responsibilities hereunder. The Executive shall
perform the duties set forth on Schedule 1 while employed as an executive
officer, and such further duties as may be determined and assigned to him from
time-to-time by the Chief Executive Officer or the Board of Directors of the
Company, and shall have full authority and responsibility with respect thereto,
subject to the general direction, approval and control of the Board of
Directors and to the restrictions, limitations and guidelines set forth by the
Board of Directors in resolutions adopted in the minutes of the Board of
Directors meetings, copies of which will be provided to the Executive from time
to time and will be incorporated herein by reference.
3. Board of Directors. The Executive shall at all times discharge his
duties in consultation with and under the supervision of the Board of Directors
of the Corporation. The Executive shall make his principal office at the
corporate headquarters of the Company in Mocksville, North Carolina, or at such
other place or places as the Executive may designate with the Company's
approval, which shall not be unreasonably withheld.
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4. Term of Employment. The term of the Executive's employment under
this Agreement shall be deemed to have commenced on October 3, 1997 and shall
continue for a three-year period until October 3, 2000, subject to extension as
hereinafter provided or termination pursuant to the provisions set forth
hereafter. Provided that Executive is in compliance with all of his obligations
hereunder, the term of Executive's employment shall be automatically extended
for an additional one-year terms upon expiration of the initial three-year term
unless either party hereto receives 90 days' prior written notice from the
other electing not to extend the Executive's employment.
5. Compensation. Commencing on October 3, 1997, the Company shall pay
to the Executive as compensation for his services a base salary of not less
than the amount specified on Schedule 1, payable semi-monthly, or such higher
salary as may be from time to time approved by the Board of Directors. Upon the
parties' execution of this Agreement, the Executive shall be entitled to
receive options granted under the Company's 1996 Omnibus Stock Option Plan in
accordance with the terms of Schedule 1 hereto. The Executive shall receive
such additional compensation and/or bonuses or stock options as may be voted to
him at the sole discretion of the Compensation Committee of the Board of
Directors.
6. Expense Reimbursement. The Company will reimburse the Executive,
at least monthly, for all reasonable and necessary expenses incurred by him in
carrying out his duties under this Agreement. The Executive shall present to
the Treasurer each month an account of such expenses in such form as is
reasonably required by the Board of Directors. Such expenses shall include
attorneys' fees and disbursements of Executive in connection with any legal
proceedings (including, but not limited to, arbitration), whether or not
instituted by the Company or Executive, relating to the interpretation or
enforcement of any provision of this Agreement; provided, however, that in the
case of any such proceeding to which the Company and the Executive are adverse
parties, the losing party shall reimburse the prevailing party for all costs
and expenses, including attorneys' fees and disbursements, incurred by the
prevailing party in defense or prosecution of any such proceeding. Prior to
advancing costs and expenses to Executive, the Board of Directors shall have
the right to obtain an agreement, and to require acceptable security therefor,
from Executive requiring him to repay Company for the same should it be
determined that Executive is not entitled to payment of such costs and
expenses.
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7. Medical and Dental Coverage. The Executive, his wife, and those
children who qualify will be entitled to participate in the Company's employee
group medical and other group insurance programs on the same basis as other
executives of the Company.
8. Medical Examination. The Executive agrees to submit himself for
physical examination on one occasion per year as requested by the Company for
the purpose of the Company's obtaining life insurance on the life of the
Executive for the benefit of the Company; provided, however, that the Company
shall bear the entire cost of such examinations and shall pay all premiums on
any key man life insurance obtained for the benefit of the Company as
beneficiary or with respect to any other designated beneficiary.
9. Automobile or Automobile Allowance. The Company will provide the
Executive with an automobile or with an automobile allowance in the amount of
$10,000 for the duration of his employment with the Company under this
Agreement.
10. Vacation Time. The Executive shall be entitled to take four (4)
weeks paid vacation per calendar year. Such vacation may not be taken in any
greater than consecutive two (2) week increments. Vacation not used by the
Executive during the calendar year will be carried forward up to a maximum of
eight (8) weeks accrual going forward.
11. Benefits Payable on Disability. If the Executive becomes disabled
from properly performing services hereunder by reason of illness or other
physical or mental incapacity, the Company shall continue to pay the Executive
his then current salary hereunder for the first twelve (12) months of such
continuous disability commencing with the first date of such disability.
If the Executive qualifies for coverage, during the term of this
Agreement, the Company shall purchase and maintain a policy of Disability
Insurance which, after twelve (12) continuous months of disability, will pay up
to $10,000 per month of the Executive's salary until Executive reaches the age
of 65. The Company has no obligation to supplement or augment disability
payments made under any such disability policy or plan or make any other
payment in connection with such disability.
If the Company is unable to obtain a policy of Disability Insurance, the
Company shall pay up to $8,000 per month to the Executive for a twelve (12)
month period from the twelfth to the twenty-fourth month from the first date of
such disability.
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12. Obligations of Executive During and After Employment.
(a) The Executive agrees that during the terms of his employment
under this Agreement, he will engage in no other business activities
directly or indirectly, which are competitive with or which might place
him in a competing position to that of the Company, or any affiliated
company.
(b) The Executive realizes that during the course of his
employment, Executive will have produced and/or have access to
confidential business plans, information, business opportunity records,
notebooks, data, formula, specifications, trade secrets, customer lists,
account lists and secret inventions and processes of the Company and its
affiliated companies. Therefore, during or subsequent to his employment
by the Company, or by an affiliated company, the Executive agrees to hold
in confidence and not to directly or indirectly disclose or use or copy
or make lists of any such information, except to the extent authorized by
the Company in writing. All records, files, business plans, documents,
equipment and the like, or copies thereof, relating to Company's
business, or the business of an affiliated company, which Executive shall
prepare, or use, or come into contact with, shall remain the sole
property of the Company, or of an affiliated company, and shall not be
removed from the Company's or the affiliated company's premises without
its written consent, and shall be promptly returned to the Company upon
termination of employment with the Company and its affiliated companies.
The restrictions and obligations of Executive set forth in this Section
12(b) shall not apply to (i) information that is or becomes generally
available and known to the sports trading card industry or the fantasy
game industry (other than as a result of a disclosure directly or
indirectly by Executive); or (ii) information that was known to Executive
prior to Executive's employment by the Company or its predecessor.
(c) Because of his employment by the Company, Executive will
have access to trade secrets and confidential information about the
Company, its business plans, its business accounts, its business
opportunities, its expansion plans into other geographical areas and its
methods of doing business. Executive agrees that for a period of one (1)
year after termination or expiration of his employment (except if
termination is as a result of termination by Executive with cause under
Section 16), he will not, directly or indirectly, compete with the
Company in the business of designing, marketing and/or distributing
NASCAR merchandise, collectible NASCAR-related sports trading cards and
fantasy race games within the United States.
(d) In the event a court of competent jurisdiction finds any
provision of this Section 12 to be so overbroad as to be unenforceable,
then such provision shall be reduced in scope by the court, but only to
the extent deemed necessary by the court to render the provision
reasonable and
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enforceable, it being the Executive's intention to provide the Company
with the broadest protection possible against harmful competition.
13. Termination for Cause by the Company. During the term of this
Agreement there can be no termination of the Executive by the Company except
for "Termination for Cause" as outlined below:
(a) Notwithstanding anything herein to the contrary the Company
may, without liability, terminate the Executive's employment hereunder
for cause at any time upon written notice from the Board of Directors
specifying such cause, and thereafter the Company's obligations hereunder
shall cease and terminate; provided, however, that the Company shall pay
the Executive two (2) weeks pay and that such written notice shall not be
delivered until after the Board of Directors shall have given the
Executive written notice specifying the conduct alleged to have
constituted such cause and the Executive has failed to cure such conduct,
if curable, within fifteen (15) days following receipt of such notice.
(b) "Termination for Cause" consists of one or more of the
following:
i) A willful breach of duty by the Executive during the
course of his employment;
ii) Habitual neglect of duty by the Executive;
iii) The Executive's material failure to perform and/or
meet objective and measurable financial standards set by the Board
of Directors and agreed upon by the Executive in advance; and
iv) Disloyal, dishonest or illegal conduct of the
Executive.
14. Termination by the Executive without Cause. The Executive, without
cause, may terminate this Agreement upon 90 days' prior written notice to the
Company. In such event, the Executive shall be required to render the services
required under this Agreement during such 90-day period unless otherwise
directed by the Board of Directors. Compensation for vacation time not taken
by Executive shall be paid to the Executive at the date of termination.
15. Termination by the Executive with Cause. The Executive may
terminate his employment with the Company at any time, upon 30-days' prior
written notice and opportunity for the Company to remedy any non-compliance, by
reason of (i) the Company's material failure to perform its duties pursuant to
this Agreement, (ii) any material diminishment in the duties and
responsibilities, working facilities, or compensation as described in
Paragraphs 2, 5 and 6 of this Agreement, or (iii) Executive's location of
employment is moved more than 60 miles from where it is on the date of this
Agreement; provided that
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such termination takes place within 90 days after receipt by Executive of
written notice of such relocation. Executive shall be entitled to all base
salary specified herein for the remaining term of this Agreement.
16. Termination upon Death of Executive. In addition to any other
provision relating to termination, this Agreement shall terminate upon the
Executive's death. In such event, the Company shall pay a severance allowance
equal to six months' salary to the Executive's estate.
17. Lump Sum Compensation. In the event of the occurrence of a
"Triggering Event" which shall be defined to include a non-negotiated (i)
change in ownership of 50% or more of the outstanding shares of the Company
subsequent to the Company's initial public offering, or (ii) merger,
consolidation, reorganization or liquidation of the Company, the Executive
shall receive lump sum compensation equal to 2.9 times his annual salary and
incentive or bonus payments, if any, as shall have been paid to the Executive
during the Company's most recent 12-month period within 30 days of the
Triggering Event. If the total amount of the change of control compensation
were to exceed three (3) times the Executive's base amount (the average annual
taxable compensation of the Executive for the five (5) years preceding the year
in which the change of control occurs), the Company and the Executive may agree
to reduce the lump sum compensation to be received by Executive in order to
avoid the imposition of the golden parachute tax as provided in the Tax Reform
Act of 1984, as amended by the Tax Reform Act of 1986.
In the event the Executive is required to hire counsel to negotiate on
his behalf in connection with his termination or resignation from the Company
upon the occurrence of a Triggering Event, or in order to enforce the
obligations of the Company as provided in this Paragraph, the Company shall
reimburse to the Executive all reasonable attorneys' fees which may be expended
by the Executive in seeking to enforce the terms hereof. Such reimbursement
shall be paid every 30 days after the Executive provides copies of invoices
from the Executive's counsel to the Company. However, such invoices may be
redacted to preserve the attorney-client privilege, client confidentiality or
work product.
18. Arbitration. Any controversy, dispute or claim arising out of, or
relating to, this Agreement and/or its interpretation shall, unless resolved by
agreement of the parties, be settled by binding arbitration in Charlotte, North
Carolina in accordance with the Rules of the American Arbitration Association
then existing. This Agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law of the State of North Carolina. The award
rendered by the arbitrators shall be final and judgment may be entered upon the
award in any court of the State of North Carolina having jurisdiction of the
matter.
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19. General Provisions.
(a) The Executive's rights and obligations under this Agreement
shall not be transferrable by assignment or otherwise, nor shall
Executive's rights be subject to encumbrance or to the claims of the
Company's creditors. Nothing in this Agreement shall prevent the
consolidation of the Company with, or its merger into, any other
corporation, or the sale by the Company of all or substantially all of
its property or assets.
(b) This Agreement constitutes the entire agreement between the
parties hereto in respect of the employment of the Executive by the
Company and supersedes any and all other agreements either oral or in
writing between the parties hereto with respect to the employment of the
Executive.
(c) Executive shall have no duty to mitigate the payment due him
from Company pursuant to this Agreement and any money earned by Executive
from other sources after his employment with the Company terminates shall
not reduce the amount owed him by the Company pursuant to this Agreement.
(d) The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part thereof are declared
invalid or unenforceable by a court of competent jurisdiction or in an
arbitration proceeding, the validity and enforceability of the remainder
of such provisions or parts thereof and the applicability thereof shall
not be affected thereby.
(e) This Agreement may not be amended or modified except by a
written instrument executed by Company and Executive.
(f) This Agreement and the rights and obligations hereunder
shall be governed by and construed in accordance with the laws of the
State of North Carolina.
(g) Any notice required or permitted by this Agreement shall be
in writing and shall be sufficient if sent by registered mail, return
receipt requested, to the last known address of the party to whom such
notice is to be given. Any notice may be waived in writing by the party
entitled to receive it.
(h) This Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties hereto and their respective
heirs, representatives, successors and permitted assigns.
20. Construction. Throughout this Agreement the singular shall include
the plural, and the plural shall include the singular, and the masculine and
neuter shall include the feminine, wherever the context so requires.
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21. Text to Control. The headings of paragraphs and sections are
included solely for convenience of reference. If any conflict between any
heading and the text of this Agreement exists, the text shall control.
22. Authority. The officer executing this agreement on behalf of the
Company has been empowered and directed to do so by the Board of Directors of
the Company.
23. Effective Date. This Agreement may be executed on the dates noted
below but shall only be effective on October 3, 1997.
FOR THE COMPANY: WHEELS SPORTS GROUP, INC.
DATED: October 3, 1997 By: /s/ Howard L. Correll
-------------------------------
FOR THE EXECUTIVE: Howard L. Correll
DATED: October 3, 1997 By: /s/ Randy C. Baker
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Randy C. Baker
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WHEELS SPORTS GROUP, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
SCHEDULE 1
DUTIES AND COMPENSATION
Executive: Randy C. Baker
Position: Chief Operating Officer
Base Salary: $200,000 per year, payable bi-weekly
Bonus: As determined by the Board of Directors and in accordance
with Company-wide bonus plan.
Term: October 3, 2000, subject to automatic one (1) year
extensions.
Options: Upon execution of this Agreement, the Executive shall be
entitled to receive options granted under the Company's
1996 Omnibus Stock Option Plan to purchase 50,000 shares
of Common Stock at an exercise price of $8.25 per share.
Duties and
Responsibilities: Management and supervision of the Company's operations.
APPROVED:
THE COMPANY: EXECUTIVE:
By: /s/ Howard L. Correll /s/ Randy C. Baker
------------------------------------ ------------------------
Howard L. Correll, Jr., Chief Executive Randy C. Baker
Officer
Date: October 3, 1997 Date: October 3, 1997
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EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT effective October 3, 1997 (the
"Agreement") by and between WHEELS SPORTS GROUP, INC. (the "Company") with
principal offices located at 1368 Salisbury Road, Mocksville, North Carolina
27028 and DAVID W. DUPREE (the "Executive").
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive in the
position described on Schedule 1 hereto as an executive officer of the Company.
The Executive accepts such employment and agrees to perform the duties and
responsibilities assigned to him pursuant to this Agreement.
2. Position and Responsibilities. The Executive shall hold the
position with the Company which is specified on Schedule 1, which is attached
hereto and incorporated herein by reference. The Executive shall exert his best
efforts and devote such time and attention to the affairs of the Company as
necessary to fulfill his responsibilities hereunder. The Executive shall
perform the duties set forth on Schedule 1 while employed as an executive
officer, and such further duties as may be determined and assigned to him from
time-to-time by the Chief Executive Officer or the Board of Directors of the
Company, and shall have full authority and responsibility with respect thereto,
subject to the general direction, approval and control of the Board of
Directors and to the restrictions, limitations and guidelines set forth by the
Board of Directors in resolutions adopted in the minutes of the Board of
Directors meetings, copies of which will be provided to the Executive from time
to time and will be incorporated herein by reference.
3. Board of Directors. The Executive shall at all times discharge
his duties in consultation with and under the supervision of the Board of
Directors of the Corporation. The Executive shall make his principal office at
the corporate headquarters of the Company in Mocksville, North Carolina, or at
such other place or places as the Executive may designate with the Company's
approval, which shall not be unreasonably withheld.
4. Term of Employment. The term of the Executive's employment under
this Agreement shall be deemed to have commenced on October 3, 1997 and shall
continue for a three-year period until October 3, 2000, subject to extension as
hereinafter provided or termination pursuant to the provisions
<PAGE> 2
set forth hereafter. Provided that Executive is in compliance with all of his
obligations hereunder, the term of Executive's employment shall be
automatically extended for an additional one-year terms upon expiration of the
initial three-year term unless either party hereto receives 90 days' prior
written notice from the other electing not to extend the Executive's
employment.
5. Compensation. Commencing on October 3, 1997, the Company shall
pay to the Executive as compensation for his services a base salary of not less
than the amount specified on Schedule 1, payable semi-monthly, or such higher
salary as may be from time to time approved by the Board of Directors. Upon the
parties' execution of this Agreement, the Executive shall be entitled to
receive options granted under the Company's 1996 Omnibus Stock Option Plan in
accordance with the terms of Schedule 1 hereto. The Executive shall receive
such additional compensation and/or bonuses or stock options as may be voted to
him at the sole discretion of the Compensation Committee of the Board of
Directors.
6. Expense Reimbursement. The Company will reimburse the Executive,
at least monthly, for all reasonable and necessary expenses incurred by him in
carrying out his duties under this Agreement. The Executive shall present to
the Treasurer each month an account of such expenses in such form as is
reasonably required by the Board of Directors. Such expenses shall include
attorneys' fees and disbursements of Executive in connection with any legal
proceedings (including, but not limited to, arbitration), whether or not
instituted by the Company or Executive, relating to the interpretation or
enforcement of any provision of this Agreement; provided, however, that in the
case of any such proceeding to which the Company and the Executive are adverse
parties, the losing party shall reimburse the prevailing party for all costs
and expenses, including attorneys' fees and disbursements, incurred by the
prevailing party in defense or prosecution of any such proceeding. Prior to
advancing costs and expenses to Executive, the Board of Directors shall have
the right to obtain an agreement, and to require acceptable security therefor,
from Executive requiring him to repay Company for the same should it be
determined that Executive is not entitled to payment of such costs and
expenses.
7. Medical and Dental Coverage. The Executive, his wife, and those
children who qualify will be entitled to participate in the Company's employee
group medical and other group insurance programs on the same basis as other
executives of the Company.
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8. Medical Examination. The Executive agrees to submit himself for
physical examination on one occasion per year as requested by the Company for
the purpose of the Company's obtaining life insurance on the life of the
Executive for the benefit of the Company; provided, however, that the Company
shall bear the entire cost of such examinations and shall pay all premiums on
any key man life insurance obtained for the benefit of the Company as
beneficiary or with respect to any other designated beneficiary.
9. Automobile or Automobile Allowance. The Company will provide the
Executive with an automobile or with an automobile allowance in the amount of
$10,000 for the duration of his employment with the Company under this
Agreement.
10. Vacation Time. The Executive shall be entitled to take four (4)
weeks paid vacation per calendar year. Such vacation may not be taken in any
greater than consecutive two (2) week increments. Vacation not used by the
Executive during the calendar year will be carried forward up to a maximum of
eight (8) weeks accrual going forward.
11. Benefits Payable on Disability. If the Executive becomes
disabled from properly performing services hereunder by reason of illness or
other physical or mental incapacity, the Company shall continue to pay the
Executive his then current salary hereunder for the first twelve (12) months of
such continuous disability commencing with the first date of such disability.
If the Executive qualifies for coverage, during the term of this
Agreement, the Company shall purchase and maintain a policy of Disability
Insurance which, after twelve (12) continuous months of disability, will pay up
to $10,000 per month of the Executive's salary until Executive reaches the age
of 65. The Company has no obligation to supplement or augment disability
payments made under any such disability policy or plan or make any other payment
in connection with such disability.
If the Company is unable to obtain a policy of Disability Insurance,
the Company shall pay up to $8,000 per month to the Executive for a twelve (12)
month period from the twelfth to the twenty-fourth month from the first date of
such disability.
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12. Obligations of Executive During and After Employment.
(a) The Executive agrees that during the terms of his employment
under this Agreement, he will engage in no other business activities
directly or indirectly, which are competitive with or which might place
him in a competing position to that of the Company, or any affiliated
company.
(b) The Executive realizes that during the course of his
employment, Executive will have produced and/or have access to
confidential business plans, information, business opportunity records,
notebooks, data, formula, specifications, trade secrets, customer lists,
account lists and secret inventions and processes of the Company and its
affiliated companies. Therefore, during or subsequent to his employment
by the Company, or by an affiliated company, the Executive agrees to
hold in confidence and not to directly or indirectly disclose or use or
copy or make lists of any such information, except to the extent
authorized by the Company in writing. All records, files, business
plans, documents, equipment and the like, or copies thereof, relating to
Company's business, or the business of an affiliated company, which
Executive shall prepare, or use, or come into contact with, shall remain
the sole property of the Company, or of an affiliated company, and shall
not be removed from the Company's or the affiliated company's premises
without its written consent, and shall be promptly returned to the
Company upon termination of employment with the Company and its
affiliated companies. The restrictions and obligations of Executive set
forth in this Section 12(b) shall not apply to (i) information that is
or becomes generally available and known to the sports trading card
industry or the fantasy game industry (other than as a result of a
disclosure directly or indirectly by Executive); or (ii) information
that was known to Executive prior to Executive's employment by the
Company or its predecessor.
(c) Because of his employment by the Company, Executive will have
access to trade secrets and confidential information about the Company,
its business plans, its business accounts, its business opportunities,
its expansion plans into other geographical areas and its methods of
doing business. Executive agrees that for a period of one (1) year after
termination or expiration of his employment (except if termination is as
a result of termination by Executive with cause under Section 16), he
will not, directly or indirectly, compete with the Company in the
business of designing, marketing and/or distributing NASCAR merchandise,
collectible NASCAR-related sports trading cards, fantasy race games and
related products within the United States.
(d) In the event a court of competent jurisdiction finds any
provision of this Section 12 to be so overbroad as to be unenforceable,
then such provision shall be reduced in scope by the court, but only to
the extent deemed necessary by the court to render the provision
reasonable and
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enforceable, it being the Executive's intention to provide the Company
with the broadest protection possible against harmful competition.
13. Termination for Cause by the Company. During the term of this
Agreement there can be no termination of the Executive by the Company except
for "Termination for Cause" as outlined below:
(a) Notwithstanding anything herein to the contrary the Company
may, without liability, terminate the Executive's employment hereunder
for cause at any time upon written notice from the Board of Directors
specifying such cause, and thereafter the Company's obligations
hereunder shall cease and terminate; provided, however, that the Company
shall pay the Executive two (2) weeks pay and that such written notice
shall not be delivered until after the Board of Directors shall have
given the Executive written notice specifying the conduct alleged to
have constituted such cause and the Executive has failed to cure such
conduct, if curable, within fifteen (15) days following receipt of such
notice.
(b) "Termination for Cause" consist of one or more of the
following:
i) A willful breach of duty by the Executive during
the course of his employment;
ii) Habitual neglect of duty by the Executive;
iii) The Executive's material failure to perform and/or
meet objective and measurable financial standards set by the
Board of Directors and agreed upon by the Executive in advance;
and
iv) Disloyal, dishonest or illegal conduct of the
Executive.
14. Termination by the Executive without Cause. The Executive, without
cause, may terminate this Agreement upon 90 days' prior written notice to the
Company. In such event, the Executive shall be required to render the services
required under this Agreement during such 90-day period unless otherwise
directed by the Board of Directors. Compensation for vacation time not taken by
Executive shall be paid to the Executive at the date of termination.
15. Termination by the Executive with Cause. The Executive may
terminate his employment with the Company at any time, upon 30-days' prior
written notice and opportunity for the Company to remedy any non-compliance, by
reason of (i) the Company's material failure to perform its duties pursuant to
this Agreement, (ii) any material diminishment in the duties and
responsibilities, working facilities, or compensation as described in
Paragraphs 2, 5 and 6 of this Agreement, or (iii) Executive's location of
employment is moved more than 100 miles from where it is on the date of this
Agreement; provided that
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such termination takes place within 90 days after receipt by Executive of
written notice of such relocation. Executive shall be entitled to all base
salary specified herein for the remaining term of this Agreement.
16. Termination upon Death of Executive. In addition to any other
provision relating to termination, this Agreement shall terminate upon the
Executive's death. In such event, the Company shall pay a severance allowance
equal to six months' salary to the Executive's estate.
17. Lump Sum Compensation. In the event of the occurrence of a
"Triggering Event" which shall be defined to include a non-negotiated (i)
change in ownership of 50% or more of the outstanding shares of the Company
subsequent to the Company's initial public offering, or (ii) merger,
consolidation, reorganization or liquidation of the Company, the Executive
shall receive lump sum compensation equal to 2.9 times his annual salary and
incentive or bonus payments, if any, as shall have been paid to the Executive
during the Company's most recent 12-month period within 30 days of the
Triggering Event. If the total amount of the change of control compensation
were to exceed three (3) times the Executive's base amount (the average annual
taxable compensation of the Executive for the five (5) years preceding the year
in which the change of control occurs), the Company and the Executive may agree
to reduce the lump sum compensation to be received by Executive in order to
avoid the imposition of the golden parachute tax as provided in the Tax Reform
Act of 1984, as amended by the Tax Reform Act of 1986.
In the event the Executive is required to hire counsel to negotiate on
his behalf in connection with his termination or resignation from the Company
upon the occurrence of a Triggering Event, or in order to enforce the
obligations of the Company as provided in this Paragraph, the Company shall
reimburse to the Executive all reasonable attorneys' fees which may be expended
by the Executive in seeking to enforce the terms hereof. Such reimbursement
shall be paid every 30 days after the Executive provides copies of invoices
from the Executive's counsel to the Company. However, such invoices may be
redacted to preserve the attorney-client privilege, client confidentiality or
work product.
18. Arbitration. Any controversy, dispute or claim arising out of, or
relating to, this Agreement and/or its interpretation shall, unless resolved by
agreement of the parties, be settled by binding arbitration in Charlotte, North
Carolina in accordance with the Rules of the American Arbitration Association
then existing. This Agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law of the State of North Carolina. The award
rendered by the arbitrators shall be final and judgment may be entered upon the
award in any court of the State of North Carolina having jurisdiction of the
matter.
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19. General Provisions.
(a) The Executive's rights and obligations under this Agreement
shall not be transferrable by assignment or otherwise, nor shall
Executive's rights be subject to encumbrance or to the claims of the
Company's creditors. Nothing in this Agreement shall prevent the
consolidation of the Company with, or its merger into, any other
corporation, or the sale by the Company of all or substantially all of
its property or assets.
(b) This Agreement constitutes the entire agreement between the
parties hereto in respect of the employment of the Executive by the
Company and supersede any and all other agreements either oral or in
writing between the parties hereto with respect to the employment of the
Executive.
(c) Executive shall have no duty to mitigate the payment due him
from Company pursuant to this Agreement and any money earned by
Executive from other sources after his employment with the Company
terminates shall not reduce the amount owed him by the Company pursuant
to this Agreement.
(d) The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part thereof are
declared invalid or unenforceable by a court of competent jurisdiction
or in an arbitration proceeding, the validity and enforceability of the
remainder of such provisions or parts thereof and the applicability
thereof shall not be affected thereby.
(e) This Agreement may not be amended or modified except by a
written instrument executed by Company and Executive.
(f) This Agreement and the rights and obligations hereunder shall
be governed by and construed in accordance with the laws of the State of
North Carolina.
(g) Any notice required or permitted by this Agreement shall be
in writing and shall be sufficient if sent by registered mail, return
receipt requested, to the last known address of the party to whom such
notice is to be given. Any notice may be waived in writing by the party
entitled to receive it.
(h) This Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties hereto and their respective
heirs, representatives, successors and permitted assigns.
20. Construction. Throughout this Agreement the singular shall
include the plural, and the plural shall include the singular, and the
masculine and neuter shall include the feminine, wherever the context so
requires.
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21. Text to Control. The headings of paragraphs and sections are
included solely for convenience of reference. If any conflict between any
heading and the text of this Agreement exists, the text shall control.
22. Authority. The officer executing this agreement on behalf of
the Company has been empowered and directed to do so by the Board of Directors
of the Company.
23. Effective Date. This Agreement may be executed on the dates
noted below but shall only be effective on October 3, 1997.
FOR THE COMPANY: WHEELS SPORTS GROUP, INC.
DATED: October 3, 1997 By: /s/ Howard L. Correll
---------------------------
Howard L. Correll
FOR THE EXECUTIVE:
DATED: October 3, 1997 By: /s/ David W. Dupree
---------------------------
David W. Dupree
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WHEELS SPORTS GROUP, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
SCHEDULE 1
DUTIES AND COMPENSATION
Executive: David W. Dupree
Position: Vice President of Marketing for the High Performance Sports
Marketing division of the Company.
Base Salary: $175,000 per year, payable bi-weekly
Bonus: As determined by the Board of Directors and in accordance
with Company-wide bonus plan.
Term: October 3, 2000, subject to automatic one (1) year
extensions.
Options: Upon execution of this Agreement, the Executive shall be
entitled to receive options granted under the Company's
1996 Omnibus Stock Option Plan to purchase 15,000 shares
of Common Stock at an exercise price of $8.25 per share.
Duties and
Responsibilities: Supervision and coordination of all marketing activities of
the High Performance Sports Marketing division of the
Company.
APPROVED:
THE COMPANY: EXECUTIVE:
By: /s/ Howard L. Correll, Jr. /s/ David W. Dupree
------------------------------ ----------------------------
Howard L. Correll, Jr., David W. Dupree
Chief Executive Officer
Date: October 3, 1997 Date: October 3, 1997
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LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease") is made and entered into as of the
1st day of March, 1997, by and between BEALE STREET REALTY, LLC hereinafter
called "Landlord"; and HIGH PERFORMANCE SPORTS MARKETING, INC. hereinafter
called "Tenant".
AGREEMENT:
In consideration of the mutual covenants and agreements contained in
this Lease, the parties agree for themselves, their successors and assigns, as
follows:
1. DESCRIPTION OF PREMISES.
Landlord leases to Tenant, and Tenant accepts and rents from Landlord,
the premises located at 149 Gasoline Alley Drive, Mooresville, Iredell County,
North Carolina (the "Premises"), which Premises are more particularly described
on Exhibit A attached hereto and incorporated by this reference.
2. TERM; RENEWAL.
The term of this Lease shall commence on March 1, 1997 (the
"Commencement Date") and shall end at midnight on February 28, 2012 (the
"Expiration Date").
3. RENTAL.
During the full term of this Lease, including any Renewal Term, Tenant
shall pay to Landlord, without notice, demand, reduction (except as may be
applicable pursuant to paragraph entitled "Damage or Destruction of Premises"
or the paragraph entitled "Eminent Domain" of this Lease), setoff or any
defense, a total rental (the "Rent"), in advance, on the first day of each
month, of Sixteen Thousand One Hundred Sixtynine and 14/100 Dollars
($16,169.14) per month, subject to annual escalation as provided in clause (c)
below.
(a) Late Payment.
If any monthly installment of Rent or any other sum due and payable
pursuant to this Lease remains due and unpaid fifteen (15) days after said
amount becomes due, Tenant shall pay as additional rent hereunder a late
payment charge equal to the greater of (i) fifty and No/100 Dollars ($50.00) or
(ii) a sum equal to five percent (5%) of the unpaid rent or other payment. All
unpaid rent and other sums of whatever nature owed by Tenant to Landlord under
this Lease shall bear interest from the fifteenth (15th) day after the due date
until paid, at the lesser of twelve percent (12%) per annum or the maximum
interest rate per annum allowed by law. Acceptance by Landlord of any payment
from Tenant under this Lease in an amount less than that which is currently due
shall in no way affect Landlord's rights under this Lease and shall in no way
constitute an accord and satisfaction.
(b) Documentary Tax.
In the event that any documentary stamp tax, sales tax or any other
tax or similar charge (exclusive of any income tax payable by Landlord) levied
on the rental, leasing or letting of the
<PAGE> 2
Premises, whether local, state or federal, is required to be paid due to the
execution of this Lease or otherwise with respect to this Lease or the payments
due under this Lease, the cost shall be borne by Tenant and shall be paid
promptly and prior to same becoming past due. Tenant shall provide Landlord
with copies of all paid receipts such tax or charge promptly after payment of
same.
(c) Annual Escalation of Rent.
The amount of the monthly Rent shall be increased annually during the
term of this Lease on March 1, 1998 and on each March 1 thereafter, for the
one-year period beginning on such March 1, if the CPI (as defined in this
Lease) for the month of January next preceding such March 1 shall be greater
than the CPI for the month of January in the previous year. Such increased Rent
shall be an amount equal to the monthly Rent in effect immediately prior to
such March 1 multiplied by a fraction, the numerator of which is the CPI for
the month of January next preceding such March 1 and the denominator of which
is the CPI for the month of January in the previous year. "Consumer Price
Index" means the monthly Consumer Price Index, All Urban Consumers, All Items,
U.S. City Average (1982-84=100), published by the U.S. Bureau of Labor
Statistics and generally referred to as the "CPI-U," or, if such index is no
longer published, the most nearly comparable index published by Federal
authorities which reflects changes in the cost of living. If information
necessary to compute the change in the CPI is not available on any March 1, the
previous monthly Rent shall continue until such information becomes available,
at which time appropriate retroactive adjustment shall be made to reflect the
increased monthly Rent from such March 1.
4. DELIVERY OF POSSESSION.
Landlord will deliver the Premises to Tenant on the Commencement Date.
5. ALTERATIONS AND IMPROVEMENTS BY TENANT.
Tenant shall make no structural changes respecting the Premises and
shall make no changes of any kind respecting the Premises that are visible from
the exterior of the Premises. Any other nonstructural changes or other
alterations, additions, or improvements to the Premises shall be made by or on
behalf of Tenant only with the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed. All alterations, additions or
improvements, including without limitation all partitions, walls, railings,
carpeting, floor and wall covering and other fixtures (excluding, however,
Tenant's trade fixtures as described in the paragraph entitled "Trade Fixtures
and Equipment" below) made by, for, or at the direction of Tenant shall, when
made, become the property of Landlord, at Landlord's sole election, and shall,
at Landlord's sole election, remain upon the Premises at the expiration or
earlier termination of this Lease.
6. USE OF PREMISES.
(a) Tenant shall use the Premises only for office and warehouse
purposes and for no other purposes. Tenant shall comply with all laws,
ordinances, orders, regulations or zoning classifications of any lawful
governmental authority, agency or other public or private regulatory authority
(including insurance underwriters or rating bureaus) having jurisdiction over
the Premises. Tenant shall not do any act or follow any practice relating to
the Premises which shall constitute a nuisance or detract in any way from the
reputation of the Premises. Tenant's duties in this regard
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shall include allowing no noxious or offensive odors, fumes, gases, smoke,
dust, steam or vapors, or any loud or disturbing noise or vibrations to
originate in or emit from the Premises.
(b) Without limiting the generality of (a) above, the Premises shall
not be used for the treatment, storage, transportation to from, use or disposal
of toxic or hazardous wastes, materials, or substances, or any other substance
that is prohibited, limited or regulated by any governmental or
quasi-governmental authority or that, even if not so regulated, could or does
pose a hazard to the health and safety of the occupants of the Premises or
surrounding property.
(c) Tenant shall exercise due care in its use and occupancy of the
Premises and shall not commit or allow waste to be committed on any portion of
the Premises; and at the expiration or earlier termination of this Lease,
Tenant shall deliver the Premises to Landlord in as good condition as existed
on the date they were received by Tenant, ordinary wear and tear and acts of
God alone excepted.
(d) Tenant shall save Landlord harmless from any claim, liabilities,
penalties, fines, costs, expenses or damages resulting from the failure of
Tenant to comply with the provisions of this paragraph 6. This indemnification
shall survive the termination or expiration of this Lease.
7. TAXES.
Tenant shall pay any taxes, documentary stamps or assessments of any
nature imposed or assessed upon this Lease, Tenant's occupancy of the Premises
or Tenant's trade fixtures, equipment, machinery, inventory, merchandise or
other personal property located on the Premises and owned by or in the custody
of Tenant as promptly as all such taxes or assessments may become due and
payable without any delinquency, and shall pay all ad valorem property taxes
which are now or hereafter assessed upon the Premises during the term of this
Lease.
8. FIRE AND EXTENDED COVERAGE INSURANCE.
Tenant shall maintain and pay for fire insurance, with extended
coverage, covering the Premises in an amount equal to the replacement cost.
Landlord shall be named as the insured owner in such policy. Tenant shall
deliver such policy to Landlord prior to Commencement Date. Such policy shall
contain a provision that at least thirty (30) days' prior written notice of any
cancellation be give to Landlord; shall provide that all payments for losses
under such policy be made to Landlord; and shall provide that no act or
omission of Tenant shall be a basis for denial of Landlord's coverage under the
policy. Tenant shall not do or cause to be done or permit on the Premises
anything deemed extrahazardous on account of fire, and Tenant shall not use the
Premises in any manner which will cause an increase in the premium rate for any
insurance in effect on the Premises or a part of the Premises. If, because of
anything done, caused to be done, permitted or omitted by Tenant or its agents,
contractors, employees, invitees, licensees, servants, subcontractors or
subtenants, the premium rate for any kind of insurance in effect on the
Premises or any part of the Premises shall be raised, Tenant shall pay the
amount of any such increase in premium. Tenant shall maintain and pay for all
fire and extended coverage insurance on its contents in the Premises, including
trade fixtures, equipment, machinery, merchandise or other personal property
belonging to or in the custody of Tenant.
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9. LANDLORD'S COVENANT TO REPAIR AND REPLACE.
(a) During the term of this Lease, Landlord shall be responsible only
for repairs or replacements to the roof, exterior walls, and structural members
(including foundation and subflooring of the Premises). Landlord's repairs and
replacements shall be made within a reasonable time, not to exceed one hundred
twenty (120) days after receiving written notice from Tenant of the need for
repairs. If Landlord cannot, using due diligence, complete its repairs within
one hundred twenty (120) days after receiving written notice from Tenant, then
(unless the need for such repairs or replacements is the result of the
negligence, misconduct or intentional acts or omissions of Tenant, its agents,
contractors, employees invitees, licensees, servants, subcontractors, or
subtenants, in which event Tenant shall not be entitled to terminate this
Lease) either party may terminate this Lease effective upon thirty (30) days'
prior written notice, without prejudice to Landlord's rights or receive payment
from Tenant for uninsured damages caused directly or indirectly by Tenant as
stated below. If the need for such repairs or replacements is the result of the
negligence, misconduct or intentional acts or omissions of Tenant, its agents,
contractors, employees, invitees, licensees, servants, subcontractors, or
subtenants, and the expense of such repairs or replacements are not fully
covered. Landlord's duty to repair or replace as prescribed in this paragraph
shall be Tenant's sole remedy and shall be in lieu of all other warranties or
guaranties of Landlord, express or implied.
(b) Landlord shall not be liable for any failure to make any repairs
or to perform any maintenance required of Landlord under this Lease unless such
failure shall persist for an unreasonable period of time after written notice
from Tenant setting forth the need for such repairs or replacements in
reasonable detail has been received by Landlord. Except as set forth in the
paragraph of this Lease entitled "Damage or Destruction of Premises", there
shall be no abatement of rent. There shall be no liability of Landlord by
reason of any injury to or interference with Tenant's business arising from the
making of any repairs, replacements, alterations or improvements to any portion
of the Premises, or to fixtures, appurtenances and equipment. To the extent
permitted under applicable law, Tenant waives the right to make repairs at
Landlord's expense under any law, statute or ordinance now or hereafter in
effect.
10. TENANT'S COVENANT TO REPAIR.
Tenant shall be responsible for the repair, replacement and
maintenance in good order and condition of all parts and components of the
Premises, other than those specified for repair, replacement and maintenance by
Landlord above, including, without limitation, the plumbing, wiring, electrical
systems, heating systems, air conditioning systems, glass and plate glass,
equipment and machinery constituting fixtures, unless such repairs or
replacements are required as a result of the negligence, misconduct or
intentional acts or omissions of Landlord, its agents, contractors, employees,
invitees, or subcontractors, in which event Landlord shall be responsible for
such repairs. At the end of the term of this Lease, Tenant shall return the
Premises to Landlord in as good condition as they were when received, excepting
only normal wear and tear, acts of God and repairs required to be made by
Landlord under this Lease. Tenant's duty to maintain the heating and air
conditioning systems shall specifically include the duty to perform the routine
and periodic maintenance and regular inspection of such heating and air
conditioning systems, the replacement of filters as recommended and the
performance of other recommended periodic servicing in accordance with
applicable manufacturer's standards and recommendations.
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11. TRADE FIXTURES AND EQUIPMENT.
So long as Tenant is not in default under this Lease, any trade
fixtures installed in the Premises at Tenant's expense shall remain Tenant's
personal property and Tenant shall have the right at any time during the term
of this Lease to remove such trade fixtures. Upon removal of any trade
fixtures, Tenant shall immediately restore the Premises to substantially the
same condition as they were when received by Tenant, ordinary wear and tear and
acts of God alone excepted. Any trade fixtures not removed by Tenant at the
expiration or an earlier termination of the Lease shall become, at Landlord's
sole election, either (i) the property of Landlord, in which event Landlord
shall be entitled to handle and dispose of same in any manner Landlord deems
fit without any liability or obligation to Tenant or any other third party with
respect thereto, or (ii) subject to Landlord's removing such property from the
Premises and storing same, all at Tenant's expense and without any recourse
against Landlord with respect thereto. Without limiting the generality of the
foregoing, the following property shall in no event be deemed to be "trade
fixtures" and Tenant shall not remove any such property from the Premises under
any circumstances, regardless of whether installed by Landlord or Tenant: (a)
any air conditioning, air ventilating or heating fixtures or equipment; (b) any
lighting fixtures or equipment; (c) any carpeting or other permanent floor
coverings; (d) any paneling or other wall coverings; (e) plumbing fixtures and
equipment; or (f) permanent shelving.
12. UTILITIES.
Tenant shall pay for all utilities or services related to its use of
the Premises including without limitation electricity, gas, heat, water, sewer,
telephone and janitorial services.
13. DAMAGE OR DESTRUCTION OF PREMISES.
If the Premises are damages by fire or other casualty, but are
rendered untenantable for Tenant's business, either in whole or in part, Tenant
shall cause such damage to be repaired without unreasonable delay and the Rent
shall not be abated. If by reason of such casualty the Premises are rendered
untenantable for Tenant's business, either in whole or in part, Tenant shall
cause the damage to be repaired or replaced without unreasonable delay, and, in
the interim, the Rent shall be proportionately reduced as to such portion of
the Premises as is rendered untenantable. Any such abatement of rent shall not,
however, create an extension of the term of this Lease. Provided, however, if
by reason of such casualty, the Premises are rendered untenantable in some
material portion, and the amount of time required to repair the damage using
due diligence is in excess of one hundred eighty (180) days, then either party
shall have the right to terminate this Lease by giving written notice of
termination within sixty (60) days after the date of casualty, and the Rent
shall abate as of the date of such casualty in proportion to the part of the
Premises rendered untenantable. Tenant shall give Landlord immediate notice of
any fire or other casualty in the Premises.
14. GOVERNMENTAL ORDERS.
Tenant agrees, at its own expense, to comply promptly with all
requirements of any legally constituted public authority that may be in effect
from time to time made necessary by reason of Tenant's use or occupancy of the
Premises.
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15. MUTUAL WAIVER OF SUBROGATION.
For the purpose of waiver of subrogation, the parties mutually release
and waive unto the other all rights to claim damages, costs or expenses for any
injury to persons (including death) or property caused by a casualty of any
type whatsoever in, on or about the Premises if the amount of such damage, cost
or expense has been paid to such damaged party under the terms of any policy of
insurance. All insurance policies carried with respect to this Lease, if
permitted under applicable law, shall contain a provision whereby the insurer
waives, prior to loss, all rights of subrogation against either Landlord or
Tenant.
16. SIGNS AND ADVERTISING.
Tenant may, at Tenant's sole cost and expense, install identification
signs on the Premises, subject to Landlord's approval as to size, location,
illumination, configuration, and materials of construction, such approval not
to be unreasonably withheld.
17. INDEMNIFICATION AND LIABILITY INSURANCE.
(a) Tenant shall indemnify and save Landlord harmless against any and
all claims, suits, demands, actions, fines, damages, and liabilities, and all
costs and expenses (including, without limitation, reasonable attorneys' fees)
arising out of injury to persons (including death) or property occurring in, on
or about, or arising out of the Premises if caused or occasioned wholly or in
part by any acts or omissions of Tenant, its agents, contractors, employees,
invitees, licensees, servants, subcontractors or subtenants, except if caused
by any acts or omissions on the part of Landlord. The non-prevailing party
shall also pay all costs, expenses and reasonable attorneys' fees that may be
incurred by the prevailing party in enforcing the agreements of this Lease,
whether incurred as a result of litigation or otherwise. Tenant shall give
Landlord immediate notice of any such happening causing injury to persons or
property.
(b) At all times during the term of this Lease, Tenant shall at its
own expense keep in force adequate public liability insurance in such amounts
(at a minimum) and with such companies as shall from time to time be acceptable
to Landlord (and to any lender having a mortgage interest in the Premises) and
naming Landlord as an additional insured. The amounts of such coverage, until
changed at Landlord's reasonable request, shall be not less than $500,000.00
with respect to bodily injury or death of one person, $1,000,000.00 with
respect to bodily injury or death of more than one person as a result of any
one accident and $100,000.00 with respect to damage to property. Tenant shall
first furnish to Landlord copies of policies or certificates of insurance
evidencing the required coverage prior to the Commencement Date and thereafter
prior to each policy renewal date. All policies required of Tenant under this
Lease shall contain a provision whereby the insurer is not allowed to cancel or
change materially the coverage without first giving thirty (30) days' written
notice to Landlord and shall contain specific coverage for contractual
liability.
18. LANDLORD'S RIGHT OF ENTRY.
Landlord, and those persons authorized by it, shall have the right to
enter the Premises at all reasonable times and upon reasonable notice for the
purposes of making repairs, making connections, installing utilities, providing
services to the Premises or for any other tenant, making inspections or showing
the same to prospective purchasers and/or lenders, as well as at any time in
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the event of emergency involving possible injury to property or persons in or
around the Premises. Further, during the last six (6) months of the initial or
of any extended term, Landlord and those persons authorized by it shall have
the right at reasonable times and upon reasonable notice to show the Premises
to prospective tenants.
19. EMINENT DOMAIN.
If any substantial portion of the Premises is taken under the power of
eminent domain (including any conveyance made in lieu thereof) or if such
taking shall materially impair the normal operation of Tenant's business, then
either party shall have the right to terminate this Lease by giving written
notice of such termination within thirty (30) days after such taking. If
neither party elects to terminate this Lease, Landlord shall repair and restore
the Premises to the best possible tenantable condition, and the Rent shall be
proportionately and equitably reduced. All compensation awarded for any taking
(or the proceeds of a private sale in lieu thereof) shall be the property of
Landlord whether such award is for compensation for damages to the Landlord's
or Tenant's interest in the Premises, and Tenant assigns all of its interest in
any such award to Landlord; provided, however, Landlord shall not have any
interest in any separate award made to Tenant for loss of business, moving
expense or the taking of Tenant's trade fixtures or equipment if a separate
award for such items is made to Tenant and if such separate award does not
reduce the award to Landlord.
20. EVENTS OF DEFAULT AND REMEDIES.
(a) Upon the occurrence of any one or more of the following events
(the "Events of Default," any one an "Event of Default"), the party not in
default shall have the right to exercise any rights or remedies available in
this Lease, at law or in equity. Events of Default shall be:
(i) Tenant's failure to pay when due any rental or other sum
of money payable under this Lease and such failure is not cured within
ten (10) days after written notice of such failure; provided, however,
that Landlord shall not be required to give notice more than twice
during any twelve month period;
(ii) Failure by either party to perform any other of the
terms, covenants or conditions contained in this Lease if not remedied
within thirty (30) days after receipt of written notice of such
failure; or if such default cannot be remedied within such period,
such party does not within thirty (30) days after written notice of
such failure commence such act or acts as shall be necessary to remedy
the default and shall not thereafter complete such act or acts within
a reasonable time;
(iii) Tenant shall become bankrupt or insolvent, or file any
debtor proceedings, or file pursuant to any statute a petition in
bankruptcy or insolvency or for reorganization, or file a petition for
the appointment of a receiver or trustee for all or substantially all
of Tenant's assets and such petition or appointment shall not have
been set aside within sixty (60) days from the date of such petition
or appointment, or if Tenant makes an assignment for the benefit of
creditors, or petitions for or enters into an arrangement; or
(iv) Tenant vacates, abandons or fails to operate in the
Premises or any substantial part of the Premises or allows its
leasehold estate to be taken under any writ of execution and such writ
is not vacated or set aside within thirty (30) days.
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(b) In addition to its other remedies, Landlord, upon an Event of
Default by Tenant, shall have the immediate right, after any applicable grace
period expressed in this Lease, to terminate and cancel this Lease and/or to
reenter and remove all persons and properties from the Premises and dispose of
such property as it deems fit, all without being guilty of trespass or being
liable for any damages caused. If Landlord reenters the Premises, it may either
terminate this Lease or, from time to time without terminating this Lease, make
such alterations and repairs as may be necessary or appropriate to relet the
Premises and relet the Premises upon such terms and conditions as Landlord
deems advisable without any responsibility on Landlord whatsoever to account to
Tenant for any surplus rents collected. No retaking of possession of the
Premises by Landlord shall be deemed as an election to terminate this Lease
unless a written notice of such intention is given by Landlord to Tenant at the
time of reentry; but, notwithstanding any such reentry or reletting without
termination, Landlord may at any time thereafter elect to terminate for such
previous default. In the event of an elected termination by Landlord, whether
before or after reentry, Landlord may recover from Tenant damages, including
the costs of recovering the Premises, and Tenant shall remain liable to
Landlord for the total Rent (which may at Landlord's election be accelerated to
be due and payable in full as of the Event of Default and recoverable as
damages in a lump sum) as would have been payable by Tenant under this Lease
for the remainder of the term less the rentals actually received from any
reletting or, at Landlord's election, less the reasonable rental value of the
Premises for the remainder of the term. If any rent owing under this Lease is
collected by or through an attorney, Tenant agrees to pay Landlord's reasonable
attorneys' fees to the extent allowed by applicable law.
21. SUBORDINATION.
This Lease is subject and subordinate to any and all mortgages or
deeds of trust now or hereafter placed on the property of which the Premises
are a part, and this clause shall be self-operative without any further
instrument necessary to effect such subordination; however, if requested by
Landlord, Tenant shall promptly execute and deliver to Landlord any such
certificate(s) as Landlord may reasonably request evidencing subordination of
this Lease to or the assignment of this Lease as additional security for such
mortgages or deeds of trust. Provided, however, in each case the holder of the
mortgage or deed of trust shall agree that this Lease shall not be divested by
foreclosure or other default proceedings so long as Tenant shall not be in
default under the terms of this Lease beyond any applicable cure period set
forth in this Lease. Tenant shall continue its obligations under this Lease in
full force and effect notwithstanding any such default proceedings under a
mortgage or deed of trust and shall attorn to the mortgagee, trustee or
beneficiary of such mortgage or deed of trust, and their successors or assigns,
and to the transferee under any foreclosure or default proceedings. Tenant
will, upon request by Landlord, execute and deliver to Landlord or to any other
person designated by Landlord, any instrument or instruments required to give
effect to the provisions of this paragraph.
22. ASSIGNING AND SUBLETTING.
Tenant shall not assign, sublet, mortgage, pledge or encumber this
Lease, the Premises, or any interest in the whole or in any portion, directly
or indirectly, without the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed. If Tenant makes any such
assignment, sublease, mortgage, pledge or encumbrance with Landlord's written
consent, Tenant will still remain primarily liable for the performance of all
terms of this Lease. Landlord's consent to one assignment or sublease will not
waive the requirement of its consent to any subsequent assignment or sublease
as required in this Lease.
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23. TRANSFER OF LANDLORD'S INTEREST.
If Landlord shall sell, assign or transfer all or any part of its
interest in the Premises or in this Lease to a successor-in-interest which
expressly assumes the obligations of Landlord under this Lease, then Landlord
shall be released or discharged from all covenants and obligations under this
Lease, and Tenant shall look solely to such successor-in-interest for
performance of all of Landlord's obligations. Tenant's obligations under this
Lease shall in no manner be affected by Landlord's sale, assignment, or
transfer of all or any part of such interests of Landlord, and Tenant shall
thereafter attorn and look solely to such successor-in-interest as the Landlord
under this Lease.
24. COVENANT OF QUIET ENJOYMENT.
Landlord represents that it has full right and authority to lease the
Premises, and Tenant shall peacefully and quietly hold and enjoy the Premises
for the full term of this Lease so long as Tenant does not default in the
performance of any of the terms of this Lease.
25. ESTOPPEL CERTIFICATES.
Within ten (10) days after a request by Landlord, Tenant shall deliver
a written estoppel certificate, in form supplied by or acceptable to Landlord,
certifying any facts that are then true with respect to this Lease, including
without limitation that this Lease is in full force and effect, that no default
exists on the part of Landlord or Tenant, that Tenant is in possession, that
Tenant has commenced the payment of rent, and that Tenant claims no defenses or
offsets with respect to payment of rentals under this Lease. Likewise, within
ten (10) days after a request by Tenant, Landlord shall deliver to Tenant a
similar estoppel certificate covering such matters as are reasonably required
by Tenant.
26. PROTECTION AGAINST LIENS.
Tenant shall do all things necessary to prevent the filing of any
mechanics', materialmen's or other types of liens whatsoever, against all or
any part of the Premises by reason of any claims made by, against, through or
under Tenant. If any such lien is filed against the Premises, Tenant shall
either cause the same to be discharged of record within twenty (20) days after
filing or, if Tenant in its discretion and in good faith determines that such
lien should be contested, it shall furnish such security as may be necessary to
prevent any foreclosure proceedings against the Premises during the pendency of
such contest. If Tenant shall fail to discharge such lien within said time
period or fail to furnish such security, then Landlord may at its election, in
addition to any other right or remedy available to it, discharge the lien by
paying the amount claimed to be due or by procuring the discharge by giving
security or in such other manner as may be allowed by law. If Landlord acts to
discharge or secure the lien, then Tenant shall immediately reimburse Landlord
for all sums paid and all costs and expenses (including reasonable attorneys'
fees) incurred by Landlord involving such lien, together with interest on the
total expenses and costs at the maximum lawful rate.
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27. MEMORANDUM OF LEASE.
If requested by Tenant, Landlord shall execute a recordable Memorandum
or Short Form Lease, prepared at Tenant's expense, specifying the exact term of
this Lease and such other terms as the parties shall mutually determine.
28. FORCE MAJEURE.
In the event Landlord or Tenant shall be delayed, hindered or
prevented from the performance of any act required under this Lease, by reason
of governmental restrictions, scarcity of labor or materials, strikes, fire, or
any other reasons beyond its reasonable control, the performance of such act
shall be excused for the period of delay, and the period for performance of any
such act shall be extended as necessary to complete performance after the delay
period. However, the provisions of this paragraph shall in no way be applicable
to Tenant's obligations to pay Rent or any other sums, monies, costs, charges
or expenses required by this Lease.
29. REMEDIES CUMULATIVE -- NONWAIVER.
Unless otherwise specified in this Lease, no remedy of Landlord or
Tenant shall be considered exclusive of any other remedy, but each shall be
distinct, separate and cumulative with other available remedies. Each remedy
available under this Lease or at law or in equity may be exercised by Landlord
or Tenant from time to time as often as the need may arise. No course of
dealing between Landlord and Tenant or any delay or omission of Landlord or
Tenant in exercising any right arising from the other party's default shall
impair such right or be construed to be a waiver of a default.
30. HOLDING OVER.
If Tenant remains in possession of the Premises or any part after the
expiration of the term of this Lease, whether with or without Landlord's
acquiescence, Tenant shall be deemed only a tenant at will and there shall be
no renewal of this Lease without a written agreement signed by both parties
specifying such renewal. The "monthly" rental payable by Tenant during any such
tenancy at will period shall be one hundred fifty percent (150%) of the monthly
installments of Rent payable during the final year immediately preceding such
expiration. Tenant shall also remain liable for any and all damages, direct and
consequential, suffered by Landlord as a result of any holdover without
Landlord's unequivocal written acquiescence.
31. NOTICES.
Any notice allowed or required by this Lease shall be deemed to have
been sufficiently served if the same shall be in writing and placed in the
United States mail, via certified mail or registered mail, return receipt
requested, with proper postage prepaid and addressed as follows:
AS TO LANDLORD: Beale Street Realty, LLC
5015 A W. Wt Harris Blvd.
Charlotte, NC 28269
Attention: Joey Tillman
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AS TO TENANT: High Performance Sports Marketing,
Inc. 149 Gasoline Alley Rd.
Mooresville, NC 28115
Attention: Randy Baker
The addresses of Landlord and Tenant and the party, if any, to whose
attention a notice or copy of same shall be directed may be changed or added
from time to time by either party giving notice to the other in the prescribed
manner.
32. LEASING COMMISSION.
Landlord and Tenant represent and warrant each to the other that they
have not dealt with any broker(s) or any other person claiming any entitlement
to any commission in connection with this transaction. Landlord and Tenant
agree to indemnify and save each other harmless from and against any and all
claims, suits, liabilities, costs, judgments and expenses, including reasonable
attorneys, fees, for any leasing commissions or other commissions, fees,
charges or payments resulting from or arising out of their respective actions
in connections with this Lease.
33. MISCELLANEOUS.
(a) Limitation of Landlord's Liability.
If Landlord shall fail to perform any covenant, term or condition of
this Lease upon Landlord's part to be performed, and, as a consequence of such
default, Tenant shall recover a money judgment against Landlord, such judgment
shall be satisfied solely out of the proceeds of sale received upon execution
of such judgment levied thereon against the right, title and interest of
Landlord in the Premises as the same may then be encumbered; and neither
Landlord nor, if Landlord be a partnership, any of the partners comprising
Landlord shall have any personal liability for any deficiency. It is understood
and agreed that in no event shall Tenant or any person claiming by or through
Tenant have the right to levy execution against any property of Landlord other
than its interest in the Premises as hereinbefore expressly provided.
(b) Nature and Extent of Agreement.
This Lease, together with all exhibits hereto, contains the complete
agreement of the parties concerning the subject matter, and there are no oral
or written understandings, representations, or agreements pertaining thereto
which have not been incorporated herein. This Lease creates only the
relationship of landlord and tenant between the parties, and nothing herein
shall impose upon either party any powers, obligations or restrictions not
expressed herein. This Lease shall be construed and governed by the laws of the
state in which the Premises are located. Whenever the singular or plural
number, or the masculine, feminine or neuter gender is used in this lease, it
shall equally include the other.
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(c) Binding Effect.
This Lease shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, successors and assigns. No amendment
or modification to this Lease shall be binding upon Landlord unless same is in
writing.
(d) Captions and Headings.
The captions and headings in this Lease are for convenience and
reference only, and they shall in no way be held to explain, modify, or
construe the meaning of the terms of this Lease.
34. SEVERABILITY.
If any term or provision of this Lease or the application thereof to
any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected, and each term and provision of this Lease
shall be valid and enforced to the fullest extent permitted by law
notwithstanding the invalidity of any other term or provision of this Lease.
IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed under seal pursuant to authority duly given as of the day and year
first above written.
"LANDLORD"
BEALE STREET REALTY, LLC
By: /s/ Randy C. Baker
--------------------------------------
Title: Manager
"TENANT"
HIGH PERFORMANCE SPORTS MARKETING, INC.
By: /s / Randy C. Baker
--------------------------------------
Title: Randy C. Baker, President
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EXHIBIT "A"
LEGAL DESCRIPTION OF PREMISES
BEING all of Lots 2 and 3 of Lakeside Park (Phase IV) as shown on plot
recorded in Map Book 26 at page 106 of the Iredell County, North Carolina
Public Registry.
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PROMISSORY NOTE
$850,000 CHARLOTTE, NORTH CAROLINA
OCTOBER 24, 1997
FOR VALUE RECEIVED, Wheels Sports Group, Inc., a North Carolina
corporation with executive offices at 1368 Salisbury Road, Mocksville, North
Carolina 27028 (the "Maker"), promises to pay to the order of Randy C. Baker at
149 Gasoline Alley Drive, Mooresville, North Carolina (the "Payee"), or at such
other place as the Payee may designate from time to time by notice in writing
to the Maker, the sum of EIGHT HUNDRED FIFTY THOUSAND DOLLARS ($850,000)
together with all accrued interest thereon based on a 365 day year from the
date hereof in lawful money of the United States of America in accordance with
the following terms and conditions:
1. Payment Terms. The unpaid principal balance and all accrued but
unpaid interest thereon shall be paid on the earlier of October 24, 1998 (one
year from the date hereof), or five business days from the closing date of the
Maker's proposed secondary offering. Interest shall accrue on the unpaid
principal balance at the rate of 10% per annum.
2. Prepayments. This Note may be prepaid in whole or in part, at any
time, without premium or penalty, provided that accrued interest on the amount
of the prepayment shall be paid to the date of prepayment.
3. Default Interest. Upon an Event of Default, as defined below, the
unpaid principal balance shall bear interest at the rate of 16%. Upon the cure
of the Event of Default, the rate of interest shall revert to 10% per annum.
4. No Security. This Note is an unsecured obligation of the Maker.
5. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" under this Note:
(a) Failure of the Maker to make any required payment under
this Note when due;
(b) If the Maker (i) commences any proceeding or other action
in bankruptcy or seeking reorganization or liquidation of its
business or a substantial portion of its business under the
Bankruptcy Code of the United States or any similar law of any other
jurisdiction, (ii) applies for a receiver, trustee, custodian,
liquidator or similar official for all or a substantial part of its
assets or makes an assignment for the benefit of creditors, or (iii)
admits in writing its inability to pay its debts as they mature;
<PAGE> 2
(c) If (i) a proceeding or action is commenced against the Maker in
bankruptcy or seeking reorganization or liquidation under the Bankruptcy
Code of the United States or any similar law of any other jurisdiction,
(ii) a receiver, trustee, custodian, liquidator or similar official is
appointed for all or a substantial part of its assets, or (iii) a warrant
of attachment, execution or similar process against substantially all the
assets of the Maker is issued, and any of such events set forth in this
subsection (c) continues undismissed, unbonded or undischarged for sixty
(60) days after written notice of default from Payee; or
(d) If the Maker shall default in the performance of its obligations
under the Pledge Agreement, and such default is not cured after notice of
such default within any applicable cure period; or
(e) the merger, consolidation, dissolution or reorganization of the
Maker.
6. Setoff. Payee agrees that Maker shall have a right to setoff any
claim for indemnification (a "Claim") which Maker may be entitled to collect
against Payee under Article IX of the Agreement and Plan of Reorganization
dated as of October 3, 1997 by and between Maker and High Performance Sports
Marketing, Inc. (the "Agreement") against principal payments required under
this Note; provided, however that any setoff for a Claim shall be
proportionally applied to the Note and that certain Promissory Note dated
October 24, 1997 made by Maker and payable to the order of David W. Dupree in
the original principal amount of $150,000 (the "Dupree Note") based on the
respective principal amounts of this Note and the Dupree Note. The Maker's
right to setoff may be exercised at such time as the Payee's liability under a
Claim is determined in accordance with the terms and conditions of Article IX
of the Agreement. Upon the assertion of a Claim, and until the determination of
the Payee's liability under the Claim, the Maker shall have the right to defer
the payment of principal hereunder in an amount (the "Deferral Amount") which
is equal to the Claim amount; all accrued interest on the Deferral Amount shall
also be deferred on the same terms and conditions. Upon the determination of
Payee's liability under the Claim:
(a) That portion of the Deferral Amount which is equal to Payee's
liability under the Claim shall immediately be subject to Maker's right of
setoff, and such amount shall be deemed not to have accrued interest from
the date of the Claim; and
(b) That portion of the Deferral Amount which is not setoff pursuant
to the preceding paragraph shall be deemed to have accrued interest at the
rate of 10% per annum from the date the Claim was asserted. That portion of
the Deferral Amount which is not setoff, together with accrued interest
thereon, shall be paid on the maturity date in
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accordance with the terms of this Note as though no deferral had occurred;
provided, however, that if the determination of Payee's liability under
the Claim occurs after the maturity date, then that portion of the
Deferral Amount which is not setoff, together with accrued interest
thereon, shall be paid within five days after the date of such
determination.
7. Usury. Notwithstanding anything to the contrary contained herein or
in any instrument now or hereafter securing this Note, the total liability for
payments in the nature of interest shall not exceed the limits imposed by the
usury laws of the State of North Carolina. If the Payee receives as interest an
amount which would exceed such limits, such amount which would be excessive
interest shall be applied to the reduction of the unpaid principal balance and
not to the payment of interest; and if a surplus remains after full payment of
principal and lawful interest, such surplus shall be remitted to Maker by the
Payee, and Maker hereby agrees to accept such remittance.
8. Miscellaneous.
(a) If the Payee is required to institute any action or arbitration to
enforce collection and payment of this Note, there shall become due and
payable from the Maker, in addition to the unpaid principal balance and
accrued interest, all costs and expenses of such action or arbitration
including all costs of levy or execution or appellate proceedings or
review, or both, and including reasonable counsel and litigation fees, and
the Payee shall be entitled to recover all such additional amounts from the
Maker.
(b) No delay or failure on the part of the Payee of this Note to
exercise any power or right hereunder, shall operate as a waiver thereof,
and no right or remedy of the Payee of this Note shall be deemed abridged
or modified by any course of conduct.
(c) This Note shall be governed by and construed in accordance with
the laws of the State of North Carolina applicable to agreements made and
to be performed in North Carolina without giving effect to applicable
conflicts of law principles.
(d) This Note may be modified or amended only by a writing signed by
the Maker and the Payee.
(e) By executing this Note the individual signing below represents and
warrants that he has the power and authority to act for and bind the Maker
and that the Maker has duly authorized the execution and delivery of this
Note, and such individual agrees that the Payee is entitled to rely upon
such representation and warranty.
(f) The Payee, without prejudice to any other rights, is authorized to
proceed against the Maker to enforce its rights under this Note, and shall
not be required to have
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recourse to any security given for payment of this Note. The powers and
remedies of the Payee under this Note shall not be exclusive of any other
powers, rights or remedies available to the Payee.
(g) Any and all notices or other communications required or permitted
under this Note shall be in writing and shall be deemed given upon (1) personal
delivery, (2) upon the next business day if sent by overnight courier service,
or (3) upon the third business day next following the mailing of such notice by
certified or registered mail, return receipt requested, to the respective
addresses of the Maker and the Payee set forth above or to such other address
as the Maker or the Payee may specify by written notice given as aforesaid.
(h) The Maker hereby waives presentment for payment, demand, protest,
notice of non-payment or dishonor, and of protest, and any and all other
notices and demands whatsoever and agrees to remain bound hereunder until the
principal and interest hereunder are paid in full notwithstanding any release,
waiver, surrender, substitution, compromise, modification of or to or
indulgence granted with respect to this Note or any security for this Note.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first written
above.
WHEELS SPORTS GROUP, INC.
By: /s/ Howard L. Correll
-----------------------------------
Howard L. Correll, President
4
<PAGE> 1
PROMISSORY NOTE
$150,000 CHARLOTTE, NORTH CAROLINA
OCTOBER 24, 1997
FOR VALUE RECEIVED, Wheels Sports Group, Inc., a North Carolina
corporation with executive offices at 1368 Salisbury Road, Mocksville, North
Carolina 27028 (the "Maker"), promises to pay to the order of David W. Dupree
at 149 Gasoline Alley Drive, Mooresville, North Carolina (the "Payee"), or at
such other place as the Payee may designate from time to time by notice in
writing to the Maker, the sum of ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000)
together with all accrued interest thereon based on a 365 day year from the
date hereof in lawful money of the United States of America in accordance with
the following terms and conditions:
1. Payment Terms. The unpaid principal balance and all accrued but
unpaid interest thereon shall be paid on the earlier of October 24, 1998 (one
year from the date hereof), or five business days from the closing date of the
Maker's proposed secondary offering. Interest shall accrue on the unpaid
principal balance at the rate of 10% per annum.
2. Prepayments. This Note may be prepaid in whole or in part, at any
time, without premium or penalty, provided that accrued interest on the amount
of the prepayment shall be paid to the date of prepayment.
3. Default Interest. Upon an Event of Default, as defined below, the
unpaid principal balance shall bear interest at the rate of 16%. Upon the cure
of the Event of Default, the rate of interest shall revert to 10% per annum.
4. No Security. This Note is an unsecured obligation of the Maker.
5. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" under this Note:
(a) Failure of the Maker to make any required payment under this
Note when due;
(b) If the Maker (i) commences any proceeding or other action in
bankruptcy or seeking reorganization or liquidation of its business
or a substantial portion of its business under the Bankruptcy Code of
the United States or any similar law of any other jurisdiction, (ii)
applies for a receiver, trustee, custodian, liquidator or similar
official for all or a substantial part of its assets or makes an
assignment for the benefit of creditors, or (iii) admits in writing
its inability to pay its debts as they mature;
<PAGE> 2
(c) If (i) a proceeding or action is commenced against the
Maker in bankruptcy or seeking reorganization or liquidation under the
Bankruptcy Code of the United States or any similar law of any other
jurisdiction, (ii) a receiver, trustee, custodian, liquidator or
similar official is appointed for all or a substantial part of its
assets, or (iii) a warrant of attachment, execution or similar process
against substantially all the assets of the Maker is issued, and any
of such events set forth in this subsection (c) continues undismissed,
unbonded or undischarged for sixty (60) days after written notice of
default from Payee; or
(d) If the Maker shall default in the performance of its
obligations under the Pledge Agreement, and such default is not cured
after notice of such default within any applicable cure period; or
(e) the merger, consolidation, dissolution or reorganization
of the Maker.
6. Setoff. Payee agrees that Maker shall have a right to setoff any
claim for indemnification (a "Claim") which Maker may be entitled to collect
against Payee under Article IX of the Agreement and Plan of Reorganization
dated as of October 3, 1997 by and between Maker and High Performance Sports
Marketing, Inc. (the "Agreement") against principal payments required under
this Note; provided, however that any setoff for a Claim shall be
proportionally applied to the Note and that certain Promissory Note dated
October 24, 1997 made by Maker and payable to the order of Randy C. Baker in
the original principal amount of $850,000 (the "Baker Note") based on the
respective principal amounts of this Note and the Baker Note. The Maker's right
to setoff may be exercised at such time as the Payee's liability under a Claim
is determined in accordance with the terms and conditions of Article IX of the
Agreement. Upon the assertion of a Claim, and until the determination of the
Payee's liability under the Claim, the Maker shall have the right to defer the
payment of principal hereunder in an amount (the "Deferral Amount") which is
equal to the Claim amount; all accrued interest on the Deferral Amount shall
also be deferred on the same terms and conditions. Upon the determination of
Payee's liability under the Claim:
(a) That portion of the Deferral Amount which is equal to
Payee's liability under the Claim shall immediately be subject to
Maker's right of setoff, and such amount shall be deemed not to have
accrued interest from the date of the Claim; and
(b) That portion of the Deferral Amount which is not setoff
pursuant to the preceding paragraph shall be deemed to have accrued
interest at the rate of 10% per annum from the date the Claim was
asserted. That portion of the Deferral Amount which is not setoff,
together with accrued interest thereon, shall be paid on the maturity
date in
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<PAGE> 3
accordance with the terms of this Note as though no deferral
had occurred; provided, however, that if the determination of Payee's
liability under the Claim occurs after the maturity date, then that
portion of the Deferral Amount which is not setoff, together with
accrued interest thereon, shall be paid within five days after the
date of such determination.
7. Usury. Notwithstanding anything to the contrary contained
herein or in any instrument now or hereafter securing this Note, the total
liability for payments in the nature of interest shall not exceed the limits
imposed by the usury laws of the State of North Carolina. If the Payee receives
as interest an amount which would exceed such limits, such amount which would
be excessive interest shall be applied to the reduction of the unpaid principal
balance and not to the payment of interest; and if a surplus remains after full
payment of principal and lawful interest, such surplus shall be remitted to
Maker by the Payee, and Maker hereby agrees to accept such remittance.
8. Miscellaneous.
(a) If the Payee is required to institute any action or
arbitration to enforce collection and payment of this Note, there
shall become due and payable from the Maker, in addition to the unpaid
principal balance and accrued interest, all costs and expenses of such
action or arbitration including all costs of levy or execution or
appellate proceedings or review, or both, and including reasonable
counsel and litigation fees, and the Payee shall be entitled to
recover all such additional amounts from the Maker.
(b) No delay or failure on the part of the Payee of this Note
to exercise any power or right hereunder, shall operate as a waiver
thereof, and no right or remedy of the Payee of this Note shall be
deemed abridged or modified by any course of conduct.
(c) This Note shall be governed by and construed in
accordance with the laws of the State of North Carolina applicable to
agreements made and to be performed in North Carolina without giving
effect to applicable conflicts of law principles.
(d) This Note may be modified or amended only by a writing
signed by the Maker and the Payee.
(e) By executing this Note the individual signing below
represents and warrants that he has the power and authority to act for
and bind the Maker and that the Maker has duly authorized the
execution and delivery of this Note, and such individual agrees that
the Payee is entitled to rely upon such representation and warranty.
(f) The Payee, without prejudice to any other rights, is
authorized to proceed against the Maker to enforce its rights under
this Note, and shall not be required to have
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<PAGE> 4
recourse to any security given for payment of this Note. The powers
and remedies of the Payee under this Note shall not be exclusive of
any other powers, rights or remedies available to the Payee.
(g) Any and all notices or other communications required or
permitted under this Note shall be in writing and shall be deemed
given upon (1) personal delivery, (2) upon the next business day if
sent by overnight courier service, or (3) upon the third business day
next following the mailing of such notice by certified or registered
mail, return receipt requested, to the respective addresses of the
Maker and the Payee set forth above or to such other address as the
Maker or the Payee may specify by written notice given as aforesaid.
(h) The Maker hereby waives presentment for payment, demand,
protest, notice of non-payment or dishonor, and of protest, and any
and all other notices and demands whatsoever and agrees to remain
bound hereunder until the principal and interest hereunder are paid
in full notwithstanding any release, waiver, surrender, substitution,
compromise, modification of or to or indulgence granted with respect
to this Note or any security for this Note.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
written above.
WHEELS SPORTS GROUP, INC.
By: /s/ Howard L. Correll
---------------------------------
Howard L. Correll, President
4
<PAGE> 1
PEOPLES BANK SIMPLE INTEREST LOAN NUMBER 105800372
P.O. BOX 467 PROMISSORY NOTE Reference Number A0000000231
NEWTON, NC 28658 Date 10-24-1997
Loan Amount 1,672,000.00
Borrower(s): Maturity Date 12-01-1997
WHEELS SPORTS GROUP, INC.
1368 SALISBURY RD
MOCKSVILLE, NC 27028-
FOR MONEY BORROWED the undersigned (hereinafter "Borrower" whether one or
more), jointly and severally, promises to pay to PEOPLES BANK (hereinafter
"Bank"), or order, at any office of Bank, the principal sum of One Million Six
Hundred Seventy Two Thousand and 00/100 Dollars ($1,672,000.00), plus
interest from and including 10-24-97 at the rate of Peoples Bank's Prime Rate
per year, on the unpaid balance until paid. All interest calculations will be
based on a 360 day year. Payment shall be made as follows:
One Principal payment of $1,672,000.00 and all accrued
Interest due on 12-01-1997.
If the Borrower has obtained credit life insurance and/or credit disability
insurance, the payment amount set forth above includes the premium for such
insurance, which the Borrower agrees to pay.
The amount of the final payment required to discharge the indebtedness in full
may be different from any final payment amount set forth above because the
schedule set forth above assumes that all amounts will be paid on exact due
dates, and interest will accrue daily on the principal balance outstanding. If
this obligation has a variable rate, the final payment amount may also be
increased or decreased as a result of changes in the interest rate.
Notwithstanding anything in this Promissory Note to the contrary, unless sooner
due and payable pursuant to the terms of this Promissory Note, all remaining
unpaid principal, interest and other sums evidenced by this Promissory Note
shall be due and payable in full on the Maturity Date set forth above.
[ ] (Checked if applicable.) In the event accruals of interest shall exceed any
periodic fixed payment amount described above, the fixed payment amount shall
be immediately increased, or additional supplemental interest payments required
on the same periodic basis as specified above (increased fixed or supplemental
payments to be determined in the sole discretion of the Bank), in such amounts
and at such times as shall be necessary to pay all accruals of interest for the
period and all accruals of unpaid interest from previous periods. Such
adjustments to the fixed payment amount or supplemental payments shall remain
in effect for as long as the interest accruals shall exceed the original fixed
payment amount and shall be further adjusted upward or downward to reflect the
changes in the variable interest rate. In no event shall the fixed payment be
reduced below the original fixed payment amount specified above.
[ ] This Promissory Note is secured by N.A. dated _____________________________.
The purpose of this loan is SHORT TERM WORKING CAPITAL - Business Use.
[X] Single Advance: Borrower will receive all of this principal sum on
10-24-97. No additional advances are contemplated under this
Promissory Note.
[ ] Multiple Advance: The principal sum shown above is the maximum amount of
principal Borrower can borrow under this Promissory Note.
On _____________ Borrower will receive the amount of $____________________
and future principal advances are contemplated.
As security for the payment of all present, existing or future debts to Bank,
Borrower hereby grants to Bank a security interest in all amounts on deposit
with the Bank or owed to Borrower by the Bank. The time for making payments is
of the essence. Unless otherwise agreed or required by law, each payment shall
be applied in such order and manner as the Bank may elect to unpaid interest,
fees, premiums, other charges and to principal. Prepayments may, at the Bank's
discretion, be applied in reverse order of the dates periodic payments are due.
[X] VARIABLE RATE TERMS. (Checked if applicable.) If checked, this loan has a
variable interest rate, and the provisions set forth in this paragraph are
applicable. When used as a variable rate, "Prime Rate" means the "Prime Rate"
designated by the Bank from time to time as its "Prime Rate", which is not
necessarily the lowest rate charged by the Bank to its borrowers. When used as
a variable rate, "WSJ Prime Rate" means the "Prime Rate" published in the
"Money Rates" section of the Wall Street Journal, Eastern Edition; provided,
however, of more than one "Prime Rate" is so published, the highest "Prime
Rate" shall be used. When used as a variable rate, "The Fidelity Money Market
Savings Rate" means the rate established by the Bank from time to time in its
discretion as the savings rate on its Fidelity Bank Personal Money Market
Savings Account. Where this obligation contains a variable rate it is agreed
that the rate will change rate on its Fidelity Bank Personal Money Market
Savings Account. Where this obligation contains a variable rate it is agreed
that the rate will change
[X] daily as of the date that the Peoples Bank's Prime Rate changes,
[ ] as of the first day of the calendar month next following the most
recent change in the __________________________________________ or
[ ] as of the first day of the calendar quarter next beginning after the
most recent change in the ___________________________________________.
(Applicable box is checked. If no box is checked, the rate will change daily as
of the date the applicable index changes.) The interest rate shall not exceed
the maximum rate authorized by applicable law.
Borrower shall be in default upon (a) failure of any Borrower to pay any amount
due to the Bank as agreed, (b) failure of any Borrower to comply with any other
obligation to the Bank now existing or hereafter arising, including, without
limitation, any failure to comply with the requirements obligations, warranties
or agreements set forth in any loan agreement, loan commitment, promissory
note, deed of trust, security agreement, assignment or any other agreement with
the Bank, (c) the death, or declaration of incompetency, of any individual
Borrower or any guarantor or other person or entity obligated to pay the
indebtedness evidenced hereby (or the dissolution, merger or reorganization or
any corporate Borrower or any corporate guarantor or other person or entity
obligated to pay the indebtedness evidenced hereby), (d) loss or destruction or
any collateral securing payment to the Bank, (e) the filing of any petition in
bankruptcy reorganization, or insolvency by or against any Borrower or
guarantor or other person or entity obligated to pay the indebtedness evidenced
hereby, (f) determination by the Bank that any information supplied to the Bank
by the Borrower or any guarantor in connection with this credit is materially
false or incomplete, (g) determination by the Bank that the prospect of payment
of this obligation is impaired, (h) any guarantor failing to satisfy or comply
with the terms of any guaranty agreement in favor of the Bank, or (i) if Bank
deeming itself insecure. Upon determination by the Bank of the existence of any
such ground for default, the Bank may, without notice, declare all amounts due
hereunder, and under any other obligation to the Bank, immediately due and
payable. Any failure of the Bank to declare a default, or to otherwise exercise
any right or remedy available to it, shall not constitute a waiver by the Bank
of any such
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right or remedy. All amounts due to the Bank after the Bank declares Borrower
in default shall bear interest at 16% per annum until paid, but not in excess
of the maximum rate allowed by law. In addition to all other rights and
remedies provided to the Bank herein or by law or equity, in the event of a
default hereunder, the Bank, to the fullest extent permitted by applicable law,
without advance notice to any Borrower or other person, may set off and apply
to the indebtedness evidenced hereby, any and all deposits at any time held and
any other indebtedness at any time owing by the Bank to or for the credit of
any Borrower or any party obligated to pay this Promissory Note or any portion
thereof.
Upon default, and regardless of whether suit is commenced, Borrower agrees to
pay the Bank such reasonable attorney fees as may be allowed by law, plus all
other expenses reasonably incurred by the Bank (including attorney fees) in
exercising its rights or remedies, enforcing its rights against others, or in
storing, protecting, or repossessing any collateral.
Unless this Promissory Note is payable in a single payment, and not by
installments of interest or principal and interest. Borrower agrees to pay a
late fee of 4.00% of the amount of any payment past due for 15 days or more.
All parties to this Promissory Note, including each Borrower and any sureties,
endorsers, or guarantors hereby waive protest, presentment, notice of dishonor
and all other notices required by law. In the event that any payment shall be
past due 15 or more days, I agree to pay a Late Charge; Borrower understands
that subsequent payments shall be first applied to the past due payment(s).
All parties agree to remain bound hereunder notwithstanding any release of
other parties, the release or surrender of collateral, or any extension of time
for payment.
Any failure of the Bank to declare a default, or otherwise exercise any right
or remedy available to it, shall not constitute a waiver by the Bank of any
such right or remedy. All parties to this Promissory Note and Security
Agreement, including each Borrower, each Guarantor and any sureties, endorsers,
or guarantors hereby waive protest, presentment, notice of dishonor and all
other notices required by law. All parties agree to remain bound hereunder
notwithstanding any release of other parties, the release or surrender of
collateral, or any extension of time for payment. The validity, interpretation
and enforcement of this Promissory Note and Security Agreement shall be in
accordance with North Carolina law.
This Promissory Note is delivered in and shall be construed under the internal
laws and judicial decisions of the State of North Carolina, and, to the extent
the same may be applicable, the laws of the United States. In any litigation in
connection with or to enforce this Promissory Note against any person,
including, but not limited to, any maker, surety, guarantor, or endorser, each
such obligor irrevocably consents to and confers personal jurisdiction on the
courts of the State of North Carolina or the United States courts located in
the State of North Carolina, and expressly waives any objections as to venue in
any such courts, and agrees that service of process may be made on such obligor
by mailing a copy of the summons and complaint to them by registered or
certified mail, return receipt requested. Nothing contained herein shall,
however, prevent the Bank or any other holder of this Promissory Note from
bringing any action or exercising any rights within any other state or
jurisdiction or from obtaining personal jurisdiction by any other means
available by applicable laws.
IN TESTIMONY WHEREOF, each individual Borrower has executed this Agreement
under seal, and each Borrower which is not an individual has caused this
Agreement to be executed under seal by its duly authorized officer, partner or
manager and each person or entity signing which is not a corporation adopts as
the seal of such person or entity the word "(SEAL)" appearing beside the name
of such person or entity.
(SEAL)
- --------------------------------- ---------------------------------
Witness
(SEAL)
- --------------------------------- ---------------------------------
Witness
(SEAL)
- --------------------------------- ---------------------------------
Witness
(SEAL)
- --------------------------------- ---------------------------------
Witness
Wheels Sports Group, Inc.
---------------------------------
Name of corporation
/s/ Howard L. Correll (SEAL)
- --------------------------------- ---------------------------------
Attest Howard L. Correll, President
,Secretary (Corporate Seal)
- ------
(SEAL)
--------------------------------
Name of Partnership or Limited
Liability Company
(SEAL)
- --------------------------------- ---------------------------------
Witness
(SEAL)
- --------------------------------- ---------------------------------
Witness
(SEAL)
- --------------------------------- ---------------------------------
Witness
(SEAL)
- --------------------------------- ---------------------------------
Witness
(SEAL)
- --------------------------------- ---------------------------------
Witness
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