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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Pursuant To Section 12 (g) of the Securities Exchange Act of 1934
Commission File Number: 33-26767
000-24779
V-TWIN ACQUISITIONS, INC.
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(Exact name of Registrant as specified in its charter)
District of Columbia 52-2110338
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1707 H St. N.W. #200
Washington, DC 20006
(Mail) 11708 Bowman Green Drive
Reston, VA 20190
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 437-9886.
Securities to be registered under Section 12(g) of the Act:
Description of Securities Exchange Upon Which Registered
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808,727 N/A
Class A par value $.001 common
voting shares
191,273 N/A
Class B par value $.001 common
voting shares
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Item 1. Description of Business
V-Twin Acquisitions, Inc.
(A) Business Development
The Company, a corporation, was formed in Delaware on August 16, 1988,
and successfully completed a public offering through an S-18 registration. The
Company completed and closed the referenced offering, but never commenced its
requisite 10-K or 10-Q filings. The Form S-18 filed by American Solid Fuel,
Inc., SEC File No. 33-26767, registered 10,000,000 shares for sale at $.015 per
share on a "best efforts, mini-maxi" basis. The registration went effective on
August 2, 1989; $75,060 was raised through the sale of the minimum offering of
5,000,000 shares; the offering was closed on May 1, 1990; the proceeds of the
offering were used to pay attorneys' fees, rent, administrative costs and
auditing expenses; the business was set up as a "blind pool." The Company
remained dormant until July, 1998, as seen below, when it entered into a
statutory merger with a District of Columbia corporation, V-Twin Acquisitions,
Inc., with the latter District of Columbia company surviving. V-Twin was
incorporated in the District of Columbia on July 10, 1998 (see Exhibit 3 to Form
10-SB/A).
From its inception to the present, the Company has never been involved in
any form of bankruptcy (Chapter 13, 11 or 7, or other chapter) proceeding, nor
has it been involved in any receivership, liquidation or similar proceedings.
The Company was involved in a material reclassification, merger or
consolidation, in that it engaged in the referenced statutory merger with V-Twin
Acquisitions, Inc., a District of Columbia corporation, more fully described
herein. The statutory merger is reflected in Exhibit 2 to the Form 10-SB/A.
V-Twin exchanged one (1) share of its stock for one (1) share of Commercial
Indemnity Underwriters, Inc. ("CIU"), formerly known as American Solid Fuel,
Inc. ("ASFI"). The CIU shareholders are now the V-Twin shareholders. V-Twin was
capitalized to implement its go forward business plan and CIU was a dormant
public company with illiquid stock. The term "statutory merger" concerns a
merger in compliance with a statute, in this case DC Code Section 29-364 and
Section 29-369 through Section 29-369, inclusive.
(B) Business of Issuer
(1) Principal products or services and their markets: From the Company's
inception to the present date, it has provided no principal products, nor has it
produced any. Further, it has had no market for any of its products, since it
has produced none.
(2) Distribution methods of the products or services: The Company, from
its inception to the present date, having no products, also has no distribution
method for products.
(3) Status of any publicly announced new product or service: The Company
has not publicly announced any new product or service. Its planned new product
and business concept is reflected below under the heading of "Plan of
Operation", infra.
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(4) Competitive Business Conditions: From its inception, to the present,
the Company has been dormant, and has had no active function. The Company's
forthcoming anticipated competitive position in its contemplated new industry is
reflected below under the heading of "Plan of Operation", infra.
(5) Sources of available raw materials and principal suppliers: Since its
inception, having entered dormant status, the Company, not actively engaged in
operation, had no sources of available raw materials, nor did it have principal
suppliers. The Company's new planned source of products and suppliers thereof is
reflected under the heading of "Plan of Operation", infra.
(6) Dependence on one or few major customers: Since its inception, and up
to the present date, the Company, remaining in non-operational status, has no
dependence upon any one or few major customers. Anticipated equivalent
dependence is reflected below under the heading of "Plan of Operation", infra.
(7) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements and/or Labor Contracts: Since its inception, due to the dormant
nature of its business activities, the Company holds no patents, trademarks,
licenses, franchises, concessions, royalty agreements and/or labor contracts.
The Company does intend to do so, in the future, however, and has provided in
detail for such business operation requirements in the portion hereof
designation "Plan of Operation", infra.
(8) Government approval of products or services: Since its inception to
the present date, as a result of the Company's dormant status, it has not been
subject to any requirement of government approval for its operations. The
Company anticipates that this will be the case for future operations. The
forthcoming impact of government regulation is addressed in "Plan of Operation",
infra.
(9) Effect of existing of probable governmental regulations on the
business: From its inception, to the present, the Company has been dormant, and
has had no active function. The Company's forthcoming anticipated effect of
existing probable government regulations on business in its contemplated new
industry is reflected below under the heading of "Plan of Operation", infra.
(10) Estimate of the amount spent during each of the last two fiscal
years on research and development activities, and if applicable the extent to
which the cost of such activities are borne directly by customers: From its
inception, to the present, the Company has been dormant, and has had no active
function. The Company, therefore, has not had any costs borne directly by
customers and only has experienced minimal research and development costs which
were borne by management, as is reflected further below under the heading of
"Plan of Operation", infra.
(11) Costs and effects of compliance with environmental laws (federal,
state and local): From its inception, to the present, the Company has been
dormant, and has had no active function. The Company anticipates complying, to
the extent required, with all applicable environmental laws (federal, state and
local).
(12) Number of total employees and number of full time employees: From
its inception, to the date of the merger, the Company has been dormant, and has
had
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no active function or employees. The Company's proposed acquisition will have an
effect on the number of statutory employees it will have and is reflected below
under the heading of "Plan of Operation", infra.
American Solid Fuel, Inc. sold its minimum offering in 1990, and subsequently
expended its offering proceeds through expenses, never incurring any
liabilities. Its only asset was its loss carried forward for income tax
purposes. It never filed a 10-K after the its offering was closed, and
subsequently never became a fully reporting company. Its name was changed in
1995 to Commercial Indemnity Underwriters, Inc. At the close of the public
offering referred to above, ASFI had cash assets of $87,972. Its control
shareholders of record numbered five prior to the closing of the publicly
registered minimum offering. Please see Exhibit 99.1 attached hereto.
The District of Columbia company, V-Twin Acquisitions, Inc. was formed initially
to potentially acquire a motorcycle dealership with locations in Herndon and
Springfield, Virginia. The Company is the survivor of the merger with Commercial
Indemnity Underwriters, Inc., and because of the merger, as accomplished, the
surviving company (V-Twin), through such merger, partakes of the available
benefits of the aforedescribed S-18 registration. This Form 10-SB registration
statement is intended to establish the Company as fully reporting, since its
reporting status lapsed during its dormant period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following information should be read in conjunction with the audited
beginning financial statements and notes thereto appearing elsewhere in this
Form 10-SB. The Company has had no revenue from operations in each of the last
two fiscal years, and has developed the below listed Plan of Operation on a
go-forward basis.
Plan of Operation
V-Twin Acquisitions, Inc. ("V-Twin Acquisitions" or the "Company") is a holding
company whose intended subsidiaries will function in retail sales of several
well known brands of motorcycles, personal watercraft, all terrain vehicles
("ATVs") and related parts and accessories. The Company's intended subsidiaries
will also provide service for new and used motorcycles, all terrain vehicles and
Jet Ski type watercraft. In its present development stage, the Company intends
to focus its principal attention on the retail motorcycle market and to acquire,
consolidate and operate additional motorcycle retail subsidiaries. As of the
date of this filing, no other publicly traded company conducts business in this
market, to the Issuer's knowledge.
The Issuer, as a development stage company, has sufficient funds to satisfy its
cash requirements for the next 12 months, including its intended purchase of the
assets and liabilities of Cycle Sport, Inc., its first intended subsidiary.
Management has reached an agreement with the Seller to purchase those assets and
liabilities, on a bulk sale basis, for $300,000. Management has also projected
potential short term operating losses of a maximum of an additional $200,000, an
amount which the Registrant has on hand. The Issuer projects that its first
intended acquisition will re-attain profitability prior to any necessity to
raise additional operating funds.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Prior to the date hereof, the Company has been deemed a development stage
company primarily engaged in the research required in connection with the
acquisition of franchised motorcycle dealerships. The Company has no sales
revenues and has had no income from any operations. Its only actions have been
to complete its initial capitalization, and to enter into an agreement to
purchase with the owners of its first proposed acquisition - the assets and
liabilities of Cycle Sport, Inc. The Contract for the Bulk Sale and Purchase of
Assets between the Registrant and Cycle Sport is attached hereto as Exhibit 10.
The Company had deposited $50,000 with the Seller's attorney as a good faith
deposit concurrent with the signing of a letter of intent. However, V-Twin has
recently finalized its Contract for Sale and Purchase of Assets with Cycle
Sport, Inc., on a Bulk Sale basis pursuant to the UCC and the applicable VA
Code. The Company is still in the process of complying with the Bulk Sale
Agreement with the Seller and counsel for Cycle Sport, Inc. and is moving
towards settlement.
The most important conditions of the bulk sale purchase of Cycle Sport which
have not yet been satisfied are the transfer of the manufacturers' franchise
agreements and the secured floor plan financing arrangements through the
manufacturers. Without these transfers, the bulk purchase can not be
consummated. It should be noted that the technique to effectuate this
transaction is a "bulk sale" agreement under the Uniform Commercial Code ("UCC")
and the VA Code. This Bulk Sale is the purchase of assets and the assumption of
liabilities of the assets of a division of a going concern, with the intent of
the parties being that the purchaser will continue in the same business that the
seller operated, but as a new business. The Registrant is not purchasing any
income nor earnings, but will rely on the historical income numbers. No
undisclosed liabilities can surface, and no tax liabilities carry forward.
Management's goal is to purchase Cycle Sport's assets, liabilities and major
motorcycle, Jet Ski and ATV franchises as a going business in its two locations
in Herndon and Springfield, VA, and to recapitalize and advertise the
dealership's products in order to bring the dealership back to the profitability
it enjoyed for its first 24 years of operations.
The total acquisition cost for Cycle Sport will be $300,000. The Company has a
deposit in escrow with Seller's counsel of $50,000, applicable to the purchase
price. The sources of funds the Company will use to finance such acquisition
will be from the proceeds of the sale of V-Twin's marketable securities in
Century Industries, Inc., or from funds provided by the control shareholders.
The Company has sufficient cash and marketable securities on hand to accomplish
this proposed objective in the near two year term, as the Cycle Sport dealership
never had an annual loss which would create a "going concern" problem. In 1997
the Springfield location maintained a break even status from operations, and the
Herndon location's loss from operations included its owner's salary, without any
investment in advertising. Its small operating loss was consolidated with the
present owner's profitable retail fitness business.
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The Company functions as a development stage public holding company, and
proposes to acquire certain operating subsidiaries, without any operations of
its own, other than its research and its related acquisition, legal, accounting,
stock transfer agent, and shareholder related record keeping responsibilities
and concomitant management costs on behalf of its subsidiaries, which will be
defrayed through management fees charged to its subsidiaries. The operations of
the proposed subsidiaries will be consolidated with the Company as a public
parent, if the acquisitions contemplated are consummated. The Company proposes
that each separate dealership will be a separate subsidiary corporation.
The fact that the Cycle Sport dealership is in the metropolitan Washington, DC
area, enjoys major product brands such as Kawasaki, Suzuki, Yamaha and Triumph,
is in a protected franchise territory, and is in a rising industry growing by
20% annually, gives it possible growth potential for the future.
Cycle Sport's motorcycle division is located in Springfield, Virginia and
Herndon, Virginia, and both areas are considered to be in the DC metropolitan
area. (See Washington Post - Real Estate section on Saturdays, with sales,
average income per household and other statistics, always referring to the
"Washington Metropolitan Area").
The Company has found its research from data taken from various internet sources
including, but not limited to, the Motorcycle Industry Council, Cycle News,
Harley Davidson's 10-K, various press releases disseminated by Reuters, Polaris
Industries, Excelsior Henderson Motorcycle Co., Harley Davidson, and the
regional sales statistics from the Yamaha Motorcycle Division of Yamaha
Industries. All of these authoritative sources report that the entire motorcycle
industry is growing considerably. The statement concerning "a rising industry
growing by 20% annually" is taken from several different sources, of which the
majority all cite the Motorcycle Industry Council as the source of their
statistics, infra.
More specifically, Mike Pasche published a paper for Sonoma State University
entitled "The Motorcycle Industry". A vast majority of his information came from
the Motorcycle Industry Council, the most active and complete fact gathering
organization about the motorcycle industry. He reported 31 million motorcycle
riders in the USA, leading golfing at 23 million, and being third to fishing at
41 million and camping at 47 million as activities. This paper is attached as
Exhibit 99.2 hereto.
Further, Reuters New Service, on September 30, 1998, reported in a News
Release about Harley Davidson motorcycles, that "new bike sales are up 20% in
the first seven months of 1998 over a year ago sales". Reuters reports Harley
having a 47% market share. Don Brown, an independent motorcycle industry
analyst, is then quoted as stating that "Harley's market share will be down an
estimated 6.5%, while the Japanese brands are expected to gain 6.5% by year
end". This release is appended hereto as Exhibit 99.3.
In Harley Davidson's May, 1998 annual report, it states on page 3 that "During
1997 the worldwide heavyweight (651+CC) motorcycle market grew 15.7%... industry
registrations of domestic (U.S.) heavyweight motorcycles were up 14.8% (data
provided by the Motorcycle Industry Council." On page 8 of the Annual Report,
Harley provided a graph of heavyweight motorcycle sales of all brands in the US
for 1993-1997, from information derived from data published by R.L. Polk & Co.
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Data was obtained from data published by the Motorcycle Industry Council.
Highlights are as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
1,000's of units sold 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
190.2 165.7 151.2 140.8 123.8
</TABLE>
We note (not Harley Davidson) that the annual percentages of increase year by
year are as follows:
<TABLE>
<S> <C> <C> <C> <C>
14.79% 9.59% 7.4% 13.7% ---
</TABLE>
The Harley Davidson annual report also graphs manufacturer percentage market
share for 1997 from the same data as follows:
<TABLE>
<S> <C>
Harley 49.1%
Honda 18.4%
Suzuki 10.1%
Kawasaki 10.4%
Yamaha 5.5%
Other 5.5%
--------------------
Total 100.0%
</TABLE>
An informative article from Cycle News, quoting sales data from the Motorcycle
Industry Council, states that "with its figures tallied through March of 1998,
the MIC reports that motorcycle sales are up 20 percent across the board, with
perhaps the most interesting change coming in the playbike and
competition/off-road segments, which posted the highest percentage increase in
the market, at just over 26 percent." That article is attached hereto as Exhibit
99.5.
Finally, Yamaha Motor Corporation, USA provided Cycle Sport with their Industry
Comparison Data, based on MIC statistics from warranty registrations, for the
months from September, 1997 through March, 1998 for the Mid-Atlantic Region. The
report shows a 19% increase overall for all motorcycle and ATV manufacturers.
See attached Exhibit 99.6 hereto.
Other than the above acquisition target plan, the Company existed in a dormant
status only and has conducted no real business operations other than
identifying, researching and negotiating the acquisition of Cycle Sport's assets
and liabilities on a bulk sale basis.
The Company should not be considered an investment company under the Investment
Company Act of 1940 by virtue of the provisions found at 15 USC 80a-3, exempting
a company therefrom which has a business purpose other than the making of
investments, a fact which is manifest by virtue of V-Twin's plan to acquire, and
operate motorcycle dealerships. In this regard, V-Twin relies upon Progress
Development Corporation v. Mitchell, 206 F.2d 222, 4 FR Serv.2d 895 (1961), a
case establishing that even the "40% test" is inapplicable to a company
primarily engaged in activities other than investments. Further, even a company
with 51% and 40% of two chain stores which actively controlled management was
held exempt from the 1940 Act. Re US Stores, 10 SEC 1145 (1942). As further
authority for V-Twin's position, please see Re Fresnillo Co., 42 SEC 551 (1965);
Re International Bank, 42 SEC 34 (1964); Re Frobsisker, Ltd., 27 SEC 944 (1948);
Re Broadway & 58th St. Corp., 12 SEC 1128 (1943) and Re US Foil, 9 SEC 22
(1941).
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In addition to the foregoing authority, one finds Re MA Hanwa Co., 10 SEC 581
(1941) and Manacker v. Reynolds, 39 Del Ch. 401, 165 A.2d 741 (1960).
Accordingly, V-Twin's plan to actively participate in the retail motorcycle,
water craft and ATV sales and service market reflects an intent not to act as an
investment company.
Liquidity and Capital Resources
The Company anticipates meeting its working capital needs during the current
fiscal year from capital raised through the common stock already sold to its
control shareholders. The Company is also investigating the possibility of other
financing to provide additional acquisition capital and to further its
acquisition program. Although management has not made any arrangements or
definitive agreements, the Company is contemplating both the private placement
of securities and/or a public offering. The Company does not anticipate any
working capital shortage in 1998, in view of its current assets and assuming
neither of these offerings take place.
As of July 31, 1998, the Company had total assets of $50,148 in cash, and
$612,500 of marketable securities. The Company has no liabilities at July 31,
1998. However, as a subsequent event at September 27, 1998, the control
shareholders (Villa Beau Holdings, Ltd., Ted L. Schwartzbeck, and A. Jay
Pignatello), have forgiven the debts shown owing to them on the balance sheet.
The letters from the control shareholders forgiving the debts are attached as
Exhibit 99.7.
The Company has raised its capital funds through private common stock sales to
its control parties. Management has determined that the Company will spend
approximately $300,000 to acquire the assets and liabilities of Cycle Sport, and
anticipates expending an additional $200,000 to recapitalize the new subsidiary,
for advertising and potential shorter term operating losses (two years maximum).
In the opinion of Management, inflation has not had a material effect on the
operations of the Company.
A detailed description of the business of the first proposed acquisition is as
follows:
Cycle Sport, Inc.
The Company has targeted its first intended acquisition, known as Cycle Sport, a
27 year old two store motorcycle, ATV and Jet Ski dealership in Herndon and
Springfield, Virginia. The Herndon location the Yamaha, Kawasaki, Suzuki, and
Triumph motorcycle and Jet Ski factory franchises. The Springfield store sells
only Yamaha and Triumph brand motorcycles, ATVs and Jet Skis.
The current new motorcycle, ATV and Jet Ski inventory exceeds approximately
$600,000 for both stores. Parts and accessories inventories exceed $300,000.
Used motorcycle inventory exceeds $100,000. These figures are based upon Cycle
Sport's books and records.
Cycle Sport sales in 1997 of motorcycles, Jet Ski's, parts, accessories and
service exceeded $4,000,000. These figures are based upon Cycle Sport's books
and records.
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Four years ago, Cycle Sport's present owner used this motorcycle dealership as
a base for the establishment of 12 "physical fitness" stores with revenues now
exceeding $15,000,000, and was therefore unable to devote the time he used to
devote to the dealership. As a result, net income suffered somewhat for three
years, as gross profit margins suffered. For the prior 24 years the dealership
was profitable, based upon Cycle Sport's books and records. In addition, the
present owner offset the fitness operating profits with the motorcycle
division's small loss.
The Company expects to pay $300,000 cash for the dealership's assets and
liabilities and Kawasaki, Yamaha, Suzuki and Triumph franchises, and must set
aside an additional $200,000 to recapitalize the dealership to bring it back to
profitability. These funds have been provided by the control shareholders of the
Issuer, and the funds will be invested by the Issuer in exchange for the assets
and liabilities of Cycle Sport. The purchase will include, on a bulk sale basis,
Cycle Sport's motorcycle, Jet Ski and ATV related assets and liabilities, which
will also include the assumption of the secured floor plan debt related to
motorcycle, ATV and Jet Ski inventory, and the franchises. The Company will
lease the Herndon premises from the present owner, and assume a lease on the
Springfield location.
PRODUCTS AND MARKETS
The Company's first proposed subsidiary is primarily engaged in retail sales of
several well known brands: Yamaha, Kawasaki, Suzuki and Triumph motorcycles,
ATVs and Jet Skis (personal watercraft), related parts and accessories, and the
service of these products.
Once the proposed acquisition of the Cycle Sport assets and liabilities are
completed, the Company's general market will be the retail motorcycle, ATV and
Jet Ski market, and related parts, accessories and service.
As recreational products, Cycle Sports Kawasaki, Yamaha, Suzuki and Triumph
motorcycles, and Yamaha and Kawasaki ATVs and Jet Skis and related parts and
accessories are products enjoying a rising consumer market. According to U.S.
Government reports, from 1992 through 1995 spending on recreational products
grew at over five percent per year and from 1994 through 1997 grew at three
times the rate of overall consumer spending.
Based on industry information, the Company believes that the typical customer
for heavyweight American touring and cruiser motorcycles is a male between the
ages of 35 and 65, with a household income of approximately $65,000. These
customers are generally experienced motorcycle riders who purchase motorcycles
for recreational purposes rather than for transportation. According to U.S.
Department of Commerce demographic surveys, the number of Americans that will
fall into the targeted age bracket is projected to increase by approximately 11%
over the next five years and by 19% over the next ten years. The 35 to 65 year
old age group also leads all age groups in annual spending per consumer on
recreational products and generally has greater disposable income than other age
groups.
The Company believes that an opportunity exists for dealership groups with
significant equity capital and experience in identifying, acquiring and
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professionally managing dealerships, to acquire additional dealerships and
capitalize on changes in the motorcycle retailing industry. Motorcycle retailing
is a rapidly growing consumer retail market in the United States. The industry
ownership today is highly fragmented, with the majority of dealerships being
privately owned and operated. The Company believes that these factors, together
with increasing capital costs of opening new motorcycle dealerships, franchising
costs which require substantial inventories, the lack of alternative exit
strategies (especially for larger dealerships) and the aging of many dealership
owners provide attractive consolidation opportunities.
In 1992, the Motorcycle Industry Council recorded that 31 million people rode a
motorcycle, scooter or ATV that year. With the variety of vehicles growing at a
significant rate, popularity is increasing. In comparison to other leisure
activities, motorcycling is surprisingly popular. In 1992, motorcycling was
enjoyed by 31 million people; golf had 23 million aficionados; fishing 41
million, and camping 47 million.
According to the Motorcycle Industry Council, motorcycle sales are up 20% across
the board, including a surprise in the playbike and competition/off road
segments, which increased 26%.
COMPETITION
As of the date of this filing, no other publicly traded company proposes to
conduct or conducts business in the retail motorcycle market, other than Polaris
Industries, which is now manufacturing the new American made Polaris motorcycle
which will be distributed through their own Polaris jet ski dealer network;
therefore, the Company will have no direct competition in the stock acquisition
arena at this time, although some competition will continue from investors
purchasing privately held and operated franchised dealerships.
The Company's competitive position within the industry will be largely
determined by its ability to offer major franchised brands which control over
60% of the present motorcycle market in America, and value and service to its
customers, both in the factory replacement parts retail sector and in the
service sector. The Company, as a holding company for retail dealerships and a
proposed consolidator of additional motorcycle dealerships, has no direct
competition insofar as it is a public company which proposes to purchase
motorcycle dealerships that are traditionally held by private owners. The vast
majority of motorcycle dealerships of all brands are single store operations
which are family owned style dealerships. There are very few buyers for these
dealerships as the average business buyer does not have any motorcycle
experience, or if they do, they can't afford the investment as the majority of
the dealerships are profitable and too expensive for individual small business
buyers. Motorcycle dealerships are also typically too small in revenues,
earnings and assets to interest most large business buyers.
DISTRIBUTION
During 1997, the majority of merchandise purchased by the Company's proposed
subsidiaries was shipped directly to the stores from their franchise
manufacturers: Kawasaki, Yamaha, Suzuki and Triumph Motorcycles. The balance of
the merchandise was after market parts and accessories, such as: side cars,
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wearing apparel, helmets, saddlebags, custom exhausts, seats, handle bars,
light bars, sissy bars, and touring luggage.
The Company's first proposed dealership and any subsequently acquired
dealerships will operate pursuant to franchise agreements between each
motorcycle manufacturer (or authorized distributor thereof) (the "Manufacturer")
and the proposed subsidiary of the Company that operates such dealership. The
Company is dependent to a significant extent on its relationship with such
Manufacturers for distribution (and subsequent sales) of motorcycles and related
products. The manufacturers protect the dealer's geographical sales area through
the franchise agreements, which provides for the dealer having an exclusive for
each brand in its area with written protection from more franchises being issued
in those areas.
OPERATIONS
All phases of the Company's operations are subject to influences outside its
control. Any one, or a combination, of these factors could materially affect the
results of the Company's operations. These factors include: the cost of goods,
competitive pressures, inflation, consumer debt levels, currency exchange
fluctuations, trade restrictions, changes in tariff and freight rates, interest
rate fluctuations and other capital market conditions. Forward-looking
statements made by or on behalf of the Company are based on a knowledge of its
business and the environment in which it operates, but because of the factors
listed above, actual results may differ from those in the forward-looking
statements. Consequently, all of the forward-looking statements made are
qualified by these and other cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will have the expected
consequences to or effects on the Company or its business or operations.
SEASONALITY
The Company will experience significant seasonal fluctuations in motorcycle
sales, as summer sales are generally twice as great as winter sales, and weather
conditions, specifically a harsh and long winter season, always affect sales.
GOVERNMENT REGULATION
The success of sales of the motorcycles which the Company's subsidiary will be
franchised to sell depends upon compliance with certain government regulations.
The motorcycles which the Company will be franchised to sell are subject to the
emissions and noise standards of the U.S. Environmental Protection Agency and
the more stringent emissions standards of various State agencies. The
motorcycles are also subject to the National Traffic and Motor Vehicle Safety
Act and the rules promulgated thereunder by the National Highway Traffic Safety
Administration. Finally, federal, state and local authorities have adopted
various standards relating to air, water, helmet rules and noise pollution that
may affect the Company's distributors' manufacturing operations and its own
retail markets. The Company expects that its future facilities will comply with
all such regulations and standards, and that current production levels of
motorcycles will continue in line with the increasing interest in motorcycles,
ATVs and personal watercraft. To the degree that franchises are involved in
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dealerships, the Federal Trade Commission has certain regulatory authority
thereover.
EMPLOYEES
As of July 31, 1998, the Company had no full-time employees. If the acquisition
of the assets and liabilities of Cycle Sport is successful, the Company will not
be subject to any collective bargaining agreements. The proposed subsidiary
already employs approximately 25 employees in sales, service and administration,
and the Company will provide those employees with health insurance. The Company
anticipates adding home office supervisory, marketing and administrative staff
as the Company acquires more franchised motorcycle dealerships.
CUSTOMER BASE
The Company will not be dependent on any one major or any few select customers;
all sales will be the result of comprehensive advertising campaigns, referrals
and re-sales to old customers. V-Twin Acquisition's first proposed subsidiary
and any subsequent subsidiaries will be, however, dependent on its manufacturers
to provide it with quality motorcycles (and associated parts and accessories) to
be sold to the public. The first subsidiary will enjoy the benefit of its
customers who have purchased various items from Cycle Sport for the past 27
years.
RESEARCH AND DEVELOPMENT
The Company has conducted specific research required in connection with the
acquisition of franchised motorcycle dealerships. Research and development is
limited to a study of the retail motorcycle industry, and finding, evaluating
and negotiating the purchase of financially sound motorcycle dealerships to be
acquired. Research and development is a critical factor to the Company only to
the extent that sound business decisions in finding and closing the purchase of
acquisitions in the unconsolidated motorcycle franchise market will lead to
success for the Company and its shareholders.
GROWTH STRATEGY
The Company plans to implement an acquisition program primarily by pursuing (i)
its first dealership in the District of Columbia/Northern Virginia metropolitan
and its growing suburban geographic markets, (ii) dealerships in other
geographic locations that will allow the Company to capitalize on regional
economies of scale, offer a greater breadth of products and services in any of
its markets or increase brand diversity, and (iii) dealerships in warm weather
geographical locations which will allow for year round sales, thereby enhancing
gross sales of motorcycles.
The Company will look to acquire dealerships in geographic markets it does not
currently serve, principally in the Eastern half of the United States. The
Company will target dealers having superior operational and financial
management, the cost of which can provide future earnings. Generally, the
Company will seek to retain the acquired dealerships' existing operational and
financial management, and thereby benefit from their market knowledge, customer
base and local reputation.
12
<PAGE> 13
The Company will seek growth in its operations within existing markets by
acquiring dealerships that will increase the consolidated sales, and profits to
be made in those markets. These acquisitions should produce opportunities for
additional operating efficiencies, promote increased name recognition and
provide the Company with better opportunities for repeat and referral business.
The Company intends to grow significantly through the acquisition of additional
franchised motorcycle dealers. This strategy will entail reviewing and
potentially reorganizing acquired business operations, corporate infrastructure
and systems, and financial controls. Unforeseen expenses, difficulties, and
delays frequently encountered in connection with rapid expansion through
acquisitions could inhibit the Company's growth and negatively impact
profitability. There can be no assurance that suitable acquisition candidates
will be identified, that acquisitions of such candidates will be consummated, or
that the operations of any acquired businesses will be successfully integrated
into the Company's operations and managed profitably without substantial costs,
delays, or other operational or financial difficulties. In addition, increased
competition for acquisition candidates may increase purchase prices for
acquisitions to levels beyond the Company's financial capability or to levels
that would not result in the returns required by the Company's acquisition
criteria. As of the date of this filing, the Company has no binding agreements
to effect any acquisitions and is not engaged in any active negotiations to
acquire any other dealers except Cycle Sport. The Company may issue Common
Stock, preferred stock, debt instruments, or incur substantial bank indebtedness
in making future acquisitions.
ANTI-TAKEOVER EFFECT OF ARTICLES AND BYLAW PROVISIONS
The Company's Articles of Incorporation provide that up to 25,000,000 shares of
Class A common stock and 25,000,000 Class B common stock, and 2,000,000 shares
of preferred stock may be issued by the Company from time to time in one or more
series. The Board of Directors is authorized to determine the rights,
preferences, privileges and restrictions granted to and imposed upon any
unissued series of preferred stock and to fix the number of shares of any series
of preferred stock and the designation of any such series, without any vote or
action by the Company's stockholders. The Board of Directors may authorize and
issue preferred stock with voting or conversion rights that could adversely
affect the voting power or other rights of the holders of Common Stock. In
addition, the issuance of preferred stock could have the effect of delaying,
deferring or preventing a change in control of the Company. The Company's
Articles of Incorporation also allow the Board of Directors to fix the number of
directors in the Bylaws with no minimum or maximum number of directors required.
The effect of these provisions may be to delay or prevent a tender offer or
takeover attempt that a stockholder might consider to be in his best interest,
including attempts that might result in a premium over the market price for the
shares held by the stockholders.
CHANGES IN TAX LAWS
The Company's operations depend upon a number of factors relating to or
affecting consumer spending for luxury goods, such as motorcycles. The Company's
operations may be adversely affected by unfavorable local, regional, or national
economic developments or by uncertainties regarding future economic prospects
that reduce consumer spending in the markets served by the Company. Consumer
13
<PAGE> 14
spending on luxury goods can also be adversely affected as a result of declines
in consumer confidence levels, even if prevailing economic conditions are
favorable. In an economic downturn, consumer discretionary spending levels
generally decline, often resulting in disproportionately large reductions in the
sale of luxury goods. Similarly, rising interest rates could have a negative
impact on consumers' ability or willingness to finance motorcycle purchases,
which could also adversely affect the ability of the Company to sell its
products.
Local influences, such as corporate downsizing and military base closings, also
could adversely affect the Company's operations in certain markets. There can be
no assurance that the Company could maintain its profitability during any such
period of adverse economic conditions or low consumer confidence. Changes in
federal and state tax laws, such as an imposition of luxury taxes on leisure
time products, also could influence consumers' decisions to purchase products
offered by the Company and could have a negative effect on the Company's sales.
DILUTION THROUGH ISSUANCE OF STOCK
The size, timing, and integration of any future acquisitions may cause
substantial fluctuations in operating results from quarter to quarter.
Consequently, operating results for any quarter may not be indicative of the
results that may be achieved for any subsequent quarter or for a full fiscal
year. These fluctuations could adversely affect the market price of the Common
Stock. The Company's ability to continue to grow through the acquisition of
additional dealers will depend upon (i) the availability of suitable acquisition
candidates at attractive purchase prices, (ii) the Company's ability to compete
effectively for available acquisition opportunities, and (iii) the availability
of funds or the market price of the Company's Common Stock with a sufficient
market price to complete the acquisitions. The Company's future growth through
acquisitions also will depend upon its ability to obtain the requisite
manufacturer approvals of franchise transfers. Alternatively, one or more
manufacturers may attempt to impose further restrictions on the Company in
connection with their approval of acquisitions.
MANUFACTURERS' CONSENT TO ACQUISITIONS AND MARKET EXPANSION
Dealer agreements with each proposed acquisition by its terms will require the
dealer to obtain consent from the Manufacturers of the franchised dealers'
motorcycles to any change in the ownership of the dealer. In determining whether
to approve acquisitions, manufacturers may consider many factors, including the
financial condition and ownership structure of the Company. Further,
manufacturers may impose conditions on granting their approvals for
acquisitions, including a limitation on the number of such manufacturers'
dealers that may be acquired by the Company. The Company's ability to meet
manufacturers' requirements for approving future acquisitions will have a direct
bearing on the Company's ability to complete acquisitions and effect its growth
strategy. There can be no assurance that a manufacturer will not terminate its
dealer agreement, refuse to renew its dealer agreement, refuse to approve future
acquisitions, or take other action that could have a material adverse effect on
the Company's acquisition program.
The Company's growth strategy also entails expanding its product line and
geographic scope by obtaining additional distribution rights from its existing
14
<PAGE> 15
and new manufacturers. While the Company believes it will be successful in
obtaining such distribution rights, there can be no assurance that such
distribution rights will be granted to the Company or that it can obtain
suitable alternative sources of supply if the Company is unable to obtain such
distribution rights.
MOTORCYCLE MANUFACTURERS' CONTROL OVER DEALERS
Historically, motorcycle manufacturers have exercised significant control over
their dealers, restricted them to specified geographic areas, and retained
approval rights over changes in ownership. The continuation of the Company's
dealer franchise agreements with certain manufacturers is contingent upon
several factors. Failure to meet the customer satisfaction and market share
goals set forth in any dealer agreement could result in the imposition of
additional conditions in subsequent dealer agreements, termination of such
dealer agreement by the manufacturer, limitations on inventory allocations,
reductions in reimbursement rates for warranty work performed by the dealer, or
denial of approval of future acquisitions. The Company's dealer agreements with
manufacturers give the Company the exclusive right to sell those manufacturers'
products within a given protected geographical area. Accordingly, a competing
manufacturer selling a different brand could authorize another dealer to start a
new dealership in proximity to one or more of the Company's locations, or an
existing competing dealer selling competing brands could move a dealership to a
location that would be directly competitive with the Company. Such an event
could have a material adverse effect on the Company and its operations; however,
Kawasaki, Yamaha, Suzuki and Honda Motorcycles currently own 62% of the retail
motorcycle sales market in the USA, and they protect their dealers' territories.
FUTURE CAPITAL NEEDS; DEBT SERVICE REQUIREMENTS; POSSIBLE DILUTION THROUGH
ISSUANCE OF STOCK
The Company's future capital requirements will depend upon the size, timing, and
structure of future acquisitions and its working capital and general corporate
needs. To the extent that the Company finances future acquisitions in whole or
in part through the issuance of Common Stock or securities convertible into or
exercisable for Common Stock, existing stockholders will experience a dilution
in the voting power of their Common Stock and earnings per share could be
negatively impacted. The extent to which the Company will be able or willing to
use the Common Stock for acquisitions will depend on the market value of its
Common Stock from time to time and the willingness of potential sellers to
accept Common Stock as full or partial consideration. The inability of the
Company to use its Common Stock as consideration, to generate cash from
operations, or to obtain additional funding through debt or equity financings in
order to pursue its acquisition program could materially limit the Company's
growth.
Any borrowings made to finance future acquisitions or for operations could make
the Company more vulnerable to a downturn in its operating results, a downturn
in economic conditions, or increases in interest rates on borrowings that are
subject to interest rate fluctuations. If the Company's cash flow from
operations is insufficient to meet its debt service requirements, the Company
could be required to sell additional equity securities, refinance its
obligations, or dispose of assets in order to meet its debt service
requirements. In addition, it is likely any credit arrangements will contain
15
<PAGE> 16
financial and operational covenants and other restrictions with which the
Company must comply, including limitations on capital expenditures and the
incurrence of additional indebtedness. There can be no assurance that such
financing will be available if and when needed or will be available on terms
acceptable to the Company. The failure to obtain sufficient financing on
favorable terms and conditions could have a material adverse effect on the
Company's growth prospects and its business, financial condition, and results of
operations.
IMPACT OF GENERAL ECONOMIC CONDITIONS AND DISCRETIONARY CONSUMER SPENDING
The Company's operations are dependent upon a number of factors relating to or
affecting consumer spending. The Company's operations may be adversely affected
by unfavorable local, regional or national economic developments or
uncertainties regarding future economic prospects that reduce consumer spending
in the markets served by the Company's stores. Consumer spending on
non-essential goods such as motorcycles can also be adversely affected due to
declines in consumer confidence levels, even if prevailing economic conditions
are positive. In an economic downturn, consumer discretionary spending levels
are also reduced, often resulting in disproportionately large declines in the
sale of high-dollar items such as motorcycles. During 1988 through 1990, the US
economy was severely depressed due to declines in the financial, oil and gas and
real estate markets. There can be no assurance that a similar economic downturn
might not recur in the United States or any other market or that the Company
could remain profitable during any such period. Similarly, rising interest rates
could have a negative impact on consumers' ability or willingness to obtain
financing from third-party lenders, which could also adversely affect the
ability of the Company to sell its products. Changes in federal and state tax
laws including, without limitation, the imposition or proposed adoption of
luxury or similar taxes on certain consumer products, could also influence
consumers' decisions to purchase products offered by the Company and could have
a negative effect on the Company's sales. Local influences such as corporate
downsizing and military base closings may adversely affect and may influence the
Company's operations in certain markets.
ITEM 3. DESCRIPTION OF PROPERTY OF THE PROPOSED SUBSIDIARY
Facility
The Company occupies leased office space at the rate of $100.00 per month at
1707 H Street, NW, #200 in Washington, DC, and such offices are suitable and
adequate for maintaining a registered office in the District of Columbia. The
proposed subsidiary facilities located at 632 Grant Street, Herndon, Virginia
20170 and 6603 Backlick Road, Springfield, Virginia 22150 will be leased from
the Seller and are suitable and adequate for their intended use as a motorcycle
dealership. The Registrant's lease at 1707 H Street, NW in Washington, DC
includes payment for administrative services and office space for a term of at
least one (1) year, @ a rent of $100.00 monthly, renewable for one (1) year
periods after twelve (12) months have expired. The Registrant believes this
lease agreement is not material, as it is rented to maintain a registered
address. The Registrant intends to operate from the Cycle Sport Herndon location
upon its settlement of the bulk sale purchase of the assets and liabilities of
Cycle Sport, which includes leasing the 12,000 sq. ft. Herndon
16
<PAGE> 17
location from the Seller, but will retain a registered District of Columbia
registered address.
Additionally, the Registrant has finalized the lease payments it will pay to the
Seller with respect to the proposed Cycle Sport Herndon & Springfield locations,
as outlined in the attached Bulk Sales Agreement Exhibits E-1 and E-2 of Exhibit
10. The Company will pay $8,842 per month for the first year at Herndon, and
$4500 per month during 1999 at Springfield.
Investment Policies
The Company proposes to invest its capital and subsequent earnings, if any, in
the acquisition of additional major franchised motorcycle dealerships. Such an
acquisition program is a policy of acquiring assets primarily for income. Such
investments made are centered in motorcycles, parts, accessories and service
equipment related inventory, major franchise sales agreements, and real estate
if the motorcycle dealership's retail commercial real estate locations will be
purchased. If any real estate is purchased, the Company will limit itself to 2
mortgages when arranging financing, and the purchase of a dealership location
will only be considered when it facilitates the sale of the dealership's
motorcycles and related items.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables are intended as a visual description:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
All 5% persons:
Name of Amount of
Beneficial Beneficial
Title of Class Owner Owner Percent of Class A
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Common Voting
Ted Schwartzbeck 109,515 13.54%
A. Jay Pignatello 109,515 13.54%
Villa Beau Holdings 219,030 27.08%
Class B Common Voting
None
</TABLE>
The address for the above referenced 5% persons are: Ted L. Schwartzbeck, 43783
Michener Drive, Ashburn, VA 20147; Jay Pignatello, 4334 Gingham Ct., Alexandria,
VA 22310; Villa Beau Holdings, Ltd., 43 Elizabeth Street, Nassau, NP, Bahamas.
The principals of Villa Beau Holdings are: Clara Cespedes: Director, President;
Jose Tamarez, Esq.: Director, Secretary, control shareholder.
17
<PAGE> 18
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Management 5% persons:
Name of Amount of
Beneficial Beneficial
Title of Class Owner Owner Percent of Class
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Common Voting
Ted Schwartzbeck 109,515 13.54%
A. Jay Pignatello 109,515 13.54%
Class B Common Voting
None
</TABLE>
The following Class A management warrants have been reserved for the following
persons, which may only be exercised based upon the performance of those
individuals as part of the proposed management team:
<TABLE>
Management 5% persons:
Name of Amount of
Beneficial Beneficial
Title of Class Owner Owner Percent of Class
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Common Voting
David Settle 109,515 9.62% *
Eric Arlt 109,515 9.62% *
Jose Tamarez 109,515 9.62% *
</TABLE>
* The percentages owned by each management person if the above warrants are
issued will reduce all 5% persons to 9.26% each of Class A shares, and will
reduce Villa Beau Holdings, Ltd. to 19.26% of the Class A shares on a fully
diluted basis.
<TABLE>
Class B Common Voting
<S> <C>
None
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Company's Directors, Executive Officers, and their ages are:
<TABLE>
<CAPTION>
Name Position Age
- ---------------- ---------------- ---
<S> <C> <C>
Ted Schwartzbeck Chairman 35
</TABLE>
Mr. Schwartzbeck has been an Executive Officer of Century Steel Products, Inc.,
a specialty steel fabricator in Sterling, VA, since 1985, and a Director of its
parent company, Century Industries, Inc. (PHLX) since 1993.
18
<PAGE> 19
David L. Settle Executive Counselor, 37
Director
Mr. Settle raced motocross motorcycles in Maryland and won several prestigious
races from 1974 through 1994, from age 13 through age 33. He completed his
racing days with the #5 plate in the Seniors class in the State of Maryland. He
subsequently served with the U.S. State Department for several years as
Supervisor of Foreign Embassy Elevator Maintenance, coordinating and supervising
a substantial field service force. Mr. Settle, as Executive Counselor, will
assume the responsibilities of president of V-Twin after the Cycle Sport
franchises have officially been transferred to V-Twin.
Jay Pignatello Exec. Vice-President, 28
Director, Secretary
Mr. Pignatello graduated from the University of Pennsylvania in 1992. He worked
at the law firms of Arent, Fox, Kitner, Plotkin & Kahn and Reed, Smith, Shaw &
McClay from 1992 to 1996. He is a Director and Vice President of Century
Industries, Inc., a Philadelphia Stock Exchange listed fully reporting company.
Carolyn Mongold Director 42
Prior to joining the Company, Ms. Mongold was a commercial banker with Bank
Hapoalim located in Beverly Hills, California. Prior to joining Bank Hapoalim,
Ms. Mongold spent six years with Crocker Bank.
The above Directors are all elected annually, and all the Directors have served
since the Company's inception. All of the Directors were appointed to serve for
the calendar year of 1998 at the annual meeting.
ITEM 6. EXECUTIVE COMPENSATION
No Officer or Director receives any compensation from the Company. David Settle
will receive as salary as General Manager of the acquired dealership if it is
completed. The Officers contemplate receiving a moderate compensation package
for their efforts upon the completion of the purchase of a sufficient number of
dealerships to justify such compensation.
In the following table names have been abbreviated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
V-Twin Acquisitions, Inc.
Name and Restricted All
Position Year Salary ($) Bonus Other($) stock awards Other
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jay Pignatello 1998 -0- -0- -0- -0- -0-
Ted Beck 1998 -0- -0- -0- -0- -0-
David L. Settle 1998 -0- -0- -0- -0- -0-
- --------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
As a subsequent event at September 27, 1998, the control and one 5% shareholders
(Villa Beau Holdings, Ltd., Ted L. Schwartzbeck, and A. Jay Pignatello), have
written letters to the Registrant declaring that the consideration paid by the
control and 5% shareholders (Villa Beau Holdings, Ltd., Ted L. Schwartzbeck, and
A. Jay Pignatello) should be classified as additional paid in capital. These
letters from the control shareholders are attached as Exhibit 99.7.
ITEM 8. LEGAL PROCEEDINGS
There are, at present, no legal proceedings in which the Company is involved,
either as plaintiff or defendant.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Class A and Class B shares are anticipated to trade on the NASDAQ
Bulletin Board by the Company placing a Section 240.15c2-11 on file with its
sponsoring broker dealer, and the Company becoming fully reporting upon this
Form 10-SB being declared effective. There exists no range of bid/asked
information for the Company's common voting Class A or Class B shares for each
quarter of the last two years.
There are approximately 158 stockholders which own the Class A shares, and there
are approximately 167 stockholders which own the Class B shares.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Within the past three years, the only sales of unregistered securities the
Company has undertaken have been the securities issued to the Registrant's
management and 5% persons in its recent statutory merger which are the subject
matter of this registration statement. No other securities have been sold by the
Company.
ITEM 11. DESCRIPTION OF SECURITIES
When the Company completed its statutory merger with Commercial Indemnity
Underwriters, Inc., on July 10, 1998, it was authorized to issue 25,000,000
Class A common voting shares (par value $.001) and 25,000,000 Class B common
voting shares (par value $.001), and, upon completion of the statutory merger,
had 1,000,000 shares issued and outstanding, comprised of 808,727 Class A
shares, and 191,273 Class B shares. It also issued Class A warrants for 328,545
exercisable at $.01 based upon performance, which would cause the Company to
have 1,328,515 Class A shares outstanding on a fully diluted basis, and a total
outstanding of 1,328,545 of both classes.
The Company is also authorized to issue 2,000,000 shares of Preferred Stock (par
value $.001), to be designated in one or more series at the discretion of the
Board of Directors. There are no shares of the Preferred Stock issued or
outstanding.
The Company registered 808,727 shares of its Class A (par value $.001)
common voting shares and 191,273 of its Class B (par value $.001) common voting
20
<PAGE> 21
shares by the filing of the original Form 10-SB, which went effective through
lapse of time on October 9, 1998, thereby registering such shares within the
purview of Section 12(g). This Form 10-SB/A is filed as post effective
amendment.
The Company intends to commence trading on the NASDAQ OTC:BB through the
approval of a Section 240.15c2-11 being on file with a sponsoring NASD broker
dealer, and is a fully reporting 12(g) Registrant pursuant to the aforedescribed
Form 10-SB having become effective through lapse of time on October 9, 1998.
This Form 10-SB/A is filed as a post effective amendment.
But for the 1/100th voting power of the Class B (par $.001) common voting shares
of the Company vis a vis the Company's Class A (par $.001) common voting shares,
the shareholders of each class are entitled to: a) in either 1:1 or 1:100
(depending of whether Class A or Class B common voting shares) ratio a
non-cumulative vote for each shareholder of record on all matters submitted to a
vote of the shareholders, b) full and equal rights, regardless of whether Class
A or Class B common voting shares, to participate equally in and to receive
common stock dividends (if any) as may be declared by the Board of Directors out
of legally available funds, and c) to participate equally and pro-rata,
regardless of whether Class A or Class B common voting shares, in the
distribution of any and all assets available for distribution upon liquidation
of the Company.
All shareholders, regardless of whether Class A or Class B common voting shares
have no pre-emptive rights to acquire additional shares of the Company's common
stock or any other of its securities, and all outstanding shares of common stock
are non-assessable.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
There exists no statute, provision in the charter, by-laws, contract or other
arrangements that insures or indemnifies a controlling person, director or
officer of the Company which effects his or her liability in his or her capacity
as a controlling person, director or officer of the Company.
21
<PAGE> 22
ITEM 13. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
V-TWIN ACQUISITIONS, INC.
<TABLE>
<S> <C>
REPORT OF INDEPENDENT AUDITOR F-1
BALANCE SHEET F-2
NOTES TO FINANCIAL STATEMENTS F-3 through F-6
</TABLE>
22
<PAGE> 23
Report of Independent Accountant.
Board of Directors
V-Twin Acquisitions, Inc.
Washington, D.C. 20036
We have audited the accompanying balance sheet of V-Twin Acquisitions,
Inc. as of July 31, 1998. This balance sheet is the responsibility of the
Companys management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. We believe our audit provides a reasonable basis for our opinion.
In our opinion, the above-referenced financial statement presents fairly,
in all material respects, the financial position of V-Twin Acquisitions, Inc. as
of July 31, 1998, conforming with generally accepted accounting principles.
/s/ KLIPFEL & ASSOCIATES, L.L.C.
- -------------------------------.
Klipfel & Associates, L.L.C.
Certified Public Accountants
Alexandria, VA.
August 10, 1998.
F-1
<PAGE> 24
V-TWIN ACQUISITIONS, INC.
A Development Stage Enterprise
Balance Sheet
July 31 1998
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS
<S> <C>
Cash and Cash Equivalents $50,148.00
Marketable Equity Securities 612,500.00
Available for Sale or Trading
TOTAL ASSETS $662,648.00
</TABLE>
LIABILITIES AND OWNERS' EQUITY
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
<S> <C>
Class A Common Stock, 25,000,000
Shares authorized, 589,696 issued
and outstanding: 590.00
Class B Common Stock, 25,000,000
Shares authorized, 191,273 issued
and outstanding: 191.00
Additional Paid-In Capital 661,867.00
TOTAL SHAREHOLDERS' EQUITY 662,648.00
TOTAL LIABILITIES AND OWNERS' EQUITY $662,648.00
</TABLE>
See Accompanying Notes to Financial Statement.
F-2
<PAGE> 25
V-Twin Acquisitions, Inc.
(A Development Stage Company)
Notes to Financial Statement
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization - The Company was organized under the laws of the District of
Columbia on July 10, 1998. During July 1998 the Company completed a merger with
Commercial Indemnity Underwriters, Inc., (C.I.U.) with the Company becoming the
surviving entity from the merger. The Company is considered a development stage
company and during July 1998 did not engage in any business activities. As such
there is no statement of operations and no statement of cash flows contained in
this audit.
C.I.U. was formerly known as American Solid Fuel, Inc. (A.S.F.I.) and had
remained dormant until its merger with the Company. A.S.F.I. was formed in
August 1988 and successfully completed a public offering through an S-18
registration. C.I.U. (formerly A.S.F.I.) had no assets, liabilities, and income
and expenditures from operations, so there was no historical carry-over basis.
Prior to the merger between C.I.U. and V-Twin, V-Twin was controlled by Ted
Schwartzbeck and Jay Pignatello by virtue of the ownership of two common voting
shares of V-Twin, and C.I.U. was controlled by Clara Cespedes, by virtue of her
ownership of a majority of the C.I.U. shares. Simultaneous with the merger, Ms.
Cespedes gave certain of her V-Twin shares to Mr. Schwartzbeck and Mr.
Pignatello, in view of their contribution to V-Twin of cash, a go-forward
business plan, and the right to purchase the assets and liabilities of Cycle
Sport, Inc. Dr. Davila, a shareholder of ASFI, served as V-Twin's beginning
President, in order to assure that the ASFI shareholders would receive their
V-Twin shares after the merger. Dr. Davila subsequently resigned.
The CIU/V-Twin merger transaction consisted of the following facts: CIU
(formerly ASFI), as one party to the merger, was a dormant company with no
assets, liabilities, income or expenses for eight years. Its common shares were
distributed to both the control shareholder and the public investors which
originally purchased the minimum ASFI offering registered under the then S-18
registration provisions. The other party, V-Twin, was a development stage
enterprise formed to activate the motorcycle dealership purchase business plan.
V-Twin's control shareholders further capitalized V-Twin in order to effectuate
the business plan.
The basis for the merger agreements between the parties was that V-Twin would
provide substance for the merged companies, thereby providing the ASFI
shareholders with an opportunity to ultimately recover their original investment
in their now worthless shares, and
F-3
<PAGE> 26
V-Twin would survive as a registered public company without needing to locate an
underwriter and carry the extraordinary expense of "going public" through a new
registration.
APB 16, No. 27, in brief, describes a pooling of interests is a transaction
whereby one entity issues its common stock for the common stock of another
entity, and the resulting business combination carries on the combination of the
previous businesses. In the V-Twin/CIU merger, V-Twin, the surviving company,
issued its common stock in exchange for the common stock of CIU, and the only
asset of CIU was its status as a formerly registered company with the Securities
and Exchange Commission. This is an asset which is intangible. In reality, there
was nothing to pool, either in terms of assets, liabilities, income or expenses.
The assets of V-Twin consists of cash and marketable securities will inure to
all common shareholders, which are generally the former shareholders of CIU
(formerly ASFI). Thus, the financial statement of V-Twin would survive exactly
as it was prior to the merger, and remains exactly the same subsequent to the
merger.
Additionally, consistent with Paragraph 95 of APB 16, V-Twin issued 808,727
Class A shares and 191,273 Class B shares to the shareholders of CIU (formerly
ASFI) for the 1,000,000 shares outstanding of CIU (formerly ASFI). One
development stage enterprise (V-Twin), through a statutory merger, combined with
another dormant company (CIU, formerly ASFI). The survivor, V-Twin, issued its
shares to the shareholders of the company being dissolved (CIU, formerly ASFI).
The resulting entity had a balance sheet capitalized by the former ASFI
shareholders, now the same shareholders as the V-Twin shareholders. There were
no assets, liabilities, income or expenses made available by CIU to pool or
purchase with V-Twin.
V-Twin's policy is classify and account its investment in marketable securities
at their market value as of the balance sheet date, at an average of the
bid/asked price on the day of the financial statement. The investments should
be considered "available for sale or trading" under FASB 115, paragraph 6.
NOTE 2 - PROPOSED ACQUISITIONS:
The Company's future business operations are contingent upon completing a
proposed acquisition of a retail motorcycle dealership known as Cycle Sport,
Inc., based in Herndon, Virginia. Management's business strategy is to use a
successful completion of Cycle Sport, Inc. as a springboard to future
acquisitions of similar motorcycle dealerships. As of the date of this financial
statement the proposed acquisiton of Cycle Sport, Inc. had not been finalized.
Management has not identified any other cycle dealership that it is considering
for a proposed future acquisition.
NOTE 3 - RELATED PARTY TRANSACTIONS.
During the period ended July 31, 1998, the Company received consideration from
shareholders. The consideration was deposited in the Company's checking
account:
F-4
<PAGE> 27
SHAREHOLDER AMOUNT
----------- -----------
A. Jay Pignatello 22,148.00
Villa Beau Holdings, Ltd. 20,000.00
Ted L. Schwartzbeck 8,000.00
---------
Total Shareholder Loans 50,148.00
---------
---------
The consideration was booked as additional paid in capital.
The Company's largest holder of its Class A Common Stock is Villa Beau
Holdings, Ltd., a company incorporated in The Bahamas. As consideration for
acquiring its 219,030 shares in the Company, Villa Beau Holdings, Ltd.
transferred to the Company 350,000 shares of Class A common stock of Century
Industries, Inc., which is a U.S. based company whose stock is traded on the
Philadelphia Stock Exchange. At the time of this exchange between the Company
and Villa Beau Holdings, Ltd. the 350,000 shares in Century Industries, Inc. had
a market value of $612,500.
The vice-president, treasurer, and secretary of the Company, Mr. A. Jay
Pignatello, is also a director of the Company. He sits on the board of directors
of Century Industries, Inc. The chairman of the board of the Company, Mr. Ted L.
Schwartzbeck, is president of Century Steel Products, Inc., a wholly-owned
subsidiary of Century Industries, Inc.
Management Compensation - There will be no compensation expense until the
bulk sale purchase of Cycle Sport, Inc. is consummated.
NOTE 4 - INCOME TAXES.
Statement 43 of FASB statement 109 refers to the financial statement
disclosure of net deferred tax liabilty or asset. V-Twin has no tax deferred
liabilities or deferred tax assets.
NOTE 5 - CONSOLIDATION OF INTERESTS.
In 1996 American Solid Fuel, Inc. (A.S.F.I.) changed its corporate name
to Commercial Indemnity Underwriters, Inc. (C.I.U.). C.I.U. has been in a
dormant status since
F-5
<PAGE> 28
1990. The proceeds of the A.S.F.I. S-18 registration were expended on various
costs and fees. C.I.U. has never had any operating income and expenditures
since 1990.
NOTE 6 - BULK PURCHASE.
V-Twin has proposed to acquire the assets and liabilities of Cycle Sport,
Inc. through a bulk sale/purchase of assets and liabilities. Therefore, V-Twin
is currently a Development Stage company.
NOTE 7 - LEASES.
The company has leased office space at 1707 H Street, Washington, D.C. The
terms of the lease include the payment of $ 100.00 each month to the
lessor--B.E.B. Enterprises. The lease is renewable after the conclusion of one
12-month period.
F-6
<PAGE> 29
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There are not now, nor have there been, disagreements with the Company's
presently engaged accountants, Klipfel & Associates, LLC.
ITEM 15. FINANCIAL STATEMENTS
On July 10, 1998, the Company completed the statutory merger with
Commercial Indemnity Underwriters, Inc., a dormant company registered pursuant
to section S-18, now projected to be listed on the NASDAQ Bulletin Board. This
transaction has been accounted for as a statutory merger, with the Company
designated as the survivor. The most current Financial Statement available for
the Company can be found under Item 13 hereinabove.
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
November 12, 1998
V-Twin Acquisitions, Inc.
/s/ TED L. SCHWARTZBECK
- -------------------------------------
Ted L. Schwartzbeck, Chairman and CEO
/s/ JAY PIGNATELLO
- -------------------------------------
Jay Pignatello, Director & Secretary
23
<PAGE> 30
The following Exhibits are attached as required by Small Business Issuers:
(l) Underwriting agreement. Not applicable.
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession. Attached hereto.
(3) Articles of Incorporation and by-laws. Attached hereto.
(4) Instruments defining rights of holders. Not applicable.
(5) Opinion re legality. Not applicable.
(6) No Exhibit required.
(7) Opinion re liquidation preference. Not applicable.
(8) Opinion re tax matters. Not applicable.
(9) Voting trust agreement. Not applicable.
(10) Material contracts. Attached hereto.
(11) Statement re computation of per share earnings. Not applicable.
(12) No Exhibit required.
(13) Annual or quarterly reports, Form 10-Q or quarterly report to security
holders. Not applicable.
(14) Material foreign patents. Not applicable.
(15) Letter on unaudited interim financial information. Not applicable.
(16) Letter on change in certifying accountant. Not applicable.
(17) Letter on director resignation. Not applicable.
(18) Letter re change in accounting principles. Not applicable.
(19) Report furnished to security holders. Not applicable.
(20) Other documents or statements to security holders. Not applicable.
(21) Subsidiaries of the registrant. Not applicable.
(22) Published report regarding matters submitted to vote of security holders.
Not applicable.
(23) Consents of experts and counsel. Not applicable.
(24) Power of attorney. Not applicable.
(25) Statement of eligibility of trustee. Not applicable.
24
<PAGE> 31
(26) Invitations for competitive bids. Not applicable.
(27) Financial data schedule. Not applicable.
(28) Information from reports furnished to state insurance authorities. Not
applicable.
(29) Through (98) [RESERVED]
(99) Additional Exhibits. Attached hereto.
99.1 ASFI S-18 effective letter dated 8-2-89 and prospectus
99.2 "The Motorcycle Industry"
99.3 Reuters News Release - "Harley Rides Out US Motorcycle Boom"
99.4 Antitrust Law & Economics Review by Charles E. Mueller
99.5 Cycle News - "In the Wind"
99.6 1998 Yamaha Industry Comparison Data
99.7 V-Twin control shareholders letters re: additional paid in capital.
<PAGE> 1
EXHIBIT 2
Plan of acquisition, reorganization, arrangement, liquidation or succession.
Attached hereto.
24
<PAGE> 2
GOVERNMENT OF THE DISTRICT OF COLUMBIA
DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS
BUSINESS REGULATION ADMINISTRATION
[DISTRICT OF COLUMBIA SEAL]
CERTIFICATE
THIS IS TO CERTIFY that all applicable provisions of the DISTRICT
OF COLUMBIA BUSINESS CORPORATION ACT have been complied with and accordingly,
this CERTIFICATE of MERGER is hereby issued to
COMMERCIAL INDEMNITY UNDERWRITERS, INC. (UNQUALIFIED DE CORP.)
MERGED INTO
V-TWIN ACQUISITIONS, INC.
(DC CORP.)
as of JULY 10TH, 1998.
Dwight H. Reeves
Interim Director
Patricia A. Montgomery
Administrator
Business Regulation Administration
/s/ William L. Ables, Jr.
----------------------------------------
William L. Ables, Jr.
Act. Asst. Corporate Program Manager
Corporations Division
Marion Barry, Jr.
Mayor
<PAGE> 3
ARTICLES OF MERGER OF DOMESTIC AND FOREIGN CORPORATIONS
TO: DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS
BUSINESS REGULATION ADMINISTRATION
CORPORATIONS DIVISION
614 H STREET, N.W. ROOM 407
WASHINGTON, D.C. 20001
Pursuant to the provisions of Title 29, Chapter 9 of the Code of Laws of
the District of Columbia, the undersigned domestic and foreign corporations
adopt the following Articles of Merger for the purpose of merging them into one
of such corporations:
FIRST: The names of the undersigned corporations and the States, including the
District of Columbia, under the laws of which they are respectively
organized are:
Name of Corporations State
- -------------------- -----
Commercial Indemnity Underwriters, Inc. DE
V-Twin Acquisitions, Inc. DC
SECOND: The laws of the State under which such foreign corporation is organized
permit such merger are the laws of the State of Delaware.
THIRD: The name of the surviving corporation is V-Twin Acquisitions, Inc. and
it is governed by the laws of the District of Columbia.
FOURTH: The following Plan of Merger was approved by the shareholders of the
undersigned Domestic Corporation in the manner prescribed by the Code of
Laws of the District of Columbia, and was approved by the undersigned
foreign corporation in the manner prescribed by the laws of the State
under which it is organized. Plan of Merger is attached hereto as
Exhibit "A".
FIFTH: The merger received an affirmative vote as a class of the holders of at
least 2/3rds of the outstanding shares of each class of shares entitled
to vote as a class.
SIXTH: The surviving corporation be governed by the laws of the District of
Columbia, and it agrees (a) that it may be served with process in the
District of Columbia in any proceeding for the enforcement of any
obligation of the undersigned domestic corporation and in any proceeding
for the enforcement of
<PAGE> 4
the rights of a dissenting shareholder of such domestic corporation
against the surviving corporation; (b) irrevocably appoints the
Corporations Division for the District of Columbia as its agent to
accept service of process in any such proceeding; and (c) agrees that it
will promptly pay to the dissenting shareholders of such domestic
corporation the amount, if any, to which they shall be entitled under
the provision of the Code of Laws of the District of Columbia, with
respect to the rights of dissenting shareholders.
DATE: July 9, 1998 Commercial Indemnity Underwriters, Inc.
A Delaware Corporation
BY: /s/ Clara Cespedes
-------------------------------------
Clara Cespedes, President
(Corporate Seal)
DATE: July 9, 1998 V-Twin Acquisitions, Inc.
A District of Columbia Corporation
BY: /s/ Sebastian Davila
-------------------------------------
Sebastian Davila, President
(Corporate Seal)
<PAGE> 5
Exhibit A
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER is entered into and is effective this 9th
day of July, 1998, by and between V-Twin Acquisitions, Inc., a District of
Columbia corporation (hereinafter called "V-Twin") and Commercial Indemnity
Underwriters, Inc., a Delaware corporation, (hereinafter called "CIU").
W I T N E S S E T H:
WHEREAS, V-Twin has an authorized capital stock consisting of 25,000,000
shares of Class A common stock, $.001 par value per share, 25,000,000 shares of
Class B common stock, $.001 par value per share, of which 1,000,000 shares
(808,727 Class A and 191,273 Class B) have been duly issued and are outstanding
(the "Common Stock"), and 2,000,000 shares of Preferred Stock, $.001 par value
per share, of which no shares are issued and outstanding, and
WHEREAS, CIU has an authorized capital stock consisting of 1,666,667 shares
of common stock, par value $.001 per share, of which 1,000,000 shares have been
duly issued and are now outstanding (the "Common Stock"), and
WHEREAS, V-Twin and CIU desire to adopt a plan and agreement of merger
pursuant to the provisions of Section 386(a)(1)(f) of the Internal Revenue Code
of 1954, as amended (the "Code"), upon the terms and conditions as contained in
this Agreement.
NOW, THEREFORE, for and in consideration of the premises and of the
respective agreements set forth below and in order to consummate this Plan and
Agreement of Merger, the parties hereto agree as follows:
1. Merger. CIU shall merge into V-Twin, with V-Twin surviving.
2. Effective Date. This Plan and Agreement of Merger shall become
effective as of the date first stated above, being hereinafter called the
Effective Date.
3. Surviving Corporation. V-Twin shall survive the merger herein
contemplated and shall continue to be governed by the laws of the District of
Columbia, and the separate corporate existence of CIU shall cease forthwith upon
the Effective Date.
<PAGE> 6
4. Certificate of Incorporation. The Certificate of Incorporation of the
District of Columbia Corporation set forth as Exhibit "A" hereto shall be the
composite Certificate of Incorporation of V-Twin.
5. Bylaws. The Articles of Incorporation of V-Twin shall be the Articles
of Incorporation of the merged V-Twin following the Effective Date unless and
until the same shall be amended or repealed in accordance with the provisions
thereof.
6. Authorized Capital. The authorized capital stock of V-Twin following
the Effective Date shall be 25,000,000 Class A shares having $.001 par value per
share, and 25,000,000 Class B shares of common stock having $.001 par value per
share, with the Class A shares having one vote for one share, and the Class B
shares having one vote for each 100 shares, unless and until the same shall be
changed in accordance with the laws of the District of Columbia, and 2,000,000
shares of Preferred stock, $.001 par value, to be designated at the discretion
of the Board of Directors of V-Twin.
7. Further Assurance of Title. If at any time V-Twin shall consider or be
advised that any acknowledgements or assurances in law or other similar actions
are necessary or desirable in order to acknowledge or confirm in and to the
District of Columbia Corporation any right, title, or interest which CIU held
immediately prior to the Effective Date, CIU and its proper officers and
directors shall and will execute and deliver all such acknowledgements or
assurances in law and do all things necessary or proper to acknowledge or
confirm such right, title, or interest in the District of Columbia Corporation
as shall be necessary to carry out the purposes of this Plan and Agreement of
Merger, and V-Twin and the proper officers and directors hereof are fully
authorized to take any and all such action in the name of CIU or otherwise.
8. Pro Rata Conversion of Outstanding Stock. Forthwith upon the Effective
Date, each of the issued and outstanding shares of CIU common stock and all
rights in respect thereof shall be converted into the following classes of
V-Twin Stock: 808,727 Class A and 191,273 Class B, equal to one fully paid and
non assessable share of V-Twin Class A or Class B Common Stock, and each
certificate nominally representing the Class A and Class B shares of V-Twin
Common Stock shall for all purposes be deemed to evidence the ownership of a
like manner of shares of CIU Common Stock.
9. Officers and Directors. The officers and directors of V-Twin shall
remain the same following the Effective Date, until the next annual meeting of
shareholders and directors of V-Twin.
2
<PAGE> 7
10. Book Entries. The merger contemplated herein shall be treated as a
pooling of interests and as of the Effective Date entries shall be made upon the
books of the District of Columbia Corporation in accordance with the following:
(a) The assets and liabilities of the CIU shall be recorded on the
books of V-Twin at the amounts at which they are carried on the books of the
Delaware corporation immediately prior to the Effective Date with appropriate
adjustment to V-Twin.
(b) There shall be credited to the Capital Account of V-Twin an amount
equal to that carried on the Capital Account of CIU immediately prior to the
Effective Date.
(c) There shall be credited to the Retained Earnings Account of V-Twin
an amount equal to that carried on the Retained Earnings Account of CIU
immediately prior to the Effective Date.
11. Notices. Any notice or other communication required or permitted
hereunder shall be properly given when deposited in the United States mail for
transmittal by certified or registered mail, postage prepaid, or when deposited
with a public telegraphic company for transmittal, charges prepaid, addressed:
(a) In the case of V-Twin to:
Sebastian Davila
1155 Connecticut Avenue, NW, Suite 300
Washington, DC 20036
or to such other person or address as V-Twin may from time to time furnish to
CIU.
(a) In the case of CIU to:
Clara Cespedes
11708 Bowman Green Drive - 1st Floor
Reston, Virginia 20190
or to such other persons or address as CIU may from time to time furnish to
V-Twin.
12. Submission to Shareholders. Both parties warrant that this Plan and
Agreement of Merger has been submitted separately for approval to the
shareholders of the constituent corporations in the
3
<PAGE> 8
manner provided by the laws of the District of Columbia and the State of
Delaware.
13. Termination. This Plan and Agreement of Merger may not be terminated
or abandoned by action of the Board of Directors of V-Twin or CIU subsequent to
the Effective Date, or after approval by the shareholders of the constituent
corporations.
IN WITNESS WHEREOF, an authorized representative of each of the constituent
corporations has executed this Plan and Agreement of Merger effective as of the
date written above.
V-Twin Acquisitions, Inc.
a District of Columbia corporation
BY: /s/ Sebastian Davila
-------------------------------------
Sebastian Davila, President
Commercial Indemnity Underwriters, Inc.
a Delaware corporation
BY: /s/ Clara Cespedes
-------------------------------------
Clara Cespedes, President
4
<PAGE> 1
EXHIBIT 3
Articles of Incorporation and by-laws. Attached hereto.
25
<PAGE> 2
GOVERNMENT OF THE DISTRICT OF COLUMBIA
DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS
BUSINESS REGULATION ADMINISTRATION
[DISTRICT OF COLUMBIA SEAL]
CERTIFICATE
THIS IS TO CERTIFY that all applicable provisions of the DISTRICT
OF COLUMBIA BUSINESS CORPORATION ACT have been complied with and
accordingly, this CERTIFICATE of INCORPORATION is hereby issued to
V-TWIN ACQUISITIONS, INC.
as of JULY 10TH, 1998.
Dwight H. Reeves
Interim Director
Patricia A. Montgomery
Administrator
Business Regulation Administration
/s/ Patricia E. Grays
----------------------------------------
Patricia E. Grays
Corporate Program Manager
Corporations Division
Marion Barry, Jr.
Mayor
<PAGE> 3
ARTICLES OF INCORPORATION
OF
V-TWIN ACQUISITIONS, INC.
TO: Department of Consumer and Regulatory Affairs
Corporation Division
614 H St., NW
Suite 407
Washington, DC 20001
I/We the undersigned natural persons of the age of eighteen year or more
acting as incorporators of a corporation under the BUSINESS CORPORATION ACT (DC
Code, 1981 ed., Title 29, Chap. 3), adopt the following Articles of
Incorporation:
First: The name of the corporation is V-TWIN ACQUISITIONS, INC.
Second: The period of its duration is perpetual.
Third: The purposes for which the corporation is organized is to acquire
motorcycle dealerships, and/or dealership assets, in the District of
Columbia, the District of Columbia metropolitan area, and elsewhere,
and to be in business for pecuniary gain.
Fourth: The aggregate number of shares which the corporation is authorized to
issue is: 25,000,000 shares of $.001 par value Class A common stock;
25,000,000 shares of $.001 par value Class B common stock; and
2,000,000 shares of $.001 par value preferred stock, for which the
Board of Directors is hereby granted designation rights.
Fifth: All the Class A common shares will have equal voting rights with
respect to one another. The Class B common shares shall have a single
vote for every 100 shares (1:100) and will enjoy all the other rights
and privileges as the Class A common shares. The preferred shares
shall have no voting privileges whatsoever.
Sixth: The corporation will not commence business until at least $1,000 has
been received as initial capitalization.
Seventh: The initial shareholders will not have any preemptive rights
whatsoever to acquire additional shares.
<PAGE> 4
Eighth: The internal affairs of the corporation will be regulated by the
By-Laws of the corporation.
Ninth: The address, including street and number of the initial registered
office of the corporation is 1730 K Street, NW, Suite 304, Washington,
DC, 20006, and the name of the initial registered agent at such
address is Robert J. Flynn, Jr. The address, including street and
number where it conducts its principal business is 1155 Connecticut
Ave., NW, #300, Washington, DC 20036.
Tenth: The number of directors constituting the initial Board of Directors of
the corporation is one and the name and address, including street and
number and zip code of the person who is to serve as directors until
the first annual meeting of shareholders or until their successor(s)
is/are elected and shall qualify is:
NAME ADDRESS
- ---- -------
Sebastian Davila 1155 Connecticut Ave., NW #300
Washington, DC 20036
Eleventh: The name and address, including street and number if any of each
incorporator are:
NAME ADDRESS
- ---- -------
Sebastian Davila 1155 Connecticut Ave., NW #300
Washington, DC 20036
July 9, 1998
/s/ Sebastian Davila
-----------------------------------------
Incorporator
<PAGE> 5
WRITTEN CONSENT TO ACT AS REGISTERED AGENT
TO:
The Superintendent of Corporations
Department of Consumer and Regulatory Affairs
Business Regulation Administration, Corporations Division
614 H Street, N.W. Room 407
Washington, D.C. 20001
(A) BY A DISTRICT OF COLUMBIA RESIDENT
--------------------------------------
PURSUANT TO THE DISTRICT OF COLUMBIA BUSINESS CORPORATION ACT AS AMENDED (D.C.
CODE, 1981 EDITION, TITLE 29, SECTION 29-310(2))
I, Robert J. Flynn, Jr., Esq.
---------------------------------------------------------------------------
A Bona fide Resident of the District of Columbia Herein Consent to Act as a
Registered Agent For:
V-TWIN ACQUISITIONS, INC.
- ------------------------------------------------------------------------------
(Name of Corporation)
SIGNATURE OF REGISTERED AGENT:
/s/ Robert J. Flynn, Jr.
- ------------------------------
DATE: 7-9-98
------
(B) BY A LEGALLY AUTHORIZED CORPORATION
THE CORPORATION HEREIN NAMED IS:
- ------------------------------------------------------------------------------
An Authorized Corporate Registered Agent in the District of Columbia, per
Signatures of its President/Vice-President and Secretary/Assistant Secretary,
Herein Consents to Act as Registered Agent For:
- ------------------------------------------------------------------------------
NAME OF CORPORATION
SIGNATURE: OF PRESIDENT OR VICE-PRESIDENT
-----------------------------------
ATTEST: OF SECRETARY OR ASSISTANT
--------------------------------------
SECRETARY
DATE:
----------------------------------------
<PAGE> 6
BY-LAWS
OF
V-TWIN ACQUISITIONS, INC.
ARTICLE I - OFFICES
The principal office of the corporation in the DISTRICT of COLUMBIA shall
be located in the DISTRICT of COLUMBIA. The corporation may have such other
offices, either within or without the State of incorporation as the board of
directors may designate or as the business of the corporation may from time to
time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the 31st day of
August in each year, beginning with the year 1998 at the hour 12 o'clock P.M.,
for the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday such meeting shall be held on the next
succeeding business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders
of not less than 20 per cent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate
By-Laws 1
<PAGE> 7
any place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or
if a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than 10 nor more than 60 days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
the meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the stockholder at his address as it appears
on the stock transfer books of the corporation, with postage thereon pre-paid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, 10 days. If the stock transfer books shall be
closed for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be closed for at least 3
days immediately preceding such meeting. In lieu of closing the stock transfer
books, the directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than 14 days
and, in case of a meeting of stockholders, not less than 14 days prior to the
date on which the particular action requiring such determination of stockholders
is to be taken. If the stock transfer books are not closed and no record date is
fixed for the determination of stockholders entitled to notice of or to vote at
a meeting of stockholders, or stockholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the directors declaring such dividend is adopted, as the case
may be, shall be the record date for such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of stockholders
By-Laws 2
<PAGE> 8
has been made as provided in this section, such determination shall apply to
any adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for shares
of the corporation shall make, at least 5 days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of 5
days prior to such meeting, shall be kept on file at the principal office of the
corporation and shall be subject to inspection by any stockholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting. The original stock transfer
book shall be prima facie evidence as to who are the stockholders entitled to
examine such list or transfer books or to vote at the meeting of stockholders.
7. QUORUM.
At any meeting of stockholders 51 of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy executed
in writing by the stockholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the secretary of the corporation before or at the
time of the meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by
By-Laws 3
<PAGE> 9
proxy, for each share of stock entitled to vote held by such stockholders. Upon
the demand of any stockholder, the vote for directors and upon any question
before the meeting shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided by majority
vote except as otherwise provided by the Certificate of Incorporation or the
laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
By-Laws 4
<PAGE> 10
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board
of directors. The directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be 4. Each director
shall hold office until the next annual meeting of stockholders and until his
successor shall have been elected and qualified.
3. REGULAR MEETING.
A regular meeting of the directors, shall be held without other notice
than this by-law immediately after, and at the same place as, the annual
meeting of stockholders. The directors may provide, by resolution, the time and
place for the holding of additional regular meetings without other notice than
such resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of
the president or any two directors. The person or persons authorized to call
special meetings of the directors may fix the place for holding any special
meeting of the directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least 10 days previously
thereto by written notice delivered personally, or by telegram or mailed to
each director at his business address. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
The attendance of a director at a meeting shall constitute a waiver of notice
of such meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
By-Laws 5
<PAGE> 11
6. QUORUM.
At any meeting of the directors 3 shall constitute a quorum for the
transaction of business, but if less than said number is present at a meeting,
a majority of the directors present may adjourn the meeting from time to time
without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the
removal of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled
by vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified
in the notice, the resignation shall take effect upon receipt thereof by the
board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance
at each regular or special meeting of the board may be authorized. Nothing
herein contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
By-Laws 6
<PAGE> 12
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the directors
at which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before adjournment thereof or
shall forward such dissent by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of three or more
directors. Each such committee shall serve at the pleasure of the board.
By-Laws 7
<PAGE> 13
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a vice-president, a
secretary and a treasurer, each of whom shall be elected by the directors. Such
other officers and assistant officers as may be deemed necessary may be elected
or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be removed
by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the stockholders and of the directors. He
may sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the directors have authorized to be executed, except in cases where the signing
and execution thereof shall be expressly delegated by the directors or by these
by-laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall
By-Laws 8
<PAGE> 14
perform all duties incident to the office of president and such other duties as
may be prescribed by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death, inability or
refusal to act, the vice-president shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as from time to time may be assigned to him by the President or by the
directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the corporation.
By-Laws 9
<PAGE> 15
ARTICLE V -- CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or confined to
specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the directors. Such authority may be general or confined to specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be signed
by such officer or officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution of the directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositaries as the directors may select.
ARTICLE VI -- CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form
as shall be determined by the directors. Such certificates shall be signed by
the president and by the secretary or by such other officers authorized by law
and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the
By-Laws 10
<PAGE> 16
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VII -- FISCAL YEAR
The fiscal year of the corporation shall begin on the ____ day of ________
in each year.
ARTICLE VIII -- DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX -- SEAL
The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal".
By-Laws 11
<PAGE> 17
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be
adopted by a vote of the stockholders representing a majority of all the shares
issued and outstanding, at any annual stockholders' meeting or at any special
stockholders' meeting when the proposed amendment has been set out in the
notice of such meeting.
By-Laws 12
<PAGE> 18
ARTICLE XII - ANTI-TAKEOVER EFFECT OF ARTICLES AND BYLAW PROVISIONS
The Company's Articles of Incorporation provide that up to 25,000,000
shares of Class A common stock and 25,000,000 Class B common stock, and
2,000,000 shares of preferred stock may be issued by the Company from time to
time in one or more series. The Board of Directors is authorized to determine
the rights, preferences, privileges and restrictions granted to and imposed
upon any unissued series of preferred stock and to fix the number of shares of
any series of preferred stock and the designation of any such series, without
any vote or action by the Company's stockholders. The Board of Directors may
authorize and issue preferred stock with voting or conversion rights that could
adversely affect the voting power or other rights of the holders of Common
Stock. In addition, the issuance of preferred stock could have the effect of
delaying, deferring or preventing a change in control of the Company. The
Company's Articles of Incorporation also allow the Board of Directors to fix
the number of directors in the Bylaws with no minimum or maximum number of
directors required. The effect of these provisions may be to delay or prevent a
tender offer or takeover attempt that a stockholder might consider to be in his
best interest, including attempts that might result in a premium over the
market price for the shares held by the stockholders.
By-Laws 13
<PAGE> 19
CERTIFICATION OF ADOPTION
OF BYLAWS
We, the undersigned, the duly elected and acting Directors of this corporation
certify that that within and foregoing Bylaws were adopted as the Bylaws of
this corporation on this date and that these Bylaws now constitute the Bylaws
of this corporation.
IN WITNESS WHEREOF, we have hereunto subscribed our names and affixed the seal
of the corporation this date: August 6, 1998.
/s/ Ted L. Schwartzbeck
- --------------------------
Director and Shareholder
/s/ A. Jay Pignatello
- --------------------------
Director and Shareholder
/s/ Carolyn Mongold
- --------------------------
Director and Shareholder
/s/ David Settle
- --------------------------
Director and Shareholder
<PAGE> 1
EXHIBIT 10
CONTRACT FOR
SALE AND PURCHASE OF ASSETS
for
THE MOTOR CYCLE DIVISION
Of
CYCLE SPORT UNLIMITED, INC.
SELLER: CYCLE SPORT UNLIMITED, INC.
632 Grant Street
Herndon, VA 20170
PURCIiASER: V-TWIN ACQUISITIONS, INC.
11708 Bowman Green Drive
Reston, Virginia 20190
<PAGE> 2
LIST OF SCHEDULES
SCHEDULE A............................................. LIST OF ASSETS
SCHEDULE B............................................. LIST OF ACCOUNTS
RECEIVABLE
SCHEDULE C............................................. SCHEDULE OF SELLER
LIABILITIES
SCHEDULE C-1....................................... ASSUMED LIABILITIES
SCHEDULE C-2....................................... NON-ASSUMED LIABILITIES
SCHEDULE D............................................. DEALERSHIP AGREEMENTS
SCHEDULE E............................................. LEASE AGREEMENTS
SCHEDULE E-1....................................... HERNDON LEASE
AGREEMENT
SCHEDULE E-2....................................... SPRINGFIELD LEASE
AGREEMENT
SCHEDULE F............................................. BILL OF SALE
SCHEDULE G............................................. LICENSES
<PAGE> 3
DRAFT 6.2
CONTRACT FOR SALE AND PURCHASE OF ASSETS
THIS CONTRACT, made and entered into this ____ day of ____________, 1998,
by and between CYCLE SPORT UNLIMITED, INC.("Seller") and V-TWIN ACQUISITIONS,
INC., a District of Columbia corporation ("Purchaser").
WHEREAS, Seller's Motor Cycle Division is engaged in the sale and service
of motor cycles and water sport vehicles to the general public at 632 Grant
Street, Herndon, Virginia 20170, (Herndon Location) and 6603 Backlick Road,
Springfield, Virginia 22150 ("Springfield Location") (collectively "Business");
and
WHEREAS, the term "Business" as used herein shall not include assets and
interests used by the Fitness Resource Division of Seller, except as
specifically provided herein;
WHEREAS, Seller desires to cease operating the Business and sell certain
assets designated herein to Purchaser, and
WHEREAS, Purchaser desires to acquire certain assets of Seller and to
open and to operate the same type of Business at the same locations used by
Seller in the operation of the Business, and
WHEREAS, Seller and Purchaser shall contemporaneously herewith enter into
a lease with each other for the Herndon Location, and
WHEREAS, contemporaneously herewith Seller shall assign to Purchaser all
of Seller's interest in the lease for the Springfield Location; and
WHEREAS, Purchaser has paid an earnest money deposit of $50,000.00 to
Dixon, Smith & Stahl for credit on the purchase of the Business,
NOW, THEREFORE, in consideration of the terms, covenants and conditions
herein, the parties agree as follows:
1 GENERAL TERMS OF SALE
1.1 CONTRACT TO SELL. Seller hereby agrees to sell, assign, transfer
and deliver to Purchaser, and Purchaser hereby agrees to purchase
and receive from Seller the Following assets, interests and
covenants:
1.1.1 All inventory and goods (including motor vehicles and
water vehicles), supplies, equipment, parts and
accessories, and fixtures (including trade fixtures,
office machinery and equipment), used primarily for
the Business and which are present in Herndon Location
or Springfield Location as of the close of business on
the day before settlement, all of which is included on
the list attached hereto as "SCHEDULE A." A draft of
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<PAGE> 4
SCHEDULE A is attached to this Agreement at execution. A final
version of SCHEDULE A shall be prepared and agreed upon by the
parties as a condition of settlement as provided in SECTION 4.6.2
below;
1.1.2 Accounts receivable recorded in the corporate records of Seller as
of the close of business on the day before settlement, a current
list of which is attached hereto as "SCHEDULE B, and which shall be
updated prior to settlement;"
1.1.3 The good will associated with Seller's Business, including all of
Seller's interest in the name "Cycle Sport Unlimited."
1.1.4 All files, customer fists and marketing materials of the Business in
the possession of Seller as of the day before settlement and all
advertising contracts in effect as of the close of business on the
day before settlement, together with the right to all promotions and
events sponsored in whole or in part by "Cycle Sport;"
1.1.5 All the intellectual property assets of Seller related to the
Business, including the right to use the trade name "Cycle Sport
Unlimited" together with the current logo and/or service mark; and
1.1.6 The right to assume all franchise or authorized dealer agreements
and/or contracts held by Seller with any of its suppliers or
vendors, to the extent that such agreements may be assignable or
assumable, including (but not limited to) all of Seller's interest
in those certain dealership agreements attached hereto as
"SCHEDULE D;"
1.2 PURCHASE PRICE. Purchaser shall pay to Seller as the total purchase and
sale price the sum of THREE HUNDRED THOUSAND DOLLARS ($300,000.00) payable
as follows:
1.2.1 EARNEST MONEY DEPOSIT. Purchaser has posted $50,000.00 in escrow
with Settlement Agent as consideration for the execution of this
Agreement. The Earnest Money Deposit shall be applied to the
Purchase Price at settlement. In the event of default by Purchaser
the Earnest Money Deposit shall be forfeit to Seller as liquidated
damages and not as a penalty. In the event of default by Seller the
Earnest Money Deposit shall be returned to Purchaser and the parties
shall thereupon be relieved of all further liability, duties and
obligations to each other. Upon the failure of settlement without
default by either party, the deposit shall be refunded to Purchaser.
1.2.2 FINAL PAYMENT. The sum of TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000.00), the final balance due for full payment and final
consideration shall be paid at closing, in the form of cashier's or
certified check, or wire transfer. The earnest money deposit shall
be credited toward the Purchase Price at the time of Settlement.
1.3 ALLOCATION OF PURCHASE PRICE. The full purchase price for the
assets, interests and covenants identified in SECTION 1.1 shall be
as follows:
2
<PAGE> 5
1.3.1 Garage equipment on SCHEDULE A $ 2,327
1.3.2 Office equipment on SCHEDULE A $ 4,920
1.3.3 Inventory on SCHEDULE A $209,555
[Including as shown ON SCHEDULE A:
Parts & Accessories at Herndon $179,362.22
Parts & Accessories at Springfield $130,699.65
Floor Plan Units $694,392.78
Paid Up Units $ 7,607.00]
1.3.4 Cash $ 83,198
TOTAL $300,000
1.4 CONDITION OF GOODS, EQUIPMENT AND FIXTURES. A complete list of goods
(including motor vehicles and water vehicles) equipment and fixtures
is included in SCHEDULE A. All goods equipment and fixtures
described in SCHEDULE A are included in this sale and are being
purchased on an "AS IS" basis, WITHOUT WARRANTY OF MERCHANTABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE other than those made by the
manufacturer thereof for the benefit of Seller, which warranties
shall extend to Purchaser as the successor in interest to Seller;
however, on the date of settlement, all equipment and fixtures shall
be in good working condition. Seller warrants that SCHEDULE A lists
all equipment and fixtures of Seller used in connection with the
Business.
1.5 CASH, ACCOUNTS RECEIVABLE AND PAYABLE.
1.5.1 CASH AND ACCOUNTS RECEIVABLE. Any and all cash and accounts
receivable produced by the Motorcycle Division existing as of
close of business on the day before the date of settlement
shall become the property of Purchaser. All cash and accounts
receivable as of the date of this Agreement are set forth on
SCHEDULE B, which shall be updated at settlement. Seller may
use cash to pay accrued payroll prior to settlement. Seller
may also use cash to pay trade payables which were incurred
more than 30 days prior to settlement. Trade payables
incurred less than 30 days prior to settlement shall be paid
by Purchaser after settlement. Payment of such accrued
payroll and trade payables shall not result in a reduction of
the Purchase Price.
1.5.2 ACCOUNTS PAYABLE. Purchaser agrees to assume certain
liabilities of Seller, exclusive of building and land debt
and intercompany accounts payable. The liabilities assumed by
Purchaser are listed below, and shall be assumed per their
terms in existence as of the close of business on the day
before settlement:
1.5.3 LIABILITIES.
All manufacturer's floor plan accounts as provided in Section
4.6.2;
Used unit floor plan payable at F&M bank;
Prepaid service deposits;
Repair order deposits;
Special order deposits;
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<PAGE> 6
Sales order reports; and
Trade payables incurred within 30 days of settlement as
provided in SECTION 1.5.1 above.
All accounts payable to be assumed by Purchaser, together
with the balances currently due, are set forth in "SCHEDULE
C-1," which shall be updated at the time of closing. Seller
and Seller's Guarantors shall be released from liability on
the obligations assumed.
1.5.3 PRIOR LIENS AND JUDGMENTS. Purchaser assumes no
responsibility for payment of prior liens, encumbrances,
state taxes, federal taxes and judgments recorded against the
Business, or associated real estate, except as specified in
SCHEDULE C-l. All liabilities of the Business not assumed by
Purchaser are set forth in "SCHEDULE C-2." The SCHEDULE C-1
and the SCHEDULE C-2 combined list all currently known
liabilities of the Business.
1.6 ASSUMED BUSINESS NAME AND TELEPHONE NUMBERS. Seller agrees to file
any documents as are necessary to permit the Purchaser the use of
the assumed business name "CYCLE SPORT UNLIMITED," and telephone
numbers 471-6990, 471-1823 and 451-6990, and any rollover numbers,
along with any other numbers serving the Herndon or Springfield
Locations. Purchaser shall have the exclusive right to use the above
name and telephone numbers provided Purchaser is not in default of
this Contract as hereinafter stated. This provision constitutes
authorization by Seller for Purchaser to execute for Seller such
documents as may be required following closing to effect transfer of
trade names and telephone numbers as provided herein.
1.7 INVENTORY OF ASSETS. It is agreed that the on-hand inventory of
tangible assets shall be approximately the amount set forth in
Section 1.3.3 as revised to reflect the update of Schedule A at
closing. An itemized physical inventory shall be taken by Purchaser
and Seller for tangible assets on site as of the date of
settlement, which inventory shall be attached hereto as part of
SCHEDULE A.
1.8 LEASE AGREEMENTS. At closing the Purchaser shall enter into a lease
agreement for the Herndon Location with Seller in the form attached
hereto as "SCHEDULE E-1." A copy of the current Springfield Location
lease is attached hereto as "SCHEDULE E-2". This lease is on a month
to month basis. Purchaser shall be reasonably satisfied with the
terms of Springfield Lease and Seller's duties under the lease shall
be assumed by Purchaser. These lease arrangements shall be a
condition of closing as set out in SECTION 4.6 below.
1.9 SETTLEMENT. This transaction shall be closed at the offices of The
Mandell Law Firm, A Professional Corporation, 8133 Leesburg Pike,
Suite 630, Vienna, Virginia 22182, the counsel of Seller, as
provided in SECTION 4 below or at such other place as the parties
shall mutually agree.
1.10 BROKERAGE FEES. Each party warrants to the other that it has not
retained the services of real estate or business broker and that
brokerage fee is not due on this sale.
1.11 SELLER'S LIABILITIES. Except for the liabilities set out in SCHEDULE
C-1 Seller agrees to pay promptly when due all of the liabilities of
the Business arising from Seller's ownership of the Business,
including those in SCHEDULE C-2 and Seller agrees to indemnify and
hold
4
<PAGE> 7
Purchaser harmless from any loss therefrom, including reasonable attorney's
fees. Seller shall make any such payments promptly when due. Purchaser shall
notify Seller of any unpaid obligation within 5 business days of the date on
which Purchaser receives knowledge of such unpaid obligation. If Seller fails to
make any such payments promptly when due, Purchaser may elect at Purchaser's
sole option, to pay the liability in which event any such payment shall be
immediately repaid by Seller upon demand by Purchaser, together with interest
thereon at the rate of ten percent (10.0%) per annum from the date of
Purchaser's payment until repaid by Seller; provided that if Seller gives
Purchaser notice that the claim is subject to a bona fide contest, and
diligently pursues resolution of such claim, then Purchasers shall make no
payment for 60 days, or such additional reasonable time as may be necessary to
resolve the matter.
1.12 BULK TRANSFERS. The parties shall comply with Va. Code Section
8.6A-l0l,et seq., providing for the notification of creditors of
Seller that a portion of the Seller's assets will be transferred in
bulk not in the ordinary course of business.
2 REPRESENTATIONS AND WARRANTIES.
2.1 REPRESENTATIONS OF SELLER. Seller represents and warrants that:
2.1.1 AUTHORITY. Seller has the full power and authority to enter
into this Contract, and to conclude the transaction described
herein, and no contract or agreement to which Seller is a
party prevents it from concluding the transaction described
herein, nor is the consent of any third party required,
except as provided herein.
2.1.2 GOOD STANDING. Seller is a corporation duty organized,
validly existing and in good standing under the laws of
Virginia, and has the corporate power to own its property and
conduct the Business in the manner in which the Business is
now being conducted. Proof of good standing will be provided
at settlement.
2.1.3 CORPORATE RESOLUTION. Seller shall deliver to Purchaser, at
settlement, duty executed copies of its corporate
resolution(s) authorizing the transaction described herein,
which said resolution shall form a part of this Contract.
2.1.4 TITLE. Seller represents and warrants to Purchaser that the
Seller has, and on the closing date will still have, good and
merchantable title to all of the assets to be sold and
transferred to Purchaser pursuant to SECTION 1, including
without limitation, equipment used in the Business, and all
other assets conveyed herein, free and clear of all
mortgages, pledges, liens, security interests, state taxes,
federal taxes, charges, conditional sales contracts and
encumbrances whatsoever, except those items clearly indicated
in SCHEDULE C-1 or subject to floor plan or other
arrangements as provided in the dealership agreements in
SCHEDULE D. The lien of the First Union Bank loan shall be
released as to assets sold prior to, or simultaneous with,
settlement and title to the assets transferred to Purchaser.
Seller represents that it is not aware of any claim,
administrative action, suit, litigation or anticipated claim,
suit or litigation which would in any way affect the
Business, except for normal claims relating to consumer
warranties, customer satisfaction actions, etc., the total
expense for which is not anticipated to exceed the
5
<PAGE> 8
average of such cost in the last three calendar years.
2.1.5 PROPERTY INSURANCE. The properties and assets of the Business
listed in SCHEDULE A are adequately insured by Seller against
risks commonly insured against by companies similarly
situated. To the extent possible without extra cost or
liability to Seller, Purchaser may elect to assume Seller's
applicable insurance. To that effect, Purchaser will make
such assumption arrangements as are possible prior to
closing, or obtain replacement coverage as necessary, in
order to protect the interests of secured creditors as may be
required.
2.1.6 SALE OF ASSETS CREATES NO CONFLICT. The execution, delivery
and performance of this Contract and the consummation of the
transactions herein contemplated do not and will not conflict
with, or result in a breach of any term or provisions of, or
constitute a default under, or result in the creation of any
lien or encumbrance upon the property or assets of the
Business pursuant to the articles of incorporation, or bylaws
of the Business, or other organizational and governing
documents, or any Contract, indenture, mortgage, deed of
trust or other instrument to which the Business is a party or
by which it is bound or to which its properties are subject,
or any law, rule, regulation, judgment, order or decree, and
except as disclosed in SCHEDULE C. All consents by third
parties that are required to prevent or eliminate every such
conflict, breach, default, lien and encumbrance shall have
been validly obtained before the settlement and at the
settlement shall be in full force and effect and valid and
sufficient for such purpose, or have otherwise been provided
for in SCHEDULE C.
2.1.7 BOOKS AND RECORDS. Seller represents that, to the best of
Seller's knowledge and belief, all books, records and account
statements maintained on behalf of the Business prior to
settlement are true and correct and accurately reflect the
economic condition of the business at time of settlement.
2.1.8 LICENSE COMPLIANCE. To the best of the Seller's knowledge and
belief, the Business has all governmental licenses and
permits and zoning approvals (federal, state and local)
necessary to conduct the Business and has complied in all
material respects with all laws, rules and regulations and
orders applicable to the Business. The licenses and permits
of the Business are in full force and effect and there is not
pending or threatened any proceeding looking toward the
revocation or material limitation of any such license or
permit. Copies of the applicable licenses are attached hereto
as "SCHEDULE G."
2.1.9 TAX COMPLIANCE. Seller has filed with the appropriate
governmental agencies all tax returns (federal, state and
local) required to be filed by the Business, and all taxes
shown to be due and payable on said returns or on any
assessments received by it, and all other taxes (federal,
state and local) due and payable on or before the date of
this Contract have been determined and paid.
2.1.10 TAX WARRANTY. Seller offers the following warranties and
certifications regarding the claims of creditors against the
assets of the Business:
6
<PAGE> 9
2.1.10.1 All sales and use taxes have been paid, or will be paid,
through the previous reporting period by Seller through the
date of settlement; and
2.1.10.2 All withholding, FUTA, unemployment and other payroll
related taxes have been paid, or will be paid, by Seller
through the previous reporting period.
2.1.10.3 All state tax and federal tax liability of Seller shall
be paid by Seller.
2.1.11 ENVIRONMENTAL HAZARDS. Seller warrants that, to the best of
Seller's knowledge and belief, there is no violation on the part of
the Business of any hazardous waste law under federal, state or
local law, and no violation of any such law exists on the property
occupied by the Business. Except in compliance with the requisite
laws, Seller has not generated, stored or disposed of any hazardous
waste on the property. Seller has not received any notice from any
federal, state, county, municipal or other governmental department,
agency or authority concerning the existence of any petroleum
product or other hazardous waste discharge or seepage which have
caused or may cause noncompliance with applicable laws and
regulation. The term "hazardous waste" shall mean any substance,
material or waste which is regulated by any federal, state or local
governmental or quasi-governmental authority, including, without
being limited to, any substance, material or waste defined, used or
listed as a "hazardous waste", "extremely hazardous waste",
"restricted hazardous waste", "hazardous substance", "hazardous
material", "toxic substances" or other similar or related terms as
defined, used or listed in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C.
Section 9601, et seq.), the Clean Air Act, as amended (42 U.S. C.
Sections 7401, et seq.), the Clean Water Act, as amended (42 U.S.C.
Sections 1251 et seq.) and the regulations adopted and publications
promulgated pursuant thereto or any other similar applicable
federal, state or local law, rule, regulations or ordinance.
2.1.12 OPERATION OF BUSINESS PRIOR TO SETTLEMENT. The parties hereby
agree, from the date of execution of this Contract until the date of
settlement, that the Seller will carry on the activities and
operations of the Business diligently and in substantially the same
manner as has been customary in the past, Furthermore, Seller agrees
to use its best efforts (without making any commitments on behalf of
the Purchaser) to preserve for the Purchaser the present
relationships of the Seller with its employees, customers, and
others having business relations with the Business.
2.1.13 BUSINESS PREMISES. Until possession is given, Seller agrees to
maintain the Business premises, including heating, cooling,
plumbing, and electrical systems and built-in fixtures, together
with all other equipment and assets included in this sale, in
working order and to maintain, leave and deliver the premises in a
clean, orderly condition.
2.1.14 CONSENT TO SALE. Seller shall cooperate with Purchaser in obtaining
consent to the sale of the Business to Purchaser from any lender or
landlord secured against, or having an interest in, the real estate
or other assets of the Business, which consent shall be a condition
precedent to settlement as provided in SECTION 4.7 below.
7
<PAGE> 10
2.1.15 VERACITY. No statement contained in this Contract or in any
statement, certificate, instrument or other document, furnished to
Purchaser pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement
of a material fact, or will omit to state a material fact necessary
to make the statements contained herein or therein true.
2.2 REPRESENTATIONS OF PURCHASER. Purchaser represents and warrants that:
2.2.1 AUTHORITY. Purchaser has the full power and authority to enter into
this Contract, and to conclude the transaction described herein,
and no contract or agreement to which Purchaser is a party prevents
Purchaser from concluding the transaction described herein, nor is
the consent of any third party required, except as provided herein.
2.2.2 GOOD STANDING. Purchaser is duly organized, validly existing, and in
good standing under the laws of District of Columbia.
2.2.3 CORPORATE RESOLUTION. Purchaser shall deliver to Seller, at
settlement, duly executed copies of its corporate resolution(s)
authorizing the transaction described herein, which said resolution
shall form a part of this Contract.
2.2.4 BINDING EFFECT. Purchaser has full power and authority to enter into
and perform this Contract and the transactions delineated herein,
and this Contract constitutes a valid and binding agreement of
Purchaser, enforceable in accordance with its terms except as may be
limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws, from time to time in effect, and
any equity principles relating to or affecting generally the
enforcement of creditors' rights.
2.2.5 PURCHASE OF ASSETS CREATES NO CONFLICT. The execution and delivery
of this Contract and the consummation of the transactions
contemplated hereby will not conflict or be inconsistent with or
result in the termination of or result in any breach of or
constitute a default under the terms of any indenture, mortgage,
deed of trust, covenant, Contract, or other instrument to which
Purchaser is a party or to which any of its property is subject.
2.2.6 BOOKS AND ACCOUNTS. Purchaser's agent Neal A. Klipfel Associates,
CPA, shall have the right to carefully examine the books and
accounts of the Business, including federal and state tax returns.
Purchaser's authorization of disbursement of the Purchase Price to
Seller shall constitute Purchaser's representation that it finds the
records to be true and correct.
2.2.7 FINANCIAL STATEMENTS. Any financial statements presented by the
Purchaser are audited, including the financial statements of Century
Industries.
2.2.8 ENVIRONMENTAL HAZARDS. Purchaser shall conduct a due diligence
environmental inspection of the Business and the property in and on
which the Business is conducted, which inspection shall be completed
during the Due Diligence Period. At Purchaser's option, this
inspection may consist of a Phase 1 environmental inspection of the
property.
8
<PAGE> 11
2.2.9 "AS IS" SALE. Purchaser acknowledges that it has examined the assets
identified on SCHEDULE A attached hereto and agrees to purchase the
same in their present condition, "AS IS". SELLER MAKES NO
WARRANTIES, EXPRESS OR IMPLIED, AS TO THE QUALITY, CONDITION, OR
FITNESS FOR A PARTICULAR PURPOSE OF SAID ASSETS except for
manufacturer's warranties still in effect and benefitting Seller,
which warranties shall extend to Purchaser as the successor in
interest to Seller; however, on the date of settlement, all
equipment and fixtures shall be in good working condition. It being
agreed that pursuant to SECTION 1.4 on the date of settlement, all
equipment and fixtures shall be in good working condition.
2.2.10 LICENSES AND DEALERSHIP AGREEMENTS. During the period of any
indebtedness to Seller under this Contract, or a related agreement,
Purchaser shall obtain, and maintain, any and all required licenses
or permits to continue the Business. Purchaser shall maintain in
full force and effect all dealership agreements in SCHEDULE D.
Purchaser shall conduct the Business and exercise good faith and due
diligence to conduct and promote the Business. Seller and Purchaser
represent and warrant to each other than they will cooperate in all
matters necessary to accomplish the assignments of Licenses,
Dealerships Franchises and Floor Plans.
3 COVENANTS AND FURTHER AGREEMENTS
3.1 RELIANCE UPON AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Notwithstanding any investigation at any time conducted by any of
the parties hereto, each of the parties hereto shall be entitled to
rely upon the representations and warranties of the other parties
set forth herein or in any schedule, exhibit, or other document
delivered pursuant hereto. The representations, warranties,
covenants, and agreements of the parties shall be true and accurate
as of the date of settlement, and shall survive the settlement date.
3.2 FURTHER ASSURANCES. The parties hereto agree to execute and deliver
or cause to be executed and delivered at the settlement or at other
reasonable times and places such additional instruments as another
party hereto may reasonably request for the purpose of carrying out
this Contract.
3.3 INDEMNIFICATION.
3.3.1 FOR PURCHASER. Seller covenants and agrees to indemnify and
hold harmless the Purchaser from and against any loss, claim,
liability, obligation or expense (including reasonable
attorney's fees): (i) incurred or sustained by Purchaser on
account of any misrepresentation or breach of any warranty,
covenant, or agreement of Seller contained in this Contract,
or made in connection with this Contract, or at Settlement; or
(ii) incurred or sustained on account of the nonfulfillment by
Seller of any of the conditions or covenants of this Contract
as contemplated hereby. Without limiting the generality of the
foregoing, Seller shall be liable for all material undisclosed
liabilities of the Company existing before the settlement or
which may arise based on facts or events existing prior to
settlement. If any claim is asserted against Purchaser for
which indemnification may be sought under the provisions of
this Section, Purchaser shall promptly notify Seller of such
claim in writing within 15 days of the time Purchaser
discovers or should have discovered the existence of
9
<PAGE> 12
such claim and thereafter shall permit Seller at its expense
to participate in the negotiation and settlement of any such
claim and to join in the defense of any legal action arising
therefrom.
3.3.2 FOR SELLER. Purchaser covenants and agrees to indemnify and
hold harmless Seller from and against any loss, claim,
liability, obligation or expense (including reasonable
attorney's fees) (i) incurred or sustained on account of any
misrepresentation or breach of any warranty, covenant or
agreement of Purchaser contained in this Contract or made in
connection herewith, or (ii) incurred or sustained on account
of the nonfulfillment by Purchaser of any of the conditions or
covenants of this Contract as contemplated hereby. If any
claim is asserted against Seller for which indemnification may
be sought under the provisions of this Section, Seller shall
promptly notify Purchaser of such claim in writing within 15
days of the time Seller discovers, or should have discovered,
the existence of such claim and thereafter shall permit
Purchaser at its expense to participate in the negotiation and
settlement of any such claim and to join in the defense of any
legal action arising therefrom.
3.4 EXPENSES. Each party shall pay its own expenses and costs,
including without limitation counsel fees and transfer taxes
incurred in connection with the consummation of this Contract
and the transactions contemplated hereby, except as otherwise
provided in this Contract.
3.5 RISK OF LOSS. In the event of any loss or damage to equipment
or other assets included in this sale at any time prior to
settlement, the risk of loss shall be upon the Seller.
Immediately after Settlement, all risk of loss or damage shall
be upon the Purchaser.
3.6 BUSINESS DEPOSITS. Any and all amounts on deposit for the
benefit of the Business for lease deposits, utility services,
insurance, etc., shall be assigned to Purchaser. Seller shall
identify such deposits to the Settlement Agent and shall
receive a credit for such assignments at settlement.
3.7 BUSINESS RECORDS. At settlement Seller shall deliver to
Purchaser copies of a customer accounts and records, and any
other documents pertinent to the operation of the Business
which Seller may have and which Seller certifies to be
current. Such records shall include copies of those documents
necessary to conduct business with suppliers and customers of
the Business. The books and records shall include, but are not
limited to, income statements, balance sheets, statements of
cash flow, general ledgers, sales journals, cash receipts
journals, cash disbursement journals, general journals, all
customer lists, accounts payable listings and records, and
federal and state corporate tax returns for the last three
filing periods.
3.8 INSURANCE. Purchaser shall maintain insurance as required herein and
name any creditor requiring coverage as an insured party as its
interest may appear.
3.8.1 HAZARD INSURANCE. Purchaser agrees to carry hazard insurance
as required by the Herndon Lease.
3.8.2 LIABILITY INSURANCE. So long as Seller shall remain liable for
any obligation assumed by Purchaser, Purchaser shall maintain
liability insurance in an amount of not less than
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<PAGE> 13
$5,000,000 total and $1,000,000 for each occurrence or the
amounts in effect for Seller on the date of this Contract.
3.9 PURCHASER'S RIGHTS.
3.9.1 REVIEW COMMUNICATIONS. After the closing of this Contract, the
Purchaser shall have the right to open and read any letters or
mail addressed to the Seller, and to reply to any such letters
that pertain to the conduct of the business in the same manner
that the Seller could have done had the sale not been made.
Any mail intended to be sent to the Seller personally and not
affecting the conduct of the business shall be promptly
forwarded to the Seller by the Purchaser.
3.10 ZONING. Seller warrants to Purchaser that the Herndon Location and
the Springfield Location are properly zoned for the Business.
3.11 CERTIFICATE OF OCCUPANCY. Immediately after settlement, Purchaser
shall obtain an occupancy permit at Purchaser's sole expense.
3.12 CONSULTING AGREEMENT. David Nees will be available for consulting
for twelve months from the date of closing under the terms of a
consulting agreement to be negotiated between the parties.
4 SETTLEMENT.
4.1 SETTLEMENT DATE. Settlement under this Contract shall be held on
within 3 days from completion of the Conditions Precedent to
Settlement in Section 4.6.1 below, or thereafter as counsel for
Seller and Purchaser may agree, but in no event later than December
7, 1998 at the offices of The Mandell Law Firm, A Professional
Corporation, 8133 Leesburg Pike, Suite 630, Vienna, Virginia 22182,
"Settlement Agent", or at such other place as the parties may
mutually agree.
4.2 DELIVERY. At settlement, Seller shall deliver or cause to be
delivered to Purchaser such instruments, documents and opinions
required to be delivered by Seller under this Contract or which
counsel for Purchaser or Settlement Agent may reasonably request for
the purpose of settling this Contract. At settlement, Purchaser
shall pay and deliver to Seller the Purchase Price and any
additional pre approved costs in the amount and form specified
herein and shall deliver all other instruments, documents and
opinions required to be delivered by Purchaser under this Contract
or which Seller or Settlement Agent may reasonably request for the
purpose of settling this Contract.
4.3 METHOD OF PAYMENT. Purchaser shall make payment by certified check,
cashier's check, or wire transfer.
4.4 BILL OF SALE. Seller shall deliver to Purchaser at settlement a Bill
of Sale for the Business and all assets included in this
transaction, in the form attached hereto as SCHEDULE F.
4.5 RECORDING FEES. The recording fees shall be paid by Purchaser.
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<PAGE> 14
4.6 CONDITIONS PRECEDENT TO SETTLEMENT. The settlement hereunder shall
not occur and the obligation of Seller to sell and Purchaser to buy
shall not arise hereunder unless the following conditions have been
satisfied:
4.6.1 COMPLETION OF DUE DILIGENCE. Upon the execution of this
Agreement Seller shall make all books and records of the
Business available for review by Purchaser and shall allow
Purchaser reasonable access to the Business for the purpose of
inspection and evaluation. On or before November 13, 1998
("Due Diligence Period") the Purchaser shall have concluded
such legal, financial, environmental and other due diligence
activities as the Purchaser shall deem appropriate and the
results thereof shall be reasonably satisfactory to the
Purchaser. If Purchaser reasonably determines that the
Business is not satisfactory, than Purchaser shall provide
written notice of termination to Seller within 5 days from the
completion of the Due Diligence Period. The notice shall
clearly set out the deficiencies found by Purchaser. If Seller
is unable to cure the stated deficiencies within 10 days then
this Contract shall terminate.
4.6.2 SCHEDULE A. Seller shall complete the final version of
SCHEDULE A which shall be consented to by Purchaser, which
consent shall not be unreasonably withheld.
4.6.3 LEASE AGREEMENT. Seller and Purchaser shall enter into a lease
agreement for the Herndon Location ("Herndon Lease"). The
Herndon Lease shall contain the general terms set out in
Section 5 below, and shall be in substantially the form
attached hereto as SCHEDULE E-1. The Herndon Lease shall be
guaranteed for Purchaser in a manner acceptable to Seller's
lender. The Purchaser shall notify the Seller as to the
guaranty during the Due Diligence Period, and the Seller will
advise Purchaser as to the efficacy of the proposed guarantor
on behalf of Purchaser prior to the settlement. If the
guarantor is acceptable to Seller and Seller's lender, then
the guaranty will be delivered to Seller at settlement, if it
is not Purchaser shall provide an acceptable guarantor. If an
acceptable guarantor is not provided by the scheduled
settlement date, then this condition shall not have been
fulfilled and Seller may terminate the Agreement.
4.6.4 LEASE ASSIGNMENT Seller shall assign all of its interest under
the lease for the Springfield Location, "Springfield Lease,"
which is attached hereto as "SCHEDULE E-2". Seller is
negotiating a new lease for the Springfield location. The
terms of the Springfield Lease shall be reasonably acceptable
to Purchaser. The landlord shall consent to the assignment.
4.6.5 ASSIGNMENT OF DEALERSHIP FRANCHISE AGREEMENTS. Seller shall
assign all of its interest in the dealership franchise
agreements which are in force on the date of this agreement
and identified in SCHEDULE D. The assignment shall be subject
to the approval of the respective manufacturers. The
manufacturers shall release Seller from further liability
under the dealership agreements. Purchaser shall endeavor in
good faith to seek Century Industries to guaranty the
obligations of Purchaser under these agreements.
4.6.6 ASSUMPTION OF FLOOR PLAN AGREEMENTS. Purchaser shall assume
Seller's floor plan financing. The respective lenders shall
approve the assumption and shall release Seller from further
liability under the floor plans. Purchaser shall endeavor in
good faith to seek
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<PAGE> 15
Century Industries' guaranty the obligations of Purchaser
under the floor plans. If such guaranty is not obtained, then
this condition will not be satisfied.
4.6.7 TITLE OF HERNDON LOCATION. The parties acknowledge that the
Herndon Lease will contain certain real estate purchase rights
in favor of Purchaser. The real estate title to the Herndon
Location shall be reasonably acceptable to Purchaser at the
time of settlement under this Agreement.
4.6.8 NO BULK TRANSFER CLAIMS. No creditor shall assert a right to
payment under the Bulk Transfer Act for an amount greater than
the net settlement proceeds which Seller reasonably
anticipates to receive at settlement.
4.6.9 CONSENT TO SALE BY LENDER. Seller's real estate mortgage
lender, First Union Bank, shall consent to this Contract.
4.7 FAILURE OF CONDITIONS. In the event that any of the above described
conditions precedent fails to occur within the time specified then,
unless otherwise provided under the terms of the condition, either
party may provide written notice to the other of termination of this
Agreement. The notice shall specify any condition which has not been
satisfied and the factual basis upon the party has made the
determination that the condition has not been satisfied. Upon such
termination of this Agreement, the parties shall return all records
and documents from the other. Also upon Termination the earnest
money deposit shall be returned to the Purchaser. Each party shall
be released from all other duties, obligation and liability to the
other, except for the Confidentiality provisions of the Letter of
Intent, which is hereby incorporated in this Agreement by reference.
5 DEFAULT BY PURCHASER.
5.1 INSTANCES OF DEFAULT. Default shall occur in any of the following
instances:
5.1.1 FAILURE TO PERFORM. Except for Purchaser's failure to obtain
necessary creditor approvals in SECTION 4.6 above, if
Purchaser fails to perform any obligation imposed by this
Contract, or related instrument, and does not correct or
commence and diligently pursue correction of such failure
within fifteen (15) days after written notice from Seller
specifying the manner in which Purchaser is in default.
Purchaser shall also be in default if Purchaser fails to shall
exercise its best efforts to obtain the necessary creditor
approvals.
5.1.2 INSOLVENCY. Purchaser becomes insolvent, a receiver is
appointed to take possession of all or a substantial part of
Purchaser's properties, Purchaser makes an assignment for the
benefit of creditors or files a voluntary petition in
bankruptcy, or Purchaser is the subject of an involuntary
petition in bankruptcy which is not dismissed within sixty
(60) calendar days.
5.1.3 DEFAULT ON UNDERLYING AGREEMENTS AND ASSUMED OBLIGATIONS. Any
default by Purchaser under the Herndon Lease, SCHEDULE C-1
obligations or any other agreements made pursuant to this
Contract not cured within any grace period provided herein.
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<PAGE> 16
5.2 SELLER'S AND PURCHASER'S REMEDIES UPON DEFAULT. In the event
of a party's default, the injured party shall have all the
rights and remedies granted to it by agreement and by the laws
of Virginia, and, in addition, Seller shall have the right, at
its option, to terminate this Contract and receive the full
Deposit as liquidated damages and not as a penalty.
6 MISCELLANEOUS.
6.1 BINDING EFFECT. This Contract shall be binding upon and shall
inure to the benefit of the parties hereto, their respective
successors, heirs, assigns and devisees.
6.2 INTEGRATION. This Contract constitutes the entire agreement
between the parties relating to the subject matter hereof It
supersedes prior memoranda, earnest money agreements, options
and all other prior documents made by the parties in
connection with the transaction described herein. Oral
agreements and understandings of the parties, if any,
regarding the subject matter of this Contract have been
integrated herein. This Contract may not be modified or
altered except by written agreement signed by all parties.
6.3 NOTICE. Any notice or other communication required or
permitted hereunder shall be sufficiently given if sent by
mail, first class postage prepaid, certified return receipt
requested, addressed as follows:
<TABLE>
<S> <C>
6.3.1 If to Purchaser, addressed to: V-Twin Acquisitions, Inc.
11708 Bowman Green Drive
Reston, Virginia 20190
With a copy to: Robert J. Flynn, Jr., Esq.
1730 K. Street, N.W., Suite 304
Washington, D.C. 20006
6.3.2 If to Seller, addressed to: David E. Nees, President
------------------------
------------------------
With a copy to: James E. Autry, Esq.
The Mandell Law Firm
8133 Leesburg Pike
Suite 630
Vienna, VA 22182
</TABLE>
Notices shall be deemed received on the second business day after deposit of the
same in the United States mail, properly addressed and postage prepaid.
6.4 TIME IS OF ESSENCE. Time is of the essence in this Contract.
6.5 CHOICE OF LAW, JURISDICTION AND ATTORNEY'S FEES. This Contract shall be
governed by and
14
<PAGE> 17
construed under the laws of the Commonwealth of Virginia. All parties
hereby agree that any action to enforce this Contract shall be brought in
the Circuit Court for Fairfax County, Virginia, and hereby consent to the
jurisdiction of said court. In the event any action, or suit is brought to
enforce this Contract or provision hereof or seek damages for breach
thereof, the prevailing party shall be entitled to recover from the other
party its costs of suit inducting attorney's fees, costs of trial, appeal
and all other sums provided by law.
6.6 SEVERABILITY. If any clause, provision or section of this Contract shall
be held illegal or invalid by any court, the illegality or invalidity of
such clause, provision or section shall not affect the remainder of this
Contract which shall be construed and enforced as if such illegal or
invalid clause, provision or section had not been contained this Contract.
If any agreement or obligation contained in this Contract is held to be in
violation of law, then such agreement or obligation shall be deemed to be
the agreement or obligation of the respective party hereto only to the
extent permitted bylaw.
6.7 ASSIGNMENT. Purchaser shall not sell, assign or transfer an interest in
the this Contract or in any instrument executed in connection herewith,
without prior consent of Seller. Seller shall not unreasonably withhold
consent.
6.8 WAIVER. Failure of either party, at any time, to require performance
hereunder of any provision herein contained shall in no way affect the
right of a party to enforce the same, nor shall any waiver by either party
of any breach of any provision hereof be held to be a waiver of a
succeeding breach of any suit or provision, or as a waiver of the
provision itself.
6.9 NUMBER, GENDER AND CAPTIONS. As used herein, the singular shall include
the plural and the plural the singular. The masculine and the neuter shall
include the masculine, feminine and neuter as the context requires. All
captions used herein are intended solely for convenience of reference, and
shall in no way limit any of the provisions of this Contract.
6.10 SECTION HEADINGS. The various Section headings are inserted for
convenience of reference only, and shall not affect the meaning or
interpretation of this Contract or any section thereof.
6.11 SURVIVAL. This Contract and the promises, conditions, and covenants
contained herein shall survive settlement and shall not be merged in any
settlement documents.
IN WITNESS WHEREOF, the parties have caused this Contract to be duly
executed by their representative duly authorized officers.
PURCHASER: SELLER:
V-TWIN ACQUISITIONS, NC. CYCLE SPORT UNLIMITED, NC.
A D.C. Corporation A Virginia Corporation
By: /s/ A. JAY PIGNATELLO By: /s/ DAVID E. NEES
---------------------- -------------------------
A. Jay Pignatello David E. Nees, President
Vice President
October 14, 1998
<PAGE> 18
SCHEDULE A
SCHEDULE OF ASSETS
FOR
THE MOTOR CYCLE DIVISION
OF
CYCLE SPORT UNLIMITED, INC.
<PAGE> 19
UNIT INVENTORY
<TABLE>
<CAPTION> HERNDON
MAKE MODEL SERIAL # MAKE MODEL SERIAL #
<S> <C> <C> <C> <C> <C>
YAM VMX12K 65979 KAW ZX600E6 513790
XV1100L 87675 EX250F13 62058
XV1100L 87693 EX250F11 53170
FZR600L 107898 JH750C 58118F595
YFZ350K 149406
YFM350FK 48050 SUZ VS1400GLPV 101815
YFM350FK 54488 VS1400GLPW 100262
SH50K 248247 VS800GLW 101669
SH50K 247479 VS800GLW 100101
SH50K 248884 VS800GLW 101473
SH50K 249095 VS800GLW 100712
SH50K 248902 VS800GLW 102044
SH50K 249113 VS800GLW 100185
SH50K 247473 VS800GLW 101142
RT180K 15017 VS800GLW 102262
PW80L 113026 VZ800W 104238
PW80L 112343 VZ800W 101254
PW50K 237086 VZ800W 101594
PW50L 243717 VZ800W 104028
PW50L 243725 LS650PW 100864
XL120OW 2221K798 LS650PW 100125
GP760W 1406H798 LS650PW 101659
WVT700V 2475B690 LS650PW 101698
SJ700AV 902484 LS650PW 100799
LS650PW 101700
KAW VN1500G1 12374 GSXR1100WT 101188
VN1500E1 80073 GSF1200SW 102111
VN1500E1 75730 GSF1200SW 101087
VN1500E1 78422 TL1000RW 101712
VN1500E1 80089 TL1000SW 100181
VM1500D2 75010 GSXR750W 104072
VN800B3 501360 GSXR750W 100031
VN800B3 500918 GSXR750W 104071
VN800B3 502023 GSXR750W 100968
ZX750P4 36043 GSXR750W 102721
ZX750P3 25956 GSXR750W 102507
ZX600G1 11515 GSX750W 100903
ZX600G1 11451 GSXR600W 101190
ZX600G1 11488 GSXR600W 102086
SUZ GSXR600W 102083
GSX600W 101869
DR125 101594
TRI T595 58961
T595 65140
THROPHY 900 63801
T-BIRD SPORT 66802
T-BIRD SPORT 602012
T-BIRD SPORT 66923
T-BIRD 62398
ADVENTURER 39457
PANDA TRAIL 50 88
TRAIL 50 105
TRAIL 50 146
USED BUELL S-1 200820
RF900 100525
CB750 202938
ZX600E 511185
XV535S 55520
LTF4WD 104594
YFS200 248906
</TABLE> 1
<PAGE> 20
INFORMATION ON PAGE DIDN'T CONVERT
2
<PAGE> 21
PART AND ACCESSORY INVENTORY 8/25/98
HERNDON 179,362.22
SPRINGFIELD 130,699.65
<PAGE> 22
PARTS DEPARTMENT EQUIPMENT 8/20/98
2 tire racks
1 three way mirror
6 display gondolas
2 glass display racks
2 free standing display racks
1 four way display rack
64 feet of 2' x 6' gridwall
2 microfiche readers
5 microfiche decks
2 computer terminals
1 computer terminal (486/25)
asst slatwall and gridwall hooks
1 credit card machine
2 Okidata 320 printers
1 Panasonic printer
1 HP 672C printer
56 3' x 6' metal parts shelves
3 4 drawer file cabinets
3 2 drawer file cabinets
1 Sharp fax machine
1 US Robotics modem
2 counter stools
1 task chair
2 work tables
4 hardware bins
FIXTURES
1 parts counter
1 desk
asst slatwall display
1 neon signage
1 overhead storage shelf
asst track light fixtures
4 cable storage racks
8 sections pegboard storage
<PAGE> 23
HERNDON EQUIPMENT LIST--SERVICE DEPT. & BASEMENT
SERVICE DEPARTMENT
EQUIPMENT/SUPPLIES, LIST
Qty. Description
- ---- -----------
1 Snap-On wheel balancer
1 Coats tire changer
1 Coats wheel balancer
1 Nagoya wheel trueing stand
2 Lite Works loading ramps
1 hand saw
1 level
1 tire spreader
assort Honda manuals 1980 to 1991
3 Hardy air lift
1 Grazia hydraulic lift
6 metal work bench
5 shelf cabinet with door
2 5/15" coil air hose
4 1/4" coil air hose
9 4 shelf wooden shelf unit
2 5 shelf wooden shelf unit
1 6 shelf wooden shelf unit
5 5 gal. safety gas cans
1 set Suzuki special tools
1 Sun exhaust gas analyser
1 set of Triumph special tools
2 hand crank oil pumps for oil drums
10 oil drain pans
1 acetylene welding torch set
1 Dayton drill press
1 Dayton bench grinder
1 Mac Tool bench grinder
1 Craftsman arc welder
1 bead blast cabinet
1 Strongarm hydraulic floor press
1 bench vise
1 set Yamaha special tools
1 set Suzuki specials tools
1 Rottler boring bar
2 Safety Kleen parts washer
3 Sunnen cylinder hone kits
1 Crankshaft lathe
1 CC porting tool
1 Neway cylinder hone
1
<PAGE> 24
HERNDON EQUIPMENT LIST--SERVICE DEPT. & BASEMENT
1 fan
1 cylinder micrometer set
1 headlight alignment machine
2 large plastic bin
2 5 gal. plastic gas bottles
1 Safety Kleen Carb Acid Cleaner system
1 Christie battery charger
1 Deltran battery tender
1 Christie Maintenance Free battery charger
2 Century battery charger
1 Honda battery tester
1 Schauer 4 amp battery charger
1 Microfische machine
2 microfische indexes
Honda manuals 1985-1998
Kawasaki manuals 1976-1998
Suzuki manuals 1980-1998
Yamaha manuals 1980-1998
Triumph service manuals
Suzuki Specifications manual 1978-1997
15 Parts bins
1 Craftsman roller tool box
1 microfiche machine
1 metal desk
2 chairs
1 wooden slide door shelf unit
3 metal filing cabinets
Yamaha seminar manuals
Suzuki seminar manuals
Triumph special tools
1 286 computer
1 Wyse computer terminal
2 Okidata 320 printers
1 Namco electric forklift
1 Hobart forklift battery charger
1 pr. of forklift extensions
1 Yuasa battery charger
7 assorted watercraft stands
1 Suzuki illuminated sign
3 squeegies
1 rake
1 roll of blue astro turf type carpet
2 small fans
1 industrial fan
2 weed eater trimmers
2
<PAGE> 25
HERNDON EQUIPMENT LIST--SERVICE DEPT. & BASEMENT
1 ATV snow plow
1 55 gal. drum of Yamalube 2 cycle oil
3 55 gal. drum of Suzuki 10w40 oil
1/4 55 gal. drum of Yamalube 4 cycel oil
1 floor buffer
35 gal. battery acid
1 service dept. tire rack
1 eye wash kit
1 first aid kit
compressed air system for entire shop and basement
engine exhaust system for 6 work bays
150 assorted used gas tanks
1 8' step aluminum step ladder
1 aluminum extension ladder
1 jet ski hoist system
21 8' x 4' HD pallet rack uprights
34 8' long HD pallet rack cross shelf beams
6 43" long HD pallet rack cross shelf beams
6 56" long HD pallet rack cross shelf beams
9 2' x 6' white grid wall display panels
48 12" x 12" glass squares
1 4' x 2' wooden bench/shelf unit
1 Speedaire 80 gal. compressor
1 refridgerator
1 microwave
2 Yamaha sign faces 4' x 12'
1 Kawasaki sign face 3' x 12'
1 garden hose and reel
1 Honda ATV
5 3' sections of 6' high metal shelving
1 1987 Ford F150 pickup truck
1 flat bed motorcycle trailer
28 linear feet of assorted used parts, 4 shelves high
10 linear feet of assorted used exhaust systems
50 assorted used exhaust systems (hanging from ceiling)
1 large box of assorted motorcycle body work
4 linear feet of assorted motorcycle trunks, 4 shelves high
5 crates of assorted used motors and motor parts
15 feet of assorted used motorcycle body panels
27 "parts bikes"; wrecked or damaged
10 assorted display stands
1 6' folding table
1 8' folding table
assort assembly manuals
1 Allen exaust gas analyser (broken)
3
<PAGE> 26
HERNDON EQUIPMENT LIST--SERVICE DEPT.
2 lawn mowers
1 small industrial tarp
1 very large industrial tarp
9 shovels
4
<PAGE> 27
OFFICE INVENTORY
2 L-shaped desks
1 small wood desk
2 small metal desks
1 custom metal frame executive desk
7 secretarial chairs
2 arm chairs
3 chair mats
4 straight chairs
1 boom box
5 2-drawer lateral files
2 2-drawer letter-size file cabinets
3 4-drawer letter-size file cabinet
1 credenza
1 small desk
2 folding tables
1 table
1 drawing table
1 3-shelf bookshelf
2 6-shelf bookshelves
1 storage supply cabinet
Paper towels
Plastic utinsels
Paper cups and plates
3 bulletin boards
1 mini refrigerator
1 microwave
3 rolling racks for printouts
1 Sharp 1450 copier
4 toners for copier
3 checkwriters
4 PCs
1 server
2 printers
1 printer noise reducer
1 fax machine
1 rolling 2-shelf cart
1 rolling 1-shelf cart
2 motorcycle pictures
5 phones
8 surge protectors
2 typewriters
1 British flag
1 copy stand
1
<PAGE> 28
OFFICE INVENTORY
1 laminator
Small and large laminating pouches
1 electric pencil sharpener
4 desk lights
6 calculators
5 mice
5 telephones
3 magnetic paper clip holders
3 desk lamps
1 message holder
2 computer arms
2 computer stand
1 computer stand with tray
White out of various colors
15 Assorted Stamps (Entered/Faxed/Posted/Received, etc.)
4 pairs of scissors
3 month accordion files
3 alpha accordion files
3 plain accordion file
3 tape dispensers
16 binders in use
5 pencil holders
12 stacking trays (some plastic and some metal)
2 green free standing pendaflex file holders
10 wastebaskets
Miscellaneous pens(red-black-blue)/pencils(regular and colored)
1 large 3-hole punch
1 small 3-hole punch
1 box plain #10 envelopes
Cycle Sport #10 envelopes
3 boxes window envelopes
7 rolodexes
10 boxes of paper clips plus ones in holders
Staples - regular and heavy duty
6 Rulers
Highlighters
4 boxes push pins
Erasers
12 - 3x3 post-it pads
2 boxes of discs
Miscellaneous catalogs from vendors
3 new telephone message books
1 box forms/books of doctors/hospitals from health insurance company
2
<PAGE> 29
OFFICE INVENTORY
5 new binders
14 rolls adding machine tape
5 Ribbons for fax machine
611 hanging files in use (legal and letter)
6 Staplers
2 Heavy duty staplers
Kleenex
7 wire baskets
7 small glass vases
2 5-section stand up file
3 magazine holders
2 pair metal bookends
2 storage containers for discs
3 stamp dispensers
2 Cycle Sport address stamper
1 Whiteboard
Dry erase markers & eraser & whiteboard cleaner
Binderclips - various sizes
3 typewriter ribbons
Typewriter correction tape
2 gluesticks
1 box paper reinforcements
Assorted file folder tabs
1 set alpha file folders
1 stamp sealer
2 postage scale
4 5-shelf metal units
Rubberbands
1 set of rolodex cards
2 boxes copy paper
2-3 boxes computer paper with perfed sides
App. 50 Storage boxes of old m/c files
5-1/2x8-1/2 white lined pads
8-1/2x11 white lined pads
Various dictionaries
1 vacuum
1 boxes 4x6 index cards
1 pkg. report covers
Event stuff
9 boxes new hanging files
3 pkg. hanging data binders
2 canceled check cases
Christmas decorations
3
<PAGE> 30
OFFICE INVENTORY
Drop cloths
Plastic tub
Signs
1 ball of twine
Miscellaneous flyers
48 old ledger books
10x13 brown envelopes
9x12 brown envelopes
7-1/2x10-1/2 brown envelopes
6x6 brown envelopes
Fedex envelopes & paks
Airborne envelopes
6-75 watt light bulbs
1 old video monitor and player
Box of videos
Almost 2 full boxes of Cycle Sport Letterhead
10 old checkbook covers
4 5-1/2x8 covers
2 sets alphabet file folders
Insignia sign making software
Lotus Approach software
Q&A software
Quattro Pro software
SCO Xenix software
Print Shop Deluxe software
MS Office Professional
Word Perfect 6.0 for DOS software
Friedman Sales Development System
Lemco Powersports Dealer Handbook
1 coffee pot
4
<PAGE> 31
SPRINGFIELD
SHOP EQUIPMENT
1 4-drawer file cabinet
1 chair
1 desk
Assorted broken special tools
Assorted used parts
4 repair order racks
1 nitrogen bottle w/gauge set
1 in/out rack
1 time card rack
Limited assortment of functioning special tools
1 headlight Aimer - 1950 vintage
1 pair of jack stands
10 station battery tender
Assorted service manuals, spec books, set-up manuals
1 shop truck
3 shipping containers 20'x10'x8'
4 air hose
1 I Bar
1 set jumper cables
1 dirty rag can
2 gas cans
1 time machine
1 wheel balancer
1 micro fiche reader
1 time clock
1 hydraulic press
1 welder
1 crate mate
1 4-wheel plastic dolly
1 uplift for Royal Stars
1 bench grinder
3 work hammers
3 vises
2 shelves (6'3" x 18")
1 solvent washer
1 acetylene torch
3 battery charges
1 battery load tester
1 air compressor
2 lifts (air)
1 lift (mechanical)
1 craftsman work bench w/drawers
1
<PAGE> 32
SPRINGFIELD
SHOP SUPPLEES
1 E-clip assortment
1 roll pin assortment
1 circles assortment
1 fuel/vacuum line clip assortment
1 pan head screw assortment
2 "O" ring assortments
1 cotter pin assortment
1 electrical connector assortment
3.4 & 6 pr. electrical connector block assortment
5mm, 6mm, 7mm, 8mm, 10mm, 12mm, 14mm helicoil
6mm, 8mm, 10mm time cert kits
1 tubeless tire repair kit with supplies
10 value shim kits - Yam/Kaw/Suz/Honda
8 wheel weight assortments Yam/Kaw/Suz/Honda
5 cartridge grease
3 hand cleaner (1 gallon size)
1 55 gallon oil drum
1 5 gallon battery acid
6 boxes repair orders
1 box estimate forms
Keg tags
2
<PAGE> 33
SPRINGFIELD
SALES DEPARTMENT EQUIPMENT
1 dual lighted royal star stand
2 desks
6 chairs
2 phones
6 framed prints
1 bulletin board
1 television
1 VCR recorder
1 TV stand
1 dual watercraft stand
1 metal file cabinet
1 5-shelf metal organizer
1 easel
2 trashcans
5 Yamaha rugs
1 6' table
SUPPLIES
5 banners
Miscellaneous brochures
6 framed prints
3
<PAGE> 34
SPRINGFIELD
SALES DEPARTMENT INVENTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------
MODEL SERIAL # MODEL SERIAL #
- ----------------------------------------------------------
<S> <C> <C> <C>
YFM600K-GR 014620 TRIUMPH
- ----------------------------------------------------------
T509 063908
- ----------------------------------------------------------
PW 50 244751 Sprint Exec. 070137
- ----------------------------------------------------------
PW 80 107945 Sprint 056721
- ----------------------------------------------------------
- ----------------------------------------------------------
XT 350 044277
- ----------------------------------------------------------
- ----------------------------------------------------------
VMX 12K 067758
- ----------------------------------------------------------
YZF 600 RK-B 008404
- ----------------------------------------------------------
YZF 600 RK-R 013103
- ----------------------------------------------------------
FZR 600 107924
- ----------------------------------------------------------
XJ 600 SK-B 070217
- ----------------------------------------------------------
USED
- ----------------------------------------------------------
SH 50 K 249088 Shadow 600 403502
- ----------------------------------------------------------
249084 EX 250 046661
- ----------------------------------------------------------
246606 VFR 750 600572
- ----------------------------------------------------------
TL 1000 101433
- ----------------------------------------------------------
- ----------------------------------------------------------
XV213 AK-B 027810
- ----------------------------------------------------------
026743
- ----------------------------------------------------------
- ----------------------------------------------------------
XV 1100 086517
- ----------------------------------------------------------
086522
- ----------------------------------------------------------
087712
- ----------------------------------------------------------
- ----------------------------------------------------------
GP 800 802806
- ----------------------------------------------------------
GP 760 808769
- ----------------------------------------------------------
XL 760 803619
- ----------------------------------------------------------
WVT 700 802297
- ----------------------------------------------------------
- ----------------------------------------------------------
PWC 1000 001999
- ----------------------------------------------------------
960428
- ----------------------------------------------------------
014071
- ----------------------------------------------------------
</TABLE>
4
<PAGE> 35
SPRINGFIELD
PARTS DEPARTMENT STORE EQUIPMENT
Rear Shelves 100" x 48" x 71" - 3 shelves
Overstock Shelves 72" x 25" x 75" - 20 shelves
Battery/Tubes/Yam. Stock 110" x 25" x 75" - 34 shelves
Yamaha Stock 110" x 25" x 75" - 54 shelves
Yamaha/Honda/Suzuk/Triumph 72" x 24" x 71" - 36 shelves
Special orders/spark plugs/catalogs 72" x 30" x 75" - 20 shelves
2 extra shelves 36" x 12" x 37" - 3 shelves
Desks
4 drawer file cabinet and 2 drawer file cabinet
2 shelves 95" x 12", storage nuts/bolts
6' gridwall sections - 28
7' gridwall sections - 16
5' gridwall sections - 3
3' gridwall sections - 4
Waterfall hangers - 33
Straight hangers - 4
Hooks
Display rack goggles - 1
Display rack locks - 1
2' gondola - 4
3' gondola - 2
4' gondola - 1
Grid-wall cubes - 3
Display case, glass 2x1x3 (on wheels)- 1
Glass cubicle stand 5'- 1
Glass cubicle stand 2'- 1
Glass cubicle slat sections - 6
6'- 2 bay tire rack - 1
6'- d bay tire rack - 2
"HJC" Helmets" lighted sign
"Michelin" lighted sign
"Metzler" lighted sign
"Dunlop" lighted sign
"NO FEAR" static sign
"First Gear" lighted sign
"Anti-shoplif" mirror, convey
3x4 Yamaha footmats - 2
Plexis inflatable display
5
<PAGE> 36
SPRINGFIELD
PARTS DEPARTMENT SUPPLIES
1 - Plastic raffle drawing box w/entry forms
1 - Package tape gun
1 - 4 oz. bottle rubber cement
1/2 roll - Fishing line
5 - Razor blades for box knife
46 - Razor blades
1 box - 3/4" nails
1 - Blue Yamaha miniature football
7 - Magic markers
2 - Clipboards
1000 (est) - Product sales signs
1 - Yamaha key cutter
4 rolls - Package tape
100 - Small parts bags
100 - X-mall parts bags
10 - Credit card ribbons
9 - Credit card imprint paper
14 - Bottles of white-out
8 - Post-It pads
2 - Printer ribbons
2 - Microfiche lightbulbs
72 - No. 2 pencils
500 - 3x5 cards
1000 - Paperclips
1/4 pound - Rubberbands
3 rolls - Scotch tape
1 box - Full of scratch paper
500 ft. - Theater rope
3 - Clocks
1 - UPS Scale
1 - Yamaha Radio w/3 speaker surround sound
213 - Coat hangers
2 - Staplers
2 - Scotch tape dispensers
2 - Calculators
2 - Scissors
28 - Push pins
2 - Vanson leather sample packs (color/textures)
58 - Magazines (motorcycle/watercraft/dirtbike)
2 - Price tape guns
1 - Chemical shelf for store use
1 - Caution Wet Floor Sign
6
<PAGE> 37
SPRINGFIELD
1 - Vacuum
2 - Dusters
1 - Floor mop
1 - Dust pan/broom set
2 - Fire extinguishers
9 - Bathroom cleaning chemicals
15 - Rolls of toilet paper
1 - Toilet scrub brush
2 - Stools
1 - Mop bucket w/wringer
1 - Hand dolly
4 - Microfiche machines
A massive assortment of gridwall displays & parts
1 - Rear door steel beam lock
5 - Trashcans 38 - Accessories catalogs
7
<PAGE> 38
SPRINGFIELD
OFFICE EQUIPMENT
1 - Marker board
3 - Cork boards
7 - Spare phones
1 - Copier
1 - Computer terminal
1 - Table
2 - Chairs
2 - Trash cans
1 - Fax machine
3 - File cabinets
2 - Desks
1 - Laminator machine
1 - Calculator
1 - Typewriter
1 - Paymaster check imprinter
OFFICE SUPPLIES
1 - Northern Virginia road map
1 - File baskets
10 - Yamaha Operating Manuals
4 - Safe boxes
1 - 3-hole punch
1 - Oven mitt
3 - Promotional banners
2 - Boxes of copy paper
1 - Polaroid camera
1 - Computer disc stoarge box
1 box - Clasp envelopes
12 boxes - Business cards
150 - Promotion hang tags for bikes
1 - Bottle of toner
1 - MSDS book
4 - Lightbulbs
1 - Power strip
1 - Yamaha poster
8 - Phone books
6 - Pads of paper
8 rolls - Calculator paper
2 boxes - Cycle Sport envelopes
6 pads - Change receipts for bank money
8
<PAGE> 39
SPRINGFIELD OFFICE SUPPLIES
3 - 3-ring "D" binders
1 - Postal scale Paperclips
2 - Rulers
2 - Staplers
2 bottles - White Out
1 - Tape Measure
6 - Clipboards
3 - File holders
1 - Desk lamp
1 - Business card holder
1 - Rolodex
1 - Key basket
13 - Pencils
12 - Pens
1 - Letter opener
4 - NADA Books
4 - Demo helmets
2 - Shelf units with 2 shelves
1 box - Letterhead note pads
8 rolls - Fax paper
9 - 1998 Yamaha Dealer Manuals on new products
500 - Security envelopes
1 box - Layaway tags
50 - File folder trays
1 - Triumph T-Bird Fender (slightly damaged)
1 - Royal Star Fender (slightly damaged)
9
<PAGE> 40
SCHEDULE B
SCHEDULE OF ACCOUNTS RECEIVABLE
FOR
THE MOTOR CYCLE DIVISION
OF
CYCLE SPORT UNLIMITED, INC.
<PAGE> 41
Date: 10/13/98 Time: 10:46:28 CYCLE SPORT-HERNDON Report #1104 Page 0001
GENERAL LEDGER TRIAL BALANCE
Period: 01/01/98 to 09/30/98
Starting account: 11701-00 Ending account: 11750-01
Details are not shown
Sub-account: "All"
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Account-# Beginning Total Total Net Ending
Description balance debits credits change balance
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11071-00 .00 2,777.63 2,630.01 147.64 147.64
A/R RETURNED CHECKS
11702-00 .00 1,461,761.32 1,460,486.33 1,274.99 1,274.99
A/R CYCLE SPORT (CLEARING)
11703-00 4,085.75 66,009.06 66,402.00 392.94CR 3,692.81
A/R CYCLE SPORT (HOUSE)
11704-00 22,692.91 518,108.52 491,740.77 26,367.75 49,460.66
A/R FINANCE & UNIT CUSTOMERS
11705-00 .00 16,076.11 10,782.40 5,293.71 5,293.71
A/R MANUFACTURE HOLDBACKS
11712-00 48.77 110,433.07 106,101.24 4,331.83 4,380.60
A/R AMEX
11740-01 551.80 4,687.40 4,002.21 685.19 1,236.99
A/R YAMAHA WARRANTY
11741-01 2,247.88CR 514.34 895.95 381.81CR 2,629.49CR
A/R SUZUKI WARRANTY
11742-01 450.81CR 6,702.96 6,702.96 .00 450.81CR
A/R KAWASAKI WARRANTY
11744-01 335.99CR 917.67 917.67 .00 335.99CR
A/R TRIUMPH WARRANTY
11750-01 6,355.00 31,490.83 25,020.51 6,470.32 12,825.32
A/R ASSEMBLY & PRE-DELIVERY
Grand totals: 30,699.55 2,219,478.93 2,175,682.05 43,796.88 74,496.43
</TABLE>
-- End of report --
<PAGE> 42
Date: 10/13/98 Time: 10:49:01 CYCLE SPORT-HERNDON Report #6445 Page 0001
GENERAL LEDGER TRIAL BALANCE
Period: 01/01/98 to 09/30/98
Starting account: 11701-00 Ending account: 11750-01
Details are not shown
Sub-account: "All"
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Account-# Beginning Total Total Net Ending
Description balance debits credits change balance
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11701-00 .00 7,486.12 4,779.07 2,707.05 2,707.05
A/R RETURNED CHECKS
11702-00 .00 755,514.02 755,394.03 119.99 119.99
A/R CYCLE SPORT (CLEARING)
11703-00 73.97 13,604.58 14,186.22 581.64CR 507.67CR
A/R CYCLE SPORT (HOUSE)
11704-00 247.88 444,856.28 441,824.54 3,031.74 3,279.62
A/R FINANCE & UNIT CUSTOMERS
11705-00 .00 25,650.88 .00 25,650.88 25,650.88
A/R MANUFACTURE HOLDBACKS
11712-00 .00 60,345.56 57,472.91 2,872.65 2,872.65
A/R AMEX
11740-01 1,777.98CR 95.50 3,407.06 3,311.56CR 5,089.54CR
A/R YAMAHA WARRANTY
11750-01 5,911.90 13,243.31 12,359.00 884.31 6,796.21
A/R ASSEMBLY & PRE-DELIVERY
Grand totals: 4,455.77 1,320,796.25 1,289,422.83 31,373.42 35,829.19
</TABLE>
-- End of report --
<PAGE> 43
SCHEDULE C
SCHEDULE OF SELLER LIABILITIES
FOR
THE MOTOR CYCLE DIVISION
OF
CYCLE SPORT UNLIMITED, INC.
<PAGE> 44
SCHEDULE C-1
PURCHASER ASSUMED LIABILITIES
OF
THE MOTOR CYCLE DIVISION
OF
CYCLE SPORT UNLIMITED, INC.
<PAGE> 45
Date: 10/13/98 Time: 10:57:27 CYCLE SPORT-HERNDON Report #1105 Page 0001
GENERAL LEDGER TRIAL BALANCE 1.5.2.1
1.5.2.2
Period: 01/01/98 to 09/30/98
Starting account: 21101-01 Ending account: 21106-01
Details are not shown
Sub-account: "All"
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Account-# Beginning Total Total Net Ending
Description balance debits credits change balance
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
21101-01 337,105.58CR 764.118.06 663,481.80 100,636.78 236,498.78CR
ITT FLOORPLAN-YAMAHA
21102-01 132,756.00CR 245,223.00 345,190.00 99,967.00CR 232,723.00CR
ITT FLOORPLAN-SUZUKI
21103-01 227,461.50CR 256,100.50 177,802.00 78,298.50 149,163.00CR
FLOORPLAN-KAWASAKI
21105-01 48,974.00CR 84,949.00 89,625.00 4,676.00CR 53,650.00CR
HALLMARK FLOORPLAN
21106-01 98,498.00CR 186,352.24 192,273.24 5,921.00CR 104,419.00CR
TRANS AMERICA FLOORPLAN
Grand totals: 844,823.06CR 1,336,742.82 1,468,371.54 68,371.28 776,453.78CR
</TABLE>
-- End of report --
<PAGE> 46
Date: 10/13/98 Time: 10:56:02 CYCLE SPORT-HERNDON Report #6446 Page 0001
GENERAL LEDGER TRIAL BALANCE
1.5.2.2
Period: 01/01/98 to 09/30/98
Starting account: 21101-01 Ending account: 21105-01
Details are not shown
Sub-account: "All"
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Account-# Beginning Total Total Net Ending
Description balance debits credits change balance
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
21105-01 48,814.00CR 80,746.00 59,285.03 21,480.97 27,333.03CR
FLOORPLAN PAY-HALLMARK
Grand totals: 48,814.00CR 80,746.00 59,285.03 21,480.97 27,333.03CR
</TABLE>
-- End of report --
<PAGE> 47
Date: 10/13/98 Time: 11:00:05 CYCLE SPORT-HERNDON Report #1106 Page 0001
GENERAL LEDGER TRIAL BALANCE
Period: 01/01/98 to 09/30/98 1.5.2.3
.4
Starting account: 21360-00 Ending account: 21510-02 .5
.6
Details are not shown
Sub-account: "All"
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Account-# Beginning Total Total Net Ending
Description balance debits credits change balance
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
21400-00 17,397.29CR 228,870.57 225,178.30 3,894.27 13,703.02CR
SALES DEPOSIT
21410-01 4,331.62CR 8,210.66 4,728.64 3,482.02 849.60CR
PREPAID SERVICE
21500-03 2,260.15CR 292,678.58 296,189.65 3,511.07CR 5,771.22CR
REPAIR ORDER DEPOSIT
21510-02 108.60CR 114,727.23 117,851.99 3,124.76CR 3,233.36CR
SPECIAL ORDER DEPOSIT
Grand totals: 24,097.66CR 644,487.04 643,946.58 540.46 23,557.20CR
</TABLE>
-- End of report --
<PAGE> 48
Date: 10/13/98 Time: 11:00:26 CYCLE SPORT-SPRINGFIELD Report #6447 Page 0001
GENERAL LEDGER TRIAL BALANCE
Period 01/01/98 to 09/30/98
Starting account: 22360-00 Ending account: 21510-02
Details are not shown
Sub-account: All
<TABLE>
- ------------------------------------------------------------------------------------------------------
Account-# Beginning Total Total Net Ending
Description balance debits credits change balance
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
21400-00 754.03CR 227,273.88 223,723.00 3,550.00 2,795.97
SALES DEPOSIT
21410-01 30.79 9,507.13 7,923.00 1,584.15 1,634.94
PREPAID SERVICE
21500-03 1,146.00CR 197,360.52 200,071.28 2,710.76CR 3,856.76CR
REPAIR ORDER DEPOSIT
21510-02 5,061.64CR 154,416.39 157,092.59 2,676.20CR 7,737.84CR
SPECIAL ORDER DEPOSIT
Grand totals: 6,910.88CR 588,557.94 588,810.75 252.81CR 7,163.69CR
</TABLE>
-- End of report --
<PAGE> 49
SCHEDULE C-2
PURCHASER NON-ASSUMED LIABILITIES
OF
THE MOTOR CYCLE DIVISION
OF
CYCLE SPORT UNLIMITED, INC.
<PAGE> 50
Date:10/13/98 Time:11:48:05 CYCLE SPORT-HERNDON Report #1108 Page 0001
GENERAL LEDGER TRIAL BALANCE
Period 01/01/98 to 09/30/98
Starting account: 21600-00 Ending account: 22700-00
Details are not shown
Sub-account: All
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
Account-# Beginning Total Total Net Ending
Description balance debits credits change balance
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
21600-03 24,977.02CR 438,162.01 448,823.37 10,666.56CR 35,643,58CR
ACCRUED PAYROLL
21700-01 126.64CR 34,979.29 40,500.68 5,521.39CR 5,650.03CR
DMV PAYABLE (TAGS, TITLE, TAX)
21800-00 5830.0CR 3,604.34 4,436.30 831.96CR 248.96CR
GAME & FISHERIES PAYABLE (W/V)
21900-00 1,381.93CR 17,251.25 20,610.34 3,359.69CR 4,741.62CR
SALES TAX PAYABLE (4 1/2%)
22000-00 .00 37,529.99 37,529.99 .00 .00
FICA TAX PAYABLE
22100-00 .00 70,148.06 70,148.06 .00 .00
FED WITHOLDING PAYABLE
22200-00 .00 20,218.58 20,218.58 .00 .00
VA WITHOLDING PAYABLE
22300-00 .00 746.43 746.43 .00 .00
MD WITHOLDING PAYABLE
22400-00 .00 357.20 357.20 .00 .00
EMPLOYEE DISABILITY INS. PAY.
22500-00 .00 9,330.00 9,330.00 .00 .00
EMPLOYEE HEALTH INS. PAYABLE
22600-00 .00 1,200.00 1,200.00 .00 .00
EMPLOYEE IRA PAYABLE
Grand totals: 25,904.59CR 633,527.15 653,906.75 20,379.60CR 46,284.19CR
</TABLE>
-- End of report --
<PAGE> 51
Date:10/13/98 Time:11:48:32 CYCLE SPORT-SPRINGFIELD Report #6449 Page 0001
GENERAL LEDGER TRIAL BALANCE
Period 01/01/98 to 09/30/98
Starting account: 21900-00 Ending account: 22700-00
Details are not shown
Sub-account: All
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
Account # Beginning Total Total Net Ending
Description balance debits credits change balance
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
21600-00 9,055.04CR 228,069.41 230,833.12 23,763.71CR 11,818.75CR
ACCRUED PAYROLL
21700-01 .00 17,291.30 20,809.60 3,518.30CR 3,518.30CR
DMV PAYABLE (TAGS, TITLE, TAX)
21300-00 241.00 1,792.22 1,708.78 84.04 325.04
GAME & FISHERIES PAYABLE (W/V)
21900-00 2,648.88CR 19,388.86 21,582.49 2,193.63CR 4,842.31CR
SALES TAX PAYABLE (4 1/2%)
22000-00 .00 14,647.93 14,647.93 .00 .00
FICA TAX PAYABLE
22100-00 .00 26,035.81 26,035.81 .00 .00
FED WITHOLDING PAYABLE
22200-00 .00 8,183.25 8,183.25 .00 .00
VA WITHOLDING PAYABLE
22300-00 .00 67.42 67.42 .00 .00
MD WITHOLDING PAYABLE
22500-00 .00 2,760.00 2,760.00 .00 .00
EMPLOYEE HEALTH INS. PAYABLE
22600-00 .00 560.00 560.00 .00 .00
EMPLOYEE IRA PAYABLE
Grand totals: 11,462.72CR 318,796.80 327,188.40 8,319.60CR 19,854.32CR
</TABLE>
-- End of report --
<PAGE> 52
SCHEDULE D
DEALERSHIP AGREEMENTS
FOR
THE MOTOR CYCLE DIVISION
OF
CYCLE SPORT UNLIMITED, INC.
<PAGE> 53
[YAMAHA LOGO]
DEALER AGREEMENT
[YAMAHA LOGO]
YAMAHA MOTOR CORPORATION, U.S.A
6620 ORANGETHORPE AVENUE BUENA PARK, CALIFORNIA 90620
MAIL ADDRESS: P.O. BOX 6620, BUENA PARK, CALIFORNIA 90622
PHONE: (714) 522-9444
<PAGE> 54
YAMAHA SALES AND SERVICE AGREEMENT
The information contained below is important as an integral part of the
Agreement attached hereto and required prior to the effectiveness of the
relationship. All information must be accurate and complete and Yamaha must be
notified of any changes to such information since it may affect your rights
under the Agreement.
A. DEALER'S COMPLETE LEGAL NAME
Name: CYCLE SPORT UNLIMITED, INC.
-----------------------------------------------------------------------
(OWNER, PARTNER, CORPORATE, REFERRED TO IN THE AGREEMENT AS "DEALER")
<TABLE>
<CAPTION>
SOLE
PROPRIETORSHIP PARTNERSHIP CORPORATION
(COMPLETE SEC. C-1) (COMPLETE SEC. C-1) (COMPLETE SEC. C-2)
<S> <C> <C>
VIRGINIA
--------------------------- --------------------------- ------------------------------
(STATE)
</TABLE>
Fictitious Business Name: CYCLE SPORT
----------------------------------------------------
(If different from above)
Federal Identification No. 54-0900111
----------------------------------------------------
B. DEALER'S LOCATION
Address: 1822 HOWARD AVE., VIENNA, VA. 22180
----------------------------------------------------------------------
(Referred to in the Agreement as "Dealer's Location")
C. DEALER: OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
NAME SOCIAL SECURITY NO. TITLE
<S> <C> <C> <C>
1. Owners:
----------------------- --------------------------- ----------------------
----------------------- --------------------------- ----------------------
----------------------- --------------------------- ----------------------
----------------------- --------------------------- ----------------------
<CAPTION>
NAME TITLE
<S> <C> <C>
2. Officers and DAVID E. NEES PRESIDENT
Manager: ------------------------------- ---------------------------
ROBERT P. WHEELER, JR. VICE PRESIDENT
------------------------------- ---------------------------
ROBERT P. WHEELER, JR. SECRETARY
------------------------------- ---------------------------
HOWARD A. WILES TREASURER
------------------------------- ---------------------------
------------------------------- ---------------------------
------------------------------- ---------------------------
</TABLE>
Dealer warrants and represents that the information as set forth above is
true and correct.
"Dealer"
X /s/ DAVID NEES
-------------------------------
TITLE: X PRESIDENT
-------------------------------
DATE: X 7-26-77
-------------------------------
- 2 -
<PAGE> 55
YAMAHA SALES AND SERVICE AGREEMENT
THIS AGREEMENT is made by and between YAMAHA MOTOR CORPORATION, U.S.A., a
California corporation, having its principal office located at 6620 Orangethorpe
Avenue, Buena Park, California 90620 (hereinafter referred to as "Yamaha"), and
Dealer as identified on the cover sheet attached hereto.
RECITALS
A. Yamaha is the exclusive distributor in the United States of quality
MOTORCYCLES which are sold under the trademark "Yamaha" and distributes parts
and accessories therefor (hereinafter collectively referred to as the
"Products").
B. Dealer has represented, as an inducement to Yamaha's entering into this
Agreement, that: (1) Dealer is capable of performing the terms and conditions of
this Agreement, (2) Dealer has a sufficient number of trained personnel and
adequate facilities to sell and service the Products, and (3) Dealer has
adequate financial resources to perform the monetary obligations herein.
C. Dealer desires to engage in sales of the Products in accordance with the
terms and conditions hereof; and Yamaha desires to appoint Dealer as a retail
sales and service location for the Products in accordance herewith.
Yamaha and Dealer agree to govern their relationship in accordance with the
following:
1. ESTABLISHMENT OF RELATIONSHIP
1.01 APPOINTMENT OF DEALER. Yamaha hereby appoints Dealer as an authorized
Yamaha dealer for the sales and service of the Products only from Dealer's
location and Dealer hereby accepts such appointment. Dealer agrees not to,
directly or indirectly, change Dealer's location nor establish or operate any
other location for the sales or service of the Products without the prior
written consent of Yamaha, which consent shall not be unreasonably withheld.
1.02 NONEXCLUSIVE. The rights granted herein are nonexclusive. Yamaha
reserves the right to appoint additional dealers of any or all of the Products
at any time pursuant to Yamaha's marketing program and policies; and in
accordance with the applicable state laws.
2. DEALER'S SALES OPERATIONS
2.01 SALES. Dealer agrees to and shall use its best efforts to vigorously
promote and sell the Products at retail, and shall continually work to increase
the market for the Products in the area served by Dealer's location. Dealer
agrees to maintain a fully qualified sales organization and conduct a
continuing program of quality advertising and sales promotion activities for the
Products which reflect favorably on the goodwill established by Yamaha. Dealer
agrees to afford the Products as much effort as Dealer gives to competitive or
other products of Dealer in terms of promotion, floor space, inventory, and
service.
2.02 PERFORMANCE CRITERIA. The relationship established hereby is intended
by the parties to be mutually beneficial. In this regard, Yamaha assumes under
this Agreement certain specific responsibilities to Dealer in order to obtain in
return an adequate level of performance by Dealer. Such level of performance
shall be evaluated periodically by Yamaha, at least once in each year, based on
reasonable criteria such as the following:
(a) The volume of Dealer's sales of the Products as compared with the sales
of competitive products in the market area served by Dealer's location.
(b) The volume of Dealer's sales of the Products as compared to other
dealers of the Products who are similarly situated.
(c) The actual sales volume of the Products by Dealer as compared to the
reasonable annual sales objectives which may be established by Yamaha for
Dealer.
(d) The actual promotion efforts of Dealer relating to the Products.
(e) The compliance with all of the terms and conditions of this Agreement.
2.03 CUSTOMER RELATIONS. Dealer shall at all times conduct its operations in
such a manner so as to develop and maintain good customer relations. Dealer
shall provide prompt and courteous service to customer inquiries and complaints
relating to the Products. Dealer shall at all times properly represent the
Products and shall not make, directly or indirectly, any false, misleading, or
disparaging representations to any customer or other person in regards to Yamaha
or the Products. Dealer shall conduct its operations during usual and customary
business hours.
2.04 INVENTORY. Dealer agrees to maintain at Dealer's location: (1) a
prominent display of the Products which includes at least one of each of the
current models of the units, and (2) a reasonable inventory of the Products
which is adequate to meet the current and anticipated demand in the market area
served by Dealer's location, subject only to availability.
2.05 SUPPLY OF PRODUCTS. Yamaha shall make reasonable efforts to supply
Dealer with the Products in accordance with accepted orders; however, during any
period of shortage, Yamaha shall be permitted to allocate the Products in an
equitable manner.
2.06 REPORTS AND RECORDS. In order to provide Yamaha with information
regarding sales and market trends, Dealer shall periodically provide to Yamaha
complete and accurate data regarding Dealer's sales and inventories of the
Products and such other reasonable information as and when requested by Yamaha.
Dealer shall keep complete and accurate records regarding the sales and service
activities for the Products and shall retain for at least three (3) years all
such records and documents. Dealer shall permit any designated representative of
Yamaha, at reasonable times, to examine and audit such records and documents. In
the event of the discovery of any improper claim or payment, Yamaha may charge
back to Dealer all payments or credits plus interest thereon made by Yamaha to
Dealer pursuant to such claims or otherwise, as well as the costs to Yamaha for
such audit and the recovery of such payments or credit.
2.07 CHANGES TO THE PRODUCTS. Yamaha may periodically change the design,
models, and features of the Products, add
- 3 -
<PAGE> 56
new products, or discontinue the distribution of any or all of the Products to
Dealer without accountability to Dealer in connection with any Products ordered
by Dealer or Dealer's inventory of the Products.
2.08 COOPERATION WITH YAMAHA. Dealer shall at all times cooperate and work
closely with Yamaha's representatives. In addition Dealer shall maintain close
communications with such representatives.
3. PURCHASE OF THE PRODUCTS
3.01 GENERAL TERMS AND CONDITIONS. Yamaha shall sell the Products to Dealer
and Dealer shall purchase the Products from Yamaha in accordance with the terms
and conditions set forth herein. Yamaha reserves the right to change any terms
or conditions, including price and payment terms, at any time without
accountability to Dealer.
3.02 ORDERS. Dealer shall order the Products from Yamaha in accordance with
the ordering procedures of Yamaha. All orders are subject to acceptance by
Yamaha based on the availability of the Products and Dealer's compliance with
the terms and conditions hereof. To enable Yamaha to plan its purchases from the
manufacturer of the Products, Dealer shall submit its purchase orders at such
times as may be requested by Yamaha. The effective terms and conditions of
Yamaha shall supersede any conflicting terms and conditions of any purchase
order submitted by Dealer.
3.03 PRICE. Dealer shall pay to Yamaha the price and any other charges for
the Products as set forth on Yamaha's price schedules, issued periodically by
Yamaha, which is in effect at the time of shipment of Dealer's order. On the
stated future effective date, a new price or charge shall automatically
supersede any previous price or charge.
3.04 PAYMENT. Dealer shall pay the purchase price for the Products at the
time of delivery thereof, unless Yamaha has approved other terms of credit for
Dealer. Yamaha may cancel any order placed by Dealer or refuse the shipment
thereof should Dealer fail to meet any payment term, credit, or financial
requirements of Yamaha. The cancellation or withholding of any order shall not
be construed as a termination or breach of this Agreement by Yamaha.
3.05 SHIPMENT. Yamaha shall use its best efforts to ship all accepted orders
for the Products to Dealer F.O.B. Yamaha's warehouse with reasonable promptness;
provided, however, that Yamaha shall not be liable for any damage, consequential
or otherwise, to the Products which occurs while in transit, or as a result of a
failure to fill orders, delays in delivery, or any error in the filling of
orders.
3.06 TAXES. Dealer represents and warrants that all Products purchased
hereunder are purchased for resale in the ordinary course of Dealer's business.
Dealer agrees that he is responsible for and shall comply with all laws calling
for the collection and/or payment of all taxes, including sales and use taxes
and ad valorem taxes.
4. DEALER'S SERVICE OPERATIONS
4.01 SERVICE OPERATIONS. Dealer shall establish and maintain quality service
operations as recommended by Yamaha for the Products at Dealer's location which
shall include thoroughly trained personnel, proper tools and equipment, and
adequate service facilities. Such service operations shall provide to owners of
the Products prompt, courteous, and workmanlike service.
4.02 DELIVERY AND PREPARATION OBLIGATIONS. Dealer shall be responsible for
and agrees to perform set-up, preparation, and delivery obligations as
prescribed by Yamaha, prior to the delivery of the Products to purchasers
thereof; and Yamaha agrees to compensate Dealer in accordance with the policies
of Yamaha as may be issued from time to time and in accordance with applicable
law.
4.03 GENERAL SERVICE. Dealer shall provide to owners of the Products such
general service and repair for the Products as may be necessary. Any and all
charges therefore shall be reasonable and consistent with those prevailing in
the market area of Dealer; and all such services and charges shall be in
accordance with applicable law.
4.04 WARRANTY SERVICE. Dealer agrees to perform all warranty service on all
Products brought to Dealer, whether or not sold by Dealer. Dealer shall perform
such warranty service in accordance with the policies of Yamaha as they may be
issued from time to time in the Yamaha service and warranty manuals and
bulletins. Dealer shall use only genuine Yamaha parts, or parts that are
equivalent in quality and design to genuine Yamaha parts, in performing warranty
service on the Products.
(a) Dealer acknowledges the importance of providing to owners of the
Products prompt and skilled warranty service and the need to comply with all
laws relating to warranty service. Dealer shall give immediate service to such
warranty requests and/or service. Dealer agrees to perform all warranty service
in a competent and workmanlike manner. Dealer agrees to maintain an inventory of
genuine Yamaha parts to provide all necessary warranty service.
(b) Dealer shall submit complete and accurate claims to Yamaha for
reimbursement for parts and labor used in performing warranty service on
warranty claim forms of Yamaha with all information required thereon; and Yamaha
shall reimburse Dealer for such parts and labor in accordance with the effective
schedules and rates applicable to Dealer. Dealer shall keep and retain complete
and accurate records and documents supporting such claims, which records and
documents are subject to the provisions of Paragraph 2.06, regarding inspection
and adjustments.
4.05 ASSISTANCE AND PROTECTION. In the event any warranty claim arises that
Dealer is unable to perform, Yamaha should be promptly notified by Dealer and be
provided the details of the claim and Yamaha shall use reasonable efforts to
resolve such claim. Yamaha is relying upon Dealer's assurance that he is capable
of performing service obligations for the Products. Dealer agrees to fully
protect Yamaha from any claims, liability or loss that may result from a failure
of Dealer to properly perform service for the Products as required hereunder or
under applicable law.
5. GENERAL RESPONSIBILITIES--YAMAHA AND DEALER
5.01 PROMOTION AND ASSISTANCE BY YAMAHA. Yamaha shall, from time to time,
provide to Dealer such assistance, incentives, and programs as may be offered to
all other dealers of the Products who are similarly situated. Yamaha shall
conduct an advertising program for the Products which may include television and
radio commercials, magazine advertisements, and promotional events.
- 4 -
<PAGE> 57
5.02 TRADEMARKS. Yamaha agrees to permit Dealer to identify itself as an
authorized "Yamaha" dealer for the Products and use the trademarks of Yamaha in
connection with Dealer's efforts to sell and promote the Products; provided,
however, that such use shall be subject to the control of Yamaha and be in a
manner consistent with the high quality image of the Products. Dealer shall not
use the name "Yamaha" or other trademarks as a part of its corporate name or in
any manner inconsistent with the instructions of Yamaha. Dealer acknowledges
that Yamaha has the sole right and interest in such trademarks and agrees to
cease immediately all use thereof on the termination of this Agreement.
5.03 FACILITIES. Dealer shall establish and maintain the appearance and
condition of the facilities at Dealer's location so as to favorably reflect on
the Products and the quality image of Yamaha. As part of the facilities at
Dealer's location, Dealer shall install and maintain prominent and suitable
signs as recommended by Yamaha, which identify Dealer as a dealer of the
Products.
5.04 PERSONNEL. Dealer shall employ competent personnel for its sales
operations, service operations, and administration in order to fulfill its
responsibilities under this Agreement. All sales and service personnel shall be
thoroughly familiar with the Products; and Dealer, at his expense, shall cause
such personnel to attend training programs for the Products and study sales,
service and warranty manuals and bulletins for the Products as may be provided
by Yamaha from time to time.
5.05 FINANCIAL RESPONSIBILITY. Dealer shall maintain for its operations
hereunder adequate working capital and lines of wholesale credit to enable
Dealer to fulfill his responsibilities under this Agreement. Dealer agrees to
furnish Yamaha, at reasonable times, financial reports and other financial data
to enable Yamaha to determine Dealer's financial responsibilitv. At least within
ninety (90) days following the close of Dealer's fiscal year, Dealer agrees to
submit to Yamaha Dealer's financial statement for the previous year.
5.06 COMPLIANCE WITH LAWS. Dealer shall conduct and maintain at all times
his sales and service operations in strict compliance with all applicable
federal and state laws and regulations, county and city ordinances and
regulations and any other applicable law, regulation or ordinance.
6. TERMINATION
6.01 EFFECTIVENESS. This Agreement shall be effective upon the execution
hereof by an authorized officer or representative of Yamaha at Buena Park,
California, and shall continue until terminated as provided herein.
6.02 TERMINATION FOR CAUSE (IMMEDIATE EFFECT). Unless otherwise provided for
or allowed under state law, Yamaha may terminate this Agreement with immediate
effect on the giving of written notice to Dealer should any of the following
events occur, such events being of such a nature so as to constitute good cause
for immediate termination by Yamaha:
(a) Any misrepresentation by Dealer in entering into this Agreement or the
submission by Dealer of any false or fraudulent application, claim or report in
connection with its sales or service operations.
(b) Insolvency of Dealer; inability of Dealer to meet its debts as they
mature; the filing by Dealer of a petition of voluntary bankruptcy under any
chapter of the bankruptcy laws of the United States; the institution or
proceedings to adjudge Dealer a bankrupt in an involuntary proceeding; the
execution of an assignment by Dealer for the benefit of creditors; the
appointment by a court of a receiver, trustee for Dealer or the assets of
Dealer; dissolution of Dealer; or the failure of Dealer to conduct its
operations in the ordinary course of business.
(c) Any transfer or attempted transfer by Dealer of any interest in, or
right, privilege or obligation under this Agreement; or any transfer of the
principal assets of Dealer's operations hereunder; or any change in the direct
or indirect ownership or operating management of Dealer, however accomplished,
without the prior written consent of Yamaha, which consent shall not be
unreasonably withheld.
(d) Any relocation or establishment of branch locations without having
complied with the requirements set forth in Paragraph 1.01 of this Agreement.
(e) Any act by Dealer or any person involved in the ownership or operating
management of Dealer which violates any law and affects adversely Dealer's
operations or any conduct or unfair business practice by Dealer or any person
involved in the ownership or operating management of Dealer which affects
adversely Dealer's operations or the goodwill and reputation of Dealer, Yamaha,
or the Products.
(f) Any failure by Dealer to pay to Yamaha any sums that may be due or
become due pursuant to this Agreement or maintain adequate lines of credit for
purposes of purchasing the Products from Yamaha.
(g) Revocation of Dealer's motor vehicle Dealer's license or other license
or permit necessary to conduct its operations hereunder.
6.03 TERMINATION - GENERAL NONPERFORMANCE. Unless otherwise provided for or
allowed under state law or this Agreement, Yamaha or Dealer may terminate this
Agreement on the giving of at least sixty (60) days prior written notice to the
other for failure of either party to fulfill any or all of their
responsibilities and obligations as set forth in this Agreement, except for
causes specified under Paragraph 6.02 hereof.
6.04 TERMINATION - DEATH, INCAPACITY. As an inducement to entering into this
Agreement, Dealer has represented that the persons identified on the cover sheet
shall continue to actively participate in the ownership and operating management
of Dealer; and, therefore, Yamaha may terminate this Agreement on the giving to
Dealer of at least fifteen (15) days prior written notice in the event of death,
physical or mental incapacity or disassociation of any of the identified
persons. Yamaha may defer such termination for a period up to six (6) months
from such event in order to allow Dealer an opportunity to replace such person
or persons with an equally qualified person or persons or allow an orderly
liquidation of Dealer's operations; provided, however, it can be demonstrated
that the terms and conditions of this Agreement can be fulfilled during such
period and thereafter.
6.05 TRANSITION - NEW AGREEMENT. Yamaha may terminate this Agreement at any
time on the giving to Dealer of at least sixty (60) days prior written notice
should Yamaha offer a new or modified form of agreement to all its dealers for
the Products.
7. RESPONSIBILITIES UPON TERMINATION
7.01 CONTINUING RESPONSIBILITIES. Upon the termination of this Agreement,
Dealer shall no longer be an authorized
- 5 -
<PAGE> 58
Yamaha dealer; however, Dealer shall immediately pay to Yamaha all amounts owed
to Yamaha, whether or not due.
7.02 DISCONTINUANCE OF USE OF TRADEMARKS. Upon termination, Dealer shall (1)
discontinue forthwith any and all use of the trademarks of Yamaha, including
such use in advertising, business materials of Dealer and as part of the firm or
trade name of Dealer, (2) forthwith remove or obliterate any and all signs
designating Dealer as an authorized dealer for the Products or which include any
trademark of Yamaha, and (3) forthwith notify and instruct publications and
others who may list or publish Dealer's name as an authorized Yamaha dealer,
including telephone directories, yellow pages, and other business directories,
to discontinue such listing of Dealer as an authorized Yamaha dealer.
7.03 ORDERS FOR THE PRODUCTS. In the event of the termination of this
Agreement, all unshipped orders for the Products shall be deemed cancelled.
However, from the date of the notice of termination to the effective date of
termination, orders may be filled by Yamaha if such orders are bona fide and
reasonable in quantity, Dealer pays for such order in cash on delivery; and
Dealer is capable of meeting its sales and service obligations hereunder.
7.04 REPURCHASE OF PRODUCTS.
A. Upon termination of this Agreement, Yamaha shall have the option,
but not the obligation, to repurchase from Dealer and Dealer shall sell to
Yamaha, within sixty (60) days after the effective date of termination the
following:
(1) Any or all new, unused, undamaged, then current model Products which
were purchased by Dealer from Yamaha, and are the unencumbered property of and
in the possession of Dealer, at the net invoice price, exclusive of
transportation charges and delivery and preparation reimbursement, previously
paid by Dealer therefor less all costs incurred in regards to their purchase.
(2) Any or all new, unused and undamaged resaleable parts, purchased from
Yamaha which are then the unencumbered property of and in the possession of
Dealer, at Yamaha's then current parts wholesale price list, exclusive of
transportation charges and less all costs incurred in regards to the repurchase.
Dealer shall, at Dealer's expense, inventory, tag, pack and deliver possession
of such parts to Yamaha, in accordance with Yamaha's procedures then in effect.
B. Within thirty (30) days of the date of termination of this
Agreement, Dealer shall deliver or mail to Yamaha a detailed inventory of all of
the items referred to in Paragraph 7.04. In the event Dealer fails to supply
such a list to Yamaha within said period, Yamaha shall have the right to enter
onto Dealer's premises for the purpose of compiling such an inventory list and
Dealer shall reimburse Yamaha for any costs incurred in connection therewith.
C. Within ten (10) days after receipt of Dealer's detailed inventory or
after Yamaha has taken a physical inventory, whichever is later, Yamaha shall
notify Dealer of its intention in regards to Dealer's inventory of Products.
8. MISCELLANEOUS
8.01 RELATIONSHIP OF THE PARTIES. This Agreement does not in any way create
the relationship of principal and agent between Dealer and Yamaha and in no
circumstances shall Dealer, its agents or employees be considered the agent of
Yamaha. Dealer shall not act or attempt to act or represent itself directly or
by implication as agent of Yamaha or in any manner assume or create or attempt
to assume or create any obligation or make any contract, agreement,
representation or warranty on behalf of or in the name of Yamaha, except those
authorized in writing by Yamaha. Dealer shall indemnify and hold Yamaha harmless
from any cost and liability caused by the acts of Dealer, its employees or agent
and from liability caused by any unauthorized act by Dealer, its agents, or
employees.
8.02 FORCE MAJEURE. Yamaha shall not be responsible for or liable for failure
to perform any part of this Agreement or for any delay in the performance of any
part of this Agreement, directly or indirectly resulting from or contributed to
by any foreign or domestic embargoes, seizures, acts of God, insurrections, wars
and/or continuance of war; or the adoption or enactment of any law, ordinance,
regulation, ruling or order directly or indirectly interfering with the
production, delivery or payment hereunder; or lack of the usual means of
transportation, fires, floods, explosions, strikes; extraordinary currency
devaluations, taxes, or customer duties or other similar charges or assessments;
or other events or contingencies beyond its control, either of the foregoing
nature or of any kind, nature or description affecting the transportation,
production, sale or distribution of the Products or any components used in or in
connection with their production.
8.03 ENTIRE AGREEMENT. This Agreement supersedes and terminates any and all
prior agreements or contracts, written or oral, entered into between Yamaha and
Dealer as of the effective date of this Agreement with reference to all matters
covered by this Agreement. All negotiations, correspondence and memoranda which
have passed between Yamaha and Dealer with reference to all matters covered by
this Agreement are merged herein and this Agreement constitutes the entire
agreement between Yamaha and Dealer. No representations not contained herein are
authorized by Yamaha, and this Agreement may not be altered, modified, amended,
or changed, in whole or in part, except in writing and executed by Yamaha and
Dealer in the same manner as is provided for the execution of this Agreement.
8.04 ASSIGNMENT. The relationship created between Yamaha and Dealer is
intended to be personal in nature, since Yamaha is relying on the continued
active participation of certain individuals in the operations of Dealer, and
consequently, this Agreement shall not be assignable or transferable in any
manner whatsoever without the prior consent in writing of Yamaha. For purposes
of this Agreement, any change in ownership, the legal form of the business, or
active management shall be deemed a transfer which requires the prior consent of
Yamaha. Any determination by Yamaha in this regard shall be based on an
evaluation of assignee's or transferee's qualifications and ability to meet
Yamaha's high standards. In the event Dealer changes his legal form of business
or makes an assignment without notifying Yamaha as provided herein, Dealer shall
continue to be personally liable for all past and future debts of this or a
successor business.
8.05 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
8.06 CONSTRUCTION. This Agreement and all of the words, terms, and provisions
hereof shall be construed in accordance with their usual and ordinary meanings,
and not in favor of or against either party hereto. Paragraph headings are not a
part of this Agreement, but are only for convenience.
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8.07 NONWAIVER OF RIGHTS. Failure of either party hereto to enforce any of
the provisions of this Agreement or any rights with respect thereto or failure
to exercise any election provided for herein shall in no way be considered to be
a waiver of such provisions, rights or elections or in any way affect the
validity of this Agreement. The failure of either party to exercise any of said
provisions, rights or elections shall not preclude or prejudice such party from
later enforcing or exercising the same or any other provisions, rights or
elections which it may have under this Agreement.
8.08 INVALIDITY. If any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.
8.09 NOTICE. All notices required or permitted to be given or made under this
Agreement may be effected in writing by certified mail, postage prepaid, return
receipt requested, and shall be deemed communicated three (3) days from the
mailing thereof. Mailed notices shall be addressed to the parties as their
addresses appear above, but each party may change his address by written notice
in accordance with this paragraph.
8.10 ATTORNEY'S FEES. In the event any legal action is necessary to enforce
any of the terms and conditions of this Agreement, Dealer shall pay to Yamaha
all costs and fees incurred, including reasonable attorneys' fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this 1 day of Aug, 1977. Dealer expressly acknowledges that it has read this
Agreement in its entirety and understands its rights and responsibilities under
this Agreement and the provisions relating to termination.
"YAMAHA"
YAMAHA MOTOR CORPORATION, U.S.A.
a California Corporation
By: [SIGNATURE]
----------------------------------
Title: ASSISTANT SECRETARY
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"DEALER"
X CYCLE SPORT UNLIMITED INC.
-------------------------------
BUSINESS NAME
By: X /s/ DAVID E. NESS
-------------------------------
Title: X PRESIDENT
-------------------------------
By: X
-------------------------------
Title: X
-------------------------------
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Dealer Agreernent
YAMAHA MOTOR CORPORATION, U.S.A. SALES AND SERVICE AGREEMENT
THIS AGREEMENT is made by and between YAMAHA MOTOR CORPORATION, U.S.A., a
California Corporation, YAMAHA PARTS DISTRIBUTORS, INC., a California
Corporation, each having its principal office located at 6555 Katella Avenue,
Cypress, California 90630 (hereinafter referred to as -YMUS- and -YPDI-
respectively, and collectively referred to as "Yamaha") and Dealer as identified
below. A. Dealer's Complete Legal Name Name: (Owner, Partnership, Corporation
referred to in the Agreement as "Dealer") Sole Proprietorship Partnership
Corporation (Complete Sec. C-1) (Complete Sec. C-1) (Complete Sec. C-1 & C-2)
Fictitious Business Name (if different from above) B. Dealer's Location Address:
(Referred to in the Agreement as "Dealer's Location") C. Dealer: Owners and
Management 1. Owner; Shareholder or Partner 2. Officers: A. Yamaha is the
exclusive distributor in the United States of quality products which are sold
under cenain trademarks owned by Yamaha ("Yamaha", "RIVA" and "Riva by Yamaha")
and distributes parts and accessories therefor which products, parts and
accessories are more specifically defined ontheAddendum(s), attached hereto and
made apart hereof (hereinafter collectively referred to as the "Products"). B.
Dealer has represented as an inducement to Yamaha's entering into this
Agreement, that: (1) Dealer is capable of performing the terms and conditions of
this Agreement, (2) Dealer has a sufficient number of trained personnel and
adequate facilities to sell and service the Products, and (3) Dealer has
adequate financial resourcesto perform the monetary obligations herein. C.
Dealer desires to engage in sales of the Products in accordance with the terms
and conditions hereof; and Yamaha desires to appoint Dealer as a retail sales
and service location for the Products inaccordance herewith. Yamaha and Dealer
agree to govern their relationship in accordance with the following: 1.
ESTABLISHMENT OF RELATIONSHIP 1.1 Appointment of Dealer. Yamaha hereby appoints
Dealer as an authorized dealer for the sale and service of the Products, and
Dealer hereby accepts such appointment. Yamaha and Dealer agree that Dealer
Name Name RECITALS Percentage of Ownership President Vice President Secretary
Treasurer shall only sell the Products to retail consumers and shall not sell
or otherwise transfer the Products to any other dealer except those dealers
authorized by Yamaha to sell and service the Products. 1.2 Location of Dealer.
In order to enable Yamaha to maintain an effective network of authorized Yamaha
dealers, Dealer agrees not to directly or indirectly sell or offer for sale the
Products from any location other than from Dealer's Location. 1.3 Change of
Location. Dealer agrees not to change Dealer's Location or establish or operate
anyother locationforthe sale or service of the Products without obtaining
Yamaha's prior written approval of such proposed change. Yamaha's approval
shall not be unreasonably withheld. Any proposed change of location is subject
to applicable state law; however, nothing herein shall be construed to require
Yamaha totake any step to obtain governmental approval for any proposed change
of location. 1.4 Nonexclusive. The rights granted herein are nonexclusive.
Yamaha reservesthe right to appoint additional dealers of any or all of the
Products at any time pursuant to Yamaha's marketing program and policies. 2.
DEALER'S SALES OPERATIONS 2.1 Sales. Dealer agrees to vigorously promote and
sell the Products to retail consumers, and shall continually work to increase
the market for the Products in the area served by Dealer's Location.
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Dealer shall attain the annual sales objectives, if any, established by Yamaha
for Dealer. Dealer shall conduct a continuing program of quality advertising and
sales promotion activities for the Products. Dealer may sell the Products to
retail consumers at such prices as Dealer may establish from time to time. 2.2
Sales Organization. Dealer agrees to maintain a fully qualified sales
organization which includes qualified sales personnel who are thoroughly
familiar with the Products. Dealer, at its expense, shall cause such personnel
to attend training programs for the Products, and study sales manuals and
bulletins for the Products as may be provided by Yamaha from time to time. 2,3
Multiple Brands. Yamaha recognizes that Dealer may handle brands which are
competitive with the Products sold to Dealer pursuant to this Agreement. In the
event Dealer handles such competitive products, Dealer agrees to afford the
Products at least as much effort as Dealer gives to competitive products handled
by Dealer interns of promotion and sale, floor space, inventory and service. 2.4
Performance Criteria. Dealer's level of performance may be evaluated
periodically by Yamaha, based on reasonable criteria such as the following: (a)
The volume of Dealer's sales of the Products as compared with the sale of
competitive products in the market area served by Dealer's Location. (b) The
volume of Dealer's sales of the Products as compared to other dealers of the
Products. (c) The actual sales volume of the Products by Dealer as compared to
the reasonable annual sales objectives which may be established by Yamaha for
Dealer. (d) The manner in which Dealer has conducted its sales operations,
including advertising, sales promotion and treatment of consumers. (e) The trend
over a reasonable period of time of Dealer's sales performance. (f) The
availability of Products to Dealer. (g) Significant local conditions that may
have directly affected Dealer's performance. (h) The compliance with all of the
terms and conditions of this Agreement. Evaluations prepared pursuant to this
Section 2.4 will be discussed with and provided to Dealer, with the expectation
that Dealer will take such action as may be required to correct any deficiencies
in Dealer's performance of its responsibilities. 2.5 Customer Relations. Dealer
shall at all times conduct its operations in such a manner so as to develop and
maintain good customer relations. Dealer shall provide prompt and courteous
service to customer inquiries and complaints relating to the Products. Dealer
shall at all times properly represent the Products and shall not make, directly
or indirectly, any false, misleading, or disparaging representations to any
customer or other person in regards to Yamaha or the Products. 2.6 Hours of
Business. Dealer agrees that its operations shall be conducted in the normal
course of business during usual business hours and for not less than the usual
number of days of the week and hours of the day which are customary for the same
type of business in the market area served by Dealer's Location. 2.7 Display and
Inventory. Dealer agrees to maintain a prominent display of a reasonable
representation of the entire line of the Products at Dealer's Location, which
display shall be in accordance with the guidelines established by Yamaha. Dealer
also agrees to maintain a reasonable inventory of the Products which is adequate
to meet the current and anticipated demand in the market area served by Dealer's
Location, subject to availability and to guidelines established by Yamaha. 2.8
Report and Records. In order that Yamaha may comply with applicable regulations
and achieve its marketing objective, Dealer shall report to Yamaha, all retail
sales of the Products within ten (10) days of completion of such sale. Dealer
shall periodically provide to Yamaha complete and accurate data regarding
Dealer's inventories of the Products and such other reasonable information as
and when requested by Yamaha. Dealer shall keep complete and accurate records
regarding sales and service activities for the Products, applications for
discounts, allowances, warranty claims, refunds and credits and shall retain for
at least three (3) years all such records and documents. Dealer shall permit any
designated representative of Yamaha, at reasonable times, to examine and audit
such records and documents. 2.9 Cooperation with Yamaha. Dealer shall at all
times cooperate and work closely with Yamaha's representatives and shall
maintain close communications with such representatives in regards to Dealer's
operations hereunder. 2.10 Facilities. Dealer shall establish and maintain the
appearance and condition of the facilities at Dealer's Location so as to
favorably reflect on the Products and the quality image of Yamaha. As part of
the facilities at Dealer's Location, Dealer shall install and maintain prominent
and suitable signs as recommended by Yamaha, which identify Dealer as a dealer
of the Products. Dealer agrees to maintain the facilities in a neat and orderly
fashion and in accordance with the standards established by Yamaha which may be
changed from time to time. The facilities must at all times comply with such
standards with respect to appearance, location, size, layout of building,
showroom, office, parts department and service operation. Yamaha may
periodically evaluate Dealer's facilities. Dealer shall permit any designated
representative of Yamaha, at reasonable times, to inspect the facilities and
Dealer agrees to make such alterations or improvements to the facilities as
Yamaha may reasonably specify. 3. DEALER'S SERVICE OPERATIONS 3.1 Service
Operations. Dealer shall establish and maintain quality service operations as
recommended by Yamaha for the Products at Dealer's Location including a parts
and accessories department which will comply with all standards established by
Yamaha. Dealer shall provide to owners of the Products such general service and
repair as may be necessary. Any and all charges therefore shall be reasonable
and consistent with those prevailing in the market area served by Dealer's
Location and all such services and charges shall be in accordance with
applicable law. Dealer agrees to provide service to any customer who has
purchased a Product, regardless of the dealer from whom the Product was
purchased. 3.2 Service Organization. Dealer agrees to maintain a fully qualified
service organization which includes service personnel who are thoroughly
familiar with the Products. Dealer, at its expense, shall cause such personnel
to attend training programs for the service of the Products and study service
manuals and bulletins for the Products as may be provided by Yamaha from time to
time. Dealer agrees to purchase and provide to its service personnel all tools
and equipment, as prescribed by Yamaha, that may be necessary to adequately and
properly service the Products. 3.3 Review of Dealer's Service and Repair
Performance. Yamaha may periodically evaluate Dealer's service and repair
performance in accordance with the standards recommended by Yamaha. Evaluations
prepared pursuant to this Section 3.3 will be discussed with and provided to
Dealer, with the expectation that Dealer will take such action as maybe required
to correct any deficiencies in Dealer's performance of his responsibilities. 3.4
Delivery and Preparation Obligations. Dealer shall be responsible for and agrees
to perform set-up, preparation, and delivery obligations as prescribed by
Yamaha, prior to the delivery of the Products to purchasers thereof. Dealer
agrees that all Products sold by it will be in proper operating condition prior
to delivery to any purchaser. Dealer further agrees to provide purchasers of the
Products with information concerning proper operation of the Products prior to
delivery. Yamaha agrees to compensate Dealer in accordance with the policies of
Yamaha as may be issued from time to time.
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3.5 Warranty,
A. Warranty. Products supplied to Dealer by Yamaha are warranted only in
accordance with Yamaha's written warranty to consumers, which written warranty
is supplied to Dealer for distribution to Dealer's customers and which maybe
amendeclor modified from time to time only by Yamaha. OTHER THAN THE WARRANTY
CONTAINED IN YAMAHA'S WRITTEN WARRANTYOR AS REQUIRED BY LAW, YAMAHA DISCLAIMS
ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT BY WAY OF LIMITATION,
THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. YAMAHA
DISCLAIMS ANY LIABILITY FOR INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAIVIAGES OR
COMMERCIAL LOSSES SUFFERED BY DEALER, ITS CUSTOMERS OR ANY THIRD PARTY, except
as provided under state law. B. Warranty to Customers. Dealer shall show
customers any applicable Yamaha warranty prior to sale of the Products and will
furnish customers a copy of any applicable Yamaha warranty at the time of sale.
Dealer shall not give, or purport to give any additional or different warranty
to customers on behalf of Yamaha, other than the applicable written warranty of
Yamaha for the Products. 3.6 Warranty Service. Dealer agrees to perform all
warranty service on all Products brought to Dealer, whether or not sold by
Dealer. Dealer shall perform such warranty service in accordance with the
policies of Yamaha as they may be issued from time to time in the Yamaha service
and warranty manuals and bulletins. Any charges for such warranty service shall
be reasonable and consistent with those prevailing in the market area served by
Dealer's Location. When performing warranty service on the Products, Dealer
shall use only genuine Yamaha parts, or parts that are equivalent in quality and
design to genuine Yamaha parts. (a) Dealer acknowledges the importance of
providing to owners of the Products prompt and skilled warranty service and the
need to comply with all laws relating to warranty service. Dealer shall give
immediate service to such warranty requests. Dealer agrees to perform all
warranty service in a competent and workmanlike manner. Dealer agrees to
maintain an inventory of genuine Yamaha parts in accordance with Section 2.7 and
to provide all necessary warranty service. (b) Dealer shall submit complete and
accurate claims to Yamaha for reimbursement for parts and labor used in
performing warranty service on warranty claim forms of Yamaha with all
information required therein; and Yamaha shall reimburse Dealer for such parts
and labor in accordance with the effective schedules and rates applicable to
Dealer. Dealer shall keep and retain complete and accurate records and documents
supporting such claims, which records and documents are subject to the
provisions of Section 2.8, regarding inspection. In the event of the discovery
of any improper claim or payment, Yamaha may charge back to Dealer all payments
or credits plus interest thereon made by Yamaha to Dealer pursuant to such
claims or otherwise, as well as the costs to Yamaha for such audit and the
recovery of such payments or credit. 3.7 Assistance and Protection. In the event
any warranty claim arises that Dealer is unable to perform, Yamaha should be
promptly notified by Dealer and be provided the details of the claim and Yamaha
shall use reasonable efforts to resolve such claim. Yamaha is relying upon
Dealer's assurance that it is capable of performing service obligations for the
Products. Dealer agrees to fully protect Yamaha from any claims, Iiability or
loss that may result from a failure of Dealer to properly perform service for
the Products as required hereunder or under applicable law. 3.8 Technical
Advice. Yamaha will have service representatives available for Dealer to consult
with, if necessary, in connection with service problems. 3.9 Recall and Update.
Regardless of where Products covered by a recall or a modification program
sponsored by Yamaha were purchased, Dealer will perform any inspection, recall,
or modification service as may be required from time to time. All such service
shall be performed in accordance with the announced policies and procedures of
Yamaha. 4. PURCHASE OF THE PRODUCTS 4.1 General Terms and Conditions. Yamaha
shall sell the Products to Dealer and Dealer shall purchase the Products from
Yamaha in accordance with the terms and conditions set forth herein and the
sales programs offered by Yamaha from time to time. Yamaha reserves the right.
to change any terms or conditions, including price and payment terms, at any
time without accountability to Dealer. However, Yamaha shall endeavor to provide
Dealer with advance notice of any such changes. 4.2 Price. Dealer shall pay to
Yamaha the price and any other charges for the Products as set forth on Yamaha's
price schedules, which are in effect at the time of invoicing of Dealer's order
unless the sales program pursuant to which the Products were ordered specifies a
different price- Yamaha may specify a future date upon which a new price and/or
charge may take effect and upon that date the new price and/or charge shall take
effect automatically. 4.3 Payment. Dealer shall pay the purchase price for the
Products at the time of delivery thereof, unless Yamaha has approved other terms
of credit for Dealer. If other credit terms have been approved, Dealer shall pay
for the Products in accordance with the approved terms. Yamaha may cancel any
order placed by Dealer or refuse the shipment thereof should Dealer fail to meet
any payment term, credit, or financial requirements of Yamaha or of a financing
source to which Yamaha has a recourse obligation. The cancellation or
withholding of any order shall not be construed as a termination or breach of
this Agreement by Yamaha. 4.4 Orders. Dealer shall order the Products from
Yamaha in accordance with the ordering procedures established by Yamaha. The
effective terms and conditions of Yamaha shall supersede any conflicting terms
and conditions of any purchase order submitted by Dealer. All orders are subject
to acceptance by Yamaha based on the availability of the Products and Dealer's
compliance with the terms and conditions hereof. To enable Yamaha to plan its
purchases from the manufacturer of the Products, Dealer shall submit its
purchase orders at such times as may be requested by Yamaha. 4.5 Shipment.
Yamaha shall use its best efforts to ship all accepted orders for the Products
to Dealer F.O.B. Yamaha's warehouse with reasonable promptness; provided,
however, that Yamaha shall not be liable for any damage, consequential or
otherwise, to the Products which occurs while in transit. Further, Yamaha shall
not be liable for damages, consequential or otherwise, to Dealer which arise as
a result of a failure to fill orders, delays in delivery, or any error in the
filling of orders. 4.6 Taxes. Dealer represents and warrants that all Products
purchased hereunder are purchased for resale in the ordinary course of Dealer's
business. Dealer agrees that it is responsible for and shall comply with all
laws calling for the collection and/or payment of all taxes, including sales and
use taxes and ad valorem taxes. 5. GENERAL RESPONSIBILITIES - YAMAHA AND DEALER
5.1 Supply of Products. Yamaha shall make reasonable efforts to supply Dealer
with the Products in accordance with accepted orders; however, during any period
of shortage, Yamaha shall be permitted to allocate the Products in accordance
with applicable marketing plans. 5.2 Promotion and Assistance by Yamaha. Yamaha
shall, from time to time, provide to Dealer sales assistance, incentives, and
programs. Yamaha shall conduct an advertising program for the Products which may
include television and radio commercials, magazine advertisements, and
promotional events. Any such incentives, programs, promotion and assistance
shall be at the sole discretion of Yamaha. 5.3 Change to the Products. Dealer
acknowledges that the Products are manufactured by suppliers of Yamaha;
consequently, the Products available to Yamaha may be periodically changed as to
design, models, orfeatures or some or all of the Products maybe discontinued all
without accountability to Dealer in connection with any Products ordered by
Dealer or Dealer's inventoryof the Products. Yamaha will use reasonable efforts
to provide advance notice of any such change. 5.4 Trademarks. Yamaha agrees to
permit Dealer to identify itself as an authorized dealer for the Products and
use the trademarks of Yamaha applicable to the Products in connection with
Dealers 'efforts to
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sell and promote the Products provided, however, that such use shall be subject
to the control of Yamaha and be in a manner consistent with the high quality
image of the Products. Dealer shall not use the tradenames or trademarks of
Yamaha as a part of its corporate name or in any manner inconsistent with the
instructions of Yamaha. Dealer shall promptly notify Yamaha of any infringement
or unauthorized use by any person of such patents, trademarks, tradenames,
copyrights or designs. Dealer acknowledges that Yamaha has the sole right and
interest in such patents, trademarks, tradenames, copyrights and designs. Dealer
agrees to cease immediately all use of Yamaha trademarks, tradenames and
copyrights and any other proprietary rights on termination of this Agreement.
5.5 Financial Responsibility. Dealer shall maintain for its operations hereunder
adequate working capital and lines of wholesale credit to enable Dealer to
fulfill its responsibilities under this Agreement. Dealer further agrees to
comply with financial responsibility guidelines issued by Yamaha from time to
time. Dealer agrees to furnish Yamaha, at reasonable times,.financial reports
and other financial data to enable Yamaha to determine Dealer's financial
responsibility. At least within ninety (90) days following the close of Dealer's
fiscal year, Dealer agrees to submit to Yamaha Dealer's audited financial
statement for the previous year. 5.6 Compliance with Laws. Dealer shall conduct
and maintain at all times its sales and service operations in strict compliance
with all applicable federal and state laws and regulations, county and city
ordinances and regulations and any other applicable law, regulation or
ordinance. 6. TERMINATION 6.1 Effectiveness. This Agreement shall be effective
upon the execution hereof by Dealer and an authorized officer or representative
of Yamaha and upon the execution of one or more Addedum(s) attached hereto and
made a part hereof. This Agreement shall terminate upon termination of all
Product Addendum(s) attached hereto. 6.2 Termination for Cause (immediate
Effect). Unless otherwise provided for or allowed under state law, Yamaha may
terminate this Agreement with immediate effect on the giving of written notice
to Dealer should any of the following events occur, such events being of such a
serious nature so as to constitute good cause for immediate termination by
Yamaha: (a) Any misrepresentation by Dealer in entering into this Agreement or
the submission by Dealer of any false or fraudulent application, claim or report
in connection with its sales or service operations. (b) Insolvency of Dealer;
inability of Dealer to meet its debts as they mature, the filing by Dealer of a
petition of voluntary bankruptcy under any chapter of the bankruptcy laws of the
United States, the institution of proceedings to adjudge Dealer a bankrupt in an
involuntary proceeding; the execution of an assignment by Dealer for the benefit
of creditors; the appointment by a court of a receiver, trustee for Dealer or
the assets of Dealer; dissolution of Dealer; or the failure of Dealer to conduct
its operations in the ordinary course of business including closing of Dealer's
operations in any manner inconsistent with what is customary for the same type
of business in the same market area. (c) Any relocation or establishment of
branch locations without having complied with the requirements set forth in
Section 1.3 of this Agreement. (d) Any act by Dealer or any person involved in
the ownership or operating management of Dealer which violates any law and
affects adversely Dealer's operations or any conduct or unfair business practice
by Dealer or any person involved in the ownership or operating management of
Dealer which affects adversely Dealer's operation or the goodwill and reputation
of Dealer, Yamaha, or the Products. (e) Any failure by Dealer to pay to Yamaha
any sums that maybe due or become due pursuant to this Agreement or maintain
adequate lines of credit for purposes of purchasing the Products or the parts
and accessories from Yamaha. (f) Any failure by Dealer to pay any sums that
maybe due or become due to a financing source utilized to obtain financing for
the purchase of Products pursuant to this Agreement, to which Yamaha has a
recourse obligation. (g) Revocation or non-renewal of Dealer's motor vehicle
dealer license or any other license or permit necessary to conduct its
operations hereunder. (h) Any failure by Dealer to comply with Section 7. (i)
Any default under the Security Agreement. (j) Any default under the Personal
Guarantee. 6.3 Termination -By Yamaha. Unless otherwise provided for or allowed
under state law or this Agreement, Yamaha may terminate this Agreement on the
giving of at least sixty (60) days prior written notice to Dealer for failure of
Dealer to fulfill any or all of its responsibilities and obligations as set
forth in this Agreement, except for causes specified under Section 6.2 hereof.
6.4 Termination - By Dealer. Unless otherwise provided for or allowed under
state law or this Agreement, Dealer may terminate this Agreement on the giving
of at least sixty (60) days prior written notice to Yamaha. Dealer shall be
considered to have voluntarily terminated this Agreement sixty (60) days
following (i) closing of Dealer's operations, (ii) abandonment of Dealer's
business or (iii) revocation or non-renewal of Dealer's motor vehicle dealer
license or any other license or permit necessary to conduct its operations. 6.5
Transition - New Agreement. Yamaha may terminate or modify this Agreement at any
time on the giving to Dealer of at least sixty (60) days prior written notice
should Yamaha offer a new or modified form of agreement to some or all of its
dealers for the Products, or should Yamaha's right to distribute the Products be
terminated or modified. 7. ASSIGNMENT, TRANSFER. CHANGE OF OWNERSHIP 7.1
Assignment. The relationship created between Yamaha and Dealer is intended to be
personal in nature, since Yamaha isrelyingonthe continued ownership and active
participation of certain individuals in the operations of Dealer, and
consequently, any assignment or transfer by Dealer or change in ownership or
management, shall require the prior written consent of Yamaha. This is necessary
in order for Yamaha to determine that each successor will meet the continuing
performance requirements set forth in this Agreement. Yamaha may terminate this
Agreement on the giving to Dealer at least fifteen (15) days prior written
notice, if Yamaha's prior written consent to any such transfer is not obtained.
For the purposes of this Agreement, any change in ownership, the legal form of
business or active management shall be deemed a transfer which requires the
prior written consent of Yamaha. Any transfer which is not made in accordance
with this Section is void. 7.2 Owners and Management. Dealer represents that the
current owners and key personnel of Dealer are those identified on the cover
sheet and that these individuals shall continue to actively participate in the
ownership and operating management of Dealer. Yamaha reserves the right to
terminate this Agreement on the giving to Dealer of at least fifteen (15) days
prior written notice in the event any of the key personnel ceases to be involved
in an active substantial role in the operation of Dealer as a result of death,
physical or mental incapacity or otherwise and Dealer fails to obtain Yamaha's
prior written consent to the replacement of such person. Yamaha may defer such
termination for a period up to six (6) months from such event in order to allow
Dealer an opportunity to replace such person or persons with an equally
qualified person or persons or allow an orderly liquidation of Dealer's
operations; provided, however, that it can be demonstrated that the terms and
conditions of this Agreement can be fulfilled during such period and thereafter.
8. RESPONSIBILITIES UPON TERMINATION 8.1 Continuing Responsibilities. Upon
termination of this Agreement, Dealer shall no longer be an authorized dealer
for the Products; however, Dealer shall immediately pay to Yamaha all amounts
owed to Yamaha and shall immediately pay all amounts due to any financing
institution to which Yamaha has a recourse obligation, whether or not due.
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8.2 Discontinuance of Use of Trademarks. Upon termination of this Agreement,
Dealer shall (1) discontinue forthwith any and all use of the trademarks of
Yamaha, including such use in advertising, business material of Dealer and as
part of the firm or trade name of Dealer, (2) forthwith remove or obliterate any
and all signs designating Dealer as an authorized dealer for the Products or
which include any trademark of Yamaha, (3) forthwith notify and instruct
publications and others who may list or publish Dealer's name as an authorized
Yamaha dealer, including telephone directories, yellow pages, and other business
directories, to discontinue such listing of Dealer as an authorized Yamaha
dealer, and (4) cease the use of all promotional literature and material
including point of purchase materials and displays provided to Dealer by Yamaha.
In the event Dealer fails to comply with any of the provisions of this Section,
Yamaha is authorized to take all steps necessary to insure compliance with same.
8.3 Orders for the Products. Upon termination of this Agreement, all unshipped
orders for the Products shall be deemed cancelled. However, from the date of the
notice of termination to the effective date of termination, orders may be filled
by Yamaha if such orders are bona fide and reasonable in quantity, Dealer pays
for such order in cash on delivery, and Dealer is capable of meeting its sales
and service obligations hereunder. 8.4 Repurchase of Products. A. Upon
termination of this Agreement, Yamaha shall repurchase from Dealer and Dealer
shall sell to Yamaha, within sixty (60) days after the effective date of
termination, any or all new, unused, undamaged, resaleable, Products excluding
parts and accessories, which (i) were invoiced by Yamaha to Dealer within
eighteen (18) months prior to the effective date of termination, and (ii) were
purchased by Dealer and are the unencumbered property of and in the possession
of Dealer. The repurchase price shall be the net invoice price or current
wholesale dealer price whichever is less, exclusive of transportation charges
and delivery and preparation reimbursement, previously paid by Dealer therefor
less all costs incurred in regards to their repurchase and any applicable
rebates. B. Upon termination of this Agreement, Yamaha shall have the option,
but not the obligation, to repurchase any or all new, unused, undamaged,
resaleable, Products excluding parts and accessories, which (i) were invoiced by
Yamaha to Dealer more than eighteen (18) months prior to the effective date of
termination, and (ii) were purchased by Dealer and are the unencumbered property
of and in the possession of Dealer. The repurchase price shall be the net
invoice price or current wholesale dealer price whichever is less, exclusive of
transportation charges and delivery and preparation reimbursement, previously
paid by Dealer therefor less all costs incurred in regards to their repurchase
and any applicable rebates. C. Upon termination of this Agreement, Yamaha shall
have the option, but not the obligation, to repurchase any or all new, unused,
undamaged, resaleable pans and accessories, which (i) were invoiced by Yamaha to
Dealer within eighteen (18) months prior to the effective date of termination,
and (ii) were purchased by Dealer and are the unencumbered property of and in
the possession of Dealer. The repurchase price shall be the net invoice price or
current wholesale dealer price whichever is less, exclusive of transportation
charges and delivery and preparation reimbursement, previously paid by Dealer
therefor less all costs incurred in regards to their repurchase and any
applicable rebates. D. Within thirty (30) days of the date of termination of
this Agreement, Dealer shall deliver or mail to Yamaha a detailed inventory of
all of the items referred to in Section 8.4. In the event Dealer fails to supply
such a list to Yamaha within said period, Yamaha shall have the right to enter
onto Dealer's premises for the purpose of compiling such an inventory list and
Dealer shall reimburse Yamaha for any costs incurred in connection therewith. E.
As a condition of repurchase, payment for repurchase of Products, parts or
accessories will first be applied against any obligations or money owed by
Dealer to Yamaha, and will then be applied to any monies owed to a financing
source to which Yamaha has a recourse obligation. F. This Section 8.4 is not
applicable in the event of any transfer of Dealer in accordance with Section 7.
8.5 Warranty Claims. Upon termination of this Agreement, Dealer shall no longer
be authorized to provide warranty service and shall refer warranty service
requests to the nearest authorized Yamaha dealer for the Products or to Yamaha.
Dealer acknowledges that any acceptance and payment of warranty or other claims
by Yamaha after the effective date of termination shall not be construed to be a
reinstatement of Dealer. 8.6 Records on Termination. Upon the termination of
Dealer and upon the request of Yamaha, Dealer will deliver to Yamaha copies of
Dealer's records of set-up, preparation, delivery of Products, warranty service,
recall or update service or other service of the Products. 9. MISCELLANEOUS 9.1
Relationship of the Parties. This Agreement does not in any way create the
relationship of principal and agent between Dealer and Yamaha and in no
circumstance shall Dealer, its agents or employees be considered the agent of
Yamaha. Dealer shall not act or attempt to act or represent itself directly or
by implication as an agent of Yamaha or in any manner assume or create or
attempt to assume or create any obligation or to make any contract, agreement,
representation or warranty on behalf of or in the name of Yamaha, except those
authorized in writing by Yamaha. Dealer shall indemnify and hold Yamaha harmless
from any cost and liability caused by the acts of Dealer, its employees or
agents and from liability caused by any unauthorized act by Dealer, its agents,
or employees. 9.2 Force Majeure. Yamaha and Dealer shall not be responsible for
or liable for failure to perform any part of this Agreement or for any delay in
the performance of any part of this Agreement, directly or indirectly resulting
from or contributed to by any foreign or domestic embargoes, seizures, acts of
God, insurrections, wars and/or continuance of war; or the adoption or enactment
of any law, ordinance, regulation, ruling or order directly or indirectly
interfering with the production, delivery or payment hereunder; or lack of the
usual means of transportation, fires, floods, explosion, strikes; extraordinary
currency devaluations, taxes, or custom duties or other similar charges or
assessments, or other events or contingencies beyond its control, either of the
foregoing nature or of any kind, nature or description affecting the
transportation, production, sale or distribution of the Products or any
components used in or in connection with their production. 9.3 Entire Agreement.
This Agreement and its Addendum(s) supersede and terminate any and all
agreements or contracts written or oral, entered into between Yamaha and Dealer
as of the effective date of this Agreement with reference to all matters covered
by this Agreement. All conversations, negotiations, correspondence and memoranda
which passed between Yamaha and Dealer with reference to all matters covered by
this Agreement are merged herein. This Agreement constitutes the entire
agreement between Yamaha and Dealer. This Agreement may not be altered,
modified, amended or changed, in whole or in part, except in writing and
executed by Yamaha and Dealer in the same manner as is provided for the
execution of this Agreement. 9.4 Venue. Dealer agrees that any legal proceeding
between Dealer and Yamaha which arises out of this Agreement, the dealings or
relationship between the parties, including discontinuance of such relationship,
may be brought by Dealer or Yamaha in state court or federal court located in
the County of Orange, State of California. Dealer irrevocably consents to the
jurisdiction of said court. Dealer waives any objection it may now or hereafter
have to the jurisdiction of such court. 9.5 Governing Law. This Agreement shall
be governed by and construed in accordance with the law of the State of
California, including but not limited to the California Statute of Limitations.
9.6 Construction. This Agreement and all of the words, terms, and provisions
hereof shall be construed in accordance with their usual and ordinary meanings,
and not in favor of or against either party hereto. Paragraph headings are not a
part of this Agreement, but are only for convenience.
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<PAGE> 65
9.7 NONWAIVER OF RIGHTS. Failure of either party hereto to enforce any of
the provisions of this Agreement or any rights with respect thereto or failure
to exercise any election provided for herein shall in no way be considered to be
a waiver of such provisions, rights or elections or in any way affect the
validity of this Agreement. The failure of either party to exercise any of said
provisions, rights or elections shall not preclude or prejudice such party from
later enforcing or exercising the same or any other provisions, rights or
elections which it may have under this Agreement. Any actions taken by Yamaha,
subsequent to termination of this Agreement, shall not be construed to be a
reinstatement of Dealer. Dealer may be reinstated only by the execution of a new
Dealer Agreement by both Dealer and Yamaha.
9.8 INVALIDITY. If any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.
9.9 NOTICE. All notices required or permitted to be given or made under
this Agreement may be effected in writing by certified mail, postage prepaid,
return receipt requested, and shall be deemed communicated three (3) days from
the mailing thereof. Mailed notices shall be addressed to the parties as their
addresses appear above, but each party may change his address by written notice
in accordance with this paragraph.
9.10 TERMS OF AGREEMENT. The terms of this Agreement govern unless
inconsistent with the terms set forth in an Addendum(s) attached hereto and made
a part hereof, in which case the terms of the Addendum(s) will control.
9.11 RELEASE OF CLAIMS. Dealer waives and releases any and all claims of
any kind and nature whatsoever which Dealer has against Yamaha, which arises out
of or in connection with any prior agreement including but not limited to any
Addendum entered into between them.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this 18th day of March 1988. Dealer expressly acknowledges that it has read this
Agreement in its entirety and understands its rights and responsibilities under
this Agreement and the Provisions resulting to termination.
"YAMAHA"
YAMAHA MOTOR CORPORATION, U.S.A.
A CALIFORNIA CORPORATION
BY [SIGNATURE ILLEGIBLE]
----------------------------------------
TITLE Senior Vice President/General Manager
-------------------------------------
Marine Group
YAMAHA PARTS DISTRIBUTORS, INC.
A CALIFORNIA CORPORATION
BY /s/ RON EDMONDSON
----------------------------------------
TITLE Senior Vice President/General Manager
-------------------------------------
"DEALER"
BY /s/ DAVID NEES
----------------------------------------
TITLE PRESIDENT
-------------------------------------
BY
----------------------------------------
TITLE
-------------------------------------
<PAGE> 66
[YAMAHA LOGO]
MOTO-4 DEALER AGREEMENT
<PAGE> 67
YAMAHA SALES AND SERVICE AGREEMENT
The information contained below is important as an integral part oft he
Agreement attached hereto and required prior tot he effectiveness of the
relationship. All information must be accurate and complete and Yamaha must be
notified of any changes to such information since it may affect your rights
under the Agreement.
A. DEALER'S COMPLETE LEGAL NAME
Name: CYCLE SPORT UNLIMITED, INC.
------------------------------------------------------------------------
(Owner, Partnership, Corporation referred to in the Agreement as "Dealer")
<TABLE>
<S> <C> <C>
SOLE PROPRIETORSHIP PARTNERSHIP CORPORATION
(COMPLETE SEC. C-1) (COMPLETE SEC. C-1) (COMPLETE SEC. & C-2)
- ------------------------ ---------------------- -----------------------
</TABLE>
Fictitious Business Name
-------------------------------------------------------
(if different from above)
Federal Identification No.
-----------------------
B. DEALER'S LOCATION
Address: 8338 Leesburg Pike, Vienna, Va 22180
---------------------------------------------------------------------
(Referred to in the Agreement as "Dealer's Location")
C. DEALER: OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
NAME SOCIAL SECURITY NO. TITLE
<S> <C> <C> <C>
1. Owners: DAVID E. NEES 290387417 PRESIDENT
---------------------- ------------------- --------------------
ROBERT P. WHEELER, JR SECRETARY
---------------------- ------------------- --------------------
LOUIS A. NEES ----
---------------------- ------------------- --------------------
HOWARD A. WILES TREASURER
---------------------- ------------------- --------------------
</TABLE>
<TABLE>
<CAPTION>
NAME TITLE
<S> <C> <C>
2. Offices and
Manager: DAVID E. NEES PRESIDENT
------------------------------- -------------------------------
---- VICE PRESIDENT
------------------------------- -------------------------------
ROBERT P. WHEELER, JR. SECRETARY
------------------------------- -------------------------------
HOWARD A. WILES TREASURER
------------------------------- -------------------------------
------------------------------- -------------------------------
------------------------------- -------------------------------
</TABLE>
DEALER WARRANTS AND REPRESENTS THAT THE INFORMATION AS SET FORTH ABOVE IS TRUE
AND CORRECT.
"DEALER"
X /s/ DAVID NEES
--------------------------------
TITLE: X PRESIDENT
--------------------------------
DATE: X
--------------------------------
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<PAGE> 68
YAMAHA SALES AND SERVICE AGREEMENT
THIS AGREEMENT is made by and between YAMAHA MOTOR CORPORATION, U,S.A., a
California corporation, having its principal office located at 6555 Katella
Avenue, Cypress, California 90630 (hereinafter referred to as "Yamaha"), and
Dealer as identified on the cover sheet attached hereto.
RECITALS
A. Yamaha is the exclusive distributor in the United States of quality
MOTO-4s which are sold under the trademark "Yamaha" and distributes parts and
accessories therefor (hereinafter collectively referred to as the "Products").
B. Dealer has represented, as an inducement to Yamaha's entering into this
Agreement, that: (1) Dealer is capable of performing the terms and conditions of
this Agreement, (2) Dealer has a sufficient number of trained personnel and
adequate facilities to sell and service the Products, and (3) Dealer has
adequate financial resources to perform the monetary obligations herein.
C. Dealer desires to engage in sales of the Products in accordance with the
terms and conditions hereof; and Yamaha desires to appoint Dealerasaretail sales
and service location for the Products inaccordance herewith.
1. ESTABLISHMENT OF RELATIONSHIP
1.01 Appointment of Dealer. Yamaha hereby appoints Dealer as an authorized
Yamaha dealer for the sales and service of the Products only from Dealer's
location and Dealer hereby accepts such appointment. Dealer agrees not to,
directly, or indirectly, change Dealer's location nor establish or operate any
other location for the sales or service of the Products without the prior
written consent of Yamaha, which consent shall not be unreasonably withheld.
1.02 Nonexclusive. The rights granted herein are nonexclusive. Yamaha
reserves the right to appoint additional dealers of any or all of the Products
at any time pursuant to Yamaha's marketing program and policies; and in
accordance with the applicable state laws.
2. DEALER'S SALES OPERATIONS
2.01 Sales. Dealer agrees to and shall use its best efforts to vigorously
promote and sell the Products at retail, and shall continually work to increase
the market for the Products in the area served by Dealer's location. Dealer
agrees to maintain a fully qualified sales organization and conduct a continuing
program of quality. advertising and sales promotion activities for the Products
which reflect favorably on the goodwill established by Yamaha. Dealer agrees to
afford the Products as much effort as Dealer gives to competitive or other
products of Dealer in terms of promotion, floor space, inventory, and service.
2.02 Performance Criteria. The relationship established hereby is intended
by the parties to be mutually beneficial. In this regard, Yamaha assumes under
this Agreement certain specific responsibilities to Dealer in order to obtain in
return an adequate level of performance by Dealer. Such level of performance
shall be evaluated periodically by Yamaha, at least once in each year, based on
reasonable criteria such as the following:
(a) The volume of Dealer's sales of the Products as compared ith the sales
of products in the market area served by Dealer's location. This comparison
shall be related to a comparison of the actual promotion efforts of Yamaha
vis-a-vis the promotion efforts of competitive product manufacturers.
(b) The volume of Dealer's sales of the Products as compared to other
dealers of the Products who are similarly situated.
(c) The actual sales volume of the Products by Dealer as compared to the
reasonable annual sales objectives which may be established by Yamaha for
Dealer.
(d) The actual promotion efforts of Dealer relating to the Products.
(e) The compliance with all of the terms and conditions of this Agreement.
2.03 Customer Relations. Dealer shall at all times conduct its operations
in such a manner so as to develop and maintain good customer relations. Dealer
shall provide prompt and courteous service to customer inquiries and complaints
relating to the Products. Dealer shall at all times properly represent the
Products and shall not make, directly or indirectly, any false, misleading, or
disparaging representations to any customer or other person in regards to Yamaha
or the Products- Dealer shall conduct its operations during usual and customary
business hours.
2.04 Inventory. Dealer agrees to maintain at Dealer's location: (1) a
prominent display of the Products which includes at least one of each of the
current models of the units, and (2) a reasonable inventory of the Products
which is adequate to meet the current and anticipated demand in the market area
served by Dealer's location, subject only to availability.
2.05 Supply of Products. Yamaha shall make reasonable efforts to supply
Dealer with the Products in accordance with accepted orders; however, during any
period of shortage, Yamaha shall be permitted to allocate the Products in an
equitable manner.
2.06 Reports and Records. In order to provide Yamaha with information
regarding sales and market trends, Dealer shall periodically provide to Yamaha
complete and accurate data regarding dealer's sales and inventories of the
Products and such other reasonable information as and when requested by Yamaha.
Dealer shall keep complete and accurate records regarding the sales and service
activities for the Products and shall retain for at least three (3) years all
such records and documents. Dealer shall permit any designated representative of
Yamaha, at reasonable times, to examine and audit such records and documents. In
the event of the discovery of any improper claim or payment, Yamaha may charge
back to Dealer all payments or credits plus interest thereon made by Yamaha to
Dealer pursuant to such claims or otherwise, as well as the costs to Yamaha for
such audit and the recovery of such payments or credit.
2.07 Changes to the Products. Yamaha may periodically change the design,
models, and features of the Products, add new products, or discontinue the
distribution of any or all of the Products to Dealer without accountability to
Dealer in connection with any Products ordered by Dealer or Dealer's inventory
of the Products.
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<PAGE> 69
2.08 Cooperation with Yamaha. Dealer shall at all times cooperate and work
closely with amaha's representatives. In addition Dealer shall maintain close
communications with such representatives.
3. PURCHASE OF THE PRODUCTS
3.01 General Terms and Conditions. Yamaha shall sell the Products to Dealer
and Dealer shall purchase the Products from Yamaha in accordance with the terms
and conditions set forth herein. Yamaha reserves the right to change any terms
or conditions, including price and payment terms, at any time without
accountability to Dealer.
3.02 Orders. Dealer shall order the Products from Yamaha in accordance with
the ordering procedures of Yamaha. All orders are subject to acceptance by
Yamaha based on the availability of the Products and Dealer's compliance with
the terms and conditions hereof. To enable Yamaha to plan its purchases from the
manufacturer of the Products, Dealer shall submit its purchase orders at such
times as may be requested by Yamaha. The effective terms and conditions of
Yamaha shall supersede any conflicting terms and conditions of any purchase
order submitted by Dealer.
3.03 Price. Dealer shall pay to Yamaha the price and any other charges for
the Products as set forth on Yamaha's price schedules, issued periodically by
Yamaha, which is in effect at the time of shipment of Dealer's order- On the
stated future effective date, a new price or charge shall automatically
supersede any previous price or charge.
3.04 Payment. Dealer shall pay the purchase price for the Products at the
time of delivery thereof, unless Yamaha has approved other terms of credit for
Dealer. Yamaha may cancel any order placed by Dealer or refuse the shipment
thereof should Dealer fail to meet any payment term, credit, or financial
requirements of Yamaha. The cancellation or withholding of any order shall not
be construed as termination or breach of this Agreement by Yamaha.
3.05 Shipment. Yamaha shall use its best efforts to Ship all accepted
orders for the Products to Dealer F.O.B. Yamaha's warehouse with reasonable
promptness; provided, however, that Yamaha shall not be liable for any damage,
consequential or otherwise, to the Products which occurs while in transit, or as
a result of a failure to fill orders, delays in delivery, or any error in the
filling of orders.
3.06 Taxes. Dealer represents and warrants that all Products purchased
hereunder are purchased for resale in the ordinary course of Dealer's business.
Dealer agrees that he is responsible for and shall comply with all laws calling
for the collection and/or payment of all taxes, including sales and use taxes
and ad valorem taxes.
4. DEALER'S SERVICE OPERATIONS
4.01 Service Operations. Dealer shall establish and maintain quality
service operations as recommended by Yamaha for the Products at Dealer's
location which shall include thoroughly trained personnel, proper tools and
equipment, and adequate service facilities. Such service operations shall
provide to owners of the Products prompt, courteous, and workmanlike service.
4.02 Delivery and Preparation Obligations. Dealer shall be responsible for
and agrees to perform set-up, preparation, and delivery obligations as
prescribed by Yamaha, prior to the delivery of the Products to purchasers
thereof; and Yamaha agrees to compensate Dealer in accordance with the policies
of Yamaha as may be issued from time to time and in accordance with applicable
law.
4.03 General Service. Dealer shall provide to owners of the Products such
general service and repair for the Products as may be necessary. Any and all
charges therefore shall be reasonable and consistent with those prevailing in
the market area of Dealer; and all such services and charges shall be in
accordance with applicable law.
4.04 Warranty Service. Dealer agrees to perform all warranty service on all
Products brought to Dealer, whether or not sold by Dealer. Dealer shall perform
such warranty service in accordance with the policies of Yamaha as they may be
issued from time to time in the Yamaha service and warranty manuals and
bulletins. Dealer shall use only genuine Yamaha parts, or parts that are
equivalent in quality and design to genuine Yamaha parts, in performing warranty
service on the Products.
(a) Dealer acknowledges the importance of providing to owners of the
Products prompt and skilled warranty service and the need to comply with all
laws relating to warranty service. Dealer shall give immediate service to such
warranty requests and/or service. Dealer agrees to perform all warranty service
in a competent and workmanlike manner. Dealer agrees to maintain an inventory of
genuine Yamaha parts to provide all necessary warranty service.
(b) Dealer shall submit complete and accurate claims to Yamaha for
reimbursement for parts and labor used in performing warranty service on
warranty claim forms of Yamaha with all information required thereon; and Yamaha
shall reimburse Dealer for such parts and labor in accordance with the effective
schedules and rates applicable to Dealer. Dealer shall keep and retain complete
and accurate records and documents supporting Such claims, which recorriq and
documents are subject to the provisions of Paragraph 2.06, regarding inspection
and adjustments.
4.05 Assistance and Protection. In the event any warranty claim arises that
Dealer is unable to perform, Yamaha should a be promptly notified by Dealer and
be provided the details of the claim and Yamaha shall use reasonable efforts to
resolve such claim. Yamaha is relying upon Dealer's assurance that he is capable
of performing service obligations for the Products. Dealer agrees to fully
protect Yamaha from any claims, liability or loss that may result from a failure
of Dealer to properly perform service for the Products as required hereunder or
under applicable law.
5. GENERAL RESPONSIBILITIES -
YAMAHA AND DEALER
5.01 Promotion and Assistance by Yamaha. Yamaha shall, from time to time,
provide to Dealer such assistance, incentives, and programs as maybe offered to
all other dealers of the Products who are similarly situated. Yamaha shall
conduct an advertising program for the Products which may include television and
radio commercials, magazine advertisements, and promotional events.
5.02 Trademarks. Yamaha agrees to permit Dealer to identify itself as an
authorized "Yamaha" dealer for the Products and use the trademarks of Yamaha in
connection with Dealer's efforts to sell and promote the Products; provided,
however, that such use shall be subject to the control of Yamaha and be in a
manner consistent with the high quality image of the Products. Dealer shall not
use the name "Yamaha" or other trademarks as a part of its corporate name or in
any manner inconsistent with the instructions of Yamaha. Dealer acknowledges
that Yamaha has the sole right and interest in such trademarks and agrees to
cease immediately all use thereof on the termination of this Agreement.
5.03 Facilities. Dealer shall establish and maintain the appearance and
condition of the facilities at Dealer's location
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<PAGE> 70
so as to favorbly reflect on the Products and the quality image of Yamaha As
part of the facilities at Dealer's location, Dealer shall install and maintain
prominent and suitable signs as recommended by Yamaha, which identify Dealer as
a dealer of the products.
5.04 Personnel. Dealer shall employ competent personnel for its sales
operations, service operations, and administration in order to fulfill his
responsibilities under this Agreement. All sales and service personnel shall be
thoroughly familiar with the Products; and Dealer, at his expense, shall cause
such personnel to attend training programs for the Products and study sales,
service and warranty manuals and bulletins for the Products as may be provided
by Yamaha from time to time.
5.05 Financial Responsibility. Dealer shall maintain for its operations
hereunder adequate working capital and lines of wholesale credit to enable
Dealer to fulfill his responsibilities under this Agreement. Dealer agrees to
furnish Yamaha, at reasonable times, financial reports an other financial data
to enable Yamaha to determine Dealer's financial responsibility. At least within
ninety (90) days following the close of Dealer's fiscal year, Dealer agrees to
submit to Yamaha Dealer's financial statement for the previous year.
5.06 Compliance with Laws. Dealer shall conduct and maintain at all times
his sales and service operations in strict compliance with all applicable
federal and state laws and regulations, county and city ordinances and
regulations and any other applicable law, regulation or ordinance.
6. TERMINATION
6.01 Effectiveness. This Agreement shall be effective upon the execution
hereof by an authorized officer or representative of Yamaha at Cypress,
California, and shall continue until terminated as provided herein.
6.02 Termination for Cause (immediate Effect). Unless otherwise provided
for or allowed under state law, Yamaha may terminate this Agreement with
immediate effect on the giving of written notice to Dealer should any of the
following events occur, such events being of such a nature so as to constitute
good cause for immediate termination by Yamaha:
(a) Any misrepresentation by Dealer in entering into this Agreement or the
submission by Dealer of any false or fraudulent application, claim or report in
connection with its sales or service operations.
(b) Insolvency of Dealer; inability of Dealer to meet its debts as they
mature; the filing by Dealer of a petition of voluntary bankruptcy under any
chapter of the bankruptcy laws of the United States; the institution or
proceedings to adjudge Dealer a bankrupt in an involuntary proceeding; the
execution of an assignment by Dealer for the benefit of creditors; the
appointment by a court of a receiver, trustee for Dealer or the assets of
Dealer; dissolution of Dealer; or the failure of Dealer to conduct its
operations in the ordinary course of business.
(c) Any transfer or attempted transfer by Dealer of any interest in, or
right, privilege or obligation under this Agreement; or any transfer of the
principal assets of Dealer's operations hereunder; or any change in the direct
or indirect ownership or operating management of Dealer, however accomplished,
without the prior written consent of Yamaha, which consent shall not be
unreasonably withheld.
(d) Any relocation or establishment of branch locations without having
complied with the requirements set forth in Paragraph 1.01 of this Agreement.
(e) Any act by Dealer or any person involved in the ownership or operating
management of Dealer which violates any law and affects adversely Dealer's
operations or any conduct or unfair business practice by Dealer or any person
involved in the ownership or operating management of Dealer which affects
adversely Dealer's operations or the goodwill and reputation of Dealer, Yamaha,
or the Products.
(f) Any failure by Dealer to pay to Yamaha any sums that may be due or
become due pursuant to this Agreement or maintain adequate lines of credit for
purposes of purchasing the Products from Yamaha.
(g) Revocation of Dealer's motor vehicle Dealer's license or other
license.or permit necessary to conduct its operations hereunder.
6.03 Termination - Generall Nonperformance. Unless otherwise provided for
or allowed under state law or this Agreement, Yamaha or Dealer may terminate
this Agreement on the giving of at least sixty (60) days prior written notice to
the other for failure of either party to fulfill any or all of their
responsibilities and obligations as set forth in this Agreement, except for
causes specified under Paragraph 6.02 hereof.
6.04 Termination - Death, Incapacity. As an inducement to entering into
this Agreement, Dealer has represented that the persons identified on the cover
sheet shall continue to actively participate in the ownership and operating
management of Dealer; and therefore, Yamaha may terminate this Agreement on the
giving to Dealer of at least fifteen 1115) days prior written notice in the
event of death, physical or mental incapacity or disassociation of any of the
identified persons. Yamaha may defer such termination for a period up to six (6)
months from such event in order to allow Dealer an opportunity to replace such
person or persons with an equally qualified person or persons or allow an
orderly liquidation of Dealer's operations; provided, however, it can be
demonstrated that the terms and conditions of this Agreement can be fulfilled
during such period and thereafter.
6.05 Transition - New Agreement. Yamaha may terminate this Agreement at any
time on the giving to Dealer of at least sixty (60) days prior written notice
should Yamaha offer a new or modified form of agreement to all its dealers for
the Products.
7. RESPONSIBILITIES UPON TERMINATION
7.01 Continuing Responsibilities. Upon the termination of this Agreement,
Dealer shall no longer be an authorized Yamaha dealer; however, Dealer shall
immediately pay to Yamaha all amounts owed to Yamaha, whether or not due.
7.02 Discontinuance of Use of Trademarks. Upon termination, Dealer shall
(1) discontinue forthwith any and all use of the trademarks of Yamaha, including
such use in advertising, business materials of Dealer and as part of the firm or
trade name of Dealer, (2) forthwith remove or obliterate any and all signs
designating Dealer as an authorized dealer for the Products or which include any
trademark of Yamaha, and (3) forthwith notify and instruct publications and
others who may list or publish Dealer's name as an authorized Yamaha dealer,
including telephone directories, yellow pages, and other business directories,
to discontinue such listing of Dealer as an authorized Yamaha dealer.
7.03 Orders for the Products. In the event of the termination of this
Agreement, all unshipped orders for the Products shall be deemed cancelled.
However, from the date of the notice of termination to the effective date of
termination, orders may be filled by Yamaha if such orders are bona fide and
reasonable in quantity, Dealer pays for such
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<PAGE> 71
order in cash on delivery, and Dealer is capable of meeting its sales and
service obligations hereunder,
7.04 Repurchase of Products.
A. Upon termination of this Agreement, Yamaha shall have the option,
but not the obligation, to repurchase from Dealer and Dealer shall sell to
Yamaha, within sixty (60) days after the effective date of termination the
following:
(1) Any or all new, unused, undamaged, then current model Products which
were purchased by Dealer from Yamaha, and are the unencumbered property of and
in the possession of Dealer, at the net invoice price, exclusive of
transportation charges and delivery and preparation reimbursement, previously
paid by Dealer therefor less all costs incurred in regards to their purchase.
(2)Any or all new, unused and undamaged resaleable parts, purchased from
Yamaha which are then the unencumbered property of and in the possession of
Dealer, at Yamaha's then current parts wholesale price list, exclusive of
transportation charges and less all costs incurred in regards to the repurchase.
Dealer shall, at Dealer's expense, inventory, tag, pack and deliver possession
of such parts to Yamaha, in accordance with Yamaha's procedures then in effect.
B. Within thirty (30) days of the date of termination of this
Agreement, Dealer shall deliver or mail to Yamaha a detailed inventory of all
the items referred to in Paragraph 7.04. In the event Dealer fails to supply
such a list to Yamaha within said period, Yamaha shall have the right to enter
onto Dealer's premises for the purpose of compiling such an inventory list and
Dealer shall reimburse Yamaha for any costs incurred in connection therewith.
C. Within ten (10) days after receipt of Dealer's detailed inventory
or after Yamaha has taken a physical inventory, whichever is later, Yamaha shall
notify Dealer of its intention in regards to Dealer's inventory of Products.
8. MISCELLANEOUS
8.01 Relationship of the Parties. This Agreement does not in any way create
the relationship of principal and agent between Dealer and Yamaha and in no
circumstances shall Dealer, its agents or employees be considered the agent of
Yamaha. Dealer shall not act or attempt to act or represent itself directly or
by implication as agent of Yamaha o; in any manner assume or create or attempt
to assume or create any obligation or make any contract, agreement,
representation or warranty on behalf of or in the name of Yamaha, except those
authorized in writing by Yamaha. Dealer shall indemnify and hold Yamaha harmless
from any cost and liability caused by the acts of Dealer, its employees or agent
and from liability caused by any authorized act by Dealer, its agents, or
employees.
8.02 Force Majeure. Yamaha shall not be responsible for or liable for
failure to perform any part of this Agreement or for any delay in the
performance 'of any part of this Agreement, directly or indirectly resulting
from or contributed to by any foreign or domestic embargoes, seizures, acts of
God, insurrections, wars and/or continuance of war; or the adoption or enactment
of any law, ordinance, regulation, ruling or order directly or indirectly
interfering with the production, delivery or payment hereunder; or lack of the
usual means of transportation, fires, floods, explosions, strikes; extraordinary
currency devaluations, taxes, or customer duties or other similar charges or
assessments; or other events or contingencies beyond its control, either of the
foregoing nature or of any kind, nature or description affecting the
transportation, production, sale or distribution of the Products or any
components used in or in connection with their production.
8.03 Entire Agreement. This Agreement supersedes and terminates any and all
prior agreements or contracts, written or oral, entered into between Yamaha and
Dealer as of the effective date of this Agreement with reference to all Matters
covered by this Agreement. All negotiations, correspondence and memoranda which
have passed between Yamaha and Dealer with reference to all matters covered by
this Agreement are merged herein and this Agreement constitutes the entire
agreement between Yamaha and Dealer. No representations not contained herein are
authorized by Yamaha, and this Agreement may not be altered, modified, amended,
or changed, in whole or in part, except in writing and executed by Yamaha and
Dealer in the same manner as is provided for the execution of this Agreement.
8.04 Assignment. The relationship created between Yamaha and Dealer is
intended to be personal in nature, since Yamaha is relying on the continued
active participation of certain individuals in the operations of Dealer, and
consequently, this Agreement shall not be assignable or transferable in any
manner whatsoever without the prior consent in writing of Yamaha. For purposes
of this Agreement, any change in ownership, the legal form of the business, or
active management shall be deemed a transfer which requires the prior consent of
Yamaha. Any determination by Yamaha in this regard shall be based on an
evaluation of assignee's or transferee's qualifications and ability to meet
Yamaha's high standards. In the event Dealer changes his legal form of business
or makes an assignment without notifying Yamaha as provided herein, Dealer shall
continue to be personally liable for all past and future debts of this or a
successor business.
8.05 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of California.
8.06 Construction. This Agreement and all of the words, terms, and
provisions hereof shall be construed in accordance with their usual and ordinary
meanings, and not in favor of or against either party hereto. Paragraph headings
are not a part of this Agreement, but are only for convenience.
8.07 Nonwaiver of Rights. Failure of either party hereto to enforce any of
the provisions of this Agreement or any rights with respect thereto or failure
to exercise any election provided for herein shall in no way be considered to be
a waiver of such provisions, rights or elections or in any way affect the
validity of this Agreement. The failure of either party to exercise any of said
provisions, rights or elections shall not prelude or prejudice such party from
later enforcing or exercising the same or any other provisions, rights or
elections which it may have under this Agreement.
8.08 Invalidity. If any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.
8.09 Notice. All notices required or permitted to be given or made under
this Agreement may be effected in writing by certified mail, postage prepaid,
return receipt requested, and shall be deemed communicated three (3) days from
the mailing thereof. Mailed notices shall be addressed to the parties as their
addresses appear above, but each party may change his address by written notice
in accordance with this paragraph.
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<PAGE> 72
8.10 Attorney's Fees. In the event any legal action is necessary to enforce
any of the terms and conditions of this Agreement, Dealer shall pay to Yamaha
all costs and fees incurred, including reasonable attorney's fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this 29th day of AUGUST, 1984. Dealer expressly acknowledges that it has read
this Agreement in its entirety and understands its rights and responsibilities
under this Agreement and the provisions relating to termination.
"Yamaha"
YAMAHA MOTOR CORPORATION, U.S.A.
a California Corporation
BY: /S/ GEORGE BALLARD
-----------------------------------
TITLE: ASSISTANT SECRETARY
-----------------------------------
"DEALER"
X CYCLE SPORT UNLIMITED, INC.
-----------------------------------
BUSINESS NAME
BY: X /S/ DAVID NEES
-----------------------------------
TITLE: X /S/ PRESIDENT
----------------------------------
BY: X
----------------------------------
TITLE: X
----------------------------------
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<PAGE> 73
[YAMAHA LOGO]
Dealer Agreement
<PAGE> 74
YAMAHA SALES AND SERVICE AGREEMENT
The information contained below is important as an integral part oft he
Agreement attached hereto and required prior tot he effectiveness of the
relationship. All information must be accurate and complete and Yamaha must be
notified of any changes to such information since it may affect your rights
under the Agreement.
A. DEALER'S COMPLETE LEGAL NAME
Name: CYCLE SPORT UNLIMITED, INC.
------------------------------------------------------------------------
(Owner, Partnership, Corporation referred to in the Agreement as "Dealer")
SOLE PROPRIETORSHIP PARTNERSHIP CORPORATION
(COMPLETE SEC. C-1) (COMPLETE SEC. C-1) (COMPLETE SEC. & C-2)
- ------------------------ ---------------------- -----------------------
Fictitious Business Name
-------------------------------------------------------
(if different from above)
Federal Identification No. 54-0900-111
-----------------------
B. DEALER'S LOCATION
Address: 8338 Leesburg Pike, Vienna, Va 22180
---------------------------------------------------------------------
(Referred to in the Agreement as "Dealer's Location")
C. DEALER: OWNERS AND MANAGEMENT
NAME SOCIAL SECURITY NO. TITLE
1. Owners:
---------------------- ------------------- --------------------
NAME TITLE
2. Offices and
Manager: DAVID E. NEES PRESIDENT
------------------------------- -------------------------------
---- VICE PRESIDENT
------------------------------- -------------------------------
ROBERT P. WHEELER, JR. SECRETARY
------------------------------- -------------------------------
HOWARD A. WILES TREASURER
------------------------------- -------------------------------
------------------------------- -------------------------------
------------------------------- -------------------------------
DEALER WARRANTS AND REPRESENTS THAT THE INFORMATION AS SET FORTH ABOVE IS TRUE
AND CORRECT.
"DEALER"
X CYCLE SPORT UNLIMITED, INC.
--------------------------------
BY: X /s/ DAVID NEES, PRESIDENT
--------------------------------
DATE: X 11/29/84
--------------------------------
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<PAGE> 75
YAMAHA MOTOR CORPORATION, U.S.A. SALES AND SERVICE AGREEMENT
THIS AGREEMENT is made by and between YAMAHA MOTOR CORPORATION, U.S.A., a
California corporation, having its principal office located at 6555 Katella
Avenue, Cypress, California 90630 (hereinafter referred to as "Yamaha"), and
Dealer as identified on the cover sheet attached hereto.
RECITALS
A. Yamaha is the exclusive distributor in the United States of quality
GENERATORS which are sold under the trademark "Yamaha" and distributes parts and
accessories therefor (hereinafter collectively referred to as the "Products").
B. Dealer has represented as an inducement to Yamaha's entering into this
Agreement, that: (1) Dealer is capable of performing the terms and conditions of
this Agreement, (2) Dealer has a sufficient number of trained personnel and
adequate facilities to sell and service the Products, and (3) Dealer has
adequate financial resourcesto perform the monetary obligations herein.
C. Dealer desires to engage in sales of the Products in accordance with the
terms and conditions hereof; and Yamaha desires to appoint Dealerasaretail sales
and service location for the Products inaccordance herewith.
Yamaha and Dealer agree to govern their relationship in accordance with the
following:
1. ESTABLISHMENT OF RELATIONSHIP
1.01 APPOINTMENT OF DEALER. Yamaha hereby appoints Dealer as an authorized
Yamaha dealer for the sales and service of the Products only from Dealer's
location and Dealer hereby accepts such appointment. Dealer agrees not to,
directly, or indirectly, change Dealer's location nor establish or operate any
other location for the sales or service of the Products without the prior
written consent of Yamaha, which consent shall not be unreasonably withheld.
1.02 NONEXCLUSIVE. The rights granted herein are nonexclusive. Yamaha
reserves the right to appoint additional dealers of any or all of the Products
at any time pursuant to Yamaha's marketing program and policies; and in
accordance with the applicable state laws.
2. DEALER'S SALES OPERATIONS
2.01 SALES. Dealer agrees to and shall use its best efforts to vigorously
promote and sell the Products at retail, and shall continually work to increase
the market for the Products in the area served by Dealer's location. Dealer
agrees to maintain a fully qualified sales organization and conduct a continuing
program of quality. advertising and sales promotion activities for the Products
which reflect favorably on the goodwill established by Yamaha. Dealer agrees to
afford the Products as much effort as Dealer gives to competitive or other
products of Dealer in terms of promotion, floor space, inventory, and service.
2.02 PERFORMANCE CRITERIA. The relationship established hereby is intended
by the parties to be mutually beneficial. In this regard, Yamaha assumes under
this Agreement certain specific responsibilities to Dealer in order to obtain in
return an adequate level of performance by Dealer. Such level of performance
shall be evaluated periodically by Yamaha, at least once in each year, based on
reasonable criteria such as the following:
(a) The volume of Dealer's sales of the Products as compared ith the sales
of products in the market area served by Dealer's location. This comparison
shall be related to a comparison of the actual promotion efforts of Yamaha
Motor Corp. vis-a-vis the promotion efforts of similar product manufacturers.
(b) The volume of Dealer's sales of the Products as compared to other
dealers of the Products who are similarly situated.
(c) The actual sales volume of the Products by Dealer as compared to the
reasonable annual sales objectives which may be established by Yamaha for
Dealer.
(d) The actual promotion efforts of Dealer relating to the Products.
(e) The compliance with all of the terms and conditions of this Agreement.
2.03 CUSTOMER RELATIONS. Dealer shall at all times conduct its operations
in such a manner so as to develop and maintain good customer relations. Dealer
shall provide prompt and courteous service to customer inquiries and complaints
relating to the Products. Dealer shall at all times properly represent the
Products and shall not make, directly or indirectly, any false, misleading, or
disparaging representations to any customer or other person in regards to Yamaha
or the Products- Dealer shall conduct its operations during usual and customary
business hours.
2.04 INVENTORY. Dealer agrees to maintain at Dealer's location: (1) a
prominent display of the Products which includes at least one of each of the
current models of the units, and (2) a reasonable inventory of the Products
which is adequate to meet the current and anticipated demand in the market area
served by Dealer's location, subject only to availability.
2.05 SUPPLY OF PRODUCTS. Yamaha shall make reasonable efforts to supply
Dealer with the Products in accordance with accepted orders; however, during any
period of shortage, Yamaha shall be permitted to allocate the Products in an
equitable manner.
2.06 REPORTS AND RECORDS. In order to provide Yamaha with information
regarding sales and market trends, Dealer shall periodically provide to Yamaha
complete and accurate data regarding dealer's sales and inventories of the
Products and such other reasonable information as and when requested by Yamaha.
Dealer shall keep complete and accurate records regarding the sales and service
activities for the Products and shall retain for at least three (3) years all
such records and documents. Dealer shall permit any designated representative of
Yamaha, at reasonable times, to examine and audit such records and documents. In
the event of the discovery of any improper claim or payment, Yamaha may charge
back to Dealer all payments or credits plus interest thereon made by Yamaha to
Dealer pursuant to such claims or otherwise, as well as the costs to Yamaha for
such audit and the recovery of such payments or credit.
2.07 CHANGES TO THE PRODUCTS. Yamaha may periodically change the design,
models, and features of the Products, add new products, or discontinue the
distribution of any or all of the Products to Dealer without accountability to
Dealer in connection with any Products ordered by Dealer or Dealer's inventory
of the Products.
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<PAGE> 76
2.08 COOPERATION WITH YAMAHA. Dealer shall at all times cooperate and work
closely with amaha's representatives. In addition Dealer shall maintain close
communications with such representatives.
3. PURCHASE OF THE PRODUCTS
3.01 GENERAL TERMS AND CONDITIONS. Yamaha shall sell the Products to Dealer
and Dealer shall purchase the Products from Yamaha in accordance with the terms
and conditions set forth herein. Yamaha reserves the right to change any terms
or conditions, including price and payment terms, at any time without
accountability to Dealer.
3.02 ORDERS. Dealer shall order the Products from Yamaha in accordance with
the ordering procedures of Yamaha. All orders are subject to acceptance by
Yamaha based on the availability of the Products and Dealer's compliance with
the terms and conditions hereof. To enable Yamaha to plan its purchases from the
manufacturer of the Products, Dealer shall submit its purchase orders at such
times as may be requested by Yamaha. The effective terms and conditions of
Yamaha shall supersede any conflicting terms and conditions of any purchase
order submitted by Dealer.
3.03 PRICE. Dealer shall pay to Yamaha the price and any other charges for
the Products as set forth on Yamaha's price schedules, issued periodically by
Yamaha, which is in effect at the time of shipment of Dealer's order- On the
stated future effective date, a new price or charge shall automatically
supersede any previous price or charge.
3.04 PAYMENT. Dealer shall pay the purchase price for the Products at the
time of delivery thereof, unless Yamaha has approved other terms of credit for
Dealer. Yamaha may cancel any order placed by Dealer or refuse the shipment
thereof should Dealer fail to meet any payment term, credit, or financial
requirements of Yamaha. The cancellation or withholding of any order shall not
be construed as termination or breach of this Agreement by Yamaha.
3.05 SHIPMENT. Yamaha shall use its best efforts to Ship all accepted
orders for the Products to Dealer F.O.B. Yamaha's warehouse with reasonable
promptness; provided, however, that Yamaha shall not be liable for any damage,
consequential or otherwise, to the Products which occurs while in transit, or as
a result of a failure to fill orders, delays in delivery, or any error in the
filling of orders.
3.06 TAXES. Dealer represents and warrants that all Products purchased
hereunder are purchased for resale in the ordinary course of Dealer's business.
Dealer agrees that he is responsible for and shall comply with all laws calling
for the collection and/or payment of all taxes, including sales and use taxes
and ad valorem taxes.
4. DEALER'S SERVICE OPERATIONS
4.01 SERVICE OPERATIONS. Dealer shall establish and maintain quality
service operations as recommended by Yamaha for the Products at Dealer's
location which shall include thoroughly trained personnel, proper tools and
equipment, and adequate service facilities. Such service operations shall
provide to owners of the Products prompt, courteous, and workmanlike service.
4.02 DELIVERY AND PREPARATION OBLIGATIONS. Dealer shall be responsible for
and agrees to perform set-up, preparation, and delivery obligations as
prescribed by Yamaha, prior to the delivery of the Products to purchasers
thereof; and Yamaha agrees to compensate Dealer in accordance with the policies
of Yamaha as may be issued from time to time and in accordance with applicable
law.
4.03 GENERAL SERVICE. Dealer shall provide to owners of the Products such
general service and repair for the Products as may be necessary. Any and all
charges therefore shall be reasonable and consistent with those prevailing in
the market area of Dealer; and all such services and charges shall be in
accordance with applicable law.
4.04 WARRANTY SERVICE. Dealer agrees to perform all warranty service on all
Products brought to Dealer, whether or not sold by Dealer. Dealer shall perform
such warranty service in accordance with the policies of Yamaha as they may be
issued from time to time in the Yamaha service and warranty manuals and
bulletins. Dealer shall use only genuine Yamaha parts, or parts that are
equivalent in quality and design to genuine Yamaha parts, in performing warranty
service on the Products.
(a) Dealer acknowledges the importance of providing to owners of the
Products prompt and skilled warranty service and the need to comply with all
laws relating to warranty service. Dealer shall give immediate service to such
warranty requests and/or service. Dealer agrees to perform all warranty service
in a competent and workmanlike manner. Dealer agrees to maintain an inventory of
genuine Yamaha parts to provide all necessary warranty service.
(b) Dealer shall submit complete and accurate claims to Yamaha for
reimbursement for parts and labor used in performing warranty service on
warranty claim forms of Yamaha with all information required thereon; and Yamaha
shall reimburse Dealer for such parts and labor in accordance with the effective
schedules and rates applicable to Dealer. Dealer shall keep and retain complete
and accurate records and documents supporting Such claims, which recorriq and
documents are subject to the provisions of Paragraph 2.06, regarding inspection
and adjustments.
4.05 ASSISTANCE AND PROTECTION. In the event any warranty claim arises that
Dealer is unable to perform, Yamaha should a be promptly notified by Dealer and
be provided the details of the claim and Yamaha shall use reasonable efforts to
resolve such claim. Yamaha is relying upon Dealer's assurance that he is capable
of performing service obligations for the Products. Dealer agrees to fully
protect Yamaha from any claims, liability or loss that may result from a failure
of Dealer to properly perform service for the Products as required hereunder or
under applicable law.
5. GENERAL RESPONSIBILITIES -
YAMAHA AND DEALER
5.01 PROMOTION AND ASSISTANCE BY YAMAHA. Yamaha shall, from time to time,
provide to Dealer such assistance, incentives, and programs as maybe offered to
all other dealers of the Products who are similarly situated. Yamaha shall
conduct an advertising program for the Products which may include television and
radio commercials, magazine advertisements, and promotional events.
5.02 TRADEMARKS. Yamaha agrees to permit Dealer to identify itself as an
authorized "Yamaha" dealer for the Products and use the trademarks of Yamaha in
connection with Dealer's efforts to sell and promote the Products; provided,
however, that such use shall be subject to the control of Yamaha and be in a
manner consistent with the high quality image of the Products. Dealer shall not
use the name "Yamaha" or other trademarks as a part of its corporate name or in
any manner inconsistent with the instructions of Yamaha. Dealer acknowledges
that Yamaha has the sole right and interest in such trademarks and agrees to
cease immediately all use thereof on the termination of this Agreement.
5.03 FACILITIES. Dealer shall establish and maintain the appearance and
condition of the facilities at Dealer's location
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<PAGE> 77
so as to favorbly reflect on the Products and the quality image of Yamaha As
part of the facilities at Dealer's location, Dealer shall install and maintain
prominent and suitable signs as recommended by Yamaha, which identify Dealer as
a dealer of the products.
5.04 PERSONNEL. Dealer shall employ competent personnel for its sales
operations, service operations, and administration in order to fulfill his
responsibilities under this Agreement. All sales and service personnel shall be
thoroughly familiar with the Products; and Dealer, at his expense, shall cause
such personnel to attend training programs for the Products and study sales,
service and warranty manuals and bulletins for the Products as may be provided
by Yamaha from time to time.
5.05 FINANCIAL RESPONSIBILITY. Dealer shall maintain for its operations
hereunder adequate working capital and lines of wholesale credit to enable
Dealer to fulfill his responsibilities under this Agreement. Dealer agrees to
furnish Yamaha, at reasonable times, financial reports an other financial data
to enable Yamaha to determine Dealer's financial responsibility. At least within
ninety (90) days following the close of Dealer's fiscal year, Dealer agrees to
submit to Yamaha Dealer's financial statement for the previous year.
5.06 COMPLIANCE WITH LAWS. Dealer shall conduct and maintain at all times
his sales and service operations in strict compliance with all applicable
federal and state laws and regulations, county and city ordinances and
regulations and any other applicable law, regulation or ordinance.
6. TERMINATION
6.01 EFFECTIVENESS. This Agreement shall be effective upon the execution
hereof by an authorized officer or representative of Yamaha at Cypress,
California, and shall continue until terminated as provided herein.
6.02 TERMINATION FOR CAUSE (IMMEDIATE EFFECT). Unless otherwise provided
for or allowed under state law, Yamaha may terminate this Agreement with
immediate effect on the giving of written notice to Dealer should any of the
following events occur, such events being of such a nature so as to constitute
good cause for immediate termination by Yamaha:
(a) Any misrepresentation by Dealer in entering into this Agreement or the
submission by Dealer of any false or fraudulent application, claim or report in
connection with its sales or service operations.
(b) Insolvency of Dealer; inability of Dealer to meet its debts as they
mature; the filing by Dealer of a petition of voluntary bankruptcy under any
chapter of the bankruptcy laws of the United States; the institution or
proceedings to adjudge Dealer a bankrupt in an involuntary proceeding; the
execution of an assignment by Dealer for the benefit of creditors; the
appointment by a court of a receiver, trustee for Dealer or the assets of
Dealer; dissolution of Dealer; or the failure of Dealer to conduct its
operations in the ordinary course of business.
(c) Any transfer or attempted transfer by Dealer of any interest in, or
right, privilege or obligation under this Agreement; or any transfer of the
principal assets of Dealer's operations hereunder; or any change in the direct
or indirect ownership or operating management of Dealer, however accomplished,
without the prior written consent of Yamaha, which consent shall not be
unreasonably withheld.
(d) Any relocation or establishment of branch locations without having
complied with the requirements set forth in Paragraph 1.01 of this Agreement.
(e) Any act by Dealer or any person involved in the ownership or operating
management of Dealer which violates any law and affects adversely Dealer's
operations or any conduct or unfair business practice by Dealer or any person
involved in the ownership or operating management of Dealer which affects
adversely Dealer's operations or the goodwill and reputation of Dealer, Yamaha,
or the Products.
(f) Any failure by Dealer to pay to Yamaha any sums that may be due or
become due pursuant to this Agreement or maintain adequate lines of credit for
purposes of purchasing the Products from Yamaha.
(g) Revocation of Dealer's motor vehicle Dealer's license or other
license.or permit necessary to conduct its operations hereunder.
6.03 TERMINATION - GENERALL NONPERFORMANCE. Unless otherwise provided for
or allowed under state law or this Agreement, Yamaha or Dealer may terminate
this Agreement on the giving of at least sixty (60) days prior written notice to
the other for failure of either party to fulfill any or all of their
responsibilities and obligations as set forth in this Agreement, except for
causes specified under Paragraph 6.02 hereof.
6.04 TERMINATION - DEATH, INCAPACITY. As an inducement to entering into
this Agreement, Dealer has represented that the persons identified on the cover
sheet shall continue to actively participate in the ownership and operating
management of Dealer; and therefore, Yamaha may terminate this Agreement on the
giving to Dealer of at least fifteen 1115) days prior written notice in the
event of death, physical or mental incapacity or disassociation of any of the
identified persons. Yamaha may defer such termination for a period up to six (6)
months from such event in order to allow Dealer an opportunity to replace such
person or persons with an equally qualified person or persons or allow an
orderly liquidation of Dealer's operations; provided, however, it can be
demonstrated that the terms and conditions of this Agreement can be fulfilled
during such period and thereafter.
6.05 TRANSITION - NEW AGREEMENT. Yamaha may terminate this Agreement at any
time on the giving to Dealer of at least sixty (60) days prior written notice
should Yamaha offer a new or modified form of agreement to all its dealers for
the Products.
7. RESPONSIBILITIES UPON TERMINATION
7.01 CONTINUING RESPONSIBILITIES. Upon the termination of this Agreement,
Dealer shall no longer be an authorized Yamaha dealer; however, Dealer shall
immediately pay to Yamaha all amounts owed to Yamaha, whether or not due.
7.02 DISCONTINUANCE OF USE OF TRADEMARKS. Upon termination, Dealer shall
(1) discontinue forthwith any and all use of the trademarks of Yamaha, including
such use in advertising, business materials of Dealer and as part of the firm or
trade name of Dealer, (2) forthwith remove or obliterate any and all signs
designating Dealer as an authorized dealer for the Products or which include any
trademark of Yamaha, and (3) forthwith notify and instruct publications and
others who may list or publish Dealer's name as an authorized Yamaha dealer,
including telephone directories, yellow pages, and other business directories,
to discontinue such listing of Dealer as an authorized Yamaha dealer.
7.03 ORDERS FOR THE PRODUCTS. In the event of the termination of this
Agreement, all unshipped orders for the Products shall be deemed cancelled.
However, from the date of the notice of termination to the effective date of
termination, orders may be filled by Yamaha if such orders are bona fide and
reasonable in quantity, Dealer pays for such
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<PAGE> 78
order in cash on delivery, and Dealer is capable of meeting its sales and
service obligations hereunder,
7.04 Repurchase of Products.
A. Upon termination of this Agreement, Yamaha shall have the option,
but not the obligation, to repurchase from Dealer and Dealer shall sell to
Yamaha, within sixty (60) days after the effective date of termination the
following:
(1) Any or all new, unused, undamaged, then current model Products which
were purchased by Dealer from Yamaha, and are the unencumbered property of and
in the possession of Dealer, at the net invoice price, exclusive of
transportation charges and delivery and preparation reimbursement, previously
paid by Dealer therefor less all costs incurred in regards to their purchase.
(2)Any or all new, unused and undamaged resaleable parts, purchased from
Yamaha which are then the unencumbered property of and in the possession of
Dealer, at Yamaha's then current parts wholesale price list, exclusive of
transportation charges and less all costs incurred in regards to the repurchase.
Dealer shall, at Dealer's expense, inventory, tag, pack and deliver possession
of such parts to Yamaha, in accordance with Yamaha's procedures then in effect.
B. Within thirty (30) days of the date of termination of this
Agreement, Dealer shall deliver or mail to Yamaha a detailed inventory of all
the items referred to in Paragraph 7.04. In the event Dealer fails to supply
such a list to Yamaha within said period, Yamaha shall have the right to enter
onto Dealer's premises for the purpose of compiling such an inventory list and
Dealer shall reimburse Yamaha for any costs incurred in connection therewith.
C. Within ten (10) days after receipt of Dealer's detailed inventory
or after Yamaha has taken a physical inventory, whichever is later, Yamaha shall
notify Dealer of its intention in regards to Dealer's inventory of Products.
8. MISCELLANEOUS
8.01 RELATIONSHIP OF THE PARTIES. This Agreement does not in any way create
the relationship of principal and agent between Dealer and Yamaha and in no
circumstances shall Dealer, its agents or employees be considered the agent of
Yamaha. Dealer shall not act or attempt to act or represent itself directly or
by implication as agent of Yamaha o; in any manner assume or create or attempt
to assume or create any obligation or make any contract, agreement,
representation or warranty on behalf of or in the name of Yamaha, except those
authorized in writing by Yamaha. Dealer shall indemnify and hold Yamaha harmless
from any cost and liability caused by the acts of Dealer, its employees or agent
and from liability caused by any authorized act by Dealer, its agents, or
employees.
8.02 FORCE MAJEURE. Yamaha shall not be responsible for or liable for
failure to perform any part of this Agreement or for any delay in the
performance 'of any part of this Agreement, directly or indirectly resulting
from or contributed to by any foreign or domestic embargoes, seizures, acts of
God, insurrections, wars and/or continuance of war; or the adoption or enactment
of any law, ordinance, regulation, ruling or order directly or indirectly
interfering with the production, delivery or payment hereunder; or lack of the
usual means of transportation, fires, floods, explosions, strikes; extraordinary
currency devaluations, taxes, or customer duties or other similar charges or
assessments; or other events or contingencies beyond its control, either of the
foregoing nature or of any kind, nature or description affecting the
transportation, production, sale or distribution of the Products or any
components used in or in connection with their production.
8.03 ENTIRE AGREEMENT. This Agreement supersedes and terminates any and all
prior agreements or contracts, written or oral, entered into between Yamaha and
Dealer as of the effective date of this Agreement with reference to all Matters
covered by this Agreement. All negotiations, correspondence and memoranda which
have passed between Yamaha and Dealer with reference to all matters covered by
this Agreement are merged herein and this Agreement constitutes the entire
agreement between Yamaha and Dealer. No representations not contained herein are
authorized by Yamaha, and this Agreement may not be altered, modified, amended,
or changed, in whole or in part, except in writing and executed by Yamaha and
Dealer in the same manner as is provided for the execution of this Agreement.
8.04 ASSIGNMENT. The relationship created between Yamaha and Dealer is
intended to be personal in nature, since Yamaha is relying on the continued
active participation of certain individuals in the operations of Dealer, and
consequently, this Agreement shall not be assignable or transferable in any
manner whatsoever without the prior consent in writing of Yamaha. For purposes
of this Agreement, any change in ownership, the legal form of the business, or
active management shall be deemed a transfer which requires the prior consent of
Yamaha. Any determination by Yamaha in this regard shall be based on an
evaluation of assignee's or transferee's qualifications and ability to meet
Yamaha's high standards. In the event Dealer changes his legal form of business
or makes an assignment without notifying Yamaha as provided herein, Dealer shall
continue to be personally liable for all past and future debts of this or a
successor business.
8.05 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of California.
8.06 Construction. This Agreement and all of the words, terms, and
provisions hereof shall be construed in accordance with their usual and ordinary
meanings, and not in favor of or against either party hereto. Paragraph headings
are not a part of this Agreement, but are only for convenience.
8.07 NONWAIVER OF RIGHTS. Failure of either party hereto to enforce any of
the provisions of this Agreement or any rights with respect thereto or failure
to exercise any election provided for herein shall in no way be considered to be
a waiver of such provisions, rights or elections or in any way affect the
validity of this Agreement. The failure of either party to exercise any of said
provisions, rights or elections shall not prelude or prejudice such party from
later enforcing or exercising the same or any other provisions, rights or
elections which it may have under this Agreement.
8.08 INVALIDITY. If any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.
8.09 NOTICE. All notices required or permitted to be given or made under
this Agreement may be effected in writing by certified mail, postage prepaid,
return receipt requested, and shall be deemed communicated three (3) days from
the mailing thereof. Mailed notices shall be addressed to the parties as their
addresses appear above, but each party may change his address by written notice
in accordance with this paragraph.
- 6 -
<PAGE> 79
8.10 ATTORNEY'S FEES. In the event any legal action is necessary to enforce
any of the terms and conditions of this Agreement, Dealer shall pay to Yamaha
all costs and fees incurred, including reasonable attorney's fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this 29th day of AUGUST, 1984. Dealer expressly acknowledges that it has read
this Agreement in its entirety and understands its rights and responsibilities
under this Agreement and the provisions relating to termination.
"Yamaha"
YAMAHA MOTOR CORPORATION, U.S.A.
a California Corporation
BY: /S/ GEORGE BALLARD
-----------------------------------
TITLE: ASSISTANT SECRETARY
-----------------------------------
"DEALER"
X CYCLE SPORT UNLIMITED, INC.
-----------------------------------
BUSINESS NAME
BY: X /S/ DAVID NEES
-----------------------------------
TITLE: X /S/ PRESIDENT
----------------------------------
BY: X
----------------------------------
TITLE: X
----------------------------------
- 7 -
<PAGE> 80
[RIVA LOGO]
SCOOTER DEALER AGREEMENT
<PAGE> 81
[YAMAHA MOTOR CORPORATION, U.S.A. LOGO]
6555 KATELLA AVENUE - CYPRESS, CALIFORNIA 90630
MAIL ADDRESS: P.O. BOX 762, CYPRESS, CALIFORNIA 90630
PHONE: (714) 761-7300
DISTRIBUTOR'S CERTIFICATION OF DEALER
TO: DEPARTMENT OF MOTOR VEHICLES
THIS IS TO CERTIFY THAT: CYCLE SPORT UNLIMITED INCORPORATED
--------------------------------------------------------
(NAME OF DEALER)
8338 Leesburg Pike
--------------------------------------------------------
(STREET)
Vienna, Virginia 22180
--------------------------------------------------------
(CITY AND STATE)
is a party to a written selling agreement for the present time with:
YAMAHA MOTOR CORPORATION, U.S.A.
6555 Katella Avenue
Cypress, California 90630
MAIL ADDRESS: P.O. BOX 762
Cypress, California 90630
to represent and sell: RIVA MOTOR SCOOTERS
in the city of Vienna, state of Virginia
------------------------- ------------------------------
David Nees, President Howard A. Wiles, V. President Robt.P. Wheeler, Sec.
- --------------------------------------------------------------------------------
being (officers) in said concern and this agreement will expire under the terms
and conditions contained in the Dealer Agreement upon sixty (60) days after
notification of termination of dealership to the Dealer's License Division of
your Department of Motor Vehicles.
SIGNED: /S/ T. SAKAMOTO
----------------------------
T. Sakamoto
TITLE: Executive Vice President
----------------------------
As an authorized representative of:
YAMAHA MOTOR CORPORATION, U.S.A.
6555 Katella Ave., Cypress, Ca. 90630
- - - -
COUNTY OF ORANGE
STATE OF CALIFORNIA
Subscribed and sworn to before me this 7th day of April, 1983.
--- ----- --
My Commission Expires:
[SEAL] /S/ TAMARA C. RUMINER
-------------------------------- -------------------------------------
NOTARY PUBLIC
<PAGE> 82
RIVA DEALER SALES AND SERVICE AGREEMENT
The information contained below is important as an integral part of the
Agreement attached hereto and required prior to the effectiveness of the
relationship. All information must be accurate and complete and Yamaha must be
notified of any changes to such information since it may affect your rights
under the Agreement.
A. RIVA DEALER'S COMPLETE LEGAL NAME
Name: Cycle Sport Unlimited Inc.
---------------------------------------------------------------------------
(Owner, Partner, Corporation, referred to in the Agreement as "Dealer")
SOLE
PROPRIETORSHIP PARTNERSHIP CORPORATION
(Complete Sec. C-1) (Incomplete Sec. C-1) (Complete Sec. C.)
- ---------------------- ----------------------- --------------------
Fictitious Business Name:
-------------------------------------------------------
(if different from above)
Federal Identification No.
------------------------
B. DEALER'S LOCATION
Address: 8338 Leesburg Pike Vienna, Va. 22180
---------------------------------------------------------------------
(Referred to in the Agreement as "Dealer Location")
C. DEALER: OWNERS AND MANAGEMENT
NAME SOCIAL SECURITY NO. TITLE
1. Owners:
-------------------------- ------------------ -------------------
-------------------------- ------------------ -------------------
-------------------------- ------------------ -------------------
-------------------------- ------------------ -------------------
NAME TITLE
2. Officers and
Manager: /S/ DAVID E. NEES PRESIDENT
--------------------------- -----------------------------
/S/ HOWARD WILES VICE PRESIDENT
--------------------------- -----------------------------
/S/ ROBERT P. WHEELER SECRETARY
--------------------------- -----------------------------
/S/ ROBERT P. WHEELER TREASURER
--------------------------- -----------------------------
GENERAL MANAGER
--------------------------- -----------------------------
--------------------------- -----------------------------
--------------------------- -----------------------------
DEALER WARRANTS AND REPRESENTS THAT THE INFORMATION AS SET FORTH ABOVE IS TRUE
AND CORRECT.
"DEALER"
X DAVID E. NEES
-------------------------------
TITLE: X PRESIDENT
-------------------------------
DATE: X 3-10-83
-------------------------------
<PAGE> 83
RIVA DEALER SALES AND SERVICE AGREEMENT
THIS AGREEMENT is made by and between YAMAHA MOTOR CORPORATION, U.S.A., a
California corporation, having its principal office located at 6555 Katella
Avenue, Cypress, California 90630 (hereinafter referred to as "Yamaha"), and
Dealer as identified on the cover sheet attached hereto.
RECITALS
A. Yamaha is the exclusive distributor in the United States of the Riva
line-make of quality motor scooters which are sold under the trademark "Riva"
and which utilize the trademark "Yamaha" and distributes parts and accessories
therefor (hereinafter collectively referred to as the "products").
B. Because of the distinctive and unique market for the Products, Yamaha
has determined that an agreement governing the Yamaha/Dealer relationship with
respect to the Products is necessary.
C. Dealer has represented, as an inducement to Yamaha's entering into this
Agreement, that: (1) Dealer is capable of performing the terms and conditions of
this Agreement, (2) Dealer has a sufficient number of trained personnel and
adequate facilities to sell and service the Products, and (3) Dealer has
adequate financial resources to perform its duties and responsibilities herein.
D. Dealer desires to engage in sales of the Products in accordance with the
terms and conditions hereof; and Yamaha desires to appoint Dealer as a retail
sales and service location for the Products in accordance herewith.
Yamaha and Dealer agree to govern their relationship in accordance with
the following:
1. ESTABLISHMENT OF RELATIONSHIP
1.1 APPOINTMENT OF DEALER. Yamaha hereby appoints Dealer as an authorized
Riva Dealer for the sales and service of the Products only from Dealer's
location and Dealer hereby accepts such appointment. In order to enable Yamaha
and Dealer to ensure that Dealer's location complies with the standards
established by Yamaha and to protect the ability of Riva Dealers to compete
effectively with Dealers handling competitive products, Dealer agrees not to
sell or offer for sale the Products from any location other than that which has
been authorized by Yamaha. Any change in location shall be made only with the
prior written consent of Yamaha. Yamaha and Dealer further agree that Dealer
shall sell the Products at Dealer's location to consumers only.
1.2 NONEXCLUSIVE. The rights granted herein are nonexclusive. Yamaha
reserves the right to appoint additional dealers of any or all of the Products
at any time pursuant to Yamaha's marketing program and policies; and in
accordance with the applicable state laws.
2. MUTUAL RESPONSIBILITIES
2.1 SPECIFIC RESPONSIBILITIES - SALES
(a) SALES. Dealer agrees to and shall use its best efforts to vigorously
promote and sell the Products, and shall continually work to increase the market
for the Products served by Dealer's location. In this regard, Dealer shall use
his best efforts to attain the annual sales goal set forth in Exhibit "A".
Dealer agrees to maintain a fully qualified sales organization in order to
fulfill its responsibilities under this Agreement and conduct a continuing
program of quality advertising and sales promotion activities for the Products
which reflect favorably on the goodwill established by Yamaha. All sales
personnel shall be thoroughly familiar with the Products and Dealer, at his
expense, shall cause such personnel to attend training programs for the Products
and study sales manuals and bulletins for the Products as may be provided by
Yamaha from time to time.
(b) CUSTOMER RELATIONS. Dealer shall at all times conduct its operations in
such a manner so as to develop and maintain good customer relations. Dealer
shall provide prompt and courteous service to customer inquiries and complaints
relating to the Products. Dealer shall at all times properly represent the
Products and shall not make, directly or indirectly, any false, misleading, or
disparaging representations to any customer or other person in regards to Yamaha
or the Products. Dealer shall conduct its operations during usual and customary
business hours.
(c) INVENTORY. Dealer agrees to maintain at Dealer's location: (1) a
prominent display of the Products which includes at least one of each of the
current models of the units, and (2) a reasonable inventory of the Products
which is adequate to meet the current and anticipated demand in the market area
served by Dealer's location, subject only to availability.
(d) SUPPLY OF PRODUCTS. Yamaha shall make reasonable efforts to supply
Dealer with the Products in accordance with accepted orders; however, during any
period of shortage, Yamaha shall be permitted to allocate the Products in an
equitable manner.
(e) REPORTS AND RECORDS. In order to provide Yamaha with information
regarding sales and market trends, Dealers shall periodically provide to Yamaha
complete and accurate data regarding Dealer's sales and inventories of the
Products and such other reasonable information as and when requested by Yamaha.
Dealer shall keep complete and accurate records regarding the sales and service
activities for the Products and shall retain for at least three (3) years after
termination all such records and documents. Dealer shall permit any designated
representative of Yamaha, at reasonable times, to examine and audit such records
and documents. In the event of the discovery of any improper claim or payment,
Yamaha may charge back to Dealer all payments or credits plus interest thereon
made by Yamaha to Dealer pursuant to such claims or otherwise, as well as the
costs to Yamaha for such audit and the recovery of such payments or credit.
(f) CHANGES TO THE PRODUCTS. Yamaha may periodically change the design,
models, and features of the Products, add new products, or discontinue the
distribution of any or all of the Products to Dealer without accountability to
Dealer in connection with any Products ordered by Dealer or Dealer's inventory
of the Products.
(g) COOPERATION WITH YAMAHA. Dealer shall at all times cooperate and work
closely with Yamaha's representatives. In addition Dealer shall maintain close
communications with such representatives.
2.2 SPECIFIC RESPONSIBILITIES - SERVICE
(a) SERVICE OPERATIONS. Dealer shall establish and maintain quality service
operations as recommended by Yamaha for the Products at Dealer's location which
shall include thoroughly trained personnel, proper tools and equipment, and
adequate service facilities in order to fulfill its responsibilities under this
Agreement. Such service operations shall provide to owners of the Products
prompt, courteous, and workmanlike service. All service personnel shall be
thoroughly familiar with the Products and Dealer, at his expense, shall cause
such personnel to attend training programs for the Products and study service
and warran-
<PAGE> 84
ty manuals and bulletins for the Products as may be provided by Yamaha from time
to time.
(b) DELIVERY AND PREPARATION OBLIGATIONS. Dealer shall be responsible for
and agrees to perform set-up, preparation, and delivery obligations as
prescribed by Yamaha, prior to the delivery of the Products to purchasers
thereof; and Yamaha agrees to compensate Dealer in accordance with the policies
of Yamaha as may be issued from time to time and in accordance with applicable
law.
(c) GENERAL SERVICE. Dealer shall provide to owners of the Products such
general service and repair for the Products as may be necessary. Any and all
charges therefore shall be reasonable and consistent with those prevailing in
the market area of Dealer; and all such services and charges shall be in
accordance with applicable law.
(d) WARRANTY SERVICE. Dealer agrees to perform all warranty service on all
Products brought to Dealer, whether or not sold by Dealer. Dealer shall perform
such warranty service in accordance with the policies of Yamaha as they may be
issued from time to time in the Yamaha service and warranty manuals and
bulletins. Dealer shall use only genuine Yamaha parts, or parts that are
equivalent in quality and design to genuine Yamaha parts, in performing warranty
service on the Products.
(1) Dealer acknowledges the importance of providing to owners of the
Products prompt and skilled warranty service and the need to comply with all the
laws relating to warranty service. Dealer shall give immediate service to such
warranty requests and/or service. Dealer agrees to perform all warranty service
in a competent and workmanlike manner. Dealer agrees to maintain an inventory of
genuine Yamaha parts to provide all necessary warranty service.
(2) Dealer shall submit complete and accurate claims to Yamaha for
reimbursement for parts and labor used in performing warranty service on
warranty claim forms of Yamaha with all information required thereon; and Yamaha
shall reimburse Dealer for such parts and labor in accordance with the effective
schedules and rates applicable to Dealer. Dealer shall keep and retain complete
and accurate records and documents supporting such claims, which records and
documents are subject to the provisions of Paragraph 2.1(e), regarding
inspection and adjustments.
(e) ASSISTANCE AND PROTECTION. In the event any warranty claim arises that
Dealer is unable to perform, Yamaha should be promptly notified by Dealer and be
provided the details of the claim and Yamaha shall use reasonable efforts to
resolve such claim. Yamaha is relying upon Dealer's assurance that he is capable
of performing service obligations for the Products. Dealer agrees to fully
protect Yamaha from any claims, liability or loss that may result from a failure
of Dealer to properly perform service for the Products as required hereunder or
under applicable law.
2.3 GENERAL RESPONSIBILITIES.
(a) PROMOTION AND ASSISTANCE BY YAMAHA. Yamaha shall, from time to time,
provide to Dealer such assistance, incentives, and programs as may be offered to
all other dealers of the Products who are similarly situated. Yamaha shall
conduct an advertising program for the Products which may include television and
radio commercials, magazine advertisements, and promotional programs. Dealer
agrees to participate in such appropriate promotional programs or activities
during the initial term and each renewal term of this Agreement as may be
offered by Yamaha from time to time.
(b) TRADEMARK. Yamaha agrees to permit Dealer to identify itself as an
authorized Dealer for the Products only and use the trademarks "Riva" and
"Yamaha" in connection with Dealer's efforts to sell and promote the products;
provided, however, that such use shall be subject to the control of Yamaha and
be in a manner consistent with the high quality image of the Products. Dealer
shall not use the trademarks "Riva" or "Yamaha" as a part of its corporate name
or in any manner inconsistent with the instructions of Yamaha. Dealer shall at
all times act in a manner to protect and preserve for Yamaha any patents,
trademarks, tradenames, copyrights and/or designs which Yamaha may have with
respect to the Products. Dealer shall promptly notify Yamaha of any infringement
or unauthorized use by any person of such patents, trademarks, tradenames,
copyrights or designs. Dealer acknowledges that Yamaha has the sole right and
interest in such patents, trademarks, tradenames, copyrights and designs and
agrees to cease immediately all use thereof on the termination of this
Agreement.
(c) FACILITIES. Dealer shall establish and maintain the appearance and
condition of the facilities at Dealer's location so as to favorably reflect on
the Products and the quality image of Yamaha and the Riva line-make. As part of
the facilities at Dealer's location, Dealer shall install and maintain interior
and exterior decoration and identification in accordance with Exhibit "A" which
shall include but not be limited to suitable signs which identify Dealer as a
dealer of the Products. Dealer shall also maintain a minimum amount of floor
space set forth on Exhibit "A" which shall be exclusively devoted to the
Products.
(d) FINANCIAL RESPONSIBILITY. Dealer shall maintain for its operations
hereunder adequate working capital and independent lines of wholesale credit to
enable Dealer to fulfill his responsibilities under this Agreement. Dealer
agrees to furnish Yamaha, at reasonable times, financial reports and other
financial data to enable yamaha to determine Dealer's financial responsibility.
At least within ninety (90) days following the close of Dealer's fiscal year,
Dealer agrees to submit to Yamaha Dealer's financial statement for the previous
year.
(e) COMPLIANCE WITH LAWS. Dealer shall conduct and maintain at all times
his sales and service operations in strict compliance with all applicable
federal and state laws and regulations, county and city ordinances and
regulations and any other applicable law, regulation or ordinance, and Dealer
agrees not to engage in any unfair trade practices. Dealer shall indemnify and
hold Yamaha harmless from any cost and liability that may result from a
violation of this paragraph.
(f) CONFIDENTIALITY. Dealer agrees to keep confidential and not disclose or
use, otherwise than for the purposes of this Agreement, during the term of this
Agreement, or at anytime thereafter, any trade secrets, processes, inventions,
prices, operational procedures or other proprietary information of Yamaha which
may become known to Dealer, except for such information as may be contained in
the Yamaha's promotional literature.
3. PURCHASE OF THE PRODUCTS
3.1 GENERAL TERMS AND CONDITIONS. Yamaha shall sell the Products to Dealer
and Dealer shall purchase the Products from Yamaha in accordance with the terms
and conditions set forth herein. Yamaha reserves the right to change any terms
or conditions, including price and payment terms, at any time without
accountability to Dealer.
3.2 ORDERS. Dealer shall order the Products from Yamaha in accordance with
the ordering procedures of Yamaha. All orders are subject to acceptance by
Yamaha based on the availability of the Products and Dealer's compliance with
the terms and conditions hereof. To enable Yamaha to plan its purchases from the
manufacturer of the Products, Dealer shall submit its purchase orders at such
times as may be requested by Yamaha. The effective terms and conditions of
Yamaha shall supersede any conflicting terms and conditions of any purchase
order submitted by Dealer.
<PAGE> 85
3.3 Price. Dealer shall pay to Yamaha the price and any other charges for the
Products as set forth on Yamaha's price schedules, issued periodically by
Yamaha, which is in effect at the time of shipment of Dealer's order. On the
stated future effective date, a new price or charge shall automatically
supersede any previous price or charge.
3.4 Payment. Dealer shall pay the purchase price for the Products at the time of
delivery thereof, unless Yamaha has approved other terms of credit for Dealer.
Yamaha may cancel any order placed by Dealer or refuse the shipment thereof
should Dealer fail to meet any payment term, credit, or financial requirements
of Yamaha. The cancellation or withholding of any order shall not be construed
as a termination or breach of this Agreement by Yamaha.
3.5 Shipment. Yamaha shall use its best efforts to ship all accepted orders for
the Products to dealer F.O.B. Yamaha's warehouse with reasonable promptness;
provided, however, that Yamaha shall not be liable for any damage, consequential
or otherwise, to the Products which occurs while in transit, or as a result of a
failure to fill orders, delays in delivery, or any error in the filling of
orders.
3.6 Taxes. Dealer represents and warrants that all Products purchased hereunder
are purchased for resale in the ordinary course of Dealer's business. Dealer
agrees that he is responsible for and shall comply with all laws calling for the
collection and/or payment of all taxes, including sales and use taxes and ad
valorem taxes.
4. EFFECTIVENESS AND TERMINATION
4.1 Effectiveness. Unless otherwise provided for or allowed under state law,
this Agreement shall be effective upon the execution by Dealer and by an
authorized officer or representative of Yamaha at Cypress, California and shall
automatically terminate on August 31, 1986. Yamaha at its sole option may renew
this Agreement for successive one (1) year terms at the end of the initial term
or any extensions thereof by giving thirty (30) days written notice of its
intent to renew prior to the scheduled termination.
4.2 Termination for Cause (immediate Effect). Unless otherwise provided for or
allowed under state law, Yamaha may terminate this Agreement with immediate
effect on the giving of written notice to Dealer should any of the following
events occur, such events being of such a nature so as to constitute good cause
for immediate termination by Yamaha:
(a) Any misrepresentation by Dealer in entering into this Agreement or the
submission by Dealer of any false or fraudulent application, claim or report in
connection with its sales or service operations.
(b) Inability of Dealer to meet its debts as they mature; the filing by Dealer
of a petition of voluntary bankruptcy under any chapter of the bankruptcy laws
of the United States; the institution of proceedings to adjudge Dealer of
bankrupt in an involuntary proceeding; the execution of an assignment by Dealer
for the benefit of creditors; the appointment by a court of a receiver, trustee
for Dealer or the assets of Dealer; dissolution of Dealer; or the failure of
Dealer to conduct its operations in the ordinary course of business.
(c) Any transfer or attempted transfer by Dealer of any interest in, or right,
privilege or obligation under this Agreement; or any transfer of the principal
assets of Dealer's operations hereunder; or any change in the direct or indirect
ownership or operating management of Dealer, however accomplished, without the
prior written consent of Yamaha.
(d) Any relocation or establishment of branch locations without having compiled
with the requirements set forth in Paragraph 1 - 1 of this Agreement.
(e) Any act by Dealer or any person involved in the ownership or operating
management of Dealer which violates any law and affects adversely Dealer's
operations or any conduct or unfair business practice by Dealer or any person
involved in the ownership or operating management of Dealer which affects
adversely Dealer's operations or the goodwill and reputation of Dealer, Yamaha,
or the Products.
(f) Any failure by Dealer to pay to Yamaha any sums that may be due or become
due pursuant to this Agreement or maintain adequate lines of credit for purposes
of purchasing the Products from Yamaha.
(g) Revocation of any license or permit necessary to conduct its operations
hereunder.
4.3 Termination - General Nonperformance. Unless otherwise provided for or
allowed under state law or this Agreement, Yamaha or Dealer may terminate this
Agreement on the giving of at least sixty (60) days prior written notice to the
other for failure or either party fails to fulfill any or all of their
responsibilities and obligations as set forth in this Agreement, except for
causes specified under Paragraph 4.2 hereof.
4.4 Termination - Death, Incapacity, Change of Key Personnel. As an inducement
to entering into this Agreement, Dealer has represented that the persons
identified on the cover sheet shall continue to actively participate in the
ownership and operating management of Dealer; and, therefore, Yamaha may
terminate this Agreement on the giving to Dealer of at least fifteen (15) days
prior written notice in the event of death, or physical or mental incapacity of
any of the identified persons or in the event any of the key personnel ceases to
be involved in an active and substantial role in the operation of Dealer. Yamaha
may defer such termination for a period up to six (6) months from such event in
order to allow Dealer an opportunity to replace such person or persons with an
equally qualified person or persons or allow an orderly liquidation of Dealer's
operations; provided, however, it can be demonstrated that the terms and
conditions of this Agreement can be fulfilled during such period and thereafter.
4.5 Transition - New Agreement. Yamaha may terminate this Agreement at any time
on the giving to Dealer of at least sixty (60) days prior written notice should
Yamaha offer a new or modified form of agreement to all its dealers for the
Products.
5. RESPONSIBILITIES UPON TERMINATION
5.1 Continuing Responsibilities. Upon the termination of this Agreement, Dealer
shall no longer be an authorized Dealer; however, Dealer shall immediately pay
to Yamaha all amounts owed to Yamaha, whether or not due.
5.2 Discontinuance of Use of Trademarks. Upon termination, Dealer shall (1)
discontinue forthwith any and all use of the trademarks "Riva" and "Yamaha",
including such use in advertising, business materials of Dealer and as part of
the firm or trade name of Dealer, (2) forthwith remove or obliterate any and all
signs designated Dealer as an authorized dealer for the Products or which
include the trademarks "Yamaha" or "Riva", and (3) forthwith notify and instruct
publications and others who may list or publish Dealer's name as an authorized
Riva Dealer, including telephone directories, yellow pages, and other business
directories, to discontinue such listing of Dealer as an authorized Riva Dealer.
5.3 Orders for the Products. In the event of the termination of this Agreement,
all unshipped orders for the Products shall be deemed cancelled. However, from
the date of the notice of termination to the effective date of termination,
orders May be filled by Yamaha if such orders are bona fide and reasonable in
quantity, dealer pays for such order to cash on delivery; and Dealer in capable
of meeting its sales and service obligations hereunder.
<PAGE> 86
5.4 Repurchase of Products.
(a) Upon termination of this Agreement, Yamaha shall have the option, but not
the obligation, to repurchase from Dealer and Dealer shall sell to Yamaha,
within sixty (60) days after the effective date of termination the following:
(1) Any or all new, unused, undamaged, then current model Products which were
purchased by Dealer from Yamaha, and are the unencumbered property of and in the
possession of Dealer, at the net invoice price, less discounts, transportation
charges and delivery and preparation reimbursement, previously paid by Dealer
therefor less all costs incurred in regards to their purchase.
(2) Any or all new, unused and undamaged resaleable parts, purchased from Yamaha
which are then the unencumbered property of and in the possession of Dealer, at
Yamaha's then current parts wholesale price list, exclusive of transportation
charges and less all costs incurred in regards to the repurchase. Dealer shall,
at Dealer's expense, inventory, tag, pack and deliver possession of such parts
to Yamaha, in accordance with Yamaha's procedures then in effect.
(b) Within thirty (30) days of the date of termination of this Agreement, Dealer
shall deliver or mail to Yamaha a detailed inventory of all of the items
referred to in this Paragraph 5.4. In the event Dealer fails to supply such a
list of Yamaha within said period, Yamaha shall have the right to enter onto
Dealer's premises for the purpose of compiling such an inventory list and Dealer
shall reimburse Yamaha for any costs incurred in connection therewith.
(c) Within ten (10) days after receipt of Dealer's detailed inventory or after
Yamaha has taken a physical inventory, whichever is later, Yamaha shall notify
Dealer of its intention in regards to Dealer's inventory of Products.
6. MISCELLANEOUS
6.1 Relationship of the Parties. This Agreement does not in any way create the
relationship of principal and agent between Dealer and Yamaha and in no
circumstances shall Dealer, its agents or employees be considered the agent of
Yamaha. Dealer shall not act or attempt to act or represent itself directly or
by implication as an agent of Yamaha or in any manner assume or create or
attempt to assume or create any obligation or make any contract, agreement,
representation or warranty on behalf of in the name of Yamaha, except those
authorized in writing by Yamaha. Dealer shall indemnify and hold Yamaha harmless
from any cost and liability caused by the acts of Dealer, its employees or
agents and from liability caused by any unauthorized act by Dealer, its agents,
or employees.
6.3 Entire Agreement. This Agreement supersedes and terminates any and all prior
dealer agreements or contracts, written or oral, entered into between Yamaha and
Dealer as of the effective date of this Agreement with reference to all matters
covered by this agreement. All negotiations, correspondence and memoranda which
have passed between Yamaha and Dealer with reference to all matters covered by
this Agreement are merged herein and this Agreement constitutes the entire
agreement between Yamaha and Dealer. No representations not contained herein are
authorized by Yamaha, and this Agreement may not be altered, modified, amended,
or changed, in whole or in part, except in writing and executed by Yamaha and
Dealer in the same manner as is provided for the execution of this Agreement.
6.4 Assignment. The relationship created between Yamaha and Dealer is intended
to be personal in nature, since Yamaha is relying on the continued active
participation of certain individuals in the operations of Dealer, and
consequently, this Agreement shall not be assignable or transferable in any
manner whatsoever without the prior written consent of Yamaha. For purposes of
this Agreement, any change in ownership, the legal form of the business, or
active management shall be deemed a transfer which requires the prior written
consent of Yamaha. Any determination by Yamaha in this regard shall be based on
an evaluation of assignee's or transferee's qualifications and ability to meet
Yamaha's high standards. In the event Dealer changes his legal form of business
or makes an assignment or transfer without notifying Yamaha as provided herein,
Dealer shall continue to be personally liable for all past and future debts of
this or a successor business.
6.5 Construction. This Agreement and all of the words, terms, and provisions
hereof shall be construed in accordance with their usual and ordinary meanings,
and not in favor of or against either party hereto. Paragraph headings are not a
part of this Agreement, but are only for convenience.
6.6 Nonwaiver of Rights. Failure to either party hereto to enforce any of the
provisions of this Agreement or any rights with respect thereto or failure to
exercise any election provided for herein shall in no way be considered to be a
waiver of such provisions, rights or elections or in any way affect the validity
of this Agreement. The failure of either party to exercise any of said
provisions, rights or elections shall not preclude or prejudice such party from
later enforcing or exercising the same or any other provisions, rights or
elections which it may have under this Agreement.
6.2 Force Majeure. Yamaha shall not be responsible for or liable for failure to
perform any part of this Agreement or any delay in the performance of any part
of this Agreement, directly or indirectly resulting from or contributed to by
any foreign or domestic embargoes, seizures, acts of God, insurrections, wars
and/or continuance of war; or the adoption or enactment of any law, ordinance,
regulation, ruling or order directly or indirectly interfering with the
production, delivery or payment hereunder; or lack of the usual means of
transportation, fires, floods, explosions, strikes; extraordinary currency
devaluations, taxes, or customer duties or other similar charges or assessments;
or other events or contingencies beyond its control, either of the foregoing
nature or of any kind, nature or description affecting the transportation,
production, sale or distribution of the Products or any components used in or in
connection with their production.
6.7 Invalidity. If any term, provision, covenant or condition of this Agreement
is held by court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the Orovisions shall remain in full force and effect and shall
in no way be affected, impaired, or invalidated.
6.8 Notice. All notices required or permitted to be given or made under this
Agreement may be effected in writing by certified mail, postage prepaid, return
receipt requested, and shall be deemed communicated three (3) days from the
mailing thereof. Mailed notices shall be addressed to the parties as their
addresses appear above, but each party may change his address by written notice
in accordance with this paragraph.
<PAGE> 87
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this 6th
day of April, 1983. DEALER EXPRESSLY ACKNOWLEDGES THAT IT HAS READ THIS
AGREEMENT IN ITS ENTIRETY AND UNDERSTANDS ITS RIGHTS AND RESPONSIBILITIES UNDER
THIS AGREEMENT AND THE PROVISIONS RELATING TO TERMINATION.
"Yamaha"
YAMAHA MOTOR CORPORATION, U.S.A.
A California Corporation
By: [sig]
----------------------------------
Title: ASSISIANT SECRETARY
----------------------------------
"Dealer"
X Cycle Sport Unlimited
----------------------------------
Business Name
By: [sig]
----------------------------------
Title: PRESIDENT
----------------------------------
By:
----------------------------------
Title:
----------------------------------
EXHIBIT "A"
Annual Sales Goal 150
------------------------
Minimum Showroom Floor Space 500 SQ FT
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Interior and Exterior Identification and
Decoration
YES
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
<PAGE> 88
[YAMAHA LOGO]
DEALER AGREEMENT
<PAGE> 89
YAMAHA SALES AND SERVICE AGREEMENT
The information contained below is important as an integral part oft he
Agreement attached hereto and required prior tot he effectiveness of the
relationship. All information must be accurate and complete and Yamaha must be
notified of any changes to such information since it may affect your rights
under the Agreement.
A. DEALER'S COMPLETE LEGAL NAME
Name: CYCLE SPORT UNLIMITED, INC. - SPRINGFIELD
------------------------------------------------------------------------
(Owner, Partnership, Corporation referred to in the Agreement as "Dealer")
<TABLE>
<S> <C> <C>
SOLE PROPRIETORSHIP PARTNERSHIP CORPORATION
(COMPLETE SEC. C-1) (COMPLETE SEC. C-1) (COMPLETE SEC. & C-2)
- ------------------------ ---------------------- -----------------------
</TABLE>
Fictitious Business Name CYCLE SPORT-SPRINGFIELD
-------------------------------------------------------
(if different from above)
Federal Identification No. 54-090011
-----------------------
B. DEALER'S LOCATION
Address: 6603 BACKLICK RD., SPRINGFIELD, VA. 22150
---------------------------------------------------------------------
(Referred to in the Agreement as "Dealer's Location")
C. DEALER: OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
NAME SOCIAL SECURITY NO. TITLE
<S> <C> <C> <C>
1. Owners:
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
</TABLE>
<TABLE>
<CAPTION>
NAME TITLE
<S> <C> <C>
2. Offices and
Manager: DAVID E. NEES PRESIDENT
------------------------------- -------------------------------
HOWARD A. WILES VICE PRESIDENT
------------------------------- -------------------------------
ROBERT P. WHEELER, JR. SECRETARY
------------------------------- -------------------------------
HOWARD A. WILES TREASURER
------------------------------- -------------------------------
CALVIN E. STEWART MANAGER
------------------------------- -------------------------------
------------------------------- -------------------------------
</TABLE>
DEALER WARRANTS AND REPRESENTS THAT THE INFORMATION AS SET FORTH ABOVE IS TRUE
AND CORRECT.
"DEALER"
X /s/ DAVID NEES
--------------------------------
BY: X PRESIDENT
--------------------------------
DATE: X 12/6/78
--------------------------------
- 2 -
<PAGE> 90
YAMAHA SALES AND SERVICE AGREEMENT
THIS AGREEMENT is made by and between YAMAHA MOTOR CORPORATION, U,S.A., a
California corporation, having its principal office located at 6555 Katella
Avenue, Cypress, California 90630 (hereinafter referred to as "Yamaha"), and
Dealer as identified on the cover sheet attached hereto.
RECITALS
A. Yamaha is the exclusive distributor in the United States of quality
MOTORCYCLES which are sold under the trademark "Yamaha" and distributes parts
and accessories therefor (hereinafter collectively referred to as the
"Products").
B. Dealer has represented, as an inducement to Yamaha's entering into this
Agreement, that: (1) Dealer is capable of performing the terms and conditions of
this Agreement, (2) Dealer has a sufficient number of trained personnel and
adequate facilities to sell and service the Products, and (3) Dealer has
adequate financial resources to perform the monetary obligations herein.
C. Dealer desires to engage in sales of the Products in accordance with the
terms and conditions hereof; and Yamaha desires to appoint Dealerasaretail sales
and service location for the Products inaccordance herewith.
1. ESTABLISHMENT OF RELATIONSHIP
1.01 Appointment of Dealer. Yamaha hereby appoints Dealer as an authorized
Yamaha dealer for the sales and service of the Products only from Dealer's
location and Dealer hereby accepts such appointment. Dealer agrees not to,
directly, or indirectly, change Dealer's location nor establish or operate any
other location for the sales or service of the Products without the prior
written consent of Yamaha, which consent shall not be unreasonably withheld.
1.02 Nonexclusive. The rights granted herein are nonexclusive. Yamaha
reserves the right to appoint additional dealers of any or all of the Products
at any time pursuant to Yamaha's marketing program and policies; and in
accordance with the applicable state laws.
2. DEALER'S SALES OPERATIONS
2.01 Sales. Dealer agrees to and shall use its best efforts to vigorously
promote and sell the Products at retail, and shall continually work to increase
the market for the Products in the area served by Dealer's location. Dealer
agrees to maintain a fully qualified sales organization and conduct a continuing
program of quality. advertising and sales promotion activities for the Products
which reflect favorably on the goodwill established by Yamaha. Dealer agrees to
afford the Products as much effort as Dealer gives to competitive or other
products of Dealer in terms of promotion, floor space, inventory, and service.
2.02 Performance Criteria. The relationship established hereby is intended
by the parties to be mutually beneficial. In this regard, Yamaha assumes under
this Agreement certain specific responsibilities to Dealer in order to obtain in
return an adequate level of performance by Dealer. Such level of performance
shall be evaluated periodically by Yamaha, at least once in each year, based on
reasonable criteria such as the following:
(a) The volume of Dealer's sales of the Products as compared ith the sales
of products in the market area served by Dealer's location.
(b) The volume of Dealer's sales of the Products as compared to other
dealers of the Products who are similarly situated.
(c) The actual sales volume of the Products by Dealer as compared to the
reasonable annual sales objectives which may be established by Yamaha for
Dealer.
(d) The actual promotion efforts of Dealer relating to the Products.
(e) The compliance with all of the terms and conditions of this Agreement.
2.03 Customer Relations. Dealer shall at all times conduct its operations
in such a manner so as to develop and maintain good customer relations. Dealer
shall provide prompt and courteous service to customer inquiries and complaints
relating to the Products. Dealer shall at all times properly represent the
Products and shall not make, directly or indirectly, any false, misleading, or
disparaging representations to any customer or other person in regards to Yamaha
or the Products- Dealer shall conduct its operations during usual and customary
business hours.
2.04 Inventory. Dealer agrees to maintain at Dealer's location: (1) a
prominent display of the Products which includes at least one of each of the
current models of the units, and (2) a reasonable inventory of the Products
which is adequate to meet the current and anticipated demand in the market area
served by Dealer's location, subject only to availability.
2.05 Supply of Products. Yamaha shall make reasonable efforts to supply
Dealer with the Products in accordance with accepted orders; however, during any
period of shortage, Yamaha shall be permitted to allocate the Products in an
equitable manner.
2.06 Reports and Records. In order to provide Yamaha with information
regarding sales and market trends, Dealer shall periodically provide to Yamaha
complete and accurate data regarding dealer's sales and inventories of the
Products and such other reasonable information as and when requested by Yamaha.
Dealer shall keep complete and accurate records regarding the sales and service
activities for the Products and shall retain for at least three (3) years all
such records and documents. Dealer shall permit any designated representative of
Yamaha, at reasonable times, to examine and audit such records and documents. In
the event of the discovery of any improper claim or payment, Yamaha may charge
back to Dealer all payments or credits plus interest thereon made by Yamaha to
Dealer pursuant to such claims or otherwise, as well as the costs to Yamaha for
such audit and the recovery of such payments or credit.
2.07 Changes to the Products. Yamaha may periodically change the design,
models, and features of the Products, add new products, or discontinue the
distribution of any or all of the Products to Dealer without accountability to
Dealer in connection with any Products ordered by Dealer or Dealer's inventory
of the Products.
- 3 -
<PAGE> 91
2.08 Cooperation with Yamaha. Dealer shall at all times cooperate and work
closely with amaha's representatives. In addition Dealer shall maintain close
communications with such representatives.
3. PURCHASE OF THE PRODUCTS
3.01 General Terms and Conditions. Yamaha shall sell the Products to Dealer
and Dealer shall purchase the Products from Yamaha in accordance with the terms
and conditions set forth herein. Yamaha reserves the right to change any terms
or conditions, including price and payment terms, at any time without
accountability to Dealer.
3.02 Orders. Dealer shall order the Products from Yamaha in accordance with
the ordering procedures of Yamaha. All orders are subject to acceptance by
Yamaha based on the availability of the Products and Dealer's compliance with
the terms and conditions hereof. To enable Yamaha to plan its purchases from the
manufacturer of the Products, Dealer shall submit its purchase orders at such
times as may be requested by Yamaha. The effective terms and conditions of
Yamaha shall supersede any conflicting terms and conditions of any purchase
order submitted by Dealer.
3.03 Price. Dealer shall pay to Yamaha the price and any other charges for
the Products as set forth on Yamaha's price schedules, issued periodically by
Yamaha, which is in effect at the time of shipment of Dealer's order- On the
stated future effective date, a new price or charge shall automatically
supersede any previous price or charge.
3.04 Payment. Dealer shall pay the purchase price for the Products at the
time of delivery thereof, unless Yamaha has approved other terms of credit for
Dealer. Yamaha may cancel any order placed by Dealer or refuse the shipment
thereof should Dealer fail to meet any payment term, credit, or financial
requirements of Yamaha. The cancellation or withholding of any order shall not
be construed as termination or breach of this Agreement by Yamaha.
3.05 Shipment. Yamaha shall use its best efforts to Ship all accepted
orders for the Products to Dealer F.O.B. Yamaha's warehouse with reasonable
promptness; provided, however, that Yamaha shall not be liable for any damage,
consequential or otherwise, to the Products which occurs while in transit, or as
a result of a failure to fill orders, delays in delivery, or any error in the
filling of orders.
3.06 Taxes. Dealer represents and warrants that all Products purchased
hereunder are purchased for resale in the ordinary course of Dealer's business.
Dealer agrees that he is responsible for and shall comply with all laws calling
for the collection and/or payment of all taxes, including sales and use taxes
and ad valorem taxes.
4. DEALER'S SERVICE OPERATIONS
4.01 Service Operations. Dealer shall establish and maintain quality
service operations as recommended by Yamaha for the Products at Dealer's
location which shall include thoroughly trained personnel, proper tools and
equipment, and adequate service facilities. Such service operations shall
provide to owners of the Products prompt, courteous, and workmanlike service.
4.02 Delivery and Preparation Obligations. Dealer shall be responsible for
and agrees to perform set-up, preparation, and delivery obligations as
prescribed by Yamaha, prior to the delivery of the Products to purchasers
thereof; and Yamaha agrees to compensate Dealer in accordance with the policies
of Yamaha as may be issued from time to time and in accordance with applicable
law.
4.03 General Service. Dealer shall provide to owners of the Products such
general service and repair for the Products as may be necessary. Any and all
charges therefore shall be reasonable and consistent with those prevailing in
the market area of Dealer; and all such services and charges shall be in
accordance with applicable law.
4.04 Warranty Service. Dealer agrees to perform all warranty service on all
Products brought to Dealer, whether or not sold by Dealer. Dealer shall perform
such warranty service in accordance with the policies of Yamaha as they may be
issued from time to time in the Yamaha service and warranty manuals and
bulletins. Dealer shall use only genuine Yamaha parts, or parts that are
equivalent in quality and design to genuine Yamaha parts, in performing warranty
service on the Products.
(a) Dealer acknowledges the importance of providing to owners of the
Products prompt and skilled warranty service and the need to comply with all
laws relating to warranty service. Dealer shall give immediate service to such
warranty requests and/or service. Dealer agrees to perform all warranty service
in a competent and workmanlike manner. Dealer agrees to maintain an inventory of
genuine Yamaha parts to provide all necessary warranty service.
(b) Dealer shall submit complete and accurate claims to Yamaha for
reimbursement for parts and labor used in performing warranty service on
warranty claim forms of Yamaha with all information required thereon; and Yamaha
shall reimburse Dealer for such parts and labor in accordance with the effective
schedules and rates applicable to Dealer. Dealer shall keep and retain complete
and accurate records and documents supporting Such claims, which recorriq and
documents are subject to the provisions of Paragraph 2.06, regarding inspection
and adjustments.
4.05 Assistance and Protection. In the event any warranty claim arises that
Dealer is unable to perform, Yamaha should a be promptly notified by Dealer and
be provided the details of the claim and Yamaha shall use reasonable efforts to
resolve such claim. Yamaha is relying upon Dealer's assurance that he is capable
of performing service obligations for the Products. Dealer agrees to fully
protect Yamaha from any claims, liability or loss that may result from a failure
of Dealer to properly perform service for the Products as required hereunder or
under applicable law.
5. GENERAL RESPONSIBILITIES -
YAMAHA AND DEALER
5.01 Promotion and Assistance by Yamaha. Yamaha shall, from time to time,
provide to Dealer such assistance, incentives, and programs as maybe offered to
all other dealers of the Products who are similarly situated. Yamaha shall
conduct an advertising program for the Products which may include television and
radio commercials, magazine advertisements, and promotional events.
- 4 -
<PAGE> 92
5.02 Trademarks. Yamaha agrees to permit Dealer to identify itself as an
authorized "Yamaha" dealer for the Products and use the trademarks of Yamaha in
connection with Dealer's efforts to sell and promote the Products; provided,
however, that such use shall be subject to the control of Yamaha and be in a
manner consistent with the high quality image of the Products. Dealer shall not
use the name "Yamaha" or other trademarks as a part of its corporate name or in
any manner inconsistent with the instructions of Yamaha. Dealer acknowledges
that Yamaha has the sole right and interest in such trademarks and agrees to
cease immediately all use thereof on the termination of this Agreement.
5.03 Facilities. Dealer shall establish and maintain the appearance and
condition of the facilities at Dealer's location
so as to favorbly reflect on the Products and the quality image of Yamaha As
part of the facilities at Dealer's location, Dealer shall install and maintain
prominent and suitable signs as recommended by Yamaha, which identify Dealer as
a dealer of the products.
5.04 Personnel. Dealer shall employ competent personnel for its sales
operations, service operations, and administration in order to fulfill his
responsibilities under this Agreement. All sales and service personnel shall be
thoroughly familiar with the Products; and Dealer, at his expense, shall cause
such personnel to attend training programs for the Products and study sales,
service and warranty manuals and bulletins for the Products as may be provided
by Yamaha from time to time.
5.05 Financial Responsibility. Dealer shall maintain for its operations
hereunder adequate working capital and lines of wholesale credit to enable
Dealer to fulfill his responsibilities under this Agreement. Dealer agrees to
furnish Yamaha, at reasonable times, financial reports an other financial data
to enable Yamaha to determine Dealer's financial responsibility. At least within
ninety (90) days following the close of Dealer's fiscal year, Dealer agrees to
submit to Yamaha Dealer's financial statement for the previous year.
5.06 Compliance with Laws. Dealer shall conduct and maintain at all times
his sales and service operations in strict compliance with all applicable
federal and state laws and regulations, county and city ordinances and
regulations and any other applicable law, regulation or ordinance.
6. TERMINATION
6.01 Effectiveness. This Agreement shall be effective upon the execution
hereof by an authorized officer or representative of Yamaha at Cypress,
California, and shall continue until terminated as provided herein.
6.02 Termination for Cause (immediate Effect). Unless otherwise provided
for or allowed under state law, Yamaha may terminate this Agreement with
immediate effect on the giving of written notice to Dealer should any of the
following events occur, such events being of such a nature so as to constitute
good cause for immediate termination by Yamaha:
(a) Any misrepresentation by Dealer in entering into this Agreement or the
submission by Dealer of any false or fraudulent application, claim or report in
connection with its sales or service operations.
(b) Insolvency of Dealer; inability of Dealer to meet its debts as they
mature; the filing by Dealer of a petition of voluntary bankruptcy under any
chapter of the bankruptcy laws of the United States; the institution or
proceedings to adjudge Dealer a bankrupt in an involuntary proceeding; the
execution of an assignment by Dealer for the benefit of creditors; the
appointment by a court of a receiver, trustee for Dealer or the assets of
Dealer; dissolution of Dealer; or the failure of Dealer to conduct its
operations in the ordinary course of business.
(c) Any transfer or attempted transfer by Dealer of any interest in, or
right, privilege or obligation under this Agreement; or any transfer of the
principal assets of Dealer's operations hereunder; or any change in the direct
or indirect ownership or operating management of Dealer, however accomplished,
without the prior written consent of Yamaha, which consent shall not be
unreasonably withheld.
(d) Any relocation or establishment of branch locations without having
complied with the requirements set forth in Paragraph 1.01 of this Agreement.
(e) Any act by Dealer or any person involved in the ownership or operating
management of Dealer which violates any law and affects adversely Dealer's
operations or any conduct or unfair business practice by Dealer or any person
involved in the ownership or operating management of Dealer which affects
adversely Dealer's operations or the goodwill and reputation of Dealer, Yamaha,
or the Products.
(f) Any failure by Dealer to pay to Yamaha any sums that may be due or
become due pursuant to this Agreement or maintain adequate lines of credit for
purposes of purchasing the Products from Yamaha.
(g) Revocation of Dealer's motor vehicle Dealer's license or other
license.or permit necessary to conduct its operations hereunder.
6.03 Termination - Generall Nonperformance. Unless otherwise provided for
or allowed under state law or this Agreement, Yamaha or Dealer may terminate
this Agreement on the giving of at least sixty (60) days prior written notice to
the other for failure of either party to fulfill any or all of their
responsibilities and obligations as set forth in this Agreement, except for
causes specified under Paragraph 6.02 hereof.
6.04 Termination - Death, Incapacity. As an inducement to entering into
this Agreement, Dealer has represented that the persons identified on the cover
sheet shall continue to actively participate in the ownership and operating
management of Dealer; and therefore, Yamaha may terminate this Agreement on the
giving to Dealer of at least fifteen 1115) days prior written notice in the
event of death, physical or mental incapacity or disassociation of any of the
identified persons. Yamaha may defer such termination for a period up to six (6)
months from such event in order to allow Dealer an opportunity to replace such
person or persons with an equally qualified person or persons or allow an
orderly liquidation of Dealer's operations; provided, however, it can be
demonstrated that the terms and conditions of this Agreement can be fulfilled
during such period and thereafter.
6.05 Transition - New Agreement. Yamaha may terminate this Agreement at any
time on the giving to Dealer of at least sixty (60) days prior written notice
should Yamaha offer a new or modified form of agreement to all its dealers for
the Products.
7. RESPONSIBILITIES UPON TERMINATION
7.01 Continuing Responsibilities. Upon the termination of this Agreement,
Dealer shall no longer be an authorized
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<PAGE> 93
Yamaha dealer; however, Dealer shall immediately pay to Yamaha all amounts owed
to Yamaha, whether or not due.
7.02 Discontinuance of Use of Trademarks. Upon termination, Dealer shall
(1) discontinue forthwith any and all use of the trademarks of Yamaha, including
such use in advertising, business materials of Dealer and as part of the firm or
trade name of Dealer, (2) forthwith remove or obliterate any and all signs
designating Dealer as an authorized dealer for the Products or which include any
trademark of Yamaha, and (3) forthwith notify and instruct publications and
others who may list or publish Dealer's name as an authorized Yamaha dealer,
including telephone directories, yellow pages, and other business directories,
to discontinue such listing of Dealer as an authorized Yamaha dealer.
7.03 Orders for the Products. In the event of the termination of this
Agreement, all unshipped orders for the Products shall be deemed cancelled.
However, from the date of the notice of termination to the effective date of
termination, orders may be filled by Yamaha if such orders are bona fide and
reasonable in quantity, Dealer pays for such order in cash on delivery, and
Dealer is capable of meeting its sales and service obligations hereunder.
7.04 Repurchase of Products.
A. Upon termination of this Agreement, Yamaha shall have the option,
but not the obligation, to repurchase from Dealer and Dealer shall sell to
Yamaha, within sixty (60) days after the effective date of termination the
following:
(1) Any or all new, unused, undamaged, then current model Products which
were purchased by Dealer from Yamaha, and are the unencumbered property of and
in the possession of Dealer, at the net invoice price, exclusive of
transportation charges and delivery and preparation reimbursement, previously
paid by Dealer therefor less all costs incurred in regards to their purchase.
(2)Any or all new, unused and undamaged resaleable parts, purchased from
Yamaha which are then the unencumbered property of and in the possession of
Dealer, at Yamaha's then current parts wholesale price list, exclusive of
transportation charges and less all costs incurred in regards to the repurchase.
Dealer shall, at Dealer's expense, inventory, tag, pack and deliver possession
of such parts to Yamaha, in accordance with Yamaha's procedures then in effect.
B. Within thirty (30) days of the date of termination of this
Agreement, Dealer shall deliver or mail to Yamaha a detailed inventory of all
the items referred to in Paragraph 7.04. In the event Dealer fails to supply
such a list to Yamaha within said period, Yamaha shall have the right to enter
onto Dealer's premises for the purpose of compiling such an inventory list and
Dealer shall reimburse Yamaha for any costs incurred in connection therewith.
C. Within ten (10) days after receipt of Dealer's detailed inventory
or after Yamaha has taken a physical inventory, whichever is later, Yamaha shall
notify Dealer of its intention in regards to Dealer's inventory of Products.
8. MISCELLANEOUS
8.01 Relationship of the Parties. This Agreement does not in any way create
the relationship of principal and agent between Dealer and Yamaha and in no
circumstances shall Dealer, its agents or employees be considered the agent of
Yamaha. Dealer shall not act or attempt to act or represent itself directly or
by implication as agent of Yamaha o; in any manner assume or create or attempt
to assume or create any obligation or make any contract, agreement,
representation or warranty on behalf of or in the name of Yamaha, except those
authorized in writing by Yamaha. Dealer shall indemnify and hold Yamaha harmless
from any cost and liability caused by the acts of Dealer, its employees or agent
and from liability caused by any authorized act by Dealer, its agents, or
employees.
8.02 Force Majeure. Yamaha shall not be responsible for or liable for
failure to perform any part of this Agreement or for any delay in the
performance 'of any part of this Agreement, directly or indirectly resulting
from or contributed to by any foreign or domestic embargoes, seizures, acts of
God, insurrections, wars and/or continuance of war; or the adoption or enactment
of any law, ordinance, regulation, ruling or order directly or indirectly
interfering with the production, delivery or payment hereunder; or lack of the
usual means of transportation, fires, floods, explosions, strikes; extraordinary
currency devaluations, taxes, or customer duties or other similar charges or
assessments; or other events or contingencies beyond its control, either of the
foregoing nature or of any kind, nature or description affecting the
transportation, production, sale or distribution of the Products or any
components used in or in connection with their production.
8.03 Entire Agreement. This Agreement supersedes and terminates any and all
prior agreements or contracts, written or oral, entered into between Yamaha and
Dealer as of the effective date of this Agreement with reference to all Matters
covered by this Agreement. All negotiations, correspondence and memoranda which
have passed between Yamaha and Dealer with reference to all matters covered by
this Agreement are merged herein and this Agreement constitutes the entire
agreement between Yamaha and Dealer. No representations not contained herein are
authorized by Yamaha, and this Agreement may not be altered, modified, amended,
or changed, in whole or in part, except in writing and executed by Yamaha and
Dealer in the same manner as is provided for the execution of this Agreement.
8.04 Assignment. The relationship created between Yamaha and Dealer is
intended to be personal in nature, since Yamaha is relying on the continued
active participation of certain individuals in the operations of Dealer, and
consequently, this Agreement shall not be assignable or transferable in any
manner whatsoever without the prior consent in writing of Yamaha. For purposes
of this Agreement, any change in ownership, the legal form of the business, or
active management shall be deemed a transfer which requires the prior consent of
Yamaha. Any determination by Yamaha in this regard shall be based on an
evaluation of assignee's or transferee's qualifications and ability to meet
Yamaha's high standards. In the event Dealer changes his legal form of business
or makes an assignment without notifying Yamaha as provided herein, Dealer shall
continue to be personally liable for all past and future debts of this or a
successor business.
8.05 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of California.
8.06 Construction. This Agreement and all of the words, terms, and
provisions hereof shall be construed in accordance with their usual and ordinary
meanings, and not in favor of or against either party hereto. Paragraph headings
are not a part of this Agreement, but are only for convenience.
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<PAGE> 94
8.07 Nonwaiver of Rights. Failure of either party hereto to enforce any of
the provisions of this Agreement or any rights with respect thereto or failure
to exercise any election provided for herein shall in no way be considered to be
a waiver of such provisions, rights or elections or in any way affect the
validity of this Agreement. The failure of either party to exercise any of said
provisions, rights or elections shall not prelude or prejudice such party from
later enforcing or exercising the same or any other provisions, rights or
elections which it may have under this Agreement.
8.08 Invalidity. If any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.
8.09 Notice. All notices required or permitted to be given or made under
this Agreement may be effected in writing by certified mail, postage prepaid,
return receipt requested, and shall be deemed communicated three (3) days from
the mailing thereof. Mailed notices shall be addressed to the parties as their
addresses appear above, but each party may change his address by written notice
in accordance with this paragraph.
8.10 Attorney's Fees. In the event any legal action is necessary to enforce
any of the terms and conditions of this Agreement, Dealer shall pay to Yamaha
all costs and fees incurred, including reasonable attorney's fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this 29th day of AUGUST, 1984. Dealer expressly acknowledges that it has read
this Agreement in its entirety and understands its rights and responsibilities
under this Agreement and the provisions relating to termination.
"Yamaha"
YAMAHA MOTOR CORPORATION, U.S.A.
a California Corporation
BY: /S/ [SIGNATURE ILLEGIBLE]
-----------------------------------
TITLE: ASSISTANT SECRETARY
-----------------------------------
"DEALER"
CYCLE SPORT UNLIMITED, INC. dba
X CYCLE SPORT - SPRINGFIELD
-----------------------------------
BUSINESS NAME
BY: X /s/ DAVID NEES
-----------------------------------
TITLE: X /s/ PRESIDENT
----------------------------------
BY: X
----------------------------------
TITLE: X
----------------------------------
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<PAGE> 95
YAMAHA
Dealer Agreernent
<PAGE> 96
YAMAHA MOTOR CORPORATION, U.S.A.
SALES AND SERVICE AGREEMENT
THIS AGREEMENT is made by and between YAMAHA MOTOR CORPORATION, U.S.A., a
California Corporation, YAMAHA PARTS DISTRIBUTORS, INC., a California
Corporation, each having its principal office located at 6555 Katella Avenue,
Cypress, California 90630 (hereinafter referred to as -YMUS- and -YPDI-
respectively, and collectively referred to as "Yamaha") and Dealer as identified
below.
A. Dealer's Complete Legal Name
Name:
(Owner, Partnership, Corporation referred to in the Agreement as "Dealer")
Sole Proprietorship Partnership Corporation
(Complete Sec. C-1) (Complete Sec. C-1) (Complete Sec. C-1 & C-2)
Fictitious Business Name (if different from above)
B. Dealer's Location
Address:
(Referred to in the Agreement as "Dealer's Location")
C. Dealer: Owners and Management
1. Owner; Shareholder or Partner
2. Officers:
A. Yamaha is the exclusive distributor in the United States of quality
products which are sold under cenain trademarks owned by Yamaha ("Yamaha",
"RIVA" and "Riva by Yamaha") and distributes parts and accessories therefor
which products, parts and accessories are more specifically defined
ontheAddendum(s), attached hereto and made apart hereof (hereinafter
collectively referred to as the "Products").
B. Dealer has represented as an inducement to Yamaha's entering into this
Agreement, that: (1) Dealer is capable of performing the terms and conditions of
this Agreement, (2) Dealer has a sufficient number of trained personnel and
adequate facilities to sell and service the Products, and (3) Dealer has
adequate financial resourcesto perform the monetary obligations herein.
C. Dealer desires to engage in sales of the Products in accordance with the
terms and conditions hereof; and Yamaha desires to appoint Dealerasaretail sales
and service location for the Products inaccordance herewith. Yamaha and Dealer
agree to govern their relationship in accordance with the following:
1. ESTABLISHMENT OF RELATIONSHIP
1.1 Appointment of Dealer. Yamaha hereby appoints Dealer as an authorized
dealer for the sale and service of the Products, and Dealer hereby accepts such
appointment. Yamaha and Dealer agree that Dealer shall only sell the Products
to retail consumers and shall not sell or otherwise transfer the Products to
any other dealer except those dealers authorized by Yamaha to sell and service
the Products.
1.2 Location of Dealer. In order to enable Yamaha to maintain an effective
network of authorized Yamaha dealers, Dealer agrees not to directly or
indirectly sell or offer for sale the Products from any location other than from
Dealer's Location.
1.3 Change of Location. Dealer agrees not to change Dealer's Location
orestablish oroperate anyother locationforthe saleorserviceof the Products
without obtaining Yamaha's prior written approval of such proposed change.
Yamaha's approval shall not be unreasonably withheld. Any proposed change of
location is subject to applicable state law; however, nothing herein shall be
construedto require Yamaha totake any step to obtain governmental approval for
any proposed change of location.
1.4 Nonexclusive. The rights granted herein are nonexclusive. Yamaha
reservesthe right to appoint additional dealers of any or all of the Products at
any time pursuant to Yamaha's marketing program and policies.
2. DEALER'S SALES OPERATIONS
2.1 Sales. Dealer agrees to vigorously promote and sell the Products to
retail consumers, and shall continually work to increase the market for the
Products in the area served by Dealer's Location.
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Dealer shall attain the annual sales objectives, if any, established by
Yamaha for Dealer. Dealer shall conduct a continuing program of quality
advertising and sales promotion activities for the Products. Dealer may sell the
Products to retail consumers at such prices as Dealer may establish from time to
time.
2.2 Sales Organization. Dealer agrees to maintain a fully qualified sales
organization which includes qualified sales personnel who are thoroughly
familiar with the Products. Dealer, at its expense, shall cause such personnel
to attend training programs for the Products, and study sales manuals and
bulletins for the Products as may be provided by Yamaha from time to time.
2.3 Multiple Brands. Yamaha recognizes that Dealer may handle brands which
are competitive with the Products sold to Dealer pursuant to this Agreement. In
the event Dealer handles such competitive products, Dealer agrees to afford the
Products at least as much effort as Dealer gives to competitive products handled
by Dealer interns of promotion and sale, floor space, inventory and service.
2.4 Performance Criteria. Dealer's level of performance may be evaluated
periodically by Yamaha, based on reasonable criteria such as the following:
(a) The volume of Dealer's sales of the Products as compared with the sale
of competitive products in the market area served by Dealer's Location.
(b) The volume of Dealer's sales of the Products as compared to other
dealers of the Products.
(c) The actual sales volume of the Products by Dealer as compared to the
reasonable annual sales objectives which may be established by Yamaha for
Dealer.
(d) The manner in which Dealer has conducted its sales operations,
including advertising, sales promotion and treatment of consumers.
(e) The trend over a reasonable period of time of Dealer's sales
performance.
(f) The availability of Products to Dealer.
(g) Significant local conditions that may have directly affected Dealer's
performance.
(h) The compliance with all of the terms and conditions of this Agreement.
Evaluations prepared pursuant to this Section 2.4 will be discussed with and
provided to Dealer, with the expectation that Dealer will take such action as
may be required to correct any deficiencies in Dealer's performance of its
responsibilities.
2.5 Customer Relations. Dealer shall at all times conduct its operations in such
a manner so as to develop and maintain good customer relations. Dealer shall
provide prompt and courteous service to customer inquiries and complaints
relating to the Products. Dealer shall at all times properly represent the
Products and shall not make, directly or indirectly, any false, misleading, or
disparaging representations to any customer or other person in regards to Yamaha
or the Products.
2.6 Hours of Business. Dealer agrees that its operations shall be conducted in
the normal course of business during usual business hours and for not less than
the usual number of days of the week and hours of the day which are customary
for the same type of business in the market area served by Dealer's Location.
2.7 Display and Inventory. Dealer agrees to maintain a prominent display of a
reasonable representation of the entire line of the Products at Dealer's
Location, which display shall be in accordance with the guidelines established
by Yamaha. Dealer also agrees to maintain a reasonable inventory of the Products
which is adequate to meet the current and anticipated demand in the market area
served by Dealer's Location, subject to availability and to guidelines
established by Yamaha.
2.8 Report and Records. In order that Yamaha may comply with applicable
regulations and achieve its marketing objective, Dealer shall report to Yamaha,
all retail sales of the Products within ten (10) days of completion of such
sale. Dealer shall periodically provide to Yamaha complete and accurate data
regarding Dealer's inventories of the Products and such other reasonable
information as and when requested by Yamaha. Dealer shall keep complete and
accurate records regarding sales and service activities for the Products,
applications for discounts, allowances, warranty claims, refunds and credits and
shall retain for at least three (3) years all such records and documents. Dealer
shall permit any designated representative of Yamaha, at reasonable times, to
examine and audit such records and documents.
2.9 Cooperation with Yamaha. Dealer shall at all times cooperate and work
closely with Yamaha's representatives and shall maintain close communications
with such representatives in regards to Dealer's operations hereunder.
2.10 Facilities. Dealer shall establish and maintain the appearance and
condition of the facilities at Dealer's Location so as to favorably reflect on
the Products and the quality image of Yamaha. As part of the facilities at
Dealer's Location, Dealer shall install and maintain prominent and suitable
signs as recommended by Yamaha, which identify Dealer as a dealer of the
Products. Dealer agrees to maintain the facilities in a neat and orderly fashion
and in accordance with the standards established by Yamaha which may be changed
from time to time. The facilities must at all times comply with such standards
with respect to appearance, location, size, layout of building, showroom,
office, parts department and service operation. Yamaha may periodically evaluate
Dealer's facilities. Dealer shall permit any designated representative of
Yamaha, at reasonable times, to inspect the facilities and Dealer agrees to make
such alterations or improvements to the facilities as Yamaha may reasonably
specify.
3. DEALER'S SERVICE OPERATIONS
3.1 Service Operations. Dealer shall establish and maintain quality service
operations as recommended by Yamaha for the Products at Dealer's Location
including a parts and accessories department which will comply with all
standards established by Yamaha. Dealer shall provide to owners of the Products
such general service and repair as may be necessary. Any and all charges
therefore shall be reasonable and consistent with those prevailing in the market
area served by Dealer's Location and all such services and charges shall be in
accordance with applicable law. Dealer agrees to provide service to any customer
who has purchased a Product, regardless of the dealer from whom the Product was
purchased.
3.2 Service Organization. Dealer agrees to maintain a fully qualified service
organization which includes service personnel who are thoroughly familiar with
the Products. Dealer, at its expense, shall cause such personnel to attend
training programs for the service of the Products and study service manuals and
bulletins for the Products as may be provided by Yamaha from time to time.
Dealer agrees to purchase and provide to its service personnel all tools and
equipment, as prescribed by Yamaha, that may be necessary to adequately and
properly service the Products.
3.3 Review of Dealer's Service and Repair Performance. Yamaha may periodically
evaluate Dealer's service and repair performance in accordance with the
standards recommended by Yamaha. Evaluations prepared pursuant to this Section
3.3 will be discussed with and provided to Dealer, with the expectation that
Dealer will take such action as maybe required to correct any deficiencies in
Dealer's performance of his responsibilities.
3.4 Delivery and Preparation Obligations. Dealer shall be responsible for and
agrees to perform set-up, preparation, and delivery obligations as prescribed by
Yamaha, prior to the delivery of the Products to purchasers thereof. Dealer
agrees that all Products sold by it will be in proper operating condition prior
to delivery to any purchaser. Dealer further agrees to provide purchasers of the
Products with information concerning proper operation of the Products prior to
delivery. Yamaha agrees to compensate Dealer in accordance with the policies of
Yamaha as may be issued from time to time.
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<PAGE> 98
3.5 Warranty,
A. Warranty. Products supplied to Dealer by Yamaha are warranted only in
accordance with Yamaha's written warranty to consumers, which written warranty
is supplied to Dealer for distribution to Dealer's customers and which maybe
amendeclor modified from time to time only by Yamaha. OTHER THAN THE WARRANTY
CONTAINED IN YAMAHA'S WRITTEN WARRANTYOR AS REQUIRED BY LAW, YAMAHA DISCLAIMS
ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT BY WAY OF LIMITATION,
THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. YAMAHA
DISCLAIMS ANY LIABILITY FOR INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAIVIAGES OR
COMMERCIAL LOSSES SUFFERED BY DEALER, ITS CUSTOMERS OR ANY THIRD PARTY, except
as provided under state law.
B. Warranty to Customers. Dealer shall show customers any applicable Yamaha
warranty prior to sale of the Products and will furnish customers a copy of any
applicable Yamaha warranty at the time of sale. Dealer shall not give, or
purport to give any additional or different warranty to customers on behalf of
Yamaha, other than the applicable written warranty of Yamaha for the Products.
3.6 Warranty Service. Dealer agrees to perform all warranty service on all
Products brought to Dealer, whether or not sold by Dealer. Dealer shall perform
such warranty service in accordance with the policies of Yamaha as they may be
issued from time to time in the Yamaha service and warranty manuals and
bulletins. Any charges for such warranty service shall be reasonable and
consistent with those prevailing in the market area served by Dealer's Location.
When performing warranty service on the Products, Dealer shall use only genuine
Yamaha parts, or parts that are equivalent in quality and design to genuine
Yamaha parts.
(a) Dealer acknowledges the importance of providing to owners of the Products
prompt and skilled warranty service and the need to comply with all laws
relating to warranty service. Dealer shall give immediate service to such
warranty requests. Dealer agrees to perform all warranty service in a competent
and workmanlike manner. Dealer agrees to maintain an inventory of genuine Yamaha
parts in accordance with Section 2.7 and to provide all necessary warranty
service.
(b) Dealer shall submit complete and accurate claims to Yamaha for reimbursement
for parts and labor used in performing warranty service on warranty claim forms
of Yamaha with all information required therein; and Yamaha shall reimburse
Dealer for such parts and labor in accordance with the effective schedules and
rates applicable to Dealer. Dealer shall keep and retain complete and accurate
records and documents supporting such claims, which records and documents are
subject to the provisions of Section 2.8, regarding inspection. In the event of
the discovery of any improper claim or payment, Yamaha may charge back to Dealer
all payments or credits plus interest thereon made by Yamaha to Dealer pursuant
to such claims or otherwise, as well as the costs to Yamaha for such audit and
the recovery of such payments or credit.
3.7 Assistance and Protection. In the event any warranty claim arises that
Dealer is unable to perform, Yamaha should be promptly notified by Dealer and be
provided the details of the claim and Yamaha shall use reasonable efforts to
resolve such claim. Yamaha is relying upon Dealer's assurance that it is capable
of performing service obligations for the Products. Dealer agrees to fully
protect Yamaha from any claims, Iiability or loss that may result from a failure
of Dealer to properly perform service for the Products as required hereunder or
under applicable law.
3.8 Technical Advice. Yamaha will have service representatives available for
Dealer to consult with, if necessary, in connection with service problems.
3.9 Recall and Update. Regardless of where Products covered by a recall or a
modification program sponsored by Yamaha were purchased, Dealer will perform any
inspection, recall, or modification service as may be required from time to
time. All such service shall be performed in accordance with the announced
policies and procedures of Yamaha.
4. PURCHASE OF THE PRODUCTS
4.1 General Terms and Conditions. Yamaha shall sell the Products to Dealer and
Dealer shall purchase the Products from Yamaha in accordance with the terms and
conditions set forth herein and the sales programs offered by Yamaha from time
to time. Yamaha reserves the right. to change any terms or conditions, including
price and payment terms, at any time without accountability to Dealer. However,
Yamaha shall endeavor to provide Dealer with advance notice of any such changes.
4.2 Price. Dealer shall pay to Yamaha the price and any other charges for the
Products as set forth on Yamaha's price schedules, which are in effect at the
time of invoicing of Dealer's order unless the sales program pursuant to which
the Products were ordered specifies a different price- Yamaha may specify a
future date upon which a new price and/or charge may take effect and upon that
date the new price and/or charge shall take effect automatically.
4.3 Payment. Dealer shall pay the purchase price for the Products at the time of
delivery thereof, unless Yamaha has approved other terms of credit for Dealer.
If other credit terms have been approved, Dealer shall pay for the Products in
accordance with the approved terms. Yamaha may cancel any order placed by Dealer
or refuse the shipment thereof should Dealer fail to meet any payment term,
credit, or financial requirements of Yamaha or of a financing source to which
Yamaha has a recourse obligation. The cancellation or withholding of any order
shall not be construed as a termination or breach of this Agreement by Yamaha.
4.4 Orders. Dealer shall order the Products from Yamaha in accordance with the
ordering procedures established by Yamaha. The effective terms and conditions of
Yamaha shall supersede any conflicting terms and conditions of any purchase
order submitted by Dealer. All orders are subject to acceptance by Yamaha based
on the availability of the Products and Dealer's compliance with the terms and
conditions hereof. To enable Yamaha to plan its purchases from the manufacturer
of the Products, Dealer shall submit its purchase orders at such times as may be
requested by Yamaha.
4.5 Shipment. Yamaha shall use its best efforts to ship all accepted orders for
the Products to Dealer F.O.B. Yamaha's warehouse with reasonable promptness;
provided, however, that Yamaha shall not be liable for any damage, consequential
or otherwise, to the Products which occurs while in transit. Further, Yamaha
shall not be liable for damages, consequential or otherwise, to Dealer which
arise as a result of a failure to fill orders, delays in delivery, or any error
in the filling of orders.
4.6 Taxes. Dealer represents and warrants that all Products purchased hereunder
are purchased for resale in the ordinary course of Dealer's business. Dealer
agrees that it is responsible for and shall comply with all laws calling for the
collection and/or payment of all taxes, including sales and use taxes and ad
valorem taxes.
5. GENERAL RESPONSIBILITIES -
YAMAHA AND DEALER
5.1 Supply of Products. Yamaha shall make reasonable efforts to supply Dealer
with the Products in accordance with accepted orders; however, during any period
of shortage, Yamaha shall be permitted to allocate the Products in accordance
with applicable marketing plans.
5.2 Promotion and Assistance by Yamaha. Yamaha shall, from time to time, provide
to Dealer sales assistance, incentives, and programs. Yamaha shall conduct an
advertising program for the Products which may include television and radio
commercials, magazine advertisements, and promotional events. Any such
incentives, programs, promotion and assistance shall be at the sole discretion
of Yamaha.
5.3 Change to the Products. Dealer acknowledges that the Products are
manufactured by suppliers of Yamaha; consequently, the Products available to
Yamaha may be periodically changed as to design, models, orfeatures or some or
all of the Products maybe discontinued all without accountability to Dealer in
connection with any Products ordered by Dealer or Dealer's inventoryof the
Products. Yamaha will use reasonable efforts to provide advance notice of any
such change.
5.4 Trademarks. Yamaha agrees to permit Dealer to identify itself as an
authorized dealer for the Products and use the trademarks of Yamaha applicable
to the Products in connection with Dealers 'efforts to
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sell and promote the Products provided, however, that such use shall be subject
to the control of Yamaha and be in a manner consistent with the high quality
image of the Products. Dealer shall not use the tradenames or trademarks of
Yamaha as a part of its corporate name or in any manner inconsistent with the
instructions of Yamaha. Dealer shall promptly notify Yamaha of any infringement
or unauthorized use by any person of such patents, trademarks, tradenames,
copyrights or designs. Dealer acknowledges that Yamaha has the sole right and
interest in such patents, trademarks, tradenames, copyrights and designs. Dealer
agrees to cease immediately all use of Yamaha trademarks, tradenames and
copyrights and any other proprietary rights on termination of this Agreement.
5.5 Financial Responsibility. Dealer shall maintain for its operations hereunder
adequate working capital and lines of wholesale credit to enable Dealer to
fulfill its responsibilities under this Agreement. Dealer further agrees to
comply with financial responsibility guidelines issued by Yamaha from time to
time. Dealer agrees to furnish Yamaha, at reasonable times,.financial reports
and other financial data to enable Yamaha to determine Dealer's financial
responsibility. At least within ninety (90) days following the close of Dealer's
fiscal year, Dealer agrees to submit to Yamaha Dealer's audited financial
statement for the previous year.
5.6 Compliance with Laws. Dealer shall conduct and maintain at all times its
sales and service operations in strict compliance with all applicable federal
and state laws and regulations, county and city ordinances and regulations and
any other applicable law, regulation or ordinance.
6. TERMINATION
6.1 Effectiveness. This Agreement shall be effective upon the execution hereof
by Dealer and an authorized officer or representative of Yamaha and upon the
execution of one or more Addedum(s) attached hereto and made a part hereof. This
Agreement shall terminate upon termination of all Product Addendum(s) attached
hereto.
6.2 Termination for Cause (immediate Effect). Unless otherwise provided for or
allowed under state law, Yamaha may terminate this Agreement with immediate
effect on the giving of written notice to Dealer should any of the following
events occur, such events being of such a serious nature so as to constitute
good cause for immediate termination by Yamaha:
(a) Any misrepresentation by Dealer in entering into this Agreement or the
submission by Dealer of any false or fraudulent application, claim or report in
connection with its sales or service operations.
(b) Insolvency of Dealer; inability of Dealer to meet its debts as they mature,
the filing by Dealer of a petition of voluntary bankruptcy under any chapter of
the bankruptcy laws of the United States, the institution of proceedings to
adjudge Dealer a bankrupt in an involuntary proceeding; the execution of an
assignment by Dealer for the benefit of creditors; the appointment by a court of
a receiver, trustee for Dealer or the assets of Dealer; dissolution of Dealer;
or the failure of Dealer to conduct its operations in the ordinary course of
business including closing of Dealer's operations in any manner inconsistent
with what is customary for the same type of business in the same market area.
(c) Any relocation or establishment of branch locations without having complied
with the requirements set forth in Section 1.3 of this Agreement.
(d) Any act by Dealer or any person involved in the ownership or operating
management of Dealer which violates any law and affects adversely Dealer's
operations or any conduct or unfair business practice by Dealer or any person
involved in the ownership or operating management of Dealer which affects
adversely Dealer's operation or the goodwill and reputation of Dealer, Yamaha,
or the Products.
(e) Any failure by Dealer to pay to Yamaha any sums that maybe due or become due
pursuant to this Agreement or maintain adequate lines of credit for purposes of
purchasing the Products or the parts and accessories from Yamaha.
(f) Any failure by Dealer to pay any sums that maybe due or become
due to a financing source utilized to obtain financing for the purchase of
Products pursuant to this Agreement, to which Yamaha has a recourse obligation.
(g) Revocation or non-renewal of Dealer's motor vehicle dealer license or any
other license or permit necessary to conduct its operations hereunder.
(h) Any failure by Dealer to comply with Section 7.
(i) Any default under the Security Agreement.
(j) Any default under the Personal Guarantee.
6.3 Termination -By Yamaha. Unless otherwise provided for or allowed under state
law or this Agreement, Yamaha may terminate this Agreement on the giving of at
least sixty (60) days prior written notice to Dealer for failure of Dealer to
fulfill any or all of its responsibilities and obligations as set forth in this
Agreement, except for causes specified under Section 6.2 hereof.
6.4 Termination - By Dealer. Unless otherwise provided for or allowed under
state law or this Agreement, Dealer may terminate this Agreement on the giving
of at least sixty (60) days prior written notice to Yamaha. Dealer shall be
considered to have voluntarily terminated this Agreement sixty (60) days
following (i) closing of Dealer's operations, (ii) abandonment of Dealer's
business or (iii) revocation or non-renewal of Dealer's motor vehicle dealer
license or any other license or permit necessary to conduct its operations.
6.5 Transition - New Agreement. Yamaha may terminate or modify this Agreement at
any time on the giving to Dealer of at least sixty (60) days prior written
notice should Yamaha offer a new or modified form of agreement to some or all of
its dealers for the Products, or should Yamaha's right to distribute the
Products be terminated or modified.
7. ASSIGNMENT, TRANSFER. CHANGE OF OWNERSHIP
7.1 Assignment. The relationship created between Yamaha and Dealer is intended
to be personal in nature, since Yamaha isrelyingonthe continued ownership and
active participation of certain individuals in the operations of Dealer, and
consequently, any assignment or transfer by Dealer or change in ownership or
management, shall require the prior written consent of Yamaha. This is necessary
in order for Yamaha to determine that each successor will meet the continuing
performance requirements set forth in this Agreement. Yamaha may terminate this
Agreement on the giving to Dealer at least fifteen (15) days prior written
notice, if Yamaha's prior written consent to any such transfer is not obtained.
For the purposes of this Agreement, any change in ownership, the legal form of
business or active management shall be deemed a transfer which requires the
prior written consent of Yamaha. Any transfer which is not made in accordance
with this Section is void.
7.2 Owners and Management. Dealer represents that the current owners and key
personnel of Dealer are those identified on the cover sheet and that these
individuals shall continue to actively participate in the ownership and
operating management of Dealer. Yamaha reserves the right to terminate this
Agreement on the giving to Dealer of at least fifteen (15) days prior written
notice in the event any of the key personnel ceases to be involved in an active
substantial role in the operation of Dealer as a result of death, physical or
mental incapacity or otherwise and Dealer fails to obtain Yamaha's prior written
consent to the replacement of such person. Yamaha may defer such termination for
a period up to six (6) months from such event in order to allow Dealer an
opportunity to replace such person or persons with an equally qualified person
or persons or allow an orderly liquidation of Dealer's operations; provided,
however, that it can be demonstrated that the terms and conditions of this
Agreement can be fulfilled during such period and thereafter.
8. RESPONSIBILITIES UPON TERMINATION
8.1 Continuing Responsibilities. Upon termination of this Agreement, Dealer
shall no longer be an authorized dealer for the Products; however, Dealer shall
immediately pay to Yamaha all amounts owed to Yamaha and shall immediately pay
all amounts due to any financing institution to which Yamaha has a recourse
obligation, whether or not due.
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8.2 Discontinuance of Use of Trademarks. Upon termination of this Agreement,
Dealer shall (1) discontinue forthwith any and all use of the trademarks of
Yamaha, including such use in advertising, business material of Dealer and as
part of the firm or trade name of Dealer, (2) forthwith remove or obliterate any
and all signs designating Dealer as an authorized dealer for the Products or
which include any trademark of Yamaha, (3) forthwith notify and instruct
publications and others who may list or publish Dealer's name as an authorized
Yamaha dealer, including telephone directories, yellow pages, and other business
directories, to discontinue such listing of Dealer as an authorized Yamaha
dealer, and (4) cease the use of all promotional literature and material
including point of purchase materials and displays provided to Dealer by Yamaha.
In the event Dealer fails to comply with any of the provisions of this Section,
Yamaha is authorized to take all steps necessary to insure compliance with same.
8.3 Orders for the Products. Upon termination of this Agreement, all unshipped
orders for the Products shall be deemed cancelled. However, from the date of the
notice of termination to the effective date of termination, orders may be filled
by Yamaha if such orders are bona fide and reasonable in quantity, Dealer pays
for such order in cash on delivery, and Dealer is capable of meeting its sales
and service obligations hereunder.
8.4 Repurchase of Products.
A. Upon termination of this Agreement, Yamaha shall repurchase from Dealer and
Dealer shall sell to Yamaha, within sixty (60) days after the effective date of
termination, any or all new, unused, undamaged, resaleable, Products excluding
parts and accessories, which (i) were invoiced by Yamaha to Dealer within
eighteen (18) months prior to the effective date of termination, and (ii) were
purchased by Dealer and are the unencumbered property of and in the possession
of Dealer. The repurchase price shall be the net invoice price or current
wholesale dealer price whichever is less, exclusive of transportation charges
and delivery and preparation reimbursement, previously paid by Dealer therefor
less all costs incurred in regards to their repurchase and any applicable
rebates.
B. Upon termination of this Agreement, Yamaha shall have the option, but not the
obligation, to repurchase any or all new, unused, undamaged, resaleable,
Products excluding parts and accessories, which (i) were invoiced by Yamaha to
Dealer more than eighteen (18) months prior to the effective date of
termination, and (ii) were purchased by Dealer and are the unencumbered property
of and in the possession of Dealer. The repurchase price shall be the net
invoice price or current wholesale dealer price whichever is less, exclusive of
transportation charges and delivery and preparation reimbursement, previously
paid by Dealer therefor less all costs incurred in regards to their repurchase
and any applicable rebates.
C. Upon termination of this Agreement, Yamaha shall have the option, but not the
obligation, to repurchase any or all new, unused, undamaged, resaleable pans and
accessories, which (i) were invoiced by Yamaha to Dealer within eighteen (18)
months prior to the effective date of termination, and (ii) were purchased by
Dealer and are the unencumbered property of and in the possession of Dealer. The
repurchase price shall be the net invoice price or current wholesale dealer
price whichever is less, exclusive of transportation charges and delivery and
preparation reimbursement, previously paid by Dealer therefor less all costs
incurred in regards to their repurchase and any applicable rebates.
D. Within thirty (30) days of the date of termination of this Agreement, Dealer
shall deliver or mail to Yamaha a detailed inventory of all of the items
referred to in Section 8.4. In the event Dealer fails to supply such a list to
Yamaha within said period, Yamaha shall have the right to enter onto Dealer's
premises for the purpose of compiling such an inventory list and Dealer shall
reimburse Yamaha for any costs incurred in connection therewith.
E. As a condition of repurchase, payment for repurchase of Products, parts or
accessories will first be applied against any obligations or money owed by
Dealer to Yamaha, and will then be applied to any monies owed to a financing
source to which Yamaha has a recourse obligation.
F. This Section 8.4 is not applicable in the event of any transfer of Dealer in
accordance with Section 7.
8.5 Warranty Claims. Upon termination of this Agreement, Dealer shall no longer
be authorized to provide warranty service and shall refer warranty service
requests to the nearest authorized Yamaha dealer for the Products or to Yamaha.
Dealer acknowledges that any acceptance and payment of warranty or other claims
by Yamaha after the effective date of termination shall not be construed to be a
reinstatement of Dealer.
8.6 Records on Termination. Upon the termination of Dealer and upon the request
of Yamaha, Dealer will deliver to Yamaha copies of Dealer's records of set-up,
preparation, delivery of Products, warranty service, recall or update service or
other service of the Products.
9. MISCELLANEOUS
9.1 Relationship of the Parties. This Agreement does not in any way create the
relationship of principal and agent between Dealer and Yamaha and in no
circumstance shall Dealer, its agents or employees be considered the agent of
Yamaha. Dealer shall not act or attempt to act or represent itself directly or
by implication as an agent of Yamaha or in any manner assume or create or
attempt to assume or create any obligation or to make any contract, agreement,
representation or warranty on behalf of or in the name of Yamaha, except those
authorized in writing by Yamaha. Dealer shall indemnify and hold Yamaha harmless
from any cost and liability caused by the acts of Dealer, its employees or
agents and from liability caused by any unauthorized act by Dealer, its agents,
or employees.
9.2 Force Majeure. Yamaha and Dealer shall not be responsible for or liable for
failure to perform any part of this Agreement or for any delay in the
performance of any part of this Agreement, directly or indirectly resulting from
or contributed to by any foreign or domestic embargoes, seizures, acts of God,
insurrections, wars and/or continuance of war; or the adoption or enactment of
any law, ordinance, regulation, ruling or order directly or indirectly
interfering with the production, delivery or payment hereunder; or lack of the
usual means of transportation, fires, floods, explosion, strikes; extraordinary
currency devaluations, taxes, or custom duties or other similar charges or
assessments, or other events or contingencies beyond its control, either of the
foregoing nature or of any kind, nature or description affecting the
transportation, production, sale or distribution of the Products or any
components used in or in connection with their production.
9.3 Entire Agreement. This Agreement and its Addendum(s) supersede and terminate
any and all agreements or contracts written or oral, entered into between Yamaha
and Dealer as of the effective date of this Agreement with reference to all
matters covered by this Agreement. All conversations, negotiations,
correspondence and memoranda which passed between Yamaha and Dealer with
reference to all matters covered by this Agreement are merged herein. This
Agreement constitutes the entire agreement between Yamaha and Dealer. This
Agreement may not be altered, modified, amended or changed, in whole or in part,
except in writing and executed by Yamaha and Dealer in the same manner as is
provided for the execution of this Agreement.
9.4 Venue. Dealer agrees that any legal proceeding between Dealer and Yamaha
which arises out of this Agreement, the dealings or relationship between the
parties, including discontinuance of such relationship, may be brought by Dealer
or Yamaha in state court or federal court located in the County of Orange, State
of California. Dealer irrevocably consents to the jurisdiction of said court.
Dealer waives any objection it may now or hereafter have to the jurisdiction of
such court.
9.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of California, including but not limited to
the California Statute of Limitations.
9.6 Construction. This Agreement and all of the words, terms, and provisions
hereof shall be construed in accordance with their usual and ordinary meanings,
and not in favor of or against either party hereto. Paragraph headings are not a
part of this Agreement, but are only for convenience.
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<PAGE> 101
9.7 Nonwaiver of Rights. Failure of either party hereto to enforce any of the
provisions of this Agreement or any rights with respect thereto or failure to
exercise any election provided for herein shall in no way be considered to be a
waiver of such provisions, rights or elections or in any way affect the validity
of this Agreement. The failure of either party to exercise any of said
provisions, rights or elections shall not preclude or prejudice such party from
later enforcing or exercising the same or any other provisions, rights or
elections which it may have under this Agreement. Any actions taken by Yamaha,
subsequent to termination of this Agreement, shall not be construed to be a
reinstatement of Dealer. Dealer may be reinstated only by the execution of a new
Dealer Agreement by both Dealer and Yamaha.
9.8 Invalidity. If any term, provision, covenant or condition of this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.
9.9 Notice. All notices required or permitted to be given or made under this
Agreement maybe effected in writing by certified mail, postage prepaid, return
receipt requested, and shall be deemed communicated three (3) days from the
mailing thereof. Mailed notices shall be addressed to the parties as their
addresses appear above, but each party may change his address by written notice
in accordance with this paragraph.
9.10 Terms of Agreement. The terms of this Agreement govern unless inconsistent
with the terms set forth in an Addendum(s) attached hereto and made a part
hereof, in which case the terms of the Addendum(s) will control.
9.11 Release of Claims. Dealer waives and releases any and all claims of any
kind and nature whatsoever which Dealer has against Yamaha, which arises out of
or in connection with any prior agreement including but not limited to any
Addendum entered into between them.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this 20th
day of October 1987. Dealer expressly acknowledges that it has read this
Agreement in its entirety and understands its rights and responsibilities under
this Agreement and the provisions resulting to termination.
"Yamaha"
YAMAHA MOTOR CORPORATION, U.S.A.
a California Corporation
BY: /S/ [SIGNATURE ILLEGIBLE]
-----------------------------------
TITLE: ASSISTANT SECRETARY
-----------------------------------
YAMAHA PARTS DISTRIBUTORS, INC.
A CALIFORNIA CORP
BY: /S/ [SIGNATURE ILLEGIBLE]
-----------------------------------
TITLE: DONALD J. DAY, SR. VICE PRESIDENT
-----------------------------------
"DEALER"
X
-----------------------------------
BUSINESS NAME
BY: X /S/
-----------------------------------
TITLE: X /S/
----------------------------------
BY: X
----------------------------------
TITLE: X
----------------------------------
<PAGE> 102
[YAMAHA LOGO]
MOTO-4 DEALER AGREEMENT
<PAGE> 103
YAMAHA SALES AND SERVICE AGREEMENT
The information contained below is important as an integral part oft he
Agreement attached hereto and required prior tot he effectiveness of the
relationship. All information must be accurate and complete and Yamaha must be
notified of any changes to such information since it may affect your rights
under the Agreement.
A. DEALER'S COMPLETE LEGAL NAME
Name: CYCLE SPORT UNLIMITED, INC.
------------------------------------------------------------------------
(Owner, Partnership, Corporation referred to in the Agreement as "Dealer")
<TABLE>
<S> <C> <C>
SOLE PROPRIETORSHIP PARTNERSHIP CORPORATION
(COMPLETE SEC. C-1) (COMPLETE SEC. C-1) (COMPLETE SEC. & C-2)
- ------------------------ ---------------------- -----------------------
</TABLE>
DBA CYCLE SPORT - SPRINGFIELD
-------------------------------------------------------
(if different from above)
Federal Identification No.
-----------------------
B. DEALER'S LOCATION
Address: 8338 Leesburg Pike, Vienna, Va 22180
---------------------------------------------------------------------
(Referred to in the Agreement as "Dealer's Location")
C. DEALER: OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
NAME SOCIAL SECURITY NO. TITLE
<S> <C> <C> <C>
1. Owners:
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
</TABLE>
<TABLE>
<CAPTION>
NAME TITLE
<S> <C> <C>
2. Offices and
Manager: DAVID E. NEES PRESIDENT
------------------------------- -------------------------------
--- VICE PRESIDENT
------------------------------- -------------------------------
ROBERT P. WHEELER, JR. SECRETARY
------------------------------- -------------------------------
HOWARD A. WILES TREASURER
------------------------------- -------------------------------
------------------------------- -------------------------------
------------------------------- -------------------------------
</TABLE>
DEALER WARRANTS AND REPRESENTS THAT THE INFORMATION AS SET FORTH ABOVE IS TRUE
AND CORRECT.
"DEALER"
X CYCLE SPORT - SPRINGFIELD
--------------------------------
BY: X /s/ DAVID NEES, PRESIDENT
--------------------------------
DATE: X 9/17/84
--------------------------------
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<PAGE> 104
YAMAHA SALES AND SERVICE AGREEMENT
THIS AGREEMENT is made by and between YAMAHA MOTOR CORPORATION, U,S.A., a
California corporation, having its principal office located at 6555 Katella
Avenue, Cypress, California 90630 (hereinafter referred to as "Yamaha"), and
Dealer as identified on the cover sheet attached hereto.
RECITALS
A. Yamaha is the exclusive distributor in the United States of quality
MOTO-4s which are sold under the trademark "Yamaha" and distributes parts and
accessories therefor (hereinafter collectively referred to as the "Products").
B. Dealer has represented, as an inducement to Yamaha's entering into this
Agreement, that: (1) Dealer is capable of performing the terms and conditions of
this Agreement, (2) Dealer has a sufficient number of trained personnel and
adequate facilities to sell and service the Products, and (3) Dealer has
adequate financial resources to perform the monetary obligations herein.
C. Dealer desires to engage in sales of the Products in accordance with the
terms and conditions hereof; and Yamaha desires to appoint Dealerasaretail sales
and service location for the Products inaccordance herewith.
1. ESTABLISHMENT OF RELATIONSHIP
1.01 Appointment of Dealer. Yamaha hereby appoints Dealer as an authorized
Yamaha dealer for the sales and service of the Products only from Dealer's
location and Dealer hereby accepts such appointment. Dealer agrees not to,
directly, or indirectly, change Dealer's location nor establish or operate any
other location for the sales or service of the Products without the prior
written consent of Yamaha, which consent shall not be unreasonably withheld.
1.02 Nonexclusive. The rights granted herein are nonexclusive. Yamaha
reserves the right to appoint additional dealers of any or all of the Products
at any time pursuant to Yamaha's marketing program and policies; and in
accordance with the applicable state laws.
2. DEALER'S SALES OPERATIONS
2.01 Sales. Dealer agrees to and shall use its best efforts to vigorously
promote and sell the Products at retail, and shall continually work to increase
the market for the Products in the area served by Dealer's location. Dealer
agrees to maintain a fully qualified sales organization and conduct a continuing
program of quality. advertising and sales promotion activities for the Products
which reflect favorably on the goodwill established by Yamaha. Dealer agrees to
afford the Products as much effort as Dealer gives to competitive or other
products of Dealer in terms of promotion, floor space, inventory, and service.
2.02 Performance Criteria. The relationship established hereby is intended
by the parties to be mutually beneficial. In this regard, Yamaha assumes under
this Agreement certain specific responsibilities to Dealer in order to obtain in
return an adequate level of performance by Dealer. Such level of performance
shall be evaluated periodically by Yamaha, at least once in each year, based on
reasonable criteria such as the following:
(a) The volume of Dealer's sales of the Products as compared ith the sales
of products in the market area served by Dealer's location.
(b) The volume of Dealer's sales of the Products as compared to other
dealers of the Products who are similarly situated.
(c) The actual sales volume of the Products by Dealer as compared to the
reasonable annual sales objectives which may be established by Yamaha for
Dealer.
(d) The actual promotion efforts of Dealer relating to the Products.
(e) The compliance with all of the terms and conditions of this Agreement.
2.03 Customer Relations. Dealer shall at all times conduct its operations
in such a manner so as to develop and maintain good customer relations. Dealer
shall provide prompt and courteous service to customer inquiries and complaints
relating to the Products. Dealer shall at all times properly represent the
Products and shall not make, directly or indirectly, any false, misleading, or
disparaging representations to any customer or other person in regards to Yamaha
or the Products- Dealer shall conduct its operations during usual and customary
business hours.
2.04 Inventory. Dealer agrees to maintain at Dealer's location: (1) a
prominent display of the Products which includes at least one of each of the
current models of the units, and (2) a reasonable inventory of the Products
which is adequate to meet the current and anticipated demand in the market area
served by Dealer's location, subject only to availability.
2.05 Supply of Products. Yamaha shall make reasonable efforts to supply
Dealer with the Products in accordance with accepted orders; however, during any
period of shortage, Yamaha shall be permitted to allocate the Products in an
equitable manner.
2.06 Reports and Records. In order to provide Yamaha with information
regarding sales and market trends, Dealer shall periodically provide to Yamaha
complete and accurate data regarding dealer's sales and inventories of the
Products and such other reasonable information as and when requested by Yamaha.
Dealer shall keep complete and accurate records regarding the sales and service
activities for the Products and shall retain for at least three (3) years all
such records and documents. Dealer shall permit any designated representative of
Yamaha, at reasonable times, to examine and audit such records and documents. In
the event of the discovery of any improper claim or payment, Yamaha may charge
back to Dealer all payments or credits plus interest thereon made by Yamaha to
Dealer pursuant to such claims or otherwise, as well as the costs to Yamaha for
such audit and the recovery of such payments or credit.
2.07 Changes to the Products. Yamaha may periodically change the design,
models, and features of the Products, add new products, or discontinue the
distribution of any or all of the Products to Dealer without accountability to
Dealer in connection with any Products ordered by Dealer or Dealer's inventory
of the Products.
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<PAGE> 105
2.08 Cooperation with Yamaha. Dealer shall at all times cooperate and work
closely with amaha's representatives. In addition Dealer shall maintain close
communications with such representatives.
3. PURCHASE OF THE PRODUCTS
3.01 General Terms and Conditions. Yamaha shall sell the Products to Dealer
and Dealer shall purchase the Products from Yamaha in accordance with the terms
and conditions set forth herein. Yamaha reserves the right to change any terms
or conditions, including price and payment terms, at any time without
accountability to Dealer.
3.02 Orders. Dealer shall order the Products from Yamaha in accordance with
the ordering procedures of Yamaha. All orders are subject to acceptance by
Yamaha based on the availability of the Products and Dealer's compliance with
the terms and conditions hereof. To enable Yamaha to plan its purchases from the
manufacturer of the Products, Dealer shall submit its purchase orders at such
times as may be requested by Yamaha. The effective terms and conditions of
Yamaha shall supersede any conflicting terms and conditions of any purchase
order submitted by Dealer.
3.03 Price. Dealer shall pay to Yamaha the price and any other charges for
the Products as set forth on Yamaha's price schedules, issued periodically by
Yamaha, which is in effect at the time of shipment of Dealer's order- On the
stated future effective date, a new price or charge shall automatically
supersede any previous price or charge.
3.04 Payment. Dealer shall pay the purchase price for the Products at the
time of delivery thereof, unless Yamaha has approved other terms of credit for
Dealer. Yamaha may cancel any order placed by Dealer or refuse the shipment
thereof should Dealer fail to meet any payment term, credit, or financial
requirements of Yamaha. The cancellation or withholding of any order shall not
be construed as termination or breach of this Agreement by Yamaha.
3.05 Shipment. Yamaha shall use its best efforts to Ship all accepted
orders for the Products to Dealer F.O.B. Yamaha's warehouse with reasonable
promptness; provided, however, that Yamaha shall not be liable for any damage,
consequential or otherwise, to the Products which occurs while in transit, or as
a result of a failure to fill orders, delays in delivery, or any error in the
filling of orders.
3.06 Taxes. Dealer represents and warrants that all Products purchased
hereunder are purchased for resale in the ordinary course of Dealer's business.
Dealer agrees that he is responsible for and shall comply with all laws calling
for the collection and/or payment of all taxes, including sales and use taxes
and ad valorem taxes.
4. DEALER'S SERVICE OPERATIONS
4.01 Service Operations. Dealer shall establish and maintain quality
service operations as recommended by Yamaha for the Products at Dealer's
location which shall include thoroughly trained personnel, proper tools and
equipment, and adequate service facilities. Such service operations shall
provide to owners of the Products prompt, courteous, and workmanlike service.
4.02 Delivery and Preparation Obligations. Dealer shall be responsible for
and agrees to perform set-up, preparation, and delivery obligations as
prescribed by Yamaha, prior to the delivery of the Products to purchasers
thereof; and Yamaha agrees to compensate Dealer in accordance with the policies
of Yamaha as may be issued from time to time and in accordance with applicable
law.
4.03 General Service. Dealer shall provide to owners of the Products such
general service and repair for the Products as may be necessary. Any and all
charges therefore shall be reasonable and consistent with those prevailing in
the market area of Dealer; and all such services and charges shall be in
accordance with applicable law.
4.04 Warranty Service. Dealer agrees to perform all warranty service on all
Products brought to Dealer, whether or not sold by Dealer. Dealer shall perform
such warranty service in accordance with the policies of Yamaha as they may be
issued from time to time in the Yamaha service and warranty manuals and
bulletins. Dealer shall use only genuine Yamaha parts, or parts that are
equivalent in quality and design to genuine Yamaha parts, in performing warranty
service on the Products.
(a) Dealer acknowledges the importance of providing to owners of the
Products prompt and skilled warranty service and the need to comply with all
laws relating to warranty service. Dealer shall give immediate service to such
warranty requests and/or service. Dealer agrees to perform all warranty service
in a competent and workmanlike manner. Dealer agrees to maintain an inventory of
genuine Yamaha parts to provide all necessary warranty service.
(b) Dealer shall submit complete and accurate claims to Yamaha for
reimbursement for parts and labor used in performing warranty service on
warranty claim forms of Yamaha with all information required thereon; and Yamaha
shall reimburse Dealer for such parts and labor in accordance with the effective
schedules and rates applicable to Dealer. Dealer shall keep and retain complete
and accurate records and documents supporting Such claims, which recorriq and
documents are subject to the provisions of Paragraph 2.06, regarding inspection
and adjustments.
4.05 Assistance and Protection. In the event any warranty claim arises that
Dealer is unable to perform, Yamaha should a be promptly notified by Dealer and
be provided the details of the claim and Yamaha shall use reasonable efforts to
resolve such claim. Yamaha is relying upon Dealer's assurance that he is capable
of performing service obligations for the Products. Dealer agrees to fully
protect Yamaha from any claims, liability or loss that may result from a failure
of Dealer to properly perform service for the Products as required hereunder or
under applicable law.
5. GENERAL RESPONSIBILITIES -
YAMAHA AND DEALER
5.01 Promotion and Assistance by Yamaha. Yamaha shall, from time to time,
provide to Dealer such assistance, incentives, and programs as maybe offered to
all other dealers of the Products who are similarly situated. Yamaha shall
conduct an advertising program for the Products which may include television and
radio commercials, magazine advertisements, and promotional events.
5.02 Trademarks. Yamaha agrees to permit Dealer to identify itself as an
authorized "Yamaha" dealer for the Products and use the trademarks of Yamaha in
connection with Dealer's efforts to sell and promote the Products; provided,
however, that such use shall be subject to the control of Yamaha and be in a
manner consistent with the high quality image of the Products. Dealer shall not
use the name "Yamaha" or other trademarks as a part of its corporate name or in
any manner inconsistent with the instructions of Yamaha. Dealer acknowledges
that Yamaha has the sole right and interest in such trademarks and agrees to
cease immediately all use thereof on the termination of this Agreement.
5.03 Facilities. Dealer shall establish and maintain the appearance and
condition of the facilities at Dealer's location
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<PAGE> 106
so as to favorbly reflect on the Products and the quality image of Yamaha As
part of the facilities at Dealer's location, Dealer shall install and maintain
prominent and suitable signs as recommended by Yamaha, which identify Dealer as
a dealer of the products.
5.04 Personnel. Dealer shall employ competent personnel for its sales
operations, service operations, and administration in order to fulfill his
responsibilities under this Agreement. All sales and service personnel shall be
thoroughly familiar with the Products; and Dealer, at his expense, shall cause
such personnel to attend training programs for the Products and study sales,
service and warranty manuals and bulletins for the Products as may be provided
by Yamaha from time to time.
5.05 Financial Responsibility. Dealer shall maintain for its operations
hereunder adequate working capital and lines of wholesale credit to enable
Dealer to fulfill his responsibilities under this Agreement. Dealer agrees to
furnish Yamaha, at reasonable times, financial reports an other financial data
to enable Yamaha to determine Dealer's financial responsibility. At least within
ninety (90) days following the close of Dealer's fiscal year, Dealer agrees to
submit to Yamaha Dealer's financial statement for the previous year.
5.06 Compliance with Laws. Dealer shall conduct and maintain at all times
his sales and service operations in strict compliance with all applicable
federal and state laws and regulations, county and city ordinances and
regulations and any other applicable law, regulation or ordinance.
6. TERMINATION
6.01 Effectiveness. This Agreement shall be effective upon the execution
hereof by an authorized officer or representative of Yamaha at Cypress,
California, and shall continue until terminated as provided herein.
6.02 Termination for Cause (immediate Effect). Unless otherwise provided
for or allowed under state law, Yamaha may terminate this Agreement with
immediate effect on the giving of written notice to Dealer should any of the
following events occur, such events being of such a nature so as to constitute
good cause for immediate termination by Yamaha:
(a) Any misrepresentation by Dealer in entering into this Agreement or the
submission by Dealer of any false or fraudulent application, claim or report in
connection with its sales or service operations.
(b) Insolvency of Dealer; inability of Dealer to meet its debts as they
mature; the filing by Dealer of a petition of voluntary bankruptcy under any
chapter of the bankruptcy laws of the United States; the institution or
proceedings to adjudge Dealer a bankrupt in an involuntary proceeding; the
execution of an assignment by Dealer for the benefit of creditors; the
appointment by a court of a receiver, trustee for Dealer or the assets of
Dealer; dissolution of Dealer; or the failure of Dealer to conduct its
operations in the ordinary course of business.
(c) Any transfer or attempted transfer by Dealer of any interest in, or
right, privilege or obligation under this Agreement; or any transfer of the
principal assets of Dealer's operations hereunder; or any change in the direct
or indirect ownership or operating management of Dealer, however accomplished,
without the prior written consent of Yamaha, which consent shall not be
unreasonably withheld.
(d) Any relocation or establishment of branch locations without having
complied with the requirements set forth in Paragraph 1.01 of this Agreement.
(e) Any act by Dealer or any person involved in the ownership or operating
management of Dealer which violates any law and affects adversely Dealer's
operations or any conduct or unfair business practice by Dealer or any person
involved in the ownership or operating management of Dealer which affects
adversely Dealer's operations or the goodwill and reputation of Dealer, Yamaha,
or the Products.
(f) Any failure by Dealer to pay to Yamaha any sums that may be due or
become due pursuant to this Agreement or maintain adequate lines of credit for
purposes of purchasing the Products from Yamaha.
(g) Revocation of Dealer's motor vehicle Dealer's license or other
license.or permit necessary to conduct its operations hereunder.
6.03 Termination - Generall Nonperformance. Unless otherwise provided for
or allowed under state law or this Agreement, Yamaha or Dealer may terminate
this Agreement on the giving of at least sixty (60) days prior written notice to
the other for failure of either party to fulfill any or all of their
responsibilities and obligations as set forth in this Agreement, except for
causes specified under Paragraph 6.02 hereof.
6.04 Termination - Death, Incapacity. As an inducement to entering into
this Agreement, Dealer has represented that the persons identified on the cover
sheet shall continue to actively participate in the ownership and operating
management of Dealer; and therefore, Yamaha may terminate this Agreement on the
giving to Dealer of at least fifteen 1115) days prior written notice in the
event of death, physical or mental incapacity or disassociation of any of the
identified persons. Yamaha may defer such termination for a period up to six (6)
months from such event in order to allow Dealer an opportunity to replace such
person or persons with an equally qualified person or persons or allow an
orderly liquidation of Dealer's operations; provided, however, it can be
demonstrated that the terms and conditions of this Agreement can be fulfilled
during such period and thereafter.
6.05 Transition - New Agreement. Yamaha may terminate this Agreement at any
time on the giving to Dealer of at least sixty (60) days prior written notice
should Yamaha offer a new or modified form of agreement to all its dealers for
the Products.
7. RESPONSIBILITIES UPON TERMINATION
7.01 Continuing Responsibilities. Upon the termination of this Agreement,
Dealer shall no longer be an authorized Yamaha dealer; however, Dealer shall
immediately pay to Yamaha all amounts owed to Yamaha, whether or not due.
7.02 Discontinuance of Use of Trademarks. Upon termination, Dealer shall
(1) discontinue forthwith any and all use of the trademarks of Yamaha, including
such use in advertising, business materials of Dealer and as part of the firm or
trade name of Dealer, (2) forthwith remove or obliterate any and all signs
designating Dealer as an authorized dealer for the Products or which include any
trademark of Yamaha, and (3) forthwith notify and instruct publications and
others who may list or publish Dealer's name as an authorized Yamaha dealer,
including telephone directories, yellow pages, and other business directories,
to discontinue such listing of Dealer as an authorized Yamaha dealer.
7.03 Orders for the Products. In the event of the termination of this
Agreement, all unshipped orders for the Products shall be deemed cancelled.
However, from the date of the notice of termination to the effective date of
termination, orders may be filled by Yamaha if such orders are bona fide and
reasonable in quantity, Dealer pays for such
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<PAGE> 107
order in cash on delivery, and Dealer is capable of meeting its sales and
service obligations hereunder,
7.04 Repurchase of Products.
A. Upon termination of this Agreement, Yamaha shall have the option,
but not the obligation, to repurchase from Dealer and Dealer shall sell to
Yamaha, within sixty (60) days after the effective date of termination the
following:
(1) Any or all new, unused, undamaged, then current model Products which
were purchased by Dealer from Yamaha, and are the unencumbered property of and
in the possession of Dealer, at the net invoice price, exclusive of
transportation charges and delivery and preparation reimbursement, previously
paid by Dealer therefor less all costs incurred in regards to their purchase.
(2)Any or all new, unused and undamaged resaleable parts, purchased from
Yamaha which are then the unencumbered property of and in the possession of
Dealer, at Yamaha's then current parts wholesale price list, exclusive of
transportation charges and less all costs incurred in regards to the repurchase.
Dealer shall, at Dealer's expense, inventory, tag, pack and deliver possession
of such parts to Yamaha, in accordance with Yamaha's procedures then in effect.
B. Within thirty (30) days of the date of termination of this
Agreement, Dealer shall deliver or mail to Yamaha a detailed inventory of all
the items referred to in Paragraph 7.04. In the event Dealer fails to supply
such a list to Yamaha within said period, Yamaha shall have the right to enter
onto Dealer's premises for the purpose of compiling such an inventory list and
Dealer shall reimburse Yamaha for any costs incurred in connection therewith.
C. Within ten (10) days after receipt of Dealer's detailed inventory
or after Yamaha has taken a physical inventory, whichever is later, Yamaha shall
notify Dealer of its intention in regards to Dealer's inventory of Products.
8. MISCELLANEOUS
8.01 Relationship of the Parties. This Agreement does not in any way create
the relationship of principal and agent between Dealer and Yamaha and in no
circumstances shall Dealer, its agents or employees be considered the agent of
Yamaha. Dealer shall not act or attempt to act or represent itself directly or
by implication as agent of Yamaha o; in any manner assume or create or attempt
to assume or create any obligation or make any contract, agreement,
representation or warranty on behalf of or in the name of Yamaha, except those
authorized in writing by Yamaha. Dealer shall indemnify and hold Yamaha harmless
from any cost and liability caused by the acts of Dealer, its employees or agent
and from liability caused by any authorized act by Dealer, its agents, or
employees.
8.02 Force Majeure. Yamaha shall not be responsible for or liable for
failure to perform any part of this Agreement or for any delay in the
performance 'of any part of this Agreement, directly or indirectly resulting
from or contributed to by any foreign or domestic embargoes, seizures, acts of
God, insurrections, wars and/or continuance of war; or the adoption or enactment
of any law, ordinance, regulation, ruling or order directly or indirectly
interfering with the production, delivery or payment hereunder; or lack of the
usual means of transportation, fires, floods, explosions, strikes; extraordinary
currency devaluations, taxes, or customer duties or other similar charges or
assessments; or other events or contingencies beyond its control, either of the
foregoing nature or of any kind, nature or description affecting the
transportation, production, sale or distribution of the Products or any
components used in or in connection with their production.
8.03 Entire Agreement. This Agreement supersedes and terminates any and all
prior agreements or contracts, written or oral, entered into between Yamaha and
Dealer as of the effective date of this Agreement with reference to all Matters
covered by this Agreement. All negotiations, correspondence and memoranda which
have passed between Yamaha and Dealer with reference to all matters covered by
this Agreement are merged herein and this Agreement constitutes the entire
agreement between Yamaha and Dealer. No representations not contained herein are
authorized by Yamaha, and this Agreement may not be altered, modified, amended,
or changed, in whole or in part, except in writing and executed by Yamaha and
Dealer in the same manner as is provided for the execution of this Agreement.
8.04 Assignment. The relationship created between Yamaha and Dealer is
intended to be personal in nature, since Yamaha is relying on the continued
active participation of certain individuals in the operations of Dealer, and
consequently, this Agreement shall not be assignable or transferable in any
manner whatsoever without the prior consent in writing of Yamaha. For purposes
of this Agreement, any change in ownership, the legal form of the business, or
active management shall be deemed a transfer which requires the prior consent of
Yamaha. Any determination by Yamaha in this regard shall be based on an
evaluation of assignee's or transferee's qualifications and ability to meet
Yamaha's high standards. In the event Dealer changes his legal form of business
or makes an assignment without notifying Yamaha as provided herein, Dealer shall
continue to be personally liable for all past and future debts of this or a
successor business.
8.05 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of California.
8.06 Construction. This Agreement and all of the words, terms, and
provisions hereof shall be construed in accordance with their usual and ordinary
meanings, and not in favor of or against either party hereto. Paragraph headings
are not a part of this Agreement, but are only for convenience.
8.07 Nonwaiver of Rights. Failure of either party hereto to enforce any of
the provisions of this Agreement or any rights with respect thereto or failure
to exercise any election provided for herein shall in no way be considered to be
a waiver of such provisions, rights or elections or in any way affect the
validity of this Agreement. The failure of either party to exercise any of said
provisions, rights or elections shall not prelude or prejudice such party from
later enforcing or exercising the same or any other provisions, rights or
elections which it may have under this Agreement.
8.08 Invalidity. If any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.
8.09 Notice. All notices required or permitted to be given or made under
this Agreement may be effected in writing by certified mail, postage prepaid,
return receipt requested, and shall be deemed communicated three (3) days from
the mailing thereof. Mailed notices shall be addressed to the parties as their
addresses appear above, but each party may change his address by written notice
in accordance with this paragraph.
- 6 -
<PAGE> 108
8.10 Attorney's Fees. In the event any legal action is necessary to enforce
any of the terms and conditions of this Agreement, Dealer shall pay to Yamaha
all costs and fees incurred, including reasonable attorney's fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this 29th day of AUGUST, 1984. Dealer expressly acknowledges that it has read
this Agreement in its entirety and understands its rights and responsibilities
under this Agreement and the provisions relating to termination.
"Yamaha"
YAMAHA MOTOR CORPORATION, U.S.A.
a California Corporation
BY: /S/ GEORGE BALLARD
-----------------------------------
TITLE: ASSISTANT SECRETARY
-----------------------------------
"DEALER"
X CYCLE SPORT UNLIMITED, INC.
-----------------------------------
BUSINESS NAME
BY: X /S/ DAVID NEES
-----------------------------------
TITLE: X /S/ PRESIDENT
----------------------------------
BY: X
----------------------------------
TITLE: X
----------------------------------
- 7 -
<PAGE> 109
* SUZUKI.
SUZUKI PRODUCTS DEALER AGREEMENT
THIS AGREEMENT, entered into by and between the Motorcycle Division of AMERICAN
SUZUKI MOTOR CORPORATION, a California corporation (hereinafter "Suzukr'), and
(Dealership Name) CYCLE SPORT UNLIMITED, INC. of-- 632 GRANT STREET (Business
Address) doing business as Dealer No. Z38546, at Herndon VA 22070 (City and
State) (hereinafter "Dealer"). Suzuki is the exclusive distributor in the
continental United States of the Suzuki brand products listed in Attachment A.
Dealer desires to purchase such Suzuki products from Suzuki for the purpose of
reselling them at retail in the United States at the location designated above.
PURPOSE
The purpose of the Agreement is to establish a good working relationship between
Suzuki and its independent Dealer based on a mutual understanding relating
to the sale and service of Suzuki products in a manner that will best serve the
interests of retail customers and will be of benefit to Dealer and Suzuki.
In entering into this Agreement Suzuki and Dealer recognize that their success
depends upon how well Dealer fulfills the retail customers! needs - upon the
quality and value which Suzuki offers to the public in the Suzuki products it
distributes - and upon how well each authorized independent Suzuki dealer
fulfills its obligations through aggressive, sound and ethical sales and service
efforts at the retail level. Suzuki and Dealer agree that the keystone to
success is conscientious regard for quality customer service.
Suzuki expects and Dealer in executing this Agreement acknowledges, that
Dealerwill actively, aggressively and honestly promote the sale of Suzuki
products to retail customers and will give to the public prompt efficient and
courteous service; and that Dealer will conduct its business in an independent
and responsible manner which will reflect favorably upon Suzuki and Suzuki
products, and upon Dealer and its operations; and that Dealer will preserve and
promote the goodwill of Suzuki and Suzuki products that has been created bythe
manufacturer and sale of Suzuki products of the highest quality and desigri. To
achieve the purposes set forth above and the mutual obligations of the parties
to each other, it is agreed as follows:
Dealer's Responsibility
Subject to the terms and conditions hereof, Suzuki will sell Suzuki products to
Dealer and Dealer will use its best efforts to sell Suzuki products at retail.
The Dealer is authorized to sell Suzuki products from the Dealers business
location set forth above to retail customers without regard to geographical
limitations. Dealerwill act independently of Suzuki in its sales and service
responsibilities to its customers and its representations to the public.
- 1 -
<PAGE> 110
[CYCLE SPORT LETTERHEAD]
American Suzuki Motor Corporation
Brea, California
Gentlemen:
Please accept this dealer agreement signed by us with the understanding
that, in reference to paragraph 2.3, on page 5, the dealer will follow and be
governed by the guidelines set forth as to dealer conduct in the display and
sales of ATVs, as stated in the consent decree on ATVs signed by the CPSC and
the manufacturers.
Signed,
/s/ DAVID E. NEES
-------------------------------
David E. Nees
/s/ RANDALL RENFROW
-------------------------------
Randall Renfrow
/s/ ROBERT P. WHEELER, JR.
-------------------------------
Robert P. Wheeler, Jr.
/s/ HOWARD A. WILES
-------------------------------
Howard A. Wiles
/s/ LOUIS A. NEES
-------------------------------
Louis A. Nees
<PAGE> 111
[SUZUKI LOGO]
OWNERSHIP AND MANAGEMENT
This agreement is entered into by Suzuki with Dealer in reliance upon the
ability of Dealer as an independent business to meet and perform the operating
requirements hereof and in consideration of the personal qualifications and
business ability of the following named person or persons who will participate
in the ownership of Dealer. Dealer further represents that the following
individuals are the sole legal and/or beneficial owners of Dealer in the
proportions set forth, each of whom will personally guarantee the dealership's
financial obligations to Suzuki.
<TABLE>
<S> <C>
David E. Nees /s/ DAVID E. NEES 51%
- --------------------------------------------------------------------------------
(Full Name) (% Ownership)
Yes
- --------------------------------------------------------------------------------
(Residence Address) (Management Participation? Yes/No)
Randall Renfrow /s/ RANDALL RENFROW 10%
- --------------------------------------------------------------------------------
(Full Name) (% Ownership)
Yes
- --------------------------------------------------------------------------------
(Residence Address) (Management Participation? Yes/No)
Robert P. Wheeler, Jr. 16%
- --------------------------------------------------------------------------------
(Full Name) (% Ownership)
Yes
- --------------------------------------------------------------------------------
(Residence Address) (Management Participation? Yes/No)
Howard A. Wiles 9%
- --------------------------------------------------------------------------------
(Full Name) (% Ownership)
No
- --------------------------------------------------------------------------------
(Residence Address) (Management Participation? Yes/No)
Louis A. Nees * (See note below) 14%
- --------------------------------------------------------------------------------
(Full Name) (% Ownership)
No
- --------------------------------------------------------------------------------
(Residence Address) (Management Participation? Yes/No)
</TABLE>
*As a stockholder with no management participation in this company, I disavow
and disassociate myself with the statement made in the second clause of the
second sentence of the first paragraph on this page 2. I further state that I
do not personally guarantee this dealership's financial obligations to
American Suzuki.
/s/ LOUIS A. NEES
- ---------------------------
signed: Louis A. Nees
- 2 -
<PAGE> 112
* SUZUKI.
The following named persons have full authority and responsibility for the
operation and management of the Dealership and Dealer's signature below
constitutes written authority for the belownamed persons to bind the dealership:
David E. Nees President
(Full Name) (Title)
(Residence Address)
(Full Name) (Title)
(Residence Address)
(Full Name) (Title)
(Residence Address)
(Full Name) (Title)
(Residence Address)
(Full Name) (Title)
(Residence Address)
The ownership interests and managing personnel set forth above may not be
changed without 30 days prior written notice to Suzuki, prior review by Suzuki
and prior written approval of Suzuki concerning the business qualifications of
new owners and managing personnel. Suzuki will give such approval provided the
proposed -changes meet Suzuki requirements Any change in the addresses set
forth above shall be communicated in writing to Suzuki The terms of any change
in ownership must be disclosed to Suzuki on the form provided Duration of
Agreement
This Agreement is notvalid until and unless it is executed byan officer of
Suzuki at its main office in California. From its effective date this Agreement
shall remain in full force and effect so long as Dealer performs in accordance
with the terms and conditions hereof. Suzuki may terminate this Agreement under
the provisions set forth in Section 9. Dealer may terminate this Agreement upon
sixty (60) days' written notice to Suzuki.
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<PAGE> 113
SUZUK16
GENERAL CONDITIONS
1. PLACE OF BUSINESS.
1.1 Location. Dealer will operate his dealership including showroom, sales~
service and parts, only in a permanent facility that meetsthe requirements of
thisAgreement, and only at the authorized dealer location and addresssetforth
above. If authorized Dealer desires to change the business location, it must
provide Suzuki with a minimum of thirty(30) days written notice to allow Suzuki
adequate time to review the new facility. The notice should be given on the
attached form, as soon as the Dealer gives a change of location serious
consideration. AfterSuzuki reviews the newfacility, Dealer must receivefrom
Suzuki written approval of the new location before it makes acommitmentto move
the dealership. Suzuki will not unreasonably withhold written approval so long
as the new facility meets Suzuki's requirements as published by Suzuki from time
to time.
1.2 Expansion. Dealer, at its expense, shall equip and maintain in a manner
acceptable to Suzuki~ the authorized place of business where Suzuki products are
sold In this regard, Dealer will make necessary expansions of the authorized
place of business or move to a larger place of business if in the judgment of
Suzuki such expansion or change in location is necessitated due to changes or
growth in local marketing conditions.
1.3 Size. Dealers place of business must conform to the minimum size
requirements of Suzuki as published from time to time or be of adequate size to
allow for display and storage of Suzuki products and provide for office space, a
parts area and service facilities of sufficient size to accommodate the volume
of sales and service of the Dealer in conformance with written recommendations
from Suzuki.
1.4 Appearance and Maintenance. The Dealer's place of business will at all times
be maintained so as to present a good image for Dealer and Suzuki. It is
Dealer's responsibility to maintain an attractive store for the benefit of the
customer, Dealer, and Suzuki. Dealer acknowledges that modern marketing studies
show that an attractive, well-lighted, neat and clean store will attract more
customers and contribute more to thedevelopment and growth of the Dealer's
business
1.5 BusinessHours. Dealer shall remain open during normal retail business hours
to benefit his customers. If Dealer closes for ten (10) or more successive days
without the prior written permission of Suzuki~ he will be subject to
termination, unless such closing is due to adverse weather or reasons beyond
Dealer's control.
1.6 Identification. The Dealer's place of business will be properly and
appropriately identified as a Suzuki retail store by display of authorized
Suzuki outdoor signs Suzuki will review all Suzuki identification at Dealer's
place of business on a periodic basis to assure that it is adequate, attractive
and well-maintained Dealer will follow Suzuki's recommendations regarding Suzuki
identification.
1.7 Legal Right of Use. Upon Suzuki's request Dealer will submit to Suzuki a
copy of the legal title to Dealer's facility, the lease underwhich Dealer is
leasing thefacility, orthe document granting Dealer's rightto use the facility
as the case may be
2. RETAIL SALES. *
2.1 Sales Personnel. Dealer shall at all times have competent and adequate
personnel to develop maximum sales opportunities for Suzuki products, Dealer
will employ qualified sales personneL The quality of sales personnel will be
reviewed by Suzuki from time to time. Dealer will be responsible forthe sales
personnel and assure that they practice fair and ethical selling methods. Such
personnel will be knowledgeable about all Suzuki products
2.2 Promotion Materials. Suzuki will make available to Dealer various
promotional materials at a reasonable cost and Dealer will stock an adequate
supply of these materials for the promotion of Suzuki products.
- 4-
<PAGE> 114
SUZUKI.
2.3 Types of Sales. Dealer will sell Suzuki products to retail customers only,
except for sales to other authorized Suzuki dealers. Dealer will not sell Suzuki
products to unauthorized Suzuki dealers or any other person for resale either in
this country ora foreign country. Dealerwill not sell Suzuki products to
customers who do not meetthe age requirements in regard to the size of vehicle
sold, as setforth by Suzuki from timetotime in accordance with the rules and
regulations of the CPSC and other legal authorities. Any such unauthorized sales
will subject Dealer to termination as set forth below.
2.4 Terms of Sale. Suzuki has the right at any time to change charges, discounts
and other terms of sale affecting any Suzuki product as reflected on the dealer
invoice.
2.5 SalesProcedure. All retail sales made by Dealer must conform to the
requirements for product set-up and warranty presentation as published by
Suzuki from time to time. Dealer will forward all sales registration cards
to Suzuki immediately upon conclusion of the sales transaction.
2.6 Prices. All sales to Dealer will be at such prices as from time to time are
established by Suzuki and in eff ect at the time of shipment and as invoiced.
Such prices will be herein refered to as the"Dealer Price' ' Suzuki reserves the
right to change its "Dealer Price" for any reason. Suzuki will not be bound by
Dealer's pre-sale of products to a customer in the event of a price increase.
Suzuki shall give written notice to Dealer of any change increasing the price to
be paid by Dealer before shipping any current models to which such change is
applicable. Dealer may cancel or modify orders for products to which any such
change applies, provided written notice of cancellation is delivered to Suzuki
within ten (10) days after receipt by Dealer of Suzuk?s price change notice.
2.7 Dealer Sales Responsibility. Dealer will maintain a minimum annual sales
volume for each product category mutually agreed upon each yearbySuzuki and
Dealer. Dealer will establish a target growth factorwhich it will strive to
achieve through aggressive marketing and promotion of Suzuki products. Dealer
agrees that the best method of measuring its market area share is by comparison
of its Suzuki sales against the national, state~ county and local area Suzuki
sales percentages in the product category as determined bya recognized reporting
organization. Dealer also agrees that comparison of its sales to similarly
located Suzuki dealers in comparable trade areas is a proper criteria to measure
its sales performance
2.8 Inventory Responsibility. Dealer must maintain the level of Suzuki product
inventory recommended by Suzuki. It must also maintain the capability of
purchasing and stocking Suzuki products through a line of credit exclusively for
Suzuki products with financial organizations acceptable to Suzuki. Evidence of a
line of credit must be furnished to Suzuki upon Suzuki's request
2.9 Dealer Reports. Dealer will furnish reports of its sales and inventory as
requested Dealer will also furnish reports and statements concerning its
financial condition as Suzuki may request
2.10 Inventories. Dealer shall maintain at all times a minimum inventory of
Suzuki products for display, demonstration and sale. A minimum inventory is the
quantity, and models, necessaryfora sixty- day supply, based on the current
Dealer sales plan but subject to availability.
2.11 Sales Information. Dealer shall comply with Suzuki's existing and future
bulletins and manuals pertaining to the sale of Suzuki products.
2.12 Sales Records. Dealer shall keep an accurate record of all sales of Suzuki
products. These records shall be subject to inspection by Suzuki personnel upon
reasonable notice to Dealer.
- 5 -
<PAGE> 115
SUZUKI.
2.13 Stock Orders. Suzuki will not accept orders from Dealer for a
specific retail customer. Suzuki will accept only stock orders for products from
Dealer. Dealerwil I be responsible for providing the customers, specific product
parts and accessory needs from its inventory.
2.14 Allocations. If the demand for Suzuki products is so great that
in Suzuki's judgment it is necessary to make allocations of the products on an
individual dealer basis, Dealer will accept the judgment of Suzuki that such
allocation of products is necessary and Dealer will also accept the allocations
actually made by Suzuki based on Suzuki's sole and exclusive judgment as to the
reasonableness of such allocations.
2.15 Title. Title to Suzuki products passes to Dealer only upon
payment in full for said Suzuki products delivered to Dealer. Until full payment
for Suzuki products is made, Suzuki retains a security interest therein which
shall allow Suzuki atany reasonable time, andwithout notice ordemand, and with
orwithout legal process, to take possession of said Suzuki products
2.16 Accessories. Dealer understands and acknowledges that Dealer is
responsible for the after market and accessory items that Dealer installs on
Suzuki products and must caution the customer regarding the proper use of
accessory items and any effect accessory items may have on the products handling
characteristics, mileage, Environmental Protection Act regulations or safety.
Dealer will not recommend any accessory products that will or could cause unsafe
handling or dangerous riding characteristics
2.17 Product Discontinuance. Suzuki retains the right to discontinue~
cancel, or alter any product line or model as well asthe styling, color,
or other features of said lines ormodels, Suzuki does not and will not represent
that any product or product line will continue for any period of time. Suzuki
will incur no obligation for pre-existing product or product in inventory that
does not contain a change or alteration
2.18 Foreclosure of Dealer. If Dealer loses title to his dealership
or any of his Suzuki inventory through liens, encumbrances orany lawful means~
it isa violation of thisAgreement The person orentitygaining legaltitle or
control may not operate the dealership without the written approval of Suzuki.
3. SERVICE
3.1 Service Satisfaction. Dealer as an independent business shall
strive to offer the best possible customer service to owners and users of all
Suzuki products.
3.2 Service Compliance. Dealer shall provide prompt efficient and
courteous maintenance and repairservice to all owners and users of Suzuki
products. All service shall be performed in accordance with recommendations,
specifications and instructions as may be furnished Dealer by Suzuki However,
Dealer shall be solely responsible to his customers and the public to have all
service work performed properly and in a good and workmanlike manner. Dealer
will also be solely responsible for the use of other than genuine Suzuki parts
in performing service work for his customer.
3.3 Service Area and Equipment Dealer shall maintain an appropriate
sized service department which shall be painted neat and properly organized to
insure efficient operation and inspire consumer confidence Dealer shall equip
this department with the appropriate and necessary shop equipment furniture,
Suzuki "Special" tools and those tools used in normal day to day operations.
- 6 -
<PAGE> 116
SUZUKI.
3.4 Records and Manuals. Dealer shall maintain and keep updated all
manuals, bulletins, microfiche, video training tapes and records received from
Suzuki. Dealer and its service personnel will have available and be familiar
with all service and maintenance manuals provided by SuzukL
3.5 Customer Service. Dealer will receive, investigate and handle all
customer service problems and complaints receivedfrom ownersof Suzuki
productswith aviewtoward securingand maintaining the goodwill of the public
toward Dealer, Suzuki and Suzuki products.
3.6 Service Personnel. Service personnel in the dealership will be
competent and properly trained to handle all service work of Dealers customers.
Dealerwill have at least one full-time mechanicwho has been to Suzuki Service
School, but more than one full-time mechanic if the service department volume
warrants additional mechanics. Dealer accepts the responsibility to provide fast
efficient and accurate serviceworkto its customers. From time to time, Suzuki
will make suggestions regarding the improvement and upgrading of Dealer's
service department and personnel; however, Dealer is solely responsible for all
work performed in its Service Department by its service personnel.
3.7 Special Tools. Dealer shall purchase and maintain the special
tools required by Suzuki Dealer is aware of and accepts the need for such
special tools to provide its customers fast efficient and accurate service.
3.8 Set-up, Assembly and Inspection. Dealer must comply with Suzuki's
new product assembly, set-up and inspection instructions as published from time
to time. Dealer is solely responsible to see that this work is performed in a
proper and careful manner to assure customer satisfaction with the performance
of Suzuki products, to maintain good customer relations, and to protect Dealer
and Suzuki from lawsuits by customers Failure to properly perform this set-up,
assembly and inspection service is a violation of this Agreement Acknowledgment
of proper set-up, asssembly and inspection must be made on forms provided by
Suzuki.
3.9 Service Records. Dealer will maintain accurate and complete
service records of all service performed on Suzuki products for the mutual
benefit of the customer, Dealer and Suzuki.
3.10 Prices. Dealer will charge fair and reasonable prices forthe
service work performed as customary in its area. Dealer agrees that it will not
overcharge its customers or do any unnecessary service work Dealer acknowledges
that fair and competitive pricing will help insure customer satisfaction.
3.11 Suzuki Inspections. Dealer will permit Suzuki agents and
employees to inspect and review the Dealer's service area and records from time
to time. Dealer will be aware of and discuss any and all customer problems with
SuzukF s. representatives from time to time.
3.12 Service Schools. Dealer will send his Dealer personnel to and
participate in, service training classes, service schools, seminars and other
dealer employee training courses as provided by Suzuki from time to time Dealer
acknowledges the need for such school and training to keep current on all Suzuki
products for the protection of Dealers customers.
- 7 -
<PAGE> 117
SUZUKle
3.13 Recall And Safety Procedures. If at any time Dealer receives
from Suzuki a notification of certain procedures that Dealer is to follow
concerning a recall or other safety or product improvement campaign or program,
Dealer shall comply with it If for any reason, Dealer fails or refuses to comply
with the procedures specified in such notification, Dealer shall be in violation
of this Agreement and assumes liability for noncompliance. Dealer acknowledges
the necessity of complying with recall and other safety or product improvement
notices to insure the protection of the consumer and to comply with government
laws, orders, rules and regulations.
4. CREDIT FINANCING AND PAYMENTS.
4.1 Payments. Dealer must pay for all Suzuki products shipped to it
Payments for products shall be by prepayment prior to shipment bill bank, or
sight draft, or payment may be made in accordance with wholesale financing
arrangements in effect between Suzuki, Dealer and a financial institution at the
time of shipment but not more than fifteen (15) days after receipt of the
product invoice. Any collection charges will be paid by Dealer Any such
financing arrangement will guarantee payment to Suzuki through the financial
institution. Loss of the financing guarantee or loss of the financial capability
for the purchase of Suzuki products will constitute a violation of this
Agreement Payments for other Suzuki products will be in accordance with the
Dealer terms established by the Credit Department
4.2 Security and Guarantee Documents. Dealer agrees that it will
execute and immediately return to Suzuki the continuing guarantees of all owners
or stockholders of the Dealership. Each individual owner or stockholderwho signs
this Agreement and/or a continuing guaranty, understands and acknowledges his or
her joint and individual liability and responsibility for all of the
Dealership's debts to Suzuki In addition, each signator accepts the
responsibility to provide current dealer financial statements at le ast twice a
year, as well as upon written request from SuzukL
4.3 Account Payments. Dealer's product purchases are to be paid
promptly but not later than the fifteenth (15th) day after receipt of the
invoice. All invoices are payable in full without regard to any pending Dealer
credit claims. Dealers parts, accessories and promotional purchases are to be
paid in accordance with terms established by the Credit Department from time to
time. Dealer will be delinquent in its accounts if it fails to comply with the
terms of payment for products and parts, accessories and promotional
material.
If Dealer becomes deliquent in any of its accounts with Suzuki~
Dealerwill be in default on all of its accounts with Suzuki. All accounts will
then be accelerated and become immediately due and payable. A default in any
credit account including a "special terms" account will result in such
acceleration of all of Dealer's accounts.
A default may be any of the following.
Delinquent Parts Account Delinquent Interest Payments on Finance
Delinquent Product (Vehicle) Account NSF Checks
Delinquent Accessory Account Sold Out of Trust Product (Vehicle)
Inventory
- 8 -
<PAGE> 118
SUZUKI.
4.4 Suspension by Suzuki. If dealer is delinquent in payment of any
indebtedness or obligation to Suzuki or fails to sign and immediately return any
security documents, Suzuki may suspend all pending orders and shipments until
said delinquency is cured or said security documents are received
4.5 Repossession. If Dealer becomes delinquent in its required
account payments asset forth in paragraph 4.3, Suzuki may repossess the
inventory of Dealer. If Suzuki repossesses Dealers inventory, Dealer shall be
responsible for all repossession charges including, but not limited to, handling
expenses, freight costs, a $1 00.00 per vehicle restocking charge, storage,
resale costs and attorneys' fees. Any and all such expenses will be charged to
Dealers account
4.6 Financial Statements. Dealer will maintain sufficient working
capital and net worth to allow Dealerto perform its obligations under this
Agreement In this regard Dealer will provide Suzuki with a current financial
statement upon request of SuzukL Dealer will sign the financial statement and
attest to its accuracy.
4.7 Financial Changes. Any significant change in the Dealer's
financial capability will be reported immediatelyto Suzuki. Any significant
change in Dealer's financial capability must be approved by Suzuki. Failure to
report a change in financial capability constitutes a violation of this
Agreement
5. TRANSPORTATION
5.1 Dealer Pays Freight. On all Suzuki products ordered by Dealer, it
shall pay all transportation charges from Suzuki's warehouse facility. If
Dealer refuses a deliver)4 Dealer will pay freight costs forsaid shipment These
costs will be added to Dealers account with SuzukL This includes any shipment
made on a C.O.D. basis. All charges on C.O.D. shipments are the Dealers
responsibility.
5.2 Unloading. In accordance with federal and Interstate Commerce
Commission regulations. Dealer shall provide equipment and labor for unloading
from delivery trucks all shipments weighing over 500 pounds,
5.3 Delays. Although Suzuki will use due diligence to ship promptly
orders accepted by it Suzuki shall not be liable for any delay in shipment
caused by a shortage of supplies at the Suzuki warehousing facility nearest
Dealer, riots, war, willful acts of third parties, strikes or other union labor
problems, import restrictions, Acts ofGod, or any other cause beyond Suzuki's
control. It is specifically understood that Suzuki will attempt to fill all
orders accepted by it but takes no responsibility for failure to fill any of
Dealer's orders~ orfor placing Dealers orders in a "back-order" statur.
5.4 Concealed Shortage and Damage Reports. Any concealed shortages
in, or concealed damages to, merchandise in any shipments of products, parts or
accessories received by Dealer must be reported to Suzuki immediately on the
Suzuki form provided If notification is not made within ten (10) days,
Dealerwill have waived its right to reimbursement for the shortages or damages.
5.5 Product Return. Suzuki will not accept the return of Suzuki
products from Dealer except under Paragraph 10.2 or where required by law. All
such product returned will be subject to a $100.00 per vehicle restocking fee.
If Suzuki must by local law accept the return of Suzuki products from Dealer,
Dealer will pay all transportation charges and Suzuki will deduct any handling
and restocking charges from the original invoice price. All products returned
must be new, unused, and in their original package
- 9 -
<PAGE> 119
SUZUKle
5.6 Dealer Responsibility for Shipments. When a shipment to Dealer
leaves the Suzuki warehouse, the responsibility for the shipment isthe
Dealer'sand any lossordamage during shipment must be resolved between the
carrier and the Dealer, except for concealed loss or damage, as noted in
Paragraph 5.4.
5.7 Routing. Suzuki will attempt to use the best available carrier of
Dealer's choice for all shipments to Dealer, but Suzuki reserves the right to
make the final choice of the carrier at Suzuki's sole discretion.
6. PARTS.
6.1 Inventory. Dealer agrees to maintain an adequate inventory of
Suzuki parts to fulfill customer service and warranty requirements Failure to
maintain an adequate inventory of Suzuki parts to satisfy customer needs in the
sole judgment of Suzuki will constitute a violation of this Agreement
6.2 Shipment Acceptance. Dealer will accept all shipments of Suzuki
parts ordered by it In the event of an error in a shipment by Suzuki, the Dealer
must submit a parts discrepancy report and receive the prior written approval of
Suzuki before returning the parts.
6.3 PartsSales. Dealer will sell all Suzuki parts in an ethical
manner under a proper and reasonable pricing structure and with concern that the
customer receives the right Suzuki parts for his needs.
6.4 Genuine Suzuki Replacement Parts. Dealerwill not sell any part to
a customeras a Suzuki part unless it is a genuine Suzuki part If Dealer does so
it may constitute fraud and may be a violation of this agreement
7. WARRANTY.
7.1 Warranty Repairs. Dealer understands that properand efficient
warranty repairs are an essential part of good customer relations. Dealer will
use its best efforts to complete all warranty repairs in a timely and courteous
manner without charge to the warranty customer.
7.2 Warranty Responsibility. Dealer will deliver a copy of the Suzuki
warranty and will fully explain its provisions to each customerwho purchases a
new Suzuki product that carries a Suzuki warranty. In accordance with the
provisions of the warranty policy and service bulletins furnished by Suzuki to
Dealer from time to time~ Dealer will perform any-warranty repairs of any Suzuki
products which qualify for repairs without charge to the customer under the
provisions of such warranties and service bulletins regardless of whether Dealer
sold the Suzuki products or not Dealer will be solely responsible for the
service work performed in making the warranty repair.
7.3 Warranty Information. Dealer acknowledges its responsibility to
be completely familiar with Suzuki warranties and any changes published by
Suzuki from time to time Dealer will display in his showroom the complete text
of the warranties in accordance with government regulations and instructions
from Suzuki.
- 10 -
<PAGE> 120
SUZUKIv
7.4 No Other Warranties. Dealer understands that Suzuki makes no
warranties or representations express or implied for itself or the manufacturer
except as provided in the current Suzuki warranty policy. Dealer will promote
only Suzuki approved and sanctioned warranties and extended service contracts as
Suzuki warranties and service contracts, and will not promote any other warranty
or extended warranty as a Suzuki warranty.
7.5 Warranty Claim Procedure. Suzuki will reimburse Dealer only for
warranty repairs performed in accordancewith prevailing Suzuki policyand
procedures, as published by Suzuki frorntimetotime. Dealerwill use only
properwarranty claim forms furnished by Suzuki. Credit for authorized warranty
repairs will be issued by Suzuki in a timely manner. Dealer shall not charge any
customer for warranty repairs
7.6 Sales Registration Card. Upon sale of any new Suzuki product
Dealer must send to Suzuki within three days a Sales Registration Card properly
filled out as a record of that sale. This information is essential for Suzuki to
comply with government regulations and to provide Suzuki with essential owner
information.
8. ADVERTISING.
8.1 Advertising Suzuki Products. Dealer acknowledges his
responsibility to use advertising programs to promote Suzuki products in his
sales area
8.2 Ethical Standards. To build and maintain public confidence and
respect in Dealer, Suzuki, and Suzuki products, both Dealer and Suzuki will
maintain the highest ethical standards of advertising.
8.3 Customer Confidence. Dealer will advertise only in a manner that
will develop customer confidence in Suzuki products, and will not use any
advertising tending to mislead or deceive the public. Dealerwill discontinue any
advertising that Suzuki may reasonably find in its sole judgment to be injurious
to Suzuki business or likely to deceive the public.
8.4 Cooperative Advertising Program. Dealerwill participate in
SuzukFs cooperative advertising program in accordance with Suzuki's Co-op Policy
and advertising bulletins published from time to time.
8.5 Retail Only. In its advertising Dealer must identify itself as a
retai I dealer and must not in anyway attempt to mislead the public into a
belief that Dealer is a"wholesalee', "jobber", "factory direct dealer",
oranythinqother than a retail dealer.
8.6 Stand 8ehind Advertisements. Dealer acknowledges that it is
solely responsible for and must stand behind its advertising of price~
performance, specifications~ equipment warranty and other information contained
in its advertisements. If Dealer advertises promotions of Suzuki products,
Dealer must fulfill the obligations and offers set forth in the promotion
advertisements.
8.7 Suzuki Advertising Promotions. If Suzuki makes an offer to retail
customers by an advertising promotion, Dealer will fulfill Suzuki's obligations
to the retail customers and will comply and cooperate with Suzuki's promotions
in a fair and accurate manner.
8.8 Suzuki Promotions. To further expose and popularize the
name"SUZUKI", Suzuki will from time to time participate in promotional
activities with other parties, which may include the sale or exchange of Suzuki
products for advertising or promotional value. Dealer will cooperate by
rendering assembly, pre-delivery and warranty service in connection with such
promotions, for which service Dealer will be compensated at the established
rates.
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<PAGE> 121
SUZUKle
9. TERMINATION.
9.1 Written Notice. If Dealer does not conduct its business in
accordance with the requirements set forth herein, Suzuki may terminate this
Agreement by giving to Dealer written notice of termination.
9.2 Fifteen Days? Wriften Notice. Suzuki may terminate this Agreement
with 15 days'written notice after the occurrence of any of the following events,
(1) Insolvency of Dealer, i.e., inability to pay its bills in a
timely manner,
(2) Filing of a petition by or against the Dealer under any
bankruptcy or receivership law,
(3) Assignment for the benefit of creditors;
(4) Appointment of a personal representative, receiver or trustee for
Dealer, or if any legal proceedings or process renders Dealer's
business substantially inoperative in the sole judgment of Suzuki;
(5) Failure of Dealer to be duly licensed to sell Suzuki products;
(6) Transfer of any ownership or interest in the dealership without
the written consent of Suzuki;
(7) Moving the location of the dealership without Suzuki's prior
written authorization.
(8) The submission of false documents to SuzukL
(9) Closing the dealership for ten (10) consecutive business days
without prior written permission from Suzuki.
(10) Abandonment of the dealership by Dealer.
(11) Conviction of the Dealership owner(s) and/or officers of a
felony or any crime involving moral turpitude, or a criminal offense
directly related to the business conducted pursuant to this agreement
(12) Failure to comply with instructions of Suzuki regarding recalls
or other safety or pr8duct improvement campaigns or programs, and/or
failure to make a good faith effort to comply with the National Traff
ic and Motor Vehicle Safety Act or Consumer Product Safety Act or any
other laws, orders, rules or regulations regarding recalls or other
safety or product improvement campaigns or programs,
(13) Sale of any Suzuki product to any person or entity for resale,
either in this country or a foreign country other than another
authorized Suzuki Dealer.
(14) Sale of any product or part on the representation that it is a
genuine Suzuki product with knowledge that it is not
(15) Failure to obtain and carry the insurance required under
Paragraph 10.5.
If the fifteen (l5) day written notice specified in this paragraph is lessthan
the period required byapplicable laws, such period of notice shall be deemed
increased to the minimum period required by such laws.
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<PAGE> 122
SUZUKle
9.3 Sixty Days Written Notice. Suzuki may terminate this Agreement
with sixty (60) days written notice after the occurrence of any of the following
events:
(1) Failure of the Dealer to maintain the sales volume established
for the dealership by mutual agreement of Suzuki and Dealer.
(2) Failure to keep the dealership in a proper state of repair and in
an orderly, clean and attractive condition and appearance.
(3) Improper or unethical advertising.
(4) Failure to properly perform warranty service.
(5) Failure to employ an adequate number of qualified service and
sales personnel.
(6) Failure to carry an adequate inventory of Suzuki products.
(7) Failure to have sufficient capital and/or sufficient flooring to
maintain an adequate inventory and to report a significant change in
financial capability.
(8) Dealer's sale of any product without prompt payment to Dealer's
flooring source(s) or being in an "out of trust" condition whether
financed by a separate financial organization or by Suzuki;
(9) Default by Dealer in its credit obligations, as set forth in
Paragraph 4.3 above.
(10) Any material misrepresentation by Dealer in the Dealership
Application to Suzuki.
(11) Dissension among the dealership owners which in the sole
judgment of Suzuki is detrimental to the proper operation of the
dealership.
10. LEGAL
10.1 Non-Assignable. This Agreement based on mutual trust between
Dealer and Suzukk may not be assigned or transferred by Dealer without the prior
written consent of Suzuki. Any assignment without the prior written consent of
Suzuki will be void.
10.2 Death of an Owner. If an owner or interest holder of any portion
of the dealership dies and leaves a spouse who becomes the sole owner or a
majority owner of the dealership, Suzuki reserves the right in its sole
discretion, to terminate the dealership if the spouse is not capable of
operating the dealership because of a lack of business experience and/or
knowledge of financial affairs. I n such event Suzuki will repurchase the new
and unused Suzuki product inventory subject to the prevailing restockin g and
repossession charges, and all Suzuki signs, and special tools. Suzuki will also
assist the spouse in attempting to locate a buyer for the dealership.
If in the judgment of Suzuki the spouse can operate the dealership,
it may be transferred into the spouse!s. name; however, no other heirs
ordescendants of the deceased Dealer maytake overand operatethe dealership
without the express written consent of Suzuki.
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<PAGE> 123
SUZUKle
10.3 Incapacity of Dealer. If the Dealer becomes physically or
mentally incapacitated, Suzuki will allow the Dealer to continue operation of
the dealership if the operation of the dealership and service to Suzuki
customers does not-suffer. If necessary, Suzuki will assist in the transfer or
liquidation of the dealership. Suzuki will act in a reasonable manner under the
circumstances presented to best resolve the problem of the Dealer and Suzuki if
the dealership is being operated in conformance with the terms of this
Agreement
10.4 Divorce or Sepa rate Maintenance. If the owners and/or officers
of the dealership become parties to a lawsuit for divorce or separate
maintenance, Suzuki will be notified immediately. In such event the owner and/or
officer of the dealership will not allow the operation of the dealership to be
transferred to a non-operating spouse or anyone else without the written
approval of Suzuki. Any attempt to establish the non- operating spouse or other
person as an operator of the Suzuki dealership through the divorce or separate
maintenance action without the written consent of Suzuki will be grounds for
termination of this Agreement
Owners and officers of the dealership will cause the contents of this
paragraph to be brought to the attention of the Court in any such divorce or
separate maintenance action.
10.5 Insurance. The dealership is an independent business and the
Dealer is responsible for its actions and conduct; therefore, Dealer shall
maintain continuously in effect at its own expense, insurance against the acts
of omissions of the Dealer or any of its employees, agents, servants, or
contractors in connection with the sale of products or rendering of services by
the Dealer, and for all claims for damage to property, or for injury or death of
any persons directly or indirectly resulting from such acts or omissions. Such
insurance shall include Comprehensive General Liability Insurance and also
Garage Liability Insurance. The Garage Liability Insurance shall include
products and completed operations coverage. All insurance shall be obtained from
insurance companies rated A:XII or better in Bests Insurance Ratings in the form
of a Combined Single Limit Policy in an amount not less than Five Hundred
Thousand Dollars ($500,000.00) for bodily injury and/or property damage.
The property insurance shall include coverage on all Suzuki products
as to all perils included within the classifications of fire, extended coverage,
vandalism, malicious mischief.and special extended perils (All Risk). Such
property insurance shall also cover all Suzuki products on which title and/or
security interests have not passed to Dealer.
The Garage Liability Insurance and insurance for Suzuki productsshall
name Suzuki as an additional insured Dealer shall furnish to Suzuki a
Certificate of Insurance with evidence that premiums therefore have been paid at
leastannually, and the Dealer's insurance company shall be required to provide
ten(l0) day prior written notice to Suzuki in the event of cancellation or any
material change in the policy.
Failure to provide the insurance required herein may be grounds for
termination of this agreement
10.6 Hold Harmless Agreement Dealer acknowledges its responsibility
for proper assembly, set-up, inspection and service work In this regard, Dealer
agrees that for any lawsuit that results from the dealership failing to properly
assemble, set up, inspect and/or service a Suzuki product Dealer will hold
Suzuki harmless from any and all claims of any customer plaintiff, including
attorneys' fees and costs of defense, if Dealer does not accept the tender of
Suzuki's defense, and will indemnify Suzuki to the extent of any such damages,
costs and attorneys fees,
10.7 Construction, Jurisdiction and Severability. This Agreement
shall be construed according to the laws of the State of California. If suit is
brought by either party to enforce the terms hereof, jurisdiction will be in the
Superior Court Orange County, California. If any provisions of this Agreement
should be held invalid or unenforceable for any reason whatsoever, or should
violate any law of the United States~ the District of Columbia or any State or
Territory thereof, this Agreement shall be considered divisible as to such
provisions, and such
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<PAGE> 124
SUZUKle
provisions shall be deemed deleted from this Agreement in such jurisdiction as
if such provisions were not included herein. In the event that any provision of
this Agreement should be held to violate only the laws of the District of
Columbia, or of any State or Territory, the remainder of this Agreement shall be
valid and binding with respect to jurisdictions outside of such District State
or Territory.
10.8 Attorneys' Fees. If Suzuki sues Dealer for lack of performance,
monies due, or for any other reason undertheterms of thisAgreement, Suzuki shall
be entitled to reasonable attorneys' fees as determined byacourt of competent
jurisdiction.
10.9 Only Agreement. This Agreement constitutes the entire and only
Agreement between the parties concerning Suzuki products and service. There are
no understandings between the parties hereto, either oral or written, which are
in conflict with this Agreement
10.10 Vendor-Vendee Relationship. The relationship between Suzuki and
Dealer shall be that of vendor and vendee. Dealer is an independent business and
solely responsible for its own acts, conduct and relations with itscustomers;
and the public~ and is notthe agent or legal representative of Suzuki orSuzuki
MotorCo., Ltd, the manufacturer of Suzuki products, for any purpose whatsoever.
Dealerdoes not have any express or implied right or authority to assume or
create any obligations or responsibilities on be half of or in the name of
Suzuki or Suzuki Motor Co., Ltd. However, during the term of the Agreement,
Dealer is authorized to use the Suzuki trademark and logo "S" in connection with
its business
10.11 Mutual Indemnification. Mutual indemnification between Suzuki
and Dealer shall be as follows:
(1) Indemnification by SuzukiL Subject to the provisions of this
subpargaraph, Suzuki shall indemnify and hold Dealer harmless against
any judgment including settlement against Dealer, plus reasonable
attorneys~ fees and court costs~ resulting from lawsuits commenced
against Dealer by third parties concerning bodily injury or property
damage claimed to have been caused by an alleged defect in the
design, manufacture or assembly of a Suzuki product if the claimed
defect was not detectable by Dealer in a rea sonable inspection of
the product
In the event that any lawsuit making such allegations is
brought naming Dealer as a defendant, Suzuki may, following receipt of notice as
provided in Paragraph 10.11(3), undertake the defense of said action on behalf
of Dealer at Suzuki's sole expense and with counsel of Suzuki's choice.
Suzuki shall have the right to decline to undertake such defense
or, after undertaking the defense, to tender the defense back to Dealer, and
Dealer must accept such tender, if Suzuki reasonably concludes that the
allegations being pursued are no longer those set forth above.
(2) Indemnification by Dealer. Subject to the provisions of this
subparagraph, Dealer shall indemnify and hold Suzuki harmless against
any judgment including settlement against Suzuki, plus reasonable
attorneys' fees and court costs, resulting from lawsuits commenced
against Suzuki by third parties concerning:
(a) Dealer's alleged failure to perform or negligent
performance of (i) the service obligations assumed by
Dealer, or (ii) any maintenance or repair service on
Suzuki products; or (iii) the assembly, set-up and
inspection required of Dealer before delivery of a new
product to a customer, or
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<PAGE> 125
SUZUKI.
(b) Dealers alleged breach of any contract between Dealer
and Dealer's customer, or
(c) Dealer's alleged misleading statements,
misrepresentations, or unfair or deceptive acts or
practices, whether through advertisements or otherwise~
affecting any customer of Dealer.
In the event that any lawsuit making
allegations as set forth in (a) through (c) above is
brought naming Suzuki as a defendant Dealer will,
following receipt of notice as provided in Paragraph 10.
11(3), undertake the defense of said action on behalf of
Suzuki at Dealer's sole expense and with counsel of
Dealer's choice.
Dealer shall have the right to decline to
undertake such defense or, after undertaking the defense
to tender the defense back to Suzuki, and Suzuki must
accept such tender, if Dealer reasonably concludes that
the allegations being pursued are no longer those set
forth in (a) through (c) above
(3) Notification. Whenever a lawsuit is commenced against either
Suzuki or Dealer or both of thern, each shall, within fifteen(l5)
days after service of the complaint notify the other in writing, of
any request toassume its defenseand to indemnify it The
request to assume the defense and to indemnify shall be accepted or
rejected by the party towhich it is made within fifteen(l5) days
following its receipt
11. MISCELLANEOUS.
11.1 Notices. Any notice pursuant to this Agreement must be
personally delivered or sent by Certified Mail to the address of the party shown
on this Agreement All notices to Suzuki must be sent to the attention of the
National Sales Director, Motorcycle Division, AMERICAN SUZUKI MOTOR CORPORATION
in Brea, California. When so delivered such service of notice shall satisfy all
requirements for notice under this agreement
11.2 Amendments. Any modifications or amendments to this Agreement
must be executed in the same manner as the Agreement itself and will become
effective upon publication to the Dealer by Suzuki.
11.3 Effective Date. This Agreement is not valid and binding unless
and until executed by a duly authorized officer of Suzuki, and its effective
date will be the date entered upon the execution hereof by such officer of
Suzuki.
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<PAGE> 126
SUZUKIe
The Dealer understands that this Agreement will have a very sign if
icant impact on its legal rights and liabilities in its relationship with
Suzuki. It is important that the Dealer understand the Agreement. Dealer
acknowledges that it has had the opportunity to seek professional assistance
concerning the details of the Agreement
Dealer has thoroughly reviewed all of the terms and provisions of
this Agreement and understands them fully, and freelyand voluntarily enters into
this Agreement Dealers signature below acknowledges receipt of a copy of the
Agreement
Made and entered into at Brea, California on the effective date of
this Agreement which is the 19th day of January '19 90
AMERICAN SUZUKI MOTOR CORPORATION
SUZUKI Motorcycle Division
By. Mark Blackwell Marketing Director
(Name) (Title)
(Signature)
(Dealership Legal Name - Not DBA)
By.
(Sole Proprietor Only Name) (Signature~
or if corporation or partnership
DEALERSHIP By David E. Nees x /s/
(Officer's or Partners Name) (Signature)
By Randall Renfrow x /s/
(Officer's or Partners Name) (Signature)
By ' Robert P. Wheeler, Jr. x /s/
(Officer's or Partner's Name) (Signature)
bY. Howard A. Wiles x /s/
(Officer's or Partners Name) (Signature)
By Louis A. Nees x /s/
(Officer's or Partner's Name) (Signature)
All owners, shareholders, and/or partners must sign.
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<PAGE> 127
SUZUKIs
ATTACHMENT A
The following Suzuki Brand Products are the subject of this Suzuki Products
Dealer Agreement:
1. MOTORCYCLE
2. QUADRUNNER
3.
4.
5.
6.
7.
8.
9.
10.
AMERICAN SUZUKI MOTOR CORPORATION
SUZUKI Motorcycle Division
By. MARK BLACKWELL MARKETING DIRECTOR
(Name) (Title)
/s/ Signature
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<PAGE> 128
KAWASAKI AUTHORIZED WATERCRAFT DEALER SALES AND SERVICE AGREEMENT
PARTIES TO AGREEMENT
This Agreement is made by and between KAWASAKI MOTORS CORP. 9 U.S.A., 9950
Jeronimo Road Irvine California 92718-2016o a Delaware corporation, hereinafter
called "DISTRIBUTOR P" and
Cycle sport unlimited, Inc.
639 Grant Street, Herndon, VA 22070
hereinafter called "DEALER". The purpose of this Agreement is to appoint DEALER
during the continuance of this Agreement as an authorized independent dealer
for Kawasaki brand products as hereinafter designated and to establish the
basic rules which will govern the relationship between DISTRIBUTOR and DEALER.
DURATION OF AGREEMENT
This Agreement shall be in effect from the date of execution by DISTRIBUTOR to
and including December 31, 1993, unless sooner terminated as hereinafter
provided. No act by either party to this Agreement shall be construed as an
extension or renewal of this Agreement except renewals or extensions in writing
and signed by both parties.
GRANTING OF DEALERSHIP
A. DISTRIBUTOR hereby grants to DEALER, during the continuance of this
Agreement, the non-exclusive privilege of purchasing for DEALER'S own account
for resale to retail purchasers solely at DEALER'S place of business in the
city and at the address indicated above those Kawasaki brand power products
specified in Appendix "A" to this Agreement and related parts and accessories
hereinafter collectively called "Products") which are supplied by DISTRIBUTOR.
No obligation exists on the part of DISTRIBUTOR to sell any other Kawasaki
products to DEALER.
B. DEALER will not move its place of business to any new or different location
than that specified in Paragraph 1, or establish any additional place or places
of business for the sale servicing or display of Products without the prior
written consent of DISTRIBUTOR.
C. DEALER will not establish, directly or indirectly, an associate dealer or a
sub-dealer for the sale or service of new or used Products or permit someone
else to act on DEALER'S behalf or perform DEALER'S obligations under this
Agreement in connection with the sale or service of new or used Products
without the prior written consent of an executive officer of DISTRIBUTOR.
AREA OF PRIMARY RESPONSIBILITY
A. DISTRIBUTOR and DEALER agree that DEALER'S area of primary responsibility
for the sales and service of the Products shall be a five (5) mile radius of
DEALER'S place of business as specified in this Agreement.
B. DISTRIBUTOR reserves the unrestricted right to sell the Products and grant
the privilege of using the name Kawasaki and the Kawasaki trademarks to other
dealers or persons whether located in DEALER'S area of primary responsibility
or elsewhere.
SALES PERFORMANCE
DEALER agrees, at its own cost and expense, to use its best efforts and due
diligence to energetically and aggressively develop and promote the sale of
Products including each model and type thereof. DEALER and DISTRIBUTOR agree
that DISTRIBUTOR shall evaluate DEALER'S development and promotion of the sale
of Products both as a whole and separately for each model and type based on
such reasonable criteria as DISTRIBUTOR may determine from time to time which
may include but not be limited to: (a) fair and reasonable sales objectives
which may be established from time to time by DISTRIBUTOR for DEALER after
review with DEALER$ (b) the ratio of sales of Products by DEALER to sales of
other makes of similar products as compared with (i) such ratio on a local,
state, and/or nationwide bases, (ii) the average ratio for all Kawasaki dealers
appointed by DISTRIBUTOR, and (iii) such ratios for at least two other
comparable Kawasaki dealers; (c) the development of DEALER'S sales performance
over a reasonable period of time; and (d) particular conditions in DEALER'S
areas of primary responsibility if any, affecting such performance or potential
sales performance.
OWNERSHIP AND MANAGEMENT
To induce DISTRIBUTOR to enter into this Agreement. DEALER represents that the
persons identified in Appendix "B" to this Agreement, are all of the owners and
persons executing managerial authority on behalf of DEALER. DISTRIBUTOR is
entering into this Agreement in reliance upon these representations. DEALER
agrees there will be no change in DEALER'S owners or general managers without
DISTRIBUTOR'S prior written consent.
Prices TERMS AND CONDITIONS
A. DISTRIBUTOR shall invoice Products sold to DEALER under this Agreement at
prices and on terms and conditions established by DISTRIBUTOR and that are
current at the time of shipment to DEALER. Prices, terms and conditions of sale
may be changed by DISTRIBUTOR from time to time without prior notice or
liability from DISTRIBUTOR to DEALER. Unless otherwise expressly stated by
DISTRIBUTOR., said prices to DEALER do not include sales use, excise, or
similar taxes. DEALER warrants that all Products purchased from DISTRIBUTOR are
purchased for resale only in the ordinary course of DEALER'S business and that
DEALER has complied with all pertinent state and local laws pertaining to the
collection and payment by DEALER of all sales, use and like taxes applicable to
such resale transactions.
B. If DEALER is delinquent in payment of any indebtedness or obligation to
DISTRIBUTOR or fails to execute and return any security documents requested by
DISTRIBUTOR, or if DEALER is in default with respect to any provisions of this
Agreement then DISTRIBUTOR at its sole discretion and in addition to any other
rights and remedies it may have under this Agreement or at law, may without
further notice suspend all pending orders and shipments until said delinquency
is cured or said security documents are received or until said default is
cured, as the case may be.
C. DEALER agrees that DISTRIBUTOR may apply toward the payment of any
indebtedness due DISTRIBUTOR by DEALER, whether under this Agreement or
otherwise, any credit owing to DEALER by DISTRIBUTOR.
<PAGE> 129
SECURITY AGREEMENT
Dealer shall execute a security agreement granting DISTRIBUTOR and/or its
designee a security interest in the Products. The security agreement shall not
cause DISTRIBUTOR to retain or obtain any interest in the Products other than a
security interest, and it shall not cause DISTRIBUTOR to retain or obtain title
to the Products for any purpose other than taking the security interest
provided for in the security agreement. To the extent permitted by law, DEALER
hereby authorizes DISTRIBUTOR to execute and deliver on behalf of DEALER and
file without DEALER'S signature all financing statements or other instruments
which DISTRIBUTOR deems necessary to effect the security interest provided for
in the security agreement.
SHIPMENT OF PRODUCTS
A. DISTRIBUTOR shall ship Products purchased by DEALER during the duration of
this Agreement by whatever mode of transportation DISTRIBUTOR shall select from
whatever geographic point DISTRIBUTOR may from time to time establish. All
shipments of Products shall be at DEALER'S risk and DEALER shall be responsible
for and shall pay any and all transportation and/or handling charges resulting
from shipment of Products to DEALER, unless otherwise specified in writing by
DISTRIBUTOR. B. DISTRIBUTOR will endeavor as far as practical to make
deliveries to DEALER in accordance with DEALER'S orders, but if for any cause
DISTRIBUTOR fails to make deliveries within the time stated in the order, or
cancels any of such orders, DISTRIBUTOR will not be liable to DEALER for any
payment whatsoever by reason of such failure to deliver, delays in making
deliveries or cancellation, nor for any loss of profits resulting directly or
indirectly therefrom. C. In the event that DEALER should fail or refuse, for
any reason whatsoever, to accept delivery of any Product ordered by DEALER,
DEALER will pay DISTRIBUTOR the amount of all expenses incurred by DISTRIBUTOR
in shipping such Product to DEALER and in returning it to the original point of
shipment or directing it to another destination. DEALER shall also be
responsible for and will pay any and all charges for demurrage, storage, or
other expenses accruing as a result of DEALER's failure or refusal to accept
delivery. The liability of DEALER pursuant to this clause will be in addition
to, and not in lieu of, such other liabilities as may arise from DEALER'S
failure or refusal to accept delivery.
DISCONTINUANCE OR UNAVAILABILITY OF PRODUCTS
A. DISTRIBUTOR reserves for itself, and where applicable for the manufacturer,
the right to discontinue the manufacture or sale of any of the Products or to
make changes in design, color or appearance or to add improvements to
particular Products at any time, all without notice to DEALER and without
incurring arty obligation to DEALER either with respect to any Products
previously ordered or purchased by DEALER or otherwise.
B. In the event of a Product shortage or Product introduction, DISTRIBUTOR
shall have the right to allocate or apportion said available Product or
Products among its customers as DISTRIBUTORP in the exercise of its discretion,
deems appropriate.
EQUAL REPRESENTATION
In the event DEALER sells other brands or lines of products which are
competitive with those Products purchased by DEALER from DISTRIBUTOR, DEALER
agrees to provide the Products with at least an equal representation to that
provided other competitive brands or lines.
DEALER BUSINESS FACILITIES
A. DEALER agrees to establish, staff, equip and maintain a salesroom and
service facility for the Products which will provide a first-class display of
the full line of Products and provide adequate service for the retail customer.
Each such facility will comply with reasonable written layout, appearance and
size standards established by DISTRIBUTOR from time to time. DEALER understands
that DISTRIBUTOR shall evaluate DEALER'S compliance with such standard in
determining its performance under this Agreement.
B. In carrying out its obligations under this Agreement, DEALER agrees to
maintain posted opening and closing hours, which business hours shall not be
less than that which is customary for similar business establishments in
DEALER'S area of primary responsibility.
DEALER IDENTIFICATION
DEALER shall, in the event it has not already done so, purchase, erect and
maintain at DEALER'S expense an illuminated outdoor sign, or other sign
approved by DISTRIBUTOR, identifying the Products in a conspicuous. location
outside DEALER'S salesroom and service facilities, provided the erection
thereof is not prohibited by law. DEALER shall further erect and maintain
during the term of this Agreement such other authorized Product and service
signs and identification as are necessary to properly advertise DEALER'S
capital business on a basis mutually satisfactory to both DISTRIBUTOR and
DEALER. DEALER agrees to place and maintain on the business premises signs and
other means of notification to the public that DEALER is an independent
business person, separate and distinct from Distributor.
FINANCIAL RESPONSIBILITY
A. DEALER shall at all times maintain and employ, in connection with its
business and operations under this Agreement, such working capital and not
worth together with a line of credit with a financing institution satisfactory
to DISTRIBUTOR which will permit DEALER to properly and fully carry out and
perform DEALER'S duties and obligations under this Agreement, including an
inventory of Products commensurate with annually set objectives established by
DISTRIBUTOR and DEALER. Such working capital, net worth and/or line of credit
shall be of amounts not less than minimum standards established by DISTRIBUTOR
from time to time for dealers similarly situated.
B. DEALER shall at all times maintain insurance coverage reasonably required by
dealers in such business2 including, without limitation, general liability,
property damage, and products liability to adequately protect DEALER from loss
resulting from the assembly, sale, service or repair of the Products or arising
out of any acts or omissions of the DEALER.
MODEL INVENTORY
Subject to the ability of DISTRIBUTOR to supply, DEALER agrees to purchase from
DISTRIBUTOR and at all times maintain an inventory of then available models of
Products, which inventory shall at no time be less than the number of Products
reasonably established by Distributor after consultation with DEALER.
<PAGE> 130
16. SERVICE PARTS
Dealer agrees to organize and maintain a complete parts department, including a
qualified parts manager. DEALER at all times will keep in DEALER'S place of
business an inventory of service parts of an assortment and in quantities that
in DISTRIBUTOR'S judgment is necessary to meet the current anticipated
requirements of owners of Kawasaki Products. DEALER agrees that it will not
sell or offer for sale or use in the repair of any Products, as a genuine new
Kawasaki part, any part that is not in fact a genuine new Kawasaki part.
7. EMPLOYEE TRAINING
DEALER will participate in and will make available to its employees training
courses, service schools, sales and management seminars and personnel
development programs as may be provided from time to time by DISTRIBUTOR.
DEALER agrees to have in its employ at all times during the continuance of this
Agreement at least one fully trained mechanic who has attended current service
training schools provided by DISTRIBUTOR.
18. REPORTS AND FINANCIAL INFORMATION
DEALER will provide DISTRIBUTOR, by the 30th day of the month following the end
of DEALER'S calendar or fiscal business year, a complete and accurate financial
and operating statement covering DEALER'S preceding calendar or fiscal year
operations and showing the true and accurate conditions of DEALER'S business.
DEALER further agrees to furnish to DISTRIBUTOR, at the time and on the forms
prescribed by DISTRIBUTOR, such other completes accurate and true statements of
the financial condition and operating results of DEALER'S business as
DISTRIBUTOR may request. DEALER will also furnish to DISTRIBUTOR, on such forms
and at such times as DISTRIBUTOR reasonably may require, complete and accurate
reports of DEALER'S sales activity and stock of Products then being held by
DEALER.
19. ADVERTISING AND TRADE PRACTICES
A. DEALER agrees to develop, utilize and participate in various advertising and
sales promotion programs in fulfilling its responsibilities for selling,
promoting and advertising the Products. In so doings DEALER agrees to (a)
maintain a display advertising listing in the Yellow Pages of the principal
telephone directory in its marketing area and in a form approved by
DISTRIBUTOR; (b) make reasonable use of newspapers direct mail* televisions
radio or other appropriate advertising media as suggested by DISTRIBUTOR; 1c)
participate to the greatest extent feasible in advertising or sales promotion
programs offered from time to time by DISTRIBUTOR and in accordance with the
applicable provisions and rules thereof; and (d) make every reasonable effort
to build and maintain customer interest in activities involving Products and
confidence in DEALERP DISTRIBUTOR and the Products.
B. To assist DEALER in fulfilling his advertising and promotion
responsibilities DISTRIBUTOR may develop and offer from time to time various
advertising and sales promotion programs to promote the sale of Products for
the mutual benefit of DISTRIBUTOR and DEALER. DISTRIBUTOR may also offer DEALER
from time to time advertising and sales promotion materials without charge or
for purchase by DEALER at DISTRIBUTOR'S discretion. DEALER agrees to pay
promptly for any such materials.
C. DEALER agrees to at all times conduct its business in a manner that will
reflect favorably on the good name and reputation of the Products and on
DISTRIBUTOR. DEALER expressly recognizes its obligation to avoid in every way
any discourteous deceptive, misleading or unethical practice or advertising
that is or might be detrimental to the Products, DISTRIBUTORP or the public.
DEALER agrees when notified by DISTRIBUTOR of such objections, to immediately
discontinue such practice or advertising.
20. PRE-DELIVERY SERVICE
DEALER expressly recognizes its obligation to effectively assemble, inspect,
service and/or prepare Products in accordance with schedules or instructions
furnished from time to time by DISTRIBUTOR before delivery to the retail
purchaser by DEALER. DEALER agrees to uncrate, set up, inspect and test each
new Kawasaki brand power Product at DEALER'S place of business as specified in
this Agreements prior to delivery to the retail purchaser, in accordance with
the written instructions furnished from time to time by DISTRIBUTOR. DEALER
agrees to make all necessary repairs to such power Products and agrees that
each such power Product will be received directly by the retail purchaser at
DEALER'S place of business in safe and lawful operating condition. The
pre-delivery service obligations set forth in this paragraph shall not apply to
power Products sold by DEALER to other currently authorized Kawasaki dealers.
Upon requests DEALER will furnish evidence to DISTRIBUTOR of the performance of
such pre-delivery services on forms prescribed by DISTRIBUTOR. DEALER will
report promptly, in writings, to DISTRIBUTOR'S Chief Executive Officer any act
or failure to act on the part of DISTRIBUTOR or any of its personnel which
DEALER believes was not any and equitable towards it in the establishment or
performance of pre-delivery obligations or which results in unfair or
unreasonable compensation to DEALER for the performance of preparation and
delivery obligations imposed by DISTRIBUTOR.
21. REPAIR AND MAINTENANCE SERVICE
A. DEALER expressly recognizes its obligation to obtain necessary tools and to
effectively perform repair or maintenance services required on Products in
accordance with DISTRIBUTOR'S current recommendations and specifications.
B. DEALER shall develop and maintain competent qualified and efficient service
mechanics for the service and repair of the Products and shall employ said
persons in DEALER'S service and repair facilities. DEALER shall not use service
or repair facilities or personnel other than its own in connection with the
service and repair of the Products without the prior written consent of an
executive officer of DISTRIBUTOR.
C. DEALER shall give due consideration and maintain copies of bulletins which
may from time to time be issued by DISTRIBUTOR pertaining to the service or the
use or operation of the Products, and to the maintenance of requisite tools to
perform service work on the Products.
D. DEALER shall perform all Product services under this Agreement, including
pre-delivery, warranty and recall service, as an independent contractor. DEALER
agrees to post his labor rates in a conspicuous manner so that they are plainly
visible to his service customers. Service provided by DEALER shall include only
those services which are specifically requested by the customer or those
services discussed in advance by the DEALER with the customers as being
required.
<PAGE> 131
22. WARRANTY
A. DISTRIBUTOR makes no representations or warranties, express or implied, with
respect to the Products either for itself or for the manufacturer except as may
be provided in a standard written or printed warranty offered to the retail
purchaser with respect to one or more of the Products from time to time. THE
FOREGOING IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES EXCEPT TITLE,
WHETHER EXPRESS OR IMPLIED, AND DISTRIBUTOR MAKES NO WARRANTY OF
MERCHANTABILITY OR FITNESS FOR PURPOSE TO DEALER. THE FULFILLING OF THE TERMS
OF THE PRINTED WARRANTY SHALL CONSTITUTE THE SOLE REMEDY OF DEALER AND THE SOLE
LIABILITY OF DISTRIBUTOR, WHETHER ON Warranty CONTRACT OR NEGLIGENCE.
B. DEALER expressly recognizes its obligation to effectively perform warranty
work on Products whether delivered by DEALER or by another authorized dealer
and to fulfill the conditions of the warranty as applicable to particular
Products where indicated without charge to the retail purchaser. Within three
(3) business days after delivery of a new power Product to a retail purchaser,
DEALER shall complete and send to DISTRIBUTOR a true and complete sales
warranty registration report on such Product in a manner then prescribed by
DISTRIBUTOR, including the name and address of the owner. DISTRIBUTOR may
utilize the information provided by the DEALER for purposes of establishing
warranty protection, providing essential information in the event of a recall
of a Product, and/or to provide DISTRIBUTOR with useful marketing information.
C. DEALER will report promptly, in writing, to DISTRIBUTOR'S Chief Executive
Officer, any act or failure to act on the part of Distributor's any of its
personnel which DEALER believes was not fair and equitable towards it in the
performance of warranty obligations or which resulted in DEALER not receiving
reasonable and adequate compensation for warranty labor and parts provided by
DEALER.
D. DEALER shall process and dispose of warranty claims on the Products in
accordance with the procedure which may be prescribed from time to time by
DISTRIBUTOR, and DISTRIBUTOR shall have no obligation to recognize any warranty
claims unless the prescribed procedure is complied with by DEALER. In support
of DEALER'S claim for warranty compensation DEALER agrees to provide
DISTRIBUTOR with such supportive documents as DISTRIBUTOR may request.
E. DEALER expressly warrants that should any of the Products be modified by
DEALER or at DEALER'S requests DEALER will attach to the Product prior to
retail sale a conspicuous statement which will clearly disclose the extent or
nature of the modification and the resultant warranty coverage, if any2 which
will then apply to the Products.
F. Dealer expressly acknowledges that DEALER is performing warranty work on the
Products as an independent contractor and is compensated for such services
separate and apart from the purchase price of the Products.
23. KAWASAKI TRADEMARKS AND TRADE NAMES
DISTRIBUTOR and its related companies are exclusively entitled to the use of
the trademark "Kawasaki" and to the use of all trade names and trademarks used
in connection with the Products and the goodwill attached thereto in the United
States of America (hereinafter collectively called the "Marks"). DISTRIBUTOR
grants to DEALER the non-exclusive permission to advertise and otherwise inform
the general public of the fact that DEALER sells the Products and is a
"Kawasaki Dealer" at the location specified in Paragraph 1 of this Agreement,
including the use of outdoor signs signs on buildings and other means of
identification for such specified location. DEALER will not use, or permit the
use of the Marks either as part of any corporate title firm name or trade name
unless DISTRIBUTOR shall first consent thereto in writing. on termination of
this Agreement, DEALER agrees to immediately discontinue all use of the Marks
and other means of identification that might make it appear or imply that
DEALER is still an authorized representative of the Products including, without
limitation, removal of any listing in any telephone directory, display
advertising or outdoor sign. DISTRIBUTOR shall have the right, but not the
obligation, to acquire any or all such signs in possession of DEALER an date of
termination at a price that is not in excess of the price, if any, originally
paid by DEALER. DEALER further agrees to discontinue any use of the Marks or
any semblance of same as a part of its business or corporate name any if
appropriate, file a change or discontinuance of such name with the appropriate
authorities. In the event DEALER fails to comply with the terms and conditions
of this Paragraph DISTRIBUTOR shall have the right to enter upon DEALER'S
premises and remove all such signs bearing the Kawasaki designation or Marks
without liability of DISTRIBUTOR to DEALER. DEALER agrees to reimburse
DISTRIBUTOR for all costs and expenses, including attorneys' fees incurred by
DISTRIBUTOR in effecting or enforcing compliance with this Paragraph. The
provisions of this Paragraph shall survive after termination of this Agreement.
24. INDEPENDENT PERSON
DEALER is an independent business person and the conduct of its business is
within the sole discretion of DEALER. This Agreement does not create the
relationship of principal and agent, master and servant, or employer and
employee between DISTRIBUTOR and DEALER. Nothing herein contained shall be
construed or interpreted to grant any authority to DEALER to commit or bind
DISTRIBUTOR in any manner to any person. DEALER shall be solely responsible for
all the acts and omissions of DEALER* its agents and employees. This Agreement
is not intended to govern, control or manage the day-to-day business activities
of DEALER. DEALER agrees to defend, indemnify and save DISTRIBUTOR and its
suppliers harmless from any claim, demand, damage, liability, cost or expense,
including attorneys' fees and expenses, arising out of any acts or omissions of
DEALER, its agents or employees.
25. SALE OF DEALER'S BUSINESS
A. DEALER may not sell, transfer or assign the whole or any part of DEALER'S
rights or obligations under this Agreement, without DISTRIBUTOR'S prior written
consent. DEALER shall give DISTRIBUTOR at least thirty (30) days' prior written
notice of any such proposed sale, transfer or assignment. DISTRIBUTOR'S failure
to object to the proposed sale, transfer, or assignment following notice from
DEALER shall not constitute DISTRIBUTOR'S consent.
B. Provided that this Agreement is still in effect, and provided further that
notice of termination or notice of nonrenewal has not been provided to DEALER
and is not then in effect between DEALER and DISTRIBUTOR, DISTRIBUTOR agrees to
not unreasonably refuse to enter into a new Sales and Service Agreement for the
remainder of the term provided in Paragraph 2 of this Agreement with a person
contracting to purchase DEALER'S business as pertains to the Products, provided
that said purchaser as of the date of sale meets all then current requirements
established by DISTRIBUTOR for the appointment of new dealers.
<PAGE> 132
26. EARLY TERMINATION OF AGREEMENT
A. This Agreement may be terminated at any time without notice by mutual
consent of DEALER and DISTRIBUTOR.
B. Either party may terminate this Agreement prior to the expiration date
provided in Paragraph 2 hereof, without cause, on a minimum of sixty (60) days'
prior written notice from one party to the other. If applicable State law
should require notice of termination of a fixed period of time greater than
that provided by this Agreement for a stated reason, then such required notice
in the form prescribed shall be given by the terminating party.
C. DISTRIBUTOR may immediately terminate this Agreement by written notice given
to DEALER in the event of any of the following: (1) death, incapacity, removal
or resignation of DEALER or any person in the employment thereof and in
reliance upon whom this Agreement was entered into by DISTRIBUTOR$ (2) any sale
or transfer of any substantial interest in the managerial control and/or
ownership of DEALER without DISTRIBUTOR'S prior written consent (3) an
unauthorized change made by DEALER in the location of DEALER'S place of
business as specified in this Agreement or the addition of any place of
business for Products (4) discontinuance of the operation of DEALER'S business
for a period of five (5) consecutive days, unless such discontinuance is the
result of a natural disaster; 15) the appointment of an assignee, referee,
receivers or trustee for DEALER or upon its adjudication in bankruptcy or the
liquidation of DEALER; (6) any dispute, disagreement or controversy between. or
among partners, managers, officers, or shareholders of DEALER which, in the
opinion of DISTRIBUTOR, adversely affects the operation management or business
of DEALER or DISTRIBUTOR and is not resolved within thirty (30) days after
notice is given to DEALER by DISTRIBUTOR~ (7) submission by DEALER to
DISTRIBUTOR of a fraudulent report, statement or claim for reimbursement,
refund or credit or falsification of warranty claim or registration or of
DEALER'S retail labor rate or providing of fraudulent financial information;
(a) submission to DISTRIBUTOR or a customer of DEALER of false or fraudulent
statements relating to pro-delivery preparation testing, servicing repairing or
maintenance of the Products; (9) failure by DEALER to conduct his business in
compliance with any of the provisions of this Agreement; (10) failure to
maintain DEALER'S account on a current basis and in accordance with
DISTRIBUTORS terms and conditions of sale; (11) sale of Products by DEALER
which are subject to a flooring or other financing agreement without prompt
payment on sale as required by the terms and conditions of the flooring or
financing arrangement; (12) failure by DEALER, within five (5) days following
notification by DISTRIBUTOR, to replace with cash or cashier's check any check
provided DISTRIBUTOR by DEALER which has been returned from the bank on which
the check was drawn without payment to DISTRIBUTOR; (13) conviction in any
court of competent jurisdiction of DEALER, or any principal officer or manager
of DEALER, of any crime tending to affect adversely the ownership operation
management business or interest of the DEALER or Distributor or (14) failure of
DEALER to obtain or maintain any license required by law.
D. The date of notice of termination shall be the date of mailing of such
notice. If any period of notice of termination required hereunder is less than
that required by applicable laws, such period of notice shall be increased and
be deemed to be the minimum period required by such laws.
27. PROCEDURE ON TERMINATION
A. Upon termination or expiration and nonrenewal of this Agreement, DEALER will
immediately pay to DISTRIBUTOR all sums owing from DEALER to DISTRIBUTOR. Any
amount due DISTRIBUTOR by DEALER may be deducted from credits owing DEALER.
B. In the event of early termination or expiration and nonrenewal of this
Agreement, DISTRIBUTOR shall continue to fill orders from DEALER for such
Products as may be affected by the termination or nonrenewal up to the
specified termination or expiration date. DISTRIBUTOR shall have the right to
impose reasonable limitations on such orders for such Products during the
notice period. on the specified date of termination or expiration, all unfilled
orders for such Products will be automatically cancelled. Payment terms for
such Products supplied by DISTRIBUTOR to DEALER after notice of intention to
terminate or upon expiration and nonrenewal may be changed to cash, certified
check or other terms determined by DISTRIBUTOR.
C. After the effective date of the termination of this Agreement, the
acceptance of orders from DEALER by DISTRIBUTOR, or the continuation of the
sale by DEALER of Products, or the referring of inquiries to DEALER by
DISTRIBUTOR, or any business relations either party has with the other will not
be construed as a renewal of this Agreement nor a waiver of the termination. If
DISTRIBUTOR accepts any orders from DEALER after termination of this Agreement,
all such transactions will be governed, unless the contrary intention appears,
by the terms of this Agreement applicable to such transactions.
28 FINANCING AND REPOSSESSION OF PRODUCTS
A. Should DEALER enter into an agreement for the flooring of power Products
with DISTRIBUTOR and should DEALER fail to make payments thereunder when due,
or should DEALER fail to pay or have paid on its behalf any C.O.D. charges or
bill bank terms when due or presented for payment by DISTRIBUTOR, or should
DEALER fail to pay DISTRIBUTOR for any parts and/or accessories charges
incurred by DEALER when due, DISTRIBUTOR, in addition to other remedies at law
or in equity, may assess late charges against DEALER for any of such failures
in such amounts and in such a manner as DISTRIBUTOR may have in effect at the
time of such nonpayment.
B. If DISTRIBUTOR or any flooring or financial institution or agency shall
repossess or otherwise acquire any new Kawasaki brand power Products from or
through DEALER, and DISTRIBUTOR shall repurchase such power Products either
voluntarily or pursuant, to a repurchase agreement, then DEALER (i) shall pay
any cost of repairs or replacement required to place any damaged or
deteriorated units in a new and original condition, (ii) shall pay any
transportation charges incurred by DISTRIBUTOR and/or any flooring or financial
institution or agency in repossessing such power Products, (iii) shall pay any
restocking or handling charge in effect by DISTRIBUTOR at time of repurchase or
repossession, and (iv) shall pay any other sums which might be incurred by
DISTRIBUTOR and/or the flooring or financing institution or agency in the
repurchase or repossession of such power Products.
C. Should DEALER participate in a "flooring support" program (either provided
directly by DISTRIBUTOR or interest charges paid in whole or in part by
DISTRIBUTOR to a flooring source on behalf of DEALER) for certain power
Products and should such power Products thereafter be repossessed or otherwise
acquired by DISTRIBUTOR or the flooring source, DISTRIBUTOR shall be entitled
to receive from DEALER an amount equal to the interest and other charges paid
or incurred by DISTRIBUTOR on behalf of DEALER as flooring support for such
power Products.
<PAGE> 133
29. COMPLIANCE WITH SAFETY AND REGULATORY REQUIREMENTS
A. DEALER agrees to comply with and operate consistently with all applicable
federal state and local Product safety and regulatory requirements.
B. In the event that the laws of the state in which DEALER is located require
watercraft dealers to install in new or used Products, prior to the retail sale
thereof, any safety devices or other equipment not installed or supplied as
standard equipment by DISTRIBUTOR or Kawasaki, then DEALER* prior to its sale
of any such Kawasaki Products, shall properly install such equipment.
30. DEALER SAFETY OBLIGATIONS
DEALER hereby agrees to adopt, promote and implement safety programs developed
and provided by DISTRIBUTOR upon written notification from DISTRIBUTOR. DEALER
agrees to place and display safety notices and warnings and proper user
information labels on Kawasaki Products and in the dealership as appropriate,
and to adhere to established user recommendations and restrictions on the sale
of Kawasaki Products as directed by DISTRIBUTOR. DEALER agrees to promote and
require safety awareness and training for purchasers and users of Kawasaki
Products in accordance with programs and materials developed or provided by
DISTRIBUTOR upon written notification by DISTRIBUTOR.
DEALER agrees to provide to customers safety notices and warnings and other
safety awareness materials prepared or provided by DISTRIBUTOR, and/or which
may from time to time be developed and provided by industry and/or safety
associations, regarding use of Kawasaki Products. DEALER agrees to require the
reading or viewing of such safety awareness materials by the customer in
conjunction with the sale of a Kawasaki Product as specified in writing by
DISTRIBUTOR.
DEALER agrees that violation of its safety obligations described in this
Paragraph constitutes grounds for DISTRIBUTOR action under Paragraphs 7.B and
26.C19) of the Agreement. DISTRIBUTOR retains the right, through written
notification, to amend the "DEALER SAFETY OBLIGATIONS" specified in this
Paragraph and to add such other Dealer Safety Obligations as may be necessary
or advisable.
31. DEALER'S SUCCESSOR ON DEATH OR INCAPACITY
Upon termination of this Agreement because of death or incapacity of the
principal of DEALER, DISTRIBUTOR will offer to a nominated successor of the
principal of DEALER acceptable to DISTRIBUTOR, or to spouse of the principal of
DEALER, continuation of this Agreement for the duration of the Agreement as
provided in Paragraph 2 hereof provided that:
(i) DEALER, within fifteen (15) days of the occurrence of such death or
incapacity, gives notice to DISTRIBUTOR of such occurrence and the name and
qualifications of the DEALER'S successor)
(ii) The facilities and capital of the dealership are then satisfactory in the
option of DISTRIBUTOR; and,
(iii) The person to whom the continuation of the Agreement is offered provides
written notice to DISTRIBUTOR of acceptance within fifteen (15) days from the
extension of the offer by DISTRIBUTOR.
32. DISPUTE RESOLUTION
All controversies claims and disputes arising in connection with this
Agreement, except any controversies, claims and disputes relating to amounts
due and unpaid to DISTRIBUTOR, relating to DISTRIBUTOR'S rights to retake
possession of any Product or relating to third party personal injury, shall be
settled by mutual consultation between the parties in good faith as promptly as
possible, but failing an amicable settlement shall be settled finally by
arbitration in accordance with the provisions of this Section 32. Such
arbitration shall be conducted in Los Angeles, California, in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, and
the parties hereto agree that such arbitration shall be the sole and exclusive
method of resolving any and all such controversies, claims or disputes, except
those expressly excluded above. Judgement upon such award may be entered in the
Superior Court of the State of California for the County of Orange if the award
is rendered against DISTRIBUTOR, or in any court which has jurisdiction over
DEALER, if the award is rendered against DEALER. The prevailing party shall be
entitled to recover from the nonprevailing party all costs and expenses of the
arbitration including without limitation, attorneys' fees.
33. SERVICE OF NOTICE Any notice which may be required to be served by DEALER on
DISTRIBUTOR, or by DISTRIBUTOR on DEALER* shall be in writing and may be made
by personal delivery or sent by certified or registered mail, return-receipt
requested, addressed to the party for whom intended at its last known address.
Each party will promptly advise the other, in writing, of any change of
address.
34. GENERAL PROVISIONS
DEALER agrees that it neither has nor may acquire by performance under the
terms and provisions of this Agreement, any vested right in the sales and
service responsibility assigned to it hereunder and any investments made by
DEALER in the performance hereof are made with the knowledge that this
Agreement may expire and not be renewed or be terminated as herein provided.
Except for any separate documents relating to DISTRIBUTOR'S security in and to
the Products, this Agreement is the entire agreement between the parties and
terminates and supersedes all prior agreements, verbal or written, between the
parties. Neither trade usage nor course of dealing shall serve to modify, amend
or change this Agreement. This Agreement may be altered or amended in writing
only and must be signed by an executive officer o-f DISTRIBUTOR. Both parties
shall be excused from nonperformance in the case of FORCE MAJEURE or other
causes beyond the control of the parties. The paragraph headings contained
herein are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. It is understood that this is a general form
of agreement designated for use in any state. Should any provision of this
Agreement or the application thereof to any particular person or circumstance
be contrary to or prohibited by applicable laws or regulations, such provision
shall be inapplicable and deemed omitted and the remaining provisions of this
Agreement will be valid and binding and of like effect as though such
provisions were not included herein. DISTRIBUTOR has a right to amend, modify
or change this Agreement in case of legislation, government regulation or
changes in circumstances beyond the control of DISTRIBUTOR that might affect
materially the relationship between DISTRIBUTOR and DEALER. This Agreement and
the rights and obligations arising thereunder shall be governed by and
construed according to the laws of the State of California.
<PAGE> 134
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate the
day and year hereinafter written.
DEALER DIS OR
Signature: /s/ DAVID NEES Signature: /s/ [illegible]
Position/Title: PRES.
Signature:
Position/Title: Position/
Dated: 4/27/93 Dated 4/30/93
Circle One: CORPORATION PARTNERSHIP INDIVIDUAL
This Agreement shall be executed on behalf of DEALER by the owner in case of a
sole proprietorship, by a general partner in case of a partnership or by a duly
authorized officer in case of a corporation, showing position or title of
person signing.
<PAGE> 135
RECEIVF-D
APR 2 5 1997
DEALER SERVICES
ADDENDUM TO
KAWASAKI AUTHORIZED
DEALER SALES AND SERVICE AGREEMENT
This Addendum is made this 30th day of December 1996 to the Kawasaki Authorized
Dealer Sales and Service Agreement ("the Agreement").
The duration under Paragraph 2 of the current Agreement is extended to and
including December 31, 1999.
If DEALER is a limited liability company, all references in the Agreement to
partners, managers, officers or shareholders shall also include "members."
All other provisions of the Agreement remain unchanged.
IN WITNESS WHEREOF, the parties have executed this Addendum in duplicate the
day and year above written.
DEALER DISTRIEBUTOR
CYCLE SPORT UNLIMITED, INC. 0653 KAWASAKI MOTORS CORP., U.S.A.
632 GRANT ST.
HERNDON, VA 220N
Signature: /s/ DAVID NEES Signature: /s/ (illegible)
Position/Title: President
Signature:
Position/Title: Position/Title: REGIONAL SALES MANAGER
Dated: December 30, 1996 Dated: 4-22-97
Circle One: CORPORATION Limited Liability Company Partnership Individual
This Addendum shall be executed on behalf of DEALER by the owner in case of a
sole proprietorship, by a general partner in case of a partnership, by a duly
authorized officer in case of a corporation, or by a duly authorized member in
case of a limited liability company, showing position or title of person
signing.
.0653
<PAGE> 136
Triumph Motorcycles America Limited
403 Dividend Drive
Peachtree City, Georgia 30269
Authorized Dealership Agreement
TRIUMPH AUTHORIZED DEALERSHIP AGREEMENT
THIS AUTHORIZED DEALERSHIP AGREEMENT ("Agreement") is made and entered
into as of the 11 day of October by and between Triumph Motorcycles (America)
Limited, a Georgia corporation ("Triumph"), and Cycle Sport Unlimited, Inc.,
whose legal form and domicile are described more particularly on the Appendix
hereto ("Dealer").
BACKGROUND
A. Triumph is the owner of exclusive United States importation,
distribution and trademark rights with respect to "Triumph" brand motorcycles
manufactured by Triumph Motorcycles Limited ("Triumph UK"), a United Kingdom
limited company and principal owner of Triumph, as well as certain related
parts and accessories for Triumph motorcycles.
B. Triumph desires to appoint Dealer as an authorized dealer for the
resale of certain "Triumph" products at Dealer's Approved Location as described
below.
C. Dealer wishes to act as an authorized dealer for certain Triumph
products in accordance with the terms and conditions of this Agreement and the
sales policies which Triumph may establish from time to time.
AGREEMENT
In consideration of the mutual obligations contained herein and other
consideration, the receipt and sufficiency of which is acknowledged, the
parties agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, the following words and terms shal.1
have the meanings described below:
1.1 The term "Approved Location" shall mean the address described in the
Appendix here to, or such other location as Triumph may approve from time to
time in accordance with the provisions of this Agreement.
1.2 The term "Products" shall mean Triumph's then-current line of Triumph
motorcycles, Triumph parts and accessories, as the same may be updated,
modified or discontinued by Triumph from time to time in accordance with
Section 2.3 below. A summary description of Triumph's current line of Products
is attached as part of the Appendix hereto.
1.3 The term "Trademarks" shall mean the name "Triumph," the corporate
logotype shown on, the Appendix hereto, as well as any other trademark, service
mark, trade name, design, logo, trade dress, color scheme or similar features
used by Triumph from time to time in conjunction with the marketing and sale of
the Products.
<PAGE> 137
2. GRANT OF DEALERSHIP
2.1 Appointment . Subject to the terms and conditions of this Agreement,
Triumph hereby appoints Dealer as an authorized dealer of Products and grants
to Dealer the non-exclusive right to sell Products from the Approved Location,
and Dealer hereby accepts such appointment upon the terms and conditions of
this Agreement. Dealer agrees that it shall purchase Products for resale only
from Triumph and pursuant to the terms of this Agreement.
2.2 No Territorial Exclusivity. Dealer acknowledges that Dealer's rights
as an authorized dealer of the Products are non-exclusive and Triumph retains
and reserves to itself all rights with respect to marketing, distribution and
sale of the Products and the Trademarks. Triumph reserves the right to appoint
other authorized dealers for the Products, either within Dealer's market area
or elsewhere, as Triumph, in its sole discretion, may from time to time
determine in order to implement its marketing plans or as it may deem desirable
to provide Products and service to. owners or potential owners of the Products.
2.3 Reservation of Product Rights. Triumph reserves the right to change
the composition, design or packaging of any Product at any time without notice
to Dealer, or to discontinue particular Product lines from time to time as
Triumph shall deem necessary or appropriate in its sole discretion.
2.4 Approved Location. Dealer is authorized to sell Products only from the
Approved Location. Dealer cannot sell Products from any other location, or move
its place of business for sale of the Products to another location, without the
prior written approval of Triumph.
3. PRODUCT PRICES
3.1 Determination of Price. Products shall be sold to Dealer by Triumph at
such prices as are established by Triumph and communicated to the Dealer from
time to time. Whenever Triumph gives Dealer notice of a price increase for any
of the Products, Dealer shall have the right within ten (10) days after receipt
of such notice from Triumph, to cancel any outstanding orders for any Products
which have not been delivered on the date Triumph receives the cancellation
notice. If the Dealer fails to notify Triumph of cancellation within such ten
(10) day period, such failure to notify shall constitute a confirmation of
Dealer's order for such undelivered Products at the increased price. Unless
otherwise specified by Triumph, all prices shall be F.O.B. Atlanta, Georgia or
such other F. 0. B. point as Triumph may designate from time to time.
3.2 Current Price . Triumph's current price list for the Products is shown
as part of the Appendix hereto.
3.3 Time There wi.11 be added to the price of the Products an amount equal
to any applicable value added, sales, use, excise or other similar taxes
imposed with respect to the sale by Triumph to Dealer of such Products. Dealer
represents that all Products delivered to Dealer shal.1 be purchased by Dealer
for resale in the ordinary course of Dealer's business, other than a reasonable
number of demonstrator products. Dealer shall hold Triumph harmless from any
claims, demands, assessments or penalties which may be made by any taxing
authorities against Triumph with respect to Products purchased by Dealer, and
Dealer agrees to reimburse Triumph for any and all taxes paid by Triumph in
good faith on account of Products sold by Triumph to Dealer.
3.4 Reimbursement for Labor or Material Regarding Similar Delivery
Conditions. In the event that any labor or material is required to be supplied
by Triumph in an effort to comply with any special
Rev. 9/8/94
<PAGE> 138
delivery condition(s) requested by Dealer, any and all costs and expenses
incurred by Triumph for such labor or material shall be added to the invoice
price of the Products involved.
4. PAYMENTS FOR PRODUCTS
4.1 Terms of Payment . All Products will be sold to Dealer upon such
payment terms as Triumph may in its sole discretion establish from time to
time. Until further notice from Triumph, the payment terms for Products shall
be as described in the Appendix hereto. Triumph reserves the right to vary
payment terms at any time and from time to time upon written notice to Dealer.
Without limiting the generality of the foregoing, Triumph may require, in its
sole discretion and at any time, cash payment or satisfactory security before
proceeding with delivery or as a condition to Triumph's acceptance of a Dealer
order for Products. In all events, time shall be of the essence with regard to
the Dealer's payment obligations to Triumph. Any amount riot paid by Dealer
when due shall accrue interest at the lower of two percent (2 %) per month or
the highest legal rate allowed under applicable law. All payments due hereunder
shall be tendered in United States currency. In the event Triumph engages legal
counsel to collect any debt owing from Dealer to Triumph under this Agreement,
Dealer shall pay 15 % of all principal and interest due as attorneys' fees, in
addition to all other expenses of collection. Triumph may set off the amount of
any monies owed by Dealer to Triumph against any monies owed by Triumph to
Dealer.
4.2 No Setoffs or Deductions. All obligations of Dealer to Triumph under
this Agreement shall be absolute and independent of any other obligations
imposed by this Agreement or by law, and shall not be subject to any setoff,
deduction or counterclaim.
4.3 Retention of Title Triumph shall retain title to all Products
delivered to Dealer until Dealer has paid Triumph the full invoice price due
with respect to a particular Product. Dealer agrees to execute any documents,
financing statements or similar instruments as Triumph may from time to time
require in order to protect Triumph's interest in the Products and to give
third parties public notice of such interest. Any deposits, proceeds of sale or
insurance proceeds received by Dealer with respect to any such Products shall
be deemed to be held by the Dealer as use of an express trust for the benefit
of Triumph, and Dealer agrees to segregate all such proceeds in a separate
trust account and not to commingle such funds with other funds of Dealer.
Notwithstanding Triumph's retention of title to the Products, all risk of
damage or loss with respect to Products shall pass to Dealer upon delivery of
the Products to Dealer F.O.B. Atlanta, Georgia or such other delivery point as
Triumph may designate from time to time. Dealer will maintain insurance
covering the Products against loss or damage by fire, theft, collision and
against such other risks as Triumph may from time to time require, with loss
payable to Dealer and Triumph as their respective interests may appear. Dealer
shall furnish certificates and other evidences of insurance to Triumph upon
Triumph's request. Dealer's policy or policies of insurance covering the
Products shall provide that Triumph shall receive written notice prior to any
cancellation or nonrenewal of such policies. Triumph shall be entitled, at any
time and without notice, to enter into Dealer's premises and reclaim any
Products for which Dealer is delinquent in any payment due with respect to such
Products, or if for any reason Triumph deems itself to be insecure with respect
to its interest in the Products.
5. ACCEPTANCE OF ORDERS AND SHIPMENT OF PRODUCTS
5.1 Acceptance. Triumph will not be bound by any order for the Products
placed by Dealer until such order has been accepted by Triumph. Triumph may
accept or reject any order in whole or in part. Upon Triumph's acceptance of an
order submitted by the Dealer, such order shall constitute a binding agreement
of Triumph to sell and ship, and of Dealer to purchase and tender payment for,
the Products specified.
Rev. 9/8/94
<PAGE> 139
Triumph's acceptance of Dealer's order shall be evidenced by either an invoice
or shipment to Dealer, unless otherwise specified by Triumph.
5.2 Inconsistent Terms in an Order. In the event any terms or conditions
contained in an order from Dealer are inconsistent with, or in addition to, the
terms of this Agreement, such inconsistent or additional terms or conditions in
the order shall be null and void and shall not be binding on Triumph in the
event that the order containing such inconsistent or additional terms or
conditions is accepted by Triumph.
5.3 Shipping Of Products . Triumph shall ship to Dealer the Products set
forth in an accepted order to Dealer, within a reasonable time after Triumph's
acceptance of such order; provided, however, that the parties understand and
agree that lead times will vary according to manufacturing and other conditions
and that any and all shipping dates shall be approximate and shall be computed
from the date that an order is accepted by Triumph. Triumph may from time to
time designate the point(s) from which any shipments and deliveries of the
Products shall he made to Dealer. Triumph may ship the Products by such mode of
transportation and on such route as it selects from time to time. Procedures
for shipping and delivery shall be according to such terms and conditions as
Triumph may adopt from time to time. Freight, delivery and all related charges
for Products shipped to Dealer shall be Dealer's sole responsibility, unless
otherwise agreed in writing. Any carrier of Products for delivery to Dealer
shall be deemed Dealer's agent, regardless of whether the carrier is selected
by Triumph or Dealer, and regardless of whether shipping is paid for by Dealer
or Triumph.
5.4 Allocation of Products. Dealer acknowledges that Dealer is not
entitled to any priority in the supply of Products over Triumph's other
authorized dealers and customers. If at any time orders for Products exceed
Triumph's supply, Triumph may in its sole discretion allocate the supply of
available Products among its dealers and customers, including Dealer, in any
manner in which Triumph deems reasonable.
5.5 Discharge of Triumph's Obligation. Triumph's obligation to ship the
Products shall be fully and completely discharged, and all risk of loss or
damage shall immediately pass to Dealer at the time the Products are delivered
F.O.B. Atlanta, Georgia or such other delivery point(s) as Triumph may
designate from time to time; provided, however, that Triumph shall retain legal
title to all Products until full payment is received as provided in Section
4.3.
5.6 Claims for Incomplete Delivery. All claims for incomplete delivery of
Products invoiced to Dealer must be made promptly and in accordance with such
procedures and within such limits as Triumph may from time to time specify.
5.7 Return or Diversion on Failure to Accept. If Dealer should fail or
refuse or for any reason be unable to accept delivery of any Products ordered
by Dealer, or if Dealer should request diversion of a shipment from Triumph,
Dealer shall be responsible for and pay Triumph promptly on demand the amount
of all costs and expenses incurred by Triumph in filling and shipping Dealer's
order, diversion (including but not limited to return to the original place of
shipment), demurrage and storage, plus restocking charges as determined by
Triumph. Triumph may direct that such Products be returned to another
destination, but the cost to Dealer for return to such other destination shall
not be greater than the cost of returning such Products to their original place
of shipment.
6. DEALER'S UNDERTARNGS
Rev. 9/8/94
<PAGE> 140
6.1 Sale of Products. Dealer, for itself and its representatives and
employees, agrees to conduct all of its business activities relating to the
sale or distribution of the Products in a lawful manner, consistent with the
highest standards of fair trade, fair competition and business ethics.
6.2 Marketing Efforts. Dealer agrees to use its best efforts to diligently
and faithfully to promote and develop demand for the Products within the
Dealer's market area and to solicit purchases of the Products so as to maintain
a substantial and increasing volume of sales of the Products while preserving
the goodwill that is presently associated with the name and reputation of
Triumph and the Products.
6.3 Review and Approval of Advertising. Triumph reserves the right to
approve any and all advertisements or promotional materials used by Dealer with
respect to the Products. Dealer agrees not to make any Product performance
claims or representations in Product advertising, promotion or registration
other than those specifically shown on Triumph's packaging or sales literature
or otherwise expressly approved by Triumph. Notwithstanding the foregoing,
Dealer acknowledges that the purpose of Triumph's review of such materials is
solely to enable Triumph to protect its trademarks, reputation ad the goodwill
associated with Triumph and its Products, and Triumph shall not be obligated,
and does not undertake, to review all advertisements or promotional materials
submitted by Dealer to Triumph and used by Dealer with respect to the Products.
Any review or approval by Triumph of any advertisements or promotional
materials submitted to it by Dealer shall not be considered an endorsement by
Triumph of the content thereof. Dealer shall bear sole responsibility for, and
shall be solely liable for, any and all claims arising out of advertisements or
promotional materials developed and used by Dealer (except advertisements or
promotional materials that have been developed and provided by Triumph). In
furtherance and not in limitation of the indemnification obligations of Dealer
set forth in Section 10 of this Agreement, Dealer shall indemnify and hold
harmless Triumph and its officers, directors, agents, employees, shareholders,
legal representatives, successors and assigns, and each of them, from and
against any and all claims, actions and suits, whether groundless or otherwise,
and from and against any and all liabilities, judgments, losses, damages,
costs, charges, attorneys' fees, and other expenses of every nature, kind and
character incurred or suffered by reason of any and all claims arising out of
advertisements or promotional materials developed or used by Dealer (except
advertisements and promotiona l materials that have been developed and provided
by Triumph).
6.4 Operating Standards. Dealer shall operate its Products dealership at
all times according to Triumph's Dealer Operating Standards, as the same may be
revised and updated by Triumph from time to time. Triumph's current Dealer
Operating Standards are attached as part of the Appendix hereto. Triumph
reserves the right to revise and update the Dealer Operating Standards at any
time and from time to time as Triumph in its sole discretion deems necessary.
Dealer shall promptly comply with any revised or updated Dealer Operating
Standards upon receipt of written notice from Triumph of such revisions or
updates.
6.5 Signage. At all times while this Agreement remains in effect, Dealer
shall prominently display signage at the Approved Location of a type, size and
quality specified in the Dealer Operating Standards in an agreed-upon location
or locations, which signage shall contain the Triumph name and logo and shall
identify Dealer as an authorized independent dealer of Triumph motorcycles,
parts and accessories. Dealer expressly warrants as a condition precedent to
Triumph's entering into this Agreement that there are no contractual, lease,
zoning or other restrictions applicable to Dealer which would prevent Dealer
from displaying Triumph signage in accordance with the Dealer Operating
Standards.
6.6 Employees Dealer shall at all times maintain an adequate staff of
qualified and experienced employees for sales, servicing, supply and
administration of the Products, all as determined by Triumph from time to time.
Dealer's employees shall deal with customers in a courteous and professional
manner and shall
Rev. 9/8/94
<PAGE> 141
conduct themselves at all times according to the highest ethical standards.
Dealer shall be solely responsible for all wages, taxes, benefits, unemployment
insurance and all other obligations and claims relating to Dealer's hiring,
employment and termination of Dealer's employees. Dealer shall bear sole
responsibility for, and shall be solely liable for, the quality of Dealer's
employees and for the actions or omissions of its employees, whether in
connection with the sales, service or repair of Products or otherwise. In
furtherance and not in limitation of the indemnification obligations of Dealer
set forth in Section 10 of this Agreement, Dealer shall indemnify and hold
harmless Triumph and its officers, directors, agents, employees, shareholders,
legal representatives, successors and assigns, and each of them, from and
against any and all claims, actions and suits, whether groundless or otherwise,
and from and against any and all liabilities, judgments, losses, damages,
costs, charges, attorneys' fees, and other expenses of every nature, kind and
character incurred or suffered by reason of any actions or omissions of
Dealer's employees, whether in connection with the sales, service or repair of
Products or otherwise.
6.7 Training. Triumph may from time to time require that Dealer or
designated members of Dealer's staff attend and complete training courses or
seminars relating to sales or service of the Products. Dealer shall bear the
full cost of attendance at such training courses or seminars. Because retention
and comprehension of training and instruction varies on an individual basis,
Triumph shall not bear responsibility for, and shall not be liable for, and
Dealer shall bear sole responsibility for, and shall be solely liable for, the
actions or omissions of its employees, whether in connection with the sales,
service or repair of Products or otherwise, regardless of whether training for
Dealer's employees has been provided by Triumph. In furtherance and not in
limitation of the indemnification obligations of Dealer set forth in Section 10
of this Agreement, Dealer shall indemnify and hold harmless Triumph and its
officers, directors, agents, employees, shareholders, legal representatives,
successors and assigns, and each of them, from and against any and all claims,
actions and suits, whether groundless or otherwise, and from and against any
and all liabilities, judgments, losses, damages, costs, charges, attorneys'
fees, and other expenses of every nature, kind and character incurred or
suffered by reason of any actions or omissions of Dealer's employees, whether
in connection with the sales, service or repair of Products or otherwise,
regardless of whether training for Dealer's employees has been provided by
Triumph.
6.8 Approved Location- Hours of Operation. The Dealer shall at all times
maintain all areas of the Approved Location in a clean, orderly and
professional state. Dealer shall maintain such hours of operation as Triumph
shall from time to time determine to be competitive with other motorcycle
dealers within Dealer's market area. The Dealer's initial hours of operation
shall be as described in the Appendix hereto. Triumph may require a change in
Dealer's hours of operation by giving Dealer sixty (60) days' notice of such
change.
6.9 Pre-Delivery Inspection. The Dealer shall cause each new or used
Triumph motorcycle sold by Dealer to undergo a thorough inspection by a
qualified mechanic prior to delivery to the purchaser. No new or used Triumph
motorcycle shall be sold by Dealer unless and until such inspection has been
completed and the motorcycle has been found to be safe and in proper working
condition. The inspection shall be conducted according to a pre-delivery
inspection form included within the Dealer Operating Standards, as the same may
be revised and updated from time to time. AH Dealer demonstration motorcycles
shall also undergo such inspection before being used by Dealer or its
customers.
6.10 Product Invent. Dealer shall maintain at all times an adequate and
representative inventory of Triumph motorcycles, parts, service tools and other
Products, all subject to availability from Triumph, as described more
particularly by Triumph in the Dealer Operating Standards, as the same may be
revised and updated from time to time.
<PAGE> 142
6.11 Repairs. Dealer acknowledges that top quality repair and maintenance
service is essential to the maintenance of the goodwill and reputation of
Triumph, and that Dealer's failure to provide service in accordance with
Triumph's high standards could result in damage to Triumph. The Dealer shall
provide efficient, courteous and professional repair and maintenance service
for all Triumph motorcycle owners at fair and competitive rates regardless of
whether such motorcycles were purchased from Dealer and regarding of whether
such motorcycles are covered by Triumph's warranty. Dealer shall adhere to the
highest standards of ethics and honesty in conducting its repair operations.
All service shall be performed in accordance with Triumph service standards as
communicated from time to time by Triumph to Dealer. Triumph may from time to
time inspect and evaluate Dealer's service performance, and Dealer agrees to
implement any changes or improvements to its service operations which may be
suggested by Triumph from time to time. Notwithstanding the foregoing, Dealer,
as an independent contractor, shall bear sole responsibility for, and shall be
solely liable for, the manner of performance by Dealer of any and all service
and repairs of any Triumph Products or motorcycles. In furtherance and not in
limitation of the indemnification obligations of Dealer set forth in Section 10
of this Agreement, Dealer shall indemnify and hold harmless Triumph and its
officers, directors, agents, employees, shareholders, legal representatives,
successors and assigns, and each of them, from and against any and all claims,
actions and suits, whether groundless or otherwise, and from and against any
and all liabilities, judgments, losses, damages, costs, charges, attorneys'
fees, and other expenses of every nature, kind and character incurred or
suffered by reason of any and all claims in connection with the manner of
performance by Dealer of any service or repairs of Triumph Products or
motorcycles.
6.12 Tools. Dealer shall purchase all specialized tools, equipment,
manuals and other materials which Triumph shall from time to time specify as
being necessary for the proper assembly, maintenance and repair of the
Products.
6.13 Spare Dealer shall use its best efforts to promote the sale of
Triumph brand spare parts and accessories (i.e., spare parts and accessories
bearing the authorized "Triumph" brand name, whether manufactured by Triumph or
authorized suppliers of Triumph brand parts). Dealer agrees to maintain an
adequate inventory of Triumph parts consistent with the volume or anticipated
volume of Dealer's sales and service. Dealer shall in no event sell or use in
its repair and service of Triumph motorcycles any parts which have not been
expressly approved in writing by Triumph. Dealer shall not identify any parts
as being Triumph parts unless such spare parts are in fact genuine Triumph
brand parts. In no event shall Dealer sell or offer for sale any parts for use
with Triumph motorcycles which are not in full compliance with all
requirements, standards and specifications required by applicable law. In
furtherance and not in limitation of the indemnification obligations of Dealer
set forth in Section 10 of this Agreement, Dealer shall indemnify and hold
harmless Triumph and its officers, directors, agents, employees, shareholders,
legal representatives, successors and assigns, and each of them, from and
against any and all claims, actions and suits, whether groundless or otherwise,
and from and against any and all liabilities, judgments, losses, damages,
costs, charges, attorneys' fees, and other expenses of every nature, kind and
character incurred or suffered by reason of any breach of the foregoing.
6.14 Safety Recalls. In the event Triumph notifies Dealer of any Product
recalls, Dealer shall carry out the recall in accordance with the terms of the
recall notice regardless of whether any recalled Product was purchased from
Dealer. All recall work shall be performed at no charge to customers unless
otherwise indicated by Triumph, and shall be considered as warranty service
work performed by Dealer for compensation and all other purposes.
Rev. 9/8/94
<PAGE> 143
6.15 Maintenance of Records. The Dealer shall keep and maintain detailed
and accurate records of all Dealer sales and service activities, inventories
and warranty claims, on such forms and such manner as Triumph shall specify
from time to time. Records shall be maintained for so long as Triumph may from
time to time specify.
6.16 Access to Premies and Records. Dealer shall permit Triumph, through
its authorized representatives, to have full access to Dealer's place of
business during normal business hours for purposes of inspection and assuring
Dealer's compliance with the terms of this Agreement. Triumph shall also have
the right from time to time during normal business hours to enter Dealer's
premises in order to inspect and photocopy any of Dealer's books and records
relating to Products sold or serviced by the Dealer. Triumph's rights under
this Section 6.16 shall survive any termination or expiration of this
Agreement.
6.17 Compliance with Law. Dealer shall be solely responsible for
ascertaining all applicable laws, regulations, ordinances, licensing
requirements, and other governmental requirements ("Laws") which must be
complied with in connection with the operation of Dealer's business and the
sale of the Products, and shall comply fully with such Laws. Without limiting
the foregoing, Dealer shall take all action necessary to comply with all
applicable Laws in Dealer's jurisdiction relating to Dealer licensing,
Salesperson licensing, title registration, odometer certification, model year
requirements, advertising, and sales taxes, each with respect to both new and
used Products.
6.18 Expenses Unless otherwise expressly agreed in writing, Dealer shall
pay any and a of its costs and expenses under this Agreement and shall be
solely responsible for the acts and expenses of its employees and
representatives.
6.19 Resale Prices.of the Product . Dealer shall at its own discretion
establish the prices at which it resells the Products.
6.20 Forecasts. Dealer shall submit to Triumph quarterly and annual
written forecasts of its purchases and sales of Products in a format approved
by Triumph and containing marketing information about Products and competitive
goods, as well as such other data and details as Triumph may from time to time
reasonably request.
6.21 Restrictive Covenants. Dealer, for itself and for any owner,
shareholder, subsidiary and affiliate of Dealer, covenants and agrees that it
shall refrain from directly or indirectly (through employees, agents,
contractors or otherwise), while this agreement is in effect, selling,
distributing, marketing, developing or otherwise dealing in products that are
competitive with or similar to the Products, except for the competing product
lines listed on the Appendix hereto.
6.22 Purchaser Registration. Dealer acknowledges that in the event that
Triumph is required by law or otherwise to notify purchasers of Triumph
motorcycles and other Products of significant information (e.g., because of a
recall or warranty notice), it is essential that Triumph be able to provide
such notifications promptly, and Dealer therefore agrees that it shall promptly
provide written notice to Triumph of the names and addresses of all persons or
entities that purchase any Triumph Products from Dealer on such customer
registration forms as are approved by Triumph from time to time. Dealer shall
bear sole responsibility for, and shall be solely liable for, any failure to
provide such written notice to Triumph. In furtherance and not in limitation of
the indemnification obligations of Dealer set forth in Section 10 of this
Agreement, Dealer shall indemnify and hold harmless Triumph and its officers,
directors, agents, employees, shareholders, legal representatives, successors
and assigns, and each of them, from and against any and all
<PAGE> 144
claims, actions and suits, whether groundless or otherwise, and from and
against any and all liabilities, judgments, losses, damages, costs, charges,
attorneys' fees, and other expenses of every nature, kind and character
incurred or suffered by reason of Dealer's failure to promptly provide written
notice to Triumph of the names and addresses of all persons or entities that
purchase any Triumph Products from Dealer.
6.23 Purchaser Manuals and Guides. Upon the sale of any Products by
Dealer, Dealer shall provide to the purchaser of such Products any applicable
owners manual, warranty guides and other manuals or guides prepared for use
with such Products. In addition, in the case of the sale of Triumph motorcycles
by Dealer, Dealer shall also provide to each purchaser of such motorcycles a
copy of the Motorcycle Safety Foundation Manual. Dealer shall bear sole
responsibility for, and shall be solely liable for, any failure to provide such
manuals or guides to purchasers of motorcycles or other Products. In
furtherance and not in limitation of the indemnification obligations of Dealer
set forth in Section 10 of this Agreement, Dealer shall indemnify and hold
harmless Triumph and its officers, directors, agents, employees, shareholders,
legal representatives, successors and assigns, and each of them, from and
against any and all claims, actions and suits, whether groundless or otherwise,
and from and against any and all liabilities, judgments, losses, damages,
costs, charges, attorneys' fees, and other expenses of every nature, kind and
character incurred or suffered by reason of Dealer's failure to provide such
manuals or guides to purchasers of motorcycles or other Products.
6.24 Product Liability Ins Dealer shall at all times maintain in full
force and effect policies of insurance providing coverage in the amount of
$500,000 per occurrence and in the aggregate for product liability claims and
claims of negligence in the service and repair of Triumph motorcycles and other
Products. Dealer shall furnish certificates and other evidences of such
insurance to Triumph upon Triumph's request. Triumph makes no representation to
Dealer that such amount of insurance is adequate to protect Dealer from such
claims and Dealer is advised to exercise its own business judgment in
consultation with its professional advisors in determining an adequate amount
of such insurance. Dealer shall bear sole responsibility for, and shall be
solely liable for, any failure to maintain such policies of insurance in full
force and effect. In furtherance and not in limitation of the indemnification
obligations of Dealer set forth in Section 10 of this Agreement, Dealer shall
indemnify and hold harmless Triumph and its officers, directors, agents,
employees, shareholders, legal representatives, successors and assigns, and
each of them, from and against any and all claims, actions and suits, whether
groundless or otherwise, and from and against any and all liabilities,
judgments, losses, damages, costs, charges, attorneys' fees, and other expenses
of every nature, kind and character incurred or suffered by reason of Dealer's
failure to maintain such policies of insurance in full force and effect,
7 SALES LITERATURE
Triumph shall, in its sole discretion, furnish Dealer with the following:
(i) Triumph's then current price list, mailers, brochures, catalogs, technical
specifications, service manuals, business forms, and the like pertaining to its
Products as from time to time revised by Triumph, and (ii) such packaging,
artwork, advertising, display and promotional material as Triumph deems
appropriate. All such materials shall remain the property of Triumph on loan to
Dealer (except to the extent disposed of for their intended purpose in the
ordinary course of business) and must be returned to Triumph immediately upon
its request or immediately upon expiration, cancellation or termination of this
Agreement. Triumph may require Dealer to pay a deposit with respect to any such
materials, which shall be refunded to Dealer when such materials are returned
to Triumph in accordance with the preceding sentence. Unless supplied by
Triumph, Dealer agrees to prepare and furnish, at its own cost, such packaging,
artwork, advertising, display and promotional materials as are necessary for
the promotion of the Products in Dealer's market area; provided, however, that
prior to display
<PAGE> 145
or use thereof, Dealer shall submit such material to Triumph for prior review
and written approval and shall make any changes or modifications required by
Triumph and, further provided, that it shall be Dealer's responsibility to
comply with all applicable laws pertaining to the marketing, trademark, unfair
competition or otherwise regulating the marketing, or selling of Products. All
packaging, artwork, advertising, display and promotional materials used by
Dealer in connection with the distribution, advertising, promotion or marketing
of Products, regardless of whether supplied by Triumph or submitted by Dealer
to Triumph for its review and approval, will be and remain the exclusive
property of Triumph. Notwithstanding the foregoing, Dealer acknowledges that
the purpose of Triumph's review of such materials is solely to enable Triumph
to protect its trademarks, reputation and the goodwill associated with
Triumph.and its Products, and Triumph shall not be obligated, and does not
undertake, to review all advertisements or promotional materials submitted by
Dealer to Triumph and used by Dealer with respect to the Products. Any review
or approval by Triumph of any advertisements or promotional materials submitted
to it by Dealer shall not be considered an endorsement by Triumph of the
content thereof. Dealer shall bear sole responsibility for, and shall be solely
liable for, any and all claims arising out of advertisements or promotional
materials developed and used by Dealer (except advertisements or promotional
materials that have been developed and provided by Triumph). In furtherance and
not in limitation of the indemnification obligations of Dealer set forth in
Section 10 of this Agreement, Dealer shall indemnify and hold harmless Triumph
and its officers, directors, a 3,ents, L employees, shareholders, legal
representatives, successors and assigns, and each of them, from and against any
and all claims, actions and suits, whether groundless or otherwise, and from
and against any and all liabilities, judgments, losses, damages, costs,
charges, attorneys' fees, and other expenses of every nature, kind and
character incurred or suffered by reason of any and all claims arising out of
advertisements or promotional materials developed or used by Dealer (except
advertisements and promotional materials that have been developed and provided
by Triumph). Upon the expiration, cancellation or termination of this Agreement
for any reason whatsoever, Dealer shall promptly return to Triumph, or to
Triumph's designated agent, all artwork, labels, containers, packages,
packaging, advertising, display and promotional material respecting the
Products, or, at Triumph's option, and upon its written request, Dealer shall
destroy the same under the supervision of Triumph or its designated agent.
8. CONFIDENTIAL INFORMATION
Dealer shall treat as confidential and prevent unauthorized duplication or
disclosure of any confidential information concerning the Products or the
business affairs of Triumph which Dealer may acquire during the course of its
activities under ft Agreement (or any prior agreements between Triumph and
Dealer) and shall riot use any of such confidential information for any purpose
other than in furtherance of Dealer's obligations under this Agreement. In
addition, Dealer shall take all necessary precautions to prevent any such
disclosure. by its employees and representatives. Dealer further acknowledges
and agrees that any right, tide and interest in and to the aforesaid
confidential information is vested in Triumph and that such information is the
sole property of Triumph. For purposes of this Agreement, the term
"confidential information" means any information concerning the business of
Triumph or the Products which is not in the public domain and shall include,
but is not limited to, the terms of this Agreement. The obligations of
confidentiality provided hereunder shall survive for a period of five (5) years
after the expiration, cancellation or termination of this Agreement, for any
reason; provided, however, that with respect to any item of confidential
information which is a trade secret under applicable law, the obligations of
confidentiality hereunder shall survive the expiration of such five (5) year
period and remain in full force and effect for so long as such confidential
information remains a trade secret under applicable law.
9. TRADEMARKS, PATENTS AND COPYRIGHTS
<PAGE> 146
9.1 Use of Trademarks. Subject to the terms and conditions of this
Agreement, the Dealer is granted a nonexclusive license to use the Trademarks
in connection with the operation of the dealership granted by this Agreement,
but for no other purpose. Subject to Triumph's right to review the use of the
Trademarks, the Dealer may indicate, in approved signs, advertising, publicity,
or other sales or marketing media or materials, that Dealer is an authorized
independent dealer of Triumph's Products. Dealer shall not use Triumph's name
or Trademarks in either its own corporate name or any fictitious business name.
9.2 Prominence of Trademarks. Dealer agrees to give due prominence to the
fact that the Trademarks are the property of Triumph and in the event that
Dealer refers to the Trademarks in advertising, promoting or in any other
manner so as to identify the Products, Dealer shall clearly indicate Triumph's
ownership of the Trademarks.
9.3 Limitation on Dealer s Rights. Dealer acknowledges that Triumph is the
exclusive owner of the Trademarks and all goodwill and other rights therein.
Dealer agrees that, except to the extent expressly provided herein, Dealer
shall acquire no right or license with respect to the Trademarks. Dealer agrees
that at no time during the term of this Agreement nor at any time after this
Agreement's cancellation, expiration or termination shall Dealer adopt,
register or use in any manner whatsoever, without Triumph's prior written
consent, any word, symbol or combination thereof, which in any way imitates,
resembles or is similar to the Trademarks.
9.4 Dealer Contributions. Dealer agrees that all artwork, graphics,
layouts, slogans, names, tides or similar materials incorporating, or being
used in association with, the Trademarks which may be created by the Dealer,
its employees, agents and subcontractors and any other party with whom it may
contract to create such materials pursuant to this Agreement shall become the
sole property of Triumph, including copyright rights, and Dealer agrees on
behalf of itself, its employees, its agents, its subcontractors and any other
party with whom it may contract to create such materials, to promptly execute
any and all appropriate documents in this regard.
9.5 Protection and Defense Triumph shall have sole responsibility for
protection and defense of the Trademarks in such manner as Triumph may in its
sole discretion elect. Triumph shall not be liable to Dealer for lost profits,
lost opportunity, or for any incidental and indirect costs, losses or expenses
Dealer might have in connection with the Trademarks. Dealer agrees to cooperate
and assist My with Triumph in the defense and protection of the Trademarks at
Dealer's cost and shaH promptly advise Triumph in writing of any potentially
infringing uses by others in addition to any suits brought, or claims made,
against Dealer involving the Trademarks. Decisions regarding action involving
the protection and defense of the Trademarks shall be solely in the discretion
of Triumph and Dealer shall take no action in this regard without the express
written permission of Triumph.
9.6 Preservation of Markings. Dealer agrees that it will in no way alter,
deface, remove, cover up or mutilate in any manner whatsoever, any trademark,
serial or model number, the word "patent" and/or the patent number, copyright
symbol, brand or name which Triumph may attach or affix to or make a part of
any of Triumph's Products, spare parts, components and/or assemblies of the
Products, or any packaging or sales literature relating thereto.
Rev. 9/8/94
<PAGE> 147
10. INDEMNIFICATION
Dealer shall indemnify and hold harmless Triumph and its officers,
directors, agents, employees, shareholders, legal representatives, successors
and assigns, and each of them, from and against any and all claims, actions and
suits, whether groundless or otherwise, and from and against any and a
liabilities, judgments, losses, damages, costs, charges, attorneys' fees, and
other expenses of every nature, kind and character incurred or suffered by
reason of Dealer's business and/or actions with respect to Dealer's sale,
distribution, service or repair of Products (including, but not limited to,
claims by Dealer's customers, employees or agents), except for claims, actions
and suits covered under Triumph's warranty as set forth in Section I I hereof
and except for claims, actions or suits arising solely from the negligent acts
or omissions of Triumph. Triumph may undertake the responsibility of defending
any claims with counsel chosen by Triumph in its sole discretion, or upon
Triumph's request, Dealer shall assume responsibility for such defense; in
either event, Dealer shall pay all expenses, fees and costs associated with
such defenses and judgments, fines, penalties or interest imposed on or against
Triumph as a result thereof, including, without limitation, the expenses, fees
and costs of defense counsel chosen by Triumph in Triumph's sole discretion.
Dealer further agrees that the provisions contained in this Section 10 and any
other provisions in this Agreement concerning indemnification obligations of
Dealer shall survive the termination or expiration of this Agreement and shall
be liberally construed in favor of Triumph.
11. LIMITED PRODUCT WARRANTY
1 11.1 Limited Customer Warranty. All Triumph Products supplied to Dealer
from Triumph shall be warranted by Triumph solely as provided in Triumph's
written warranty to customers which may be revised and amended from time to
time by Triumph. TRIUMPH'S WRITTEN LIMITED CUSTOMER WARRANTY AS REVISED AND
AMENDED FROM TIME TO TIME SHALL BE EXCLUSIVE AND TRIUMPH EXPRESSLY DISCLAIMS
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. IN NO
EVENT WILL TRRJMPH BE LIABLE TO DEALER, ITS CUSTOMERS OR ANY OTHER PARTY FOR
ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY NATURE,
WHETHER BASED IN CONTRACT, TORT OR OTHERWISE, THAT ARISE IN CONNECTION WITH THE
PRODUCTS OR IN CONNECTION WITH EITHER TRIUMPH'S FAILURE TO DELIVER OR ITS LATE
DELIVERY OF THE PRODUCTS (INCLUDING, BUT NOT LIAHTED TO, LOSS OF USE OF THE
PRODUCTS AND LOSS OF PROFITS).
11.2 Customer Warranty . Dealer shall provide each customer purchasing
Products from Dealer with a copy of Triumph's then current limited customer
warranty at the time of sale. Dealer shall not make any statement or
representation purporting to grant to the customer any warranty on behalf of
Triumph other than Triumph's then current limited customer warranty and Dealer
shall bear sole responsibility for, and shall be solely liable for, any other
statements, representations or warranties (whether oral or written) made by
Dealer or on Dealer's behalf with respect to any of the Products. If Dealer
should elect to give its customers any Dealer warranty with respect to the
Triumph Products in addition to Triumph's limited customer warranty, such
Dealer warranty shall provide in a clear and conspicuous manner that such
warranty is being provided by Dealer and not by Triumph. In furtherance and not
in limitation of the indemnification obligations of Dealer set forth in Section
10 of this Agreement, Dealer shall indemnify and hold harmless Triumph and its
officers, directors, agents, employees, shareholders, legal representatives,
successors and assigns, and each of them, from and against any and all claims,
actions and suits, whether groundless or otherwise, and from and against any
and all liabilities, judgments, losses, damages, costs, charges, attorneys'
fees, and other
Rev. 9/8/94
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expenses of every nature, kind and character incurred or suffered by reason of
any statements, representations or warranties (whether oral or written), other
than Triumph's then current limited customer warranty, made by Dealer or on
Dealer's behalf with respect to any of the Products.
11.3 Performance of Warranty Work; Compensation. Dealer shall perform a
warranty service work requested for Triumph Products, regardless of whether
such Products were purchased from Dealer. Triumph shall provide compensation to
Dealer for labor and Triumph parts used in the performance of Triumph warranty
work in such reasonable amounts, and subject to such terms and conditions, as
Triumph may from time to time establish. Dealer shall not charge any customer
for any work covered by a Triumph warranty and reimbursed from Triumph to
Dealer. Dealer shall use Triumph parts in work performed under the Triumph
customer warranty or otherwise reimbursed by Triumph. determination whether
any work is covered under the Triumph limited customer warranty shall be made
solely by Triumph. Notwithstanding the foregoing, Dealer, as an independent
contractor, shall bear sole responsibility for, and shall be solely liable for,
the manner of performance by Dealer of any and all warranty service and
repairs. In furtherance and not in limitation of the indemnification
obligations of Dealer set forth in Section 10 of this Agreement, Dealer shall
indemnify and hold harmless Triumph and its officers, directors, agents,
employees, shareholders, legal representatives, successors and assigns, and
each of them, from and against any and all claims, actions and suits, whether
groundless or otherwise, and from and against any and all liabilities,
judgments, losses, damages, costs, charges, attorneys' fees, and other expenses
of every nature, kind and character incurred or suffered by reason of the
manner of performance by Dealer of any and all warranty service and repairs.
11.4 Warranty Procedure . Dealer shall follow and comply with all
procedures, instructions, guidelines and policies communicated from time to
time by Triumph to Dealer regarding warranty work to be performed by Dealer
under the Triumph limited customer warranty, including without limitation
procedures, forms and standards for submission and approval of warranty claims.
All revisions and changes to warranty procedures, instructions, guidelines and
policies shall be effective upon conmunication of such revisions from Triumph
to Dealer unless otherwise expressly provided in writing.
12. INDEPENDENT CONTRACTOR RELATIONSHIP
Dealer shall be deemed to be an independent contractor and shall bear all
of its own expenses in connection with this Agreement. Dealer acknowledges that
it is not a partner, joint venturer, franchisee, employee or agent of Triumph.
Dealer shall have no authority, whether express or implied, to assume or create
any obligation on behalf of Triumph nor shall Dealer issue or cause to be
issued any quotations or draft any letters or documents over the name of
Triumph.
13. FORCE MAJEURE AND AVAILABILITY OF MATERIALS
13.1 Force Majeure. Except for Dealer's monetary obligations to Triumph
hereunder, neither party will be in default in the performance of its
obligations under this Agreement if such performance is prevented or delayed
because of war, hostilities, revolution, civil commotion, riot, strike, labor
dispute, lack or failure of transportation facilities, failure of equipment,
lack of necessary products or materials, epidemic, fire, wind, earthquake,
storm or flood, use of any law, order, proclamation, regulation or ordinance of
any government, or of any subdivision thereof, because of acts of God or for
any other cause, whether similar or dissimilar to those enumerated, that is
beyond the reasonable control and without the fault or negligence of the party
whose performance is affected (any such event is hereinafter called "Force
Majeure").
<PAGE> 149
13.2 Availability of Materials. All deliveries by Triumph are contingent on
Triumph UK's receiving timely shipment of necessary products, materials, parts
and components for the production, assembly or supply of the Products, and
Triumph may delay, reduce or cancel deliveries to Dealer to the extent such
deliveries are affected by delay, reduction or cancellation of shipments of
necessary products, materials, parts and components to Triumph UK.
14. TERM OF AGREEMENT
14.1 Initial Term and Renewal. The initial term of this Agreement is for a
five (5) year period commencing and effective as of the date of this Agreement.
Upon expiration of the initial term, this Agreement shall renew automatically
for successive three (3) year terms, unless either party gives notice to the
other of its intent not to renew at least 120 days prior to the expiration date
of the then-current initial term or renewal term. At Triumph's option, Dealer
may be required, as a condition to any rene wal, to execute Triumph's
then-current standard Dealership Agreement and any related agreements, which
shall supersede this Agreement (except that the term thereof shall be modified
if necessary to be consistent with the terms of this Section 14. 1).
14.2 Notice of Nonrenewal. Either party may, at any time, terminate this
Agreement, without cause, effective as of the end of the initial term or any
successive renewal term hereof, by giving the other party written notice of its
desire not to renew the term of this Agreement at least one hundred twenty (120)
days prior to the end of such initial term or successive renewal term.
14.3 Termination With Cause. At any time either party may terminate this
Agreement for cause, as follows:
(a) If a parry breaches any provision contained in this Agreement,
the other party may cancel or terminate this Agreement upon thirty (30) days'
written notice; provided that the breaching party has not (i) cured the breach
during the thirty (30) day period following such notice, or (ii) taken
substantial steps, during such thirty (30) day period, to cure a nonmonetary
breach which in good faith could not be totally cured within such thirty (30)
day period. In the event termination is delayed pursuant to ( ii) above due to
the breaching party's taking substantial steps to cure a nonmonetary breach,
termination shall become effective immediately and without further notice if
such party ceases diligent efforts to cure such breach, or in any case if such
breach is not cured or is not curable within 120 days following the date of the
termination notice.
(b) Notwithstanding the provisions of subsection (a) above, Triumph
may cancel or terminate this Agreement upon giving written notice with no
opportunity for Dealer to cure in the following circumstances:
(1) If Dealer becomes insolvent by any definition, makes any
assignment for the benefit of its creditors, or is placed in
receivership, liquidation or bankruptcy (voluntary or
involuntary).
(2) On the commencement of the winding up of the Dealer, other than
voluntary winding up for the purposes of amalgamation or
reorganization.
(3) If the management or control, or both, of all or any part of
Dealer's business is vested, by law, decree, ordinance of other
governmental action, in or made subject
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to the control or direction of any government agent, officer,
appointee or designee, or of any other person, firm or company not a
party to this Agreement.
(4) If after Triumph shall have given Dealer notice of a default
under subsection (a) above and Dealer shall commit the same, or
substantially the same, default within a period of twelve (12)
consecutive months after the date of Dealer's initial default.
(5) If Dealer's default is material and results from intentional
misconduct or grossly negligent acts or omissions.
(6) If Triumph should terminate any other agreement between the
parties as a result of a Dealer default thereunder.
(7) If the Dealer should attempt to assign any of its rights under
this Agreement in contravention of Section 19 hereof.
(8) If Dealer has engaged in any deceptive, unethical or illegal
trade practice in connection with the sale of Triumph Products.
(9) Dealer's abandonment of the operations of the dealership or
failure to operate as a going concern during hours and days of
operation customary for retail businesses in Dealer's market area.
For purposes of this subparagraph (9), if Dealer fails to open for
business for any period of seven (7) or more consecutive days,
Dealer shall be deemed to have abandoned the dealership.
(10) If Dealer submits or makes to Triumph any false or fraudulent
statement, application (including Dealer's initial Dealership
Application), reimbursement request or report, including without
limitation false or fraudulent claims with respect to any warranty
matters.
(11) If Dealer should violate any federal, state or local laws,
rules or regulations applicable to Dealer's operation of the
dealership, including without limitation dealership licensing laws,
the National Traffic and Motor Vehicle Safety Act of 1966, as
amended, or the Clean Air Act.
(12) If Dealer should enter into any contract, conspiracy,
combination or agreement, whether written or oral, for the purpose
of fixing prices of Triumph Products or other illegal practices.
(13) If Dealer should attempt to sell Triumph Products from any
location other than the Approved Location without the express
written consent of Triumph.
(14) If Dealer or any principal owner of Dealer should be convicted
or plead no contest to a felony or any crime involving fraud or
dishonesty.
In the event Triumph gives notice of termination under this Section 14.3(b), the
grounds specified by Triumph in such notice of termination shall not be
exclusive and shall not preclude Triumph from later proving that additional
grounds for termination existed at the time such notice was given.
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14.4 Withdrawal From Market . In addition to the foregoing, Triumph may
cancel this Agreement upon notice to Dealer at any time that Triumph withdraws
from distribution of Triumph Products, either within Dealer's market area or
generally, or at any time Triumph ceases to be an authorized distributor of
Triumph Products.
14.5 Termination Due to Governmental Action. Notwithstanding any other
provision of this Agreement to the contrary, Triumph shall have the right, in
its sole discretion, to terminate this Agreement in the event that a law, decree
or regulation is enacted or adopted by any governmental authority which would
impair or restrict in any manner whatsoever the right of Triumph to terminate or
elect not to renew this Agreement; provided, however, that such termination
shall not take effect until the day prior to t he effective date of the
aforementioned law, decree or regulation.
14.6 Suaival of Obligations. The expiration, cancellation or termination
of this Agreement, for whatever reason, will not discharge or relieve either
party from any obligation which accrued prior to such expiration, cancellation
or termination, will not relieve any party that has breached this Agreement from
liability for damages resulting from such breach and will not destroy or
diminish the binding force and effect of any of the provisions of this Agreement
that expressly, or by reasonable implication, c ome into or continue in effect
on or after cancellation or termination hereof.
14.7 Repurchase of Products and Related Items.
(a) Upon any termination or expiration without renewal of this
Agreement, upon written request from either party hereto to the other delivered
within five (5) days following such termination or expiration, Dealer shall
sell, and Triumph shall purchase from Dealer, all Triumph Products in Dealer's
inventory, all approved signage bearing the Trademarks, and all special tools
and equipment designed specifically for use in connection with the Triumph
Products and the purchase of which was required. by Triumph hereunder. In the
case of Triumph motorcycles, Triumph shall be obligated to repurchase only those
motorcycles which are new, of the then current model year, unused, undamaged,
and in first class, salable condition. In the case of Triumph parts, Triumph
shall be obligated to repurchase only those parts which are new, listed in
Triumph's then current price book, in original packaging, unused, undamaged and
in first class, salable condition. In the case of signs, tools and equipment,
Triumph shall be obligat ed to purchase only signs approved by Triumph bearing
the Triumph Trademarks, and such special tools and equipment designed
specifically. for service with Triumph Products, the purchase of which was
required by Triumph and which are in good repair and working condition. In the
event either party exercises its option hereunder, Dealer shall promptly supply
to Triumph a list of all Triumph Products, tools, signs and equipment subject to
repurchase by Triumph hereunder.
(b) The purchase price for any Triumph motorcycles or parts
purchased by Triumph pursuant to this Section 14.7 shall be equal to 85 % of
Triumph's then-current standard list price to dealers for such motorcycles and
parts, less any refunds allowances, or credits previously granted to Dealer with
respect to the motorcycles and parts being purchased. The purchase price for
signs, tools and equipment shall be the price paid by Dealer less all
depreciation computed on a straight-line basis over a five (5) year useful life.
(c) In the event of any repurchase by Triumph pursuant to this
Section 14.7, Dealer shall permit Triumph's personnel and representatives to
enter Dealer's premises and inspect and count all Triumph Products, signs, tools
and equipment proposed to be repurchased hereunder.
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(d) Dealer shall store, at Dealer's sole expense, all Triumph
Products and other items which Triumph becomes obligated to repurchase pursuant
to this Section 14.7 until receipt of shipping instructions from Triumph. Dealer
shall have sole responsibility for packing such Triumph Products suitably for
shipping and for paying all freight and insurance charges from Dealer to
Triumph's central distribution or such other location within the United States
as Triumph shall designate.
(e) Dealer shall bear all risk of loss or damage to any Triumph
Products or other items which Triumph becomes obligated to purchase hereunder
until such items have been delivered to the destination designated by Triumph
and have been inspected and accepted by Triumph, and in no event shall -Triumph
be required first to claim against any carrier or insurer with respect to any
such loss or damage for items lost or damaged in transit.
(f) Dealer represents and warrants that all Triumph Products and
other items tendered to Triumph for repurchase pursuant to this Section 14.7
shall be sold to Triumph free and clear of any liens, encumbrances, security
interests or claims and attachments whatsoever at the time of purchase by
Triumph. Dealer shall, at Dealer's sole expense, take such actions and execute
such documents as are necessary to vest in Triumph clear title, free of liens,
encumbrances, security interests, claims and attachments, in cluding without
limitation compliance with all applicable bulk sales laws. Dealer understands
and agrees that Triumph shall have no obligation to purchase any Triumph
Products or other items hereunder unless Dealer can convey clear title as
provided herein.
(g) All payments due from Triumph to Dealer hereunder shall be made
promptly after all items tendered for repurchase have been delivered to Triumph,
inspected and accepted by Triumph with clear title as provided in subsection (f)
above, and, :in the case of Triumph motorcycles, after Triumph shall have
received the manufacturer's certificate of origin or other applicable
certificates of tide. Triumph shall have the right to set off and deduct from
any amounts due Dealer in connection with such repurchase, any sums due and
owing from Dealer to Triumph or any of its affiliates for any reason.
14.8 No Claim for Compensation. The Dealer expressly acknowledges
that it is not entitled to and will not assert any claim for any compensation of
any nature whatsoever from Triumph with respect to the sales of Products, or its
distribution of Products or otherwise in connection with this Agreement. The
Dealer's sole source of compensation in relation to this Agreement will be from
the revenue, if any, derived from its resale of the Products. In the event this
Agreement expires or is cancelled or terminate d pursuant to the provisions of
this Section 14, Dealer will have no right to receive, and Triumph will have no
obligation to pay, any compensation, indemnity or reimbursement for any of the
following: loss of profit, loss of goodwill, loss of clientele, costs of
advertising, promotional materials or samples, termination of employees,
employees' salaries, the losses associated with buildings, stocks, machinery,
transportation, or other similar assets or expenditures in which Dealer invests
or expends funds in connection herewith, or for any other reason whatsoever.
14.9 Further Obligations After Termination. In the event of a
termination or expiration of this Agreement in any manner, the following further
provisions shall take effect:
(a) All rights granted to Dealer under or pursuant to this Agreement
shall cease, and, where legally possible, revert to Triumph.
(b) Dealer shall cease to hold itself out in any way as a dealer of
Triumph Products.
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(c) Dealer shall cease to use the Trademarks and shall refrain from
using any colorable imitation thereof. Dealer shall immediately cease to use and
destroy any stationery, order sheets, advertising materials and other printed
matter bearing the Trademarks and shall remove all signs containing same.
(d) Dealer shall immediately return to Triumph any originals and
copies of all confidential information, technical data or material, including
but not limited to brochures, letters, price or customer lists and memoranda,
service records, warranty information or other information pertaining to the
Products.
(e) At Triumph's option, all sums owed by each party hereto to the
other shall become due and payable immediately upon expiration or other
termination of this Agreement. Triumph, at its option, may offset any sums due
or to become due to Triumph from Dealer against any sums owed by Triumph to
Dealer.
15. REPRESENTATIONS AND WARRANTIES
15.1 Representations, Warranties and Covenants of Triumph. Triumph hereby
covenants, represents and warrants that:
(a) it is entitled to grant to the Dealer all rights, licenses and
authorities granted by it herein;
(b) it is not a party to or subject to any other agreement in
conflict with this Agreement,
(c) the execution and delivery of this Agreement by it has been duly
authorized; and
(d) the execution and delivery of this Agreement by it and the
fulfillment of the terms and conditions hereof (i) do not and will not result in
the breach of any of the terms, conditions, provisions of its constituting
documents, by-laws or resolutions of its directors or shareholders, or any
license, permit, contract, agreement, instrument, order, decree or writ issued
to it or to which it is a party or by which it or its properties or assets are
bound and (ii) does not or would not with the passage of time or the giving of
notice constitute a default under any contract, agreement or instnunent to which
it is a party or by which it or its properties or assets are bound.
15.2 Representations. Warranties and Covenants of Dealer. The Dealer
hereby represents, covenants, warrants and acknowledges that:
(a) it is not a party to or subject to any agreement in conflict
with this Agreement;
(b) the execution and delivery of this Agreement by it has been duly
authorized;
(c) the execution and delivery by it of this Agreement and the
fulfillment of the terms and conditions hereof (i) do not and will not result in
the breach of any of the terms, conditions, provisions of its constituting
documents, by-laws or resolutions of its directors or shareholders, or any
license, permit, contract, agreement, instrument, order, decree or writ issued
to it or to which it is a party or by which it or its properties or assets are
bound and (ii) does not or would not with the passage of ti me or the giving of
notice constitute a default under any contract, agreement or instrument to which
it is a party or by which it or its properties or assets are bound;
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(d) all information provided by Dealer to Triumph on the Triumph
Dealership Application and in the Appendix to this Agreement is true, complete
and correct;
(e) Dealer and/or one or more of Dealer's directors or executive
officers has at least two (2) years prior management experience in the sale of
motorcycles; and
(f) Dealer does not anticipate that Dealer's sales of Products
hereunder will exceed 20% in dollar volume of Dealer's projected gross sales
during the first full year after Dealer begins selling Products hereunder.
16. ENTIRE AGREEMIENT; AMENDMENT
This Agreement, including the Appendix hereto, contains the entire
understanding between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous written or oral negotiations and
agreements between them regarding the subject matter hereof. Except as expressly
contained herein, neither party has made or relied upon any representations,
warranties, assurances, "side deals" or understandings. Without limiting the
generality of the foregoing, Dealer acknowledges that T riumph has made no
forecasts, guarantees, representations or assurances regarding Dealer's
potential sales, profits or earnings capability as a dealer of the Products
under this Agreement. This Agreement may be amended orgy by a writing signed by
both of the parties. With respect to any consents, approvals, waivers or
amendments which may be granted by Triumph to Dealer hereunder, including
without limitation consents to assignment or to a change in the Approved
Location, no such consent, approvals, waiver s or amendments shall be valid or
binding upon Triumph unless in writing and signed by an officer of Triumph of at
least Vice President. Under no circumstances may Dealer rely upon any oral
representations or assurances from Triumph personnel with respect to consents,
approvals, waivers or amendments.
17. NOTICES
All notices and other communications hereunder shall be in writing and shall
be deemed to have been given only if and when (i) personally delivered or (h)
five (5) business days after mailing, postage prepaid, first class, certified or
registered mad, or (iii) when delivered (and receipted for) by an express
delivery service, or (iv) when first sent by telex, telecopy or other means of
instantaneous communication, provided such communication is properly confirmed
by personal delivery, mail or an express de livery service as provided above, to
the respective addresses shown in the Appendix hereto. Either parry may change
the address for the giving of notices and communications to it by written notice
to the other party in conformity with the foregoing. Nothing contained herein
shall justify or excuse failure to give oral notice for the purpose of informing
the other party hereto when prompt notification is required, but it is
understood that such oral notice shall in no way satisfy the requirement of a
writte n notice. In the event Triumph cannot effect notice to Dealer because
Dealer has abandoned its place of business or refuses to accept such notice,
such notice may be served by Triumph through the Department of Motor Vehicles
(or its equivalent) in the state in which the Approved Location is located.
18. SEVERABILITY
If any provision of this Agreement should be held invalid or unenforceable
for any reason whatsoever or to violate any law, this Agreement shall be
considered divisible as to such provisions and such provisions shall be deemed
amended to comply with such law, or if it cannot be so amended without
materially altering
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the tenor of the Agreement, then such provision(s) shall be deemed deleted from
the Agreement in such jurisdiction, and in either case, the remainder of this
Agreement shall be valid and binding.
19. ASSIGNMENT
The parties acknowledge that this Agreement constitutes a personal services
contract between Triumph and Dealer. Dealer may not transfer or assign this
Agreement or any of its rights hereunder without Triumph's prior written
approval, and any attempted assignment shall be void and shall constitute
grounds for termination by Triumph pursuant to Section 14.3(b)(7) hereof. This
Agreement shall be binding upon and shall inure to the benefit of Triumph and
its successors and assigns, and shall be binding upon a nd inure to the benefit
of Dealer and its permitted assignees. For purposes of this Section 19, any
transfer of any shares of stock or other ownership interest in Dealer to any
party other than the current owners or shareholders listed in the Appendix shall
be deemed as an assignment of Dealer's rights under this Agreement.
20. NO IMPLIED WAIVERS
The failure of either party at any time to require performance by the other
party of any provision hereof shall not affect in any way the right to require
such performance at any later time nor shall the waiver by either party of a
breach of any provision hereof be taken or held to be a waiver of such
provision.
21. COUNTERPARTS
This Agreement 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.
22. SECTION REFERENCES
Any reference in this Agreement to a section or subsection shall be deemed
to include a reference to any subsidiary sections whenever the context requires.
23. CAPTIONS
The captions of the sections and subsidiary sections of this Agreement are
included for reference purposes only and are not intended to be a part of the
Agreement or in any way to define, limit or describe the scope or intent of the
particular provision to which they refer.
24. GENDER
Masculine, feminine and neuter terms shall be interchangeable (and shall
include a corporation, a partnership, or another entity), and shall be singular
and plural, where the context makes a change of gender or number appropriate.
25. GOVERNING LAW
The parties acknowledge that this Agreement shall take effect upon execution
by Triumph at its Offices in Atlanta, Georgia. The parties further acknowledge
that the mutual performance hereof by Triumph and Dealer constitutes a
substantial contact with that State. Accordingly, the parties invoke the
protection of the laws of Georgia with respect to the protection of their rights
and enforcement of their obligations hereunder
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and they mutually stipulate that this Agreement is in all respects (including,
but not limited to, all matters o interpretation, validity, performance and the
consequences of breach) to be construed, governed and enforced in accordance
with the internal laws (excluding all conflict of laws rules) of Georgia, as
from time to time amended and in effect, and any applicable federal laws of the
United States of America, as from time to time amended and in effect.
26. ARBITRATION
(a) The parties agree to use every reasonable effort to settle any dispute
or disagreement between them relative to this Agreement by amicable means and if
appropriate utilize assistance of their respective chief executive officers and
not to resort to legal action unless and until the parties have in good faith
attempted to settle such dispute or disagreement in the foregoing manner.
(b) If this method of resolution should have proved to be impracticable, any
controversy or claim arising out of or relating to this Agreement shall be
submitted to and be finally resolved by arbitration pursuant to the provisions
of the United States Arbitration Act (9 U.S.C. I et seq.), to be conducted by
the American Arbitration Association ("AAA"), with such arbitration to be held
in Atlanta, Georgia in accordance with the AAA's Commercial Arbitration Rules
then in effect. Each party hereby irrevocab ly agrees that service of process,
summons, notices or other communications related to the arbitration procedure
shall be deemed served and accepted by the other party if given in accordance
with Section 17. The arbitrator shall render a judgment of default against any
party who fails to appear in a properly noticed arbitration proceeding. The
arbitration shall be conducted by one arbitrator, as selected by the AAA. Any
award or decision rendered in such arbitration shall be final and binding on
both parti es, and judgment may be entered thereon in any court of competent
jurisdiction if necessary. Judgments rendered in any arbitration proceedings
shall be limited to actual damages sustained by the party in whose favor such
judgment is rendered, and no consequential, punitive, exemplary, special or
multiplied damages shall be awarded. Each party shall bear its own costs and
expenses of such arbitration proceeding. Notwithstanding the foregoing, the
following categories of claims and disputes shall = be subjec t to mandatory
arbitration pursuant to the provisions of this Section 26: (i) any claim by
Triumph for monies owed by Dealer in connection with any sale of Products and
(ii) any claim or dispute arising under the Lanhan Act, or under any state law
or common law alleging infringement or misuse of the Trademarks. In case any
dispute arises involving the claims described in (i) and (ii) of the preceding
sentence which also involve matters subject to mandatory arbitration hereunder,
unless both parties agree o therwise the matters subject to mandatory
arbitration shall be severed from the claims which are not subject to mandatory
arbitration, and claims subject to mandatory arbitration shall be decided by
arbitration as provided herein, while the claims not subject to arbitration wUl
be decided in the appropriate judicial forum.
(c) Notwithstanding subsections (a) and (b) of this Section to the contrary,
any party may seek injunctive relief against the other party at any court of
proper jurisdiction with respect to any and all preliminary injunctive or
restraining procedures pertaining to this Agreement or the breach thereof. Any
provisions to the contrary herein notwithstanding, the law applicable in the
jurisdiction of such court shall apply with respect, but limited to, all such
preliminary injunctive or restraining procedures.
(d) Any judicial proceeding challenging the validity of the parties'
agreement to arbitrate pursuant to this Paragraph 26 shall be brought in a state
or federal court located in Atlanta, Georgia and each of the parties hereby
submits to the personal jurisdiction and consents to venue in any such court for
such proceeding, and hereby waives to the fullest extent possible any defense of
forum non conveniens.
-21-
<PAGE> 157
Each of the parties has executed this Agreement through their duly
authorized officers or agents whose signatures appear below, effective as of the
date shown at the beginning of this Agreement.
TRIUMPH
TRIUMPH MOTORCYCLES (AMERICA) LIMITED
BY: [signature]
-----------------------------------
TITLE: CEO
-----------------------------------
DEALER
CYLCE SPORT UNLIMTED, INC.
-----------------------------------
[Print name of Dealer]
BY: /s/ DAVID NEES
-----------------------------------
TITLE: PRESIDENT
-----------------------------------
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<PAGE> 158
SCHEDULE E
LEASE AGREEMETNS
FOR
THE MOTOR CYCLE DIVISON
OF CYCLE SPORT UNLIMITED, INC.
<PAGE> 159
SCHEDULE E-1
THE HERNDON LEASE
FOR
THE MOTOR CYCLE DIVISION
OF
CYCLE SPORT UNLIMITED, INC.
<PAGE> 160
DRAFT 6.2 SCHEDULE F-1
HERNDON LEASE AGREEMENT
<PAGE> 161
STORE LEASE Draft 6.2
CYCLE SPORT UNLIMITED, INC.,
LANDLORD
and
V-TWIN ACQUISITIONS, INC.
TENANT
for
632 Grant Street Herndon, Virginia
<PAGE> 162
DRAFT 6.2 DEED OF LEASE
THIS DEED OF LEASE (the "Lease") made this day of
19____, b y and between CYCLE SPORT UNLIMITED, INC., . Virginia, hereinafter
designated "Landlord", and V-TWIN ACQUISITIONS, INC., 11708 Bowman Green Drive,
Reston, Virginia, _, hereinafter designated "Tenant".
WITNESSETH:
1. DATA SHEET. This Section I is an integral part of this Lease and
all of the terms, dates and requirements hereof are incorporated into this Lease
in all respects. In addition to the other provisions which are elsewhere defined
in this Lease, the following terms, whenever used in this Lease, shall have the
meanings set forth in this Section 1, subject to adjustments thereto or more
detailed definitions set forth elsewhere in this Lease. If there is any conflict
between any of the Lease provisions set fo rth in this Section I and any other
provisions of this Lease, the latter shall control.
(a) Leased Premises: 632 Grant Street, Herndon, Virginia
(b) Gross Rentable Square Feet of Premises: 12,907 (c) Lease Dates: (1) Date
Lease Executed: (2) Date of Tender: (3) Rent Commencement Date: see Section 4.A
(d) Lease Term: ten (10) Lease Years, and one (1) five (5) year option
(1) Commencing:
(2) Ending: ten (10) Lease Years after Rent Commencement Date
(3) Initial Partial Lease Year: From: To:
(4) First Lease Year: From: see Sec. 4.A To: see Sec. 4.A
(e) Minimum Rent: Yearly: see Section 5.A; Monthly: see Sec. 5.A
(f) AdditionalCharges to Tenant:
(1) Utilities: to be paid directly by Tenant (3) Real Estate Taxes: 100% by
Tenant (g) Security Deposit: $7,260 (h) Tenant's Trade Name: (i) Permitted
Uses:retail sales service of motorcycles, water vehicles, mopeds and related
equipment and items as subject to Sec. 13
(j)Dimensions of Sign Box: In compliancewith Herndon & Fairfax County
Requirements
Page I of 21
<PAGE> 163
2. LEASED PREMISES.
A. In consideration of all Tenant's undertakings hereinafter set forth,
including payment of rent as hereinafter specified, Landlord hereby leases to
Tenant and Tenant hereby leases from Landlord the premises (the "Leased
Premises") which are located at 632 Grant Street in Herndon, Virginia, which
Leased Premises bear the street address set forth in Section 1(a) of the Data
Sheet, contain the approximate number of gross rentable square feet set forth in
Section 1(b) of the Data Sheet.
B. For purposes hereof, the Leased Premises shall be deemed to extend to and
include the exterior faces of all exterior walls, or to the building line where
there is no wall, or to the center line of any walls separating the Leased
Premises from any adjacent premises not included in the Leased Premises, and
shall consist of the space therein, including the structural floors and the
bottom of the roof above. Landlord reserves the right to make such changes in
the Leased Premisies and the improvements thereo n as Landlord deems advisable,
including, without limitation, the right, exercisable in Landlord's sole
discretion, to construct additional building(s) and/or other improvements
thereon, provided that any such change will not involve unreasonable
interference with the conduct of Tenant's business. Landlord agrees that any
change in the placement of pipes, ductwork and electrical lines in the Leased
Premises will not involve unreasonable interference with the conduct of Tenant's
business.
3. TENANT'S WORK.
A.(i) Tenant agrees to perform, at its risk and expense, all work which is
necessary to prepare the Leased Premises for Tenant's intended business,
including fixturing ("Tenant's Work"), commencing on the date the Landlord makes
written tender of the Leased Premises to Tenant, or, with Landlord's approval
(which shall not be unreasonably withheld), prior to such date. Specifications
for Tenant's Work shall be submitted to Landlord at least twenty (20) days prior
to commencement thereof and shall be subject to Landlord's approval, which
shall not be unreasonably withheld. Tenant's Work shall be performed in
accordance with requirements of governmental authorities and all reasonable
rules made by Landlord and its contractors and without interference with or
damage to work performed or to be performed by Landlord or its agents. If Tenant
causes any such interference or damage, Tenant shall be liable therefor.
(ii) Tenant shall not permit any lien on account of the performance of services
or supply of materials for any item of Tenant's Work, or for any other item of
construction or repair performed by Tenant, to be filed against the Leased
Premises. If any such lien is filed, Tenant shall, within thirty (30) days after
notice thereof, discharge the lien of record or, if Tenant elects to contest the
lien by appropriate proceedings, bond the lien and diligently prosecute the
proceedings. If Tenant fails to dischar ge the lien, Landlord may do so, and any
monies expended by Landlord in doing so, including court costs and attorneys
fees, shall be reimbursed by Tenant promptly upon demand.
Page 2 of 21
<PAGE> 164
4. TERM, TENANTS ACCEPTANCE.
A. The term of this Lease (the "Lease Term") shall be ten (10) years commencing
on . The first "Lease Year" during the term hereof shall be the period
commencing on the commencement date of the Lease Term if it occurs on the first
day of a calendar month, or on the first day of the next succeeding calendar
month if the commencement date occurs on any date other than the first day of a
calendar month, and shall terminate twelve (12) full calendar months thereafter.
Each subsequent Lease Year during the term hereof shall commence on the day
immediately following the last day of the preceding Lease Year, and shall
continue for a period of twelve (12) full calendar months, except that the last
Lease Year during the term hereof shall terminate on the day that this Lease
expires or is otherwise terminated.
B. At the commencement of the Lease Term, at Landlord's request, Tenant shall
execute and deliver to Landlord a certificate of commencement in a form
reasonably acceptable to Landlord's lender. After commencement of the Lease
Term, Tenant shall have no right to assert any remedy based on a claim that
Landlord failed to deliver possession of the Leased Premises, or failed to
furnish any other facilities, in accordance with the terms hereof.
5. FIXED RENT.
A. Commencing with the Rent Commencement Date, Tenant covenants to pay to
Landlord as fixed minimum annual rent for the Leased Premises for the Lease Term
("Minimum Rent") the following annual sums during the following Lease Years,
payable in the following equal monthly installments:
Lease Year Minimum Rent Monthly Installments
1st Lease Year $106,104 $8,842
2nd Lease Year $118,740 $9,895
3rd Lease Year $129,072 $10,756
4th Lease Year $135,528 $11,294
5th Lease Year $141,972 $11,813
6th Lease Year $146,232 $12,186
7th Lease Year $150,624 $12,552
8th Lease Year $155,148 $12,929
9th Lease Year $159,804 $13,317
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<PAGE> 165
10th Lease Year $164,604 $13,717
All such monthly installments of Minimum Rent shall be payable in advance on the
first day of each month or part thereof during the Lease Term. If the Lease Term
commences on other than the first day of a month, the rent for that month shall
be prorated and paid based on the days in such month after and including the
commencement date.
B. All rent shall be payable, without demand and without setoff or other
reduction, at Landlord's address above or such other place as Landlord
designates in writing.
C. No payment by Tenant or receipt by Landlord of a lesser amount than the
monthly installment of rent or other charges herein stipulated shall be deemed
to be other than on account of the earliest stipulated rent or other charges,
nor shall any endorsement or statement of any check or letter accompanying any
check or payment as rent be deemed an accord and satisfaction, and Landlord may
accept such check for payment without prejudice to Landlord's right to recover
the balance of such rent or pursue any ot her remedy in this Lease provided.
D. Tenant agrees to operate the business during reasonable retail business
hours, and shall conduct its business so as to maximize the volume of business
at the Leased Premises, all subject to causes beyond Tenant's reasonable
control. For all purposes of this Lease, "causes beyond Tenant's reasonable
control" shall include acts of God, the elements, weather conditions,
earthquakes, settlements, fires, acts of governmental authorities, wars, riots,
shortages of labor and materials, acts of third parties fo r which Tenant is not
responsible, strikes, picketing, work slowdowns or stoppages, and labor
disputes. Tenant shall keep on the Leased Premises only such goods and
merchandise as Tenant intends to offer for sale at wholesale or retail in or
from the Leased Premises. Tenant shall use for office or other non-selling
purposes only such space in the Leased Premises as is reasonably required for
Tenant's business in the Leased Premises.
E. As provided in Section 45, in addition to the Minimum Rent, Tenant shall pay
as "Additional Rent" such other obligations as are imposed under this Lease.
6. PERCENTAGE RENT. [Intentionally deleted.]
7. LATE CHARGES. Any rental or other payment required to be made by Tenant
hereunder which is not made within seven (7) days of its due date shall be
payable by Tenant to Landlord, without demand, with interest thereon from the
due date until paid at the rate of eighteen percent (18%) per annum (1 1/2% per
month), but no less than One Hundred Dollars ($ 100.00), to cover Landlord's
administrative expenses, and Tenant shall reimburse Landlord for reasonable
attorneys fees, if any, incurred by Landlord by re ason of said late payment by
Tenant.
8. REAL ESTATE TAXES. A. Tenant shall be responsible for reimbursement to
Landlord of all Real Estate
Page 4 of 21
<PAGE> 166
Taxes levied on the land and building of the Leased Premises. Tenant shall
reimburse Landlord for the Real Estate Taxes within 10 days from receipt of
notice from Landlord of the amount of reimbursement then due. In the event that
the Real Estate Taxes paid by the Tenant are not correct, the balance due shall
be paid by Tenant to Landlord, or the overpayment shall be obtained by Tenant
form the taxing authority at Tenant's expense.
B. Landlord may reasonably contest the real estate tax assessment. Reasonable
expenses, including attorneys fees, expert witness fees and similar costs,
incurred by Landlord in obtaining or attempting to obtain a reduction of any
Real Estate Taxes shall be added to and included in the amount of any such Real
Estate Taxes. Real Estate Taxes which are being contested by Landlord shall
nevertheless be included for purposes of the computation of the liability of
Tenant under the above paragraph, provided, howe ver, that in the event that
Tenant shall have paid any amount of increased rent pursuant to this Section 8
and the Landlord shall thereafter receive a refund of any portion of any Real
Estate Taxes on which such payment shall have been based, Landlord shall pay to
Tenant the appropriate portion of such refund. Landlord shall have no obligation
to contest, object or litigate the levying or imposition of any Real Estate
Taxes and may settle, compromise, consent to, waive or otherwise determine in
its discret ion to abandon any contest with respect to the amount of any Real
Estate Taxes without consent or approval of the Tenant. Without making any
representation that Tenant has legal standing to do so, Landlord has no
objection to Tenant's contesting Real Estate Taxes, so long as Tenant continues
to make timely payment of Real Estate Taxes hereunder.
C. A tax bill or true copy thereof submitted by Landlord to Tenant shall be
conclusive evidence of the amount of taxes assessed or levied, as well as of the
items taxed. If any real property tax or assessment levied against the land,
building or improvements covered hereby or the rents reserved therefrom, shall
be evidenced by improvement bonds or other bonds, or in any other form, which
may be paid in annual installments, only the amount paid or payable in any real
estate tax fiscal year shall be included as Real Estate Taxes for that real
estate tax year for purposes of this Section 8.
9. PERSONAL PROPERTY TAXES. Tenant shall pay all property taxes and assessments
on its personality, fixtures and other property installed in the Leased Premises
and on improvements made by Tenant.
10. UTILITIES. Tenant shall pay directly to the supplier all charges for water,
gas, electricity, sewer, telephone and other utilities used upon the Leased
Premises after the Tender Date. Expenses for installation and maintenance of
utility meters shall be borne by Tenant, and if Landlord pays any such expenses,
Tenant shall reimburse Landlord promptly upon demand. Landlord shall not be
liable for any failure to furnish or for any interruption of utility services.
13. USE OF LEASED PREMISES. Tenant shall use the Leased Premises exclusively for
conduct of the business set forth in Section 1(i) of the Data Sheet. Tenant
shall not, without the prior written consent of Landlord (in Landlord's sole and
absolute discretion), (a) use all
Page 5 of 21
<PAGE> 167
or any portion of the Leased Premises for any other purpose, (b) conduct any
fire, auction, "going out of business", or bankruptcy sales on the Leased
Premises, (c) use any loudspeaker or other communications equipment that may be
heard or seen outside the Leased Premises, or (d) permit the installation or use
in any portion of the Leased Premises of one or more pinball, video, electronic,
mechanical or other amusement or game machine of any kind. At no time shall
Tenant offer for sale or display any type of illicit drug or any type of drug
use paraphernalia. In its sole and absolute discretion, Landlord may agree to a
change of the permitted use. In the event that Landlord agrees to a change of
use for the Premises, then Landlord may adjust the Fixed Rent to the market rate
for such use.
14. COMPLIANCE WITH LAWS, NUISANCES, UNUSUAL RISKS. Tenant shall comply with all
laws, ordinances, rules and regulations pertaining to its use and occupancy of
the Leased Premises. Tenant shall not permit (a) any objectionable noise or odor
to emit from the Leased Premises, (b) any act upon the Leased Premises tending
to disturb other persons, including occupants of neighboring property, (c) any
act upon the Leased Premises which might subject Landlord to liability for
injury to any person or damage to any property, or (d) any act upon the Leased
Premises which invalidates, or which increases the rate of insurance of, any
policy of insurance on the Leased Premises, including the building or any
property therein. Tenant shall be liable for and shall pay to Landlord the
amount of any such increase caused by Tenant's activities.
15. CONDITION OF LEASED PREMISES. Tenant, at its expense, shall keep the Leased
Premises in clean condition, shall keep the sidewalks in front of the Leased
Premises clean and free of ice and snow, shall maintain a "dumpster" trash
receptacle suitable to handle all of Tenant's refuse, and shall remove all
refuse from the Leased Premises and adjacent areas.
16. SIGNS. The present signage on the premises is hereby accepted by the Tenant.
Should Tenant wish to make any changes to the signage, then Tenant shall submit
the changes to the locality and the Landlord for approval at Tenant's expense.
The dimensions and color of said signage shall be approved by the Landlord. At
Tenant's expense, the sign shall be installed by Tenant in compliance with
applicable law following approval of the sign by Landlord and the locality.
After installation Tenant shall maintain the sign in good repair at Tenant's
expense. Tenant shall not display any other signs, lights or advertisements on
the exterior of the Leased Premises, or on or in the immediate proximity to the
inner or outer face of the show windows, or in any other location within the
Leased Premises from which same may readily be seen from outside the Leased
Premises, unless Landlord, in its discretion, consents thereto in writing.
Tenant shall keep any signs, lights or advertisements approved by Landlord in
good repai r.
17. ALTERATIONS. Tenant shall not alter the exterior of the Leased
Premises or the building in any way. Tenant may, at its expense, alter or
improve the interior of the Leased Premises for the conduct of its business
after obtaining the written approval of Landlord as to the alterations or
improvements and the contractor to perform same, which approval shall not be
unreasonably withheld. Landlord may condition its approval upon Tenant's
delivery to Landlord of a policy or policies of workmen's compensation ,
liability and property damage insurance, naming
Page 6 of 21
<PAGE> 168
Landlord as additional insured, in limits and with companies acceptable to the
Landlord. Such alterations and improvements shall in no way be harmful to the
structure of, nor overload the electrical, plumbing, heating or air conditioning
facilities of, the Leased Premises or the building in which it is located, and
must comply with all applicable building codes, regulations and laws. Except for
modifications previously approved by Landlord, no later than fifteen (15) days
after the expiration of the Lease Term, Tenant shall, at its expense, promptly
restore the Leased Premises to their original condition, reasonable wear and
tear excepted; in default thereof, Landlord may effect such restoration, and
Tenant shall reimburse Landlord for the cost thereof.
18. FIXTURES AND EQUIPMENT. All trade or lighting fixtures and equipment placed
in the Leased Premises by Tenant shall remain Tenant's property, and Tenant
shall have sole responsibility therefor. Tenant may remove same at any time,
provided that Tenant is not then in default hereunder and further provided that
Tenant repairs any damage to the Leased Premises occasioned by removal.
19. LANDLORD'S MAINTENANCE. Prior to the commencement of Tenant's Lease,
Landlord will repair any existing roof leaks on the Leased Premises at its sole
expense. Also, prior to the commencement of the Lease, Landlord shall inspect
and service the Hvac system at its sole expense. At the commencement of the
Lease Term the Hvac systems, plumbing system and electrical system shall be in
good working order. During the Lease Term at Tenant's expense Landlord shall
make all necessary repairs to the structure and roof of the building and the to
the exterior of the Leased Premises (except doors, windows and store front),
after notice from Tenant of the need therefor. During the Lease Term, Landlord
will maintain the parking lot at Tenant's expense. Tenant will exercise best
efforts to notify Landlord of any necessary Landlord's maintenance. Landlord
will notify Tenant before incurring Landlord's maintenance expenses.
20. TENANT'S MAINTENANCE. On the commencement Date Tenant is deemed to accept
the HVAC system, plumbing system, and electrical system "AS IS" but in good
working condition as required by Section 19. During the term of the Lease,
Tenant will be responsible for all repairs and maintenance of the HVAC system,
plumbing system, and electrical system. Tenant, at its expense, shall (a) make
all repairs and replacements not required to be made by Landlord under SECTION
19, (b) maintain a service contract, satisfactory to Landlord, for the heating,
ventilating and air conditioning equipment in or exclusively serving the Leased
Premises, and (c) redecorate and repaint the interior of the Leased Premises
whenever necessary to keep the Leased Premises well maintained. If Tenant fails
to promptly perform such obligations, Landlord may make the repairs and maintain
the service contract, all at Tenant's expense, and Tenant shall reimburse
Landlord for the cost thereof promptly upon demand.
21. LANDLORD'S RIGHT OF ENTRY. Provided that entry shall not unreasonably
interfere with the conduct of the Tenant's business, Landlord and its agents may
enter the Leased Premises at reasonable hours to inspect or exhibit same; to
repair or alter same; to place and maintain a "FOR RENT" sign thereon at any
time within six (6) months prior to termination of the Lease Term.
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<PAGE> 169
22. LIABILITY, TENANT'S INDEMNITY, INSURANCE.
A. Except for damages resulting from the willful or negligent act or omission of
Landlord, LANDLORD SHALL NOT BE LIABLE FOR, AND TENANT SHALL INDEMNIFY AND HOLD
LANDLORD HARMLESS FROM AND AGAINST, any and all liabilities, damages, causes of
action, suits, claims, judgments, costs and expenses (including attorneys fees)
arising from any injury, loss or damage to any persons or property (a) arising
within the Leased Premises, or (b) arising out of any act, omission or
negligence of Tenant or any person on th e Leased Premises by the license,
express or implied, of Tenant. Similarly, except for damages resulting from the
willful or negligent act or omission of Landlord, Landlord shall not be liable
to Tenant, its employees, agents, business invitees, licensees, customers,
guests or trespassers, for any damage or loss to the property of Tenant or
others located on the Leased Premises, or in the Building or the Land on which
it is built, or for any accident or injury to persons in the Leased Premises or
the Build ing, resulting from the necessity of repairing any portion of the
Building; the use or operation (by Tenant or any other person) of any heating,
cooling, electrical or plumbing equipment or apparatus; any fire or other
casualty; any leaking in any part or portion of the Leased Premises or the
Building; any water, wind, rain, or snow that may leak into, or flow from, any
part of the Leased Premises or the Building; any water, gas, steam, fire,
explosion, electricity or falling plaster; or the bursting, stop page or leakage
of any pipes, sewer pipes, drains, conduits, appliances or plumbing works.
Landlord shall, however, be liable for damages resulting from the willful or
negligent act or omission of Landlord. On or prior to occupancy by Tenant, and
thereafter throughout the Lease Term, Tenant shall maintain, at its sole
expense, general comprehensive public liability and property damage insurance
insuring Tenant and Landlord with respect to the Leased Premises and their
appurtenances, in a company satisfacto ry to Landlord, in which the combined
single limit of such policy shall be at least Five Million Dollars
($5,000,000.00).
B. Tenant, at Tenant's sole cost and expense, shall also obtain and maintain in
effect at all times during the term of this Lease, policies providing the
following coverage:
(i) insurance covering Tenant's leasehold improvements, trade fixtures,
equipment and personal property from time to time in, on or upon the Leased
Premises, in an amount not less than eighty percent (80%) of the full
replacement value of said items, providing protection against perils included
within the standard Virginia form of fire and extended coverage insurance
policy, together with insurance against sprinkler damage, vandalism and
malicious mischief. All proceeds recovered under such insurance shall be paid to
Tenant and, unless this Lease terminates pursuant to Section 24, shall be used
by Tenant for the repair, reconstruction, restoration or replacement of the
property damaged or destroyed; and
(ii) plate glass insurance covering all plate glass and doors in the Leased
Premises, unless Tenant elects to self-insure for plate glass. In either event,
Tenant shall be and remain liable for the repair and restoration of all such
plate glass.
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<PAGE> 170
C. All insurance policies herein required to be procured by Tenant: (i) shall be
issued in the name of the Tenant with the Landlord and any other parties in
interest from time to time designated in writing by notice from Landlord to
Tenant listed as additional insurers; (ii) shall be written as primary policy
coverage and not contributing with or in excess of any coverage which Landlord
may carry; and (iii) shall, subject to the provisions of Section 22.D, contain
an express waiver of any right of subrogat ion by the insurance company against
the Landlord. With respect to every one of the insurance policies herein
required to be procured by Tenant, on or before the commencement of the term of
this Lease, and before any such insurance policy shall expire, Tenant shall
deliver to Landlord certificates of insurance for, certified copies of, or
duplicate originals of, each such policy or renewal thereof, as the case may be,
together with evidence of payment of all applicable premiums. Any insurance
required to b e carried hereunder may be carried under a blanket policy covering
the Leased Premises and other locations of Tenant. Every insurance policy
required to be carried hereunder by or on behalf of Tenant shall provide that,
unless Landlord shall first have been given ten (10) days prior written notice
thereof. (i) such insurance policy shall not be canceled and shall continue in
full force and effect; (ii) the insurance carrier shall not, for any reason
whatsoever, fail to renew such insurance policy; and (iii ) no material change
may be made in such insurance policy. In the event that Tenant shall fail to
promptly furnish any insurance coverage herein required to be procured by
Tenant, Landlord, at its sole option, shall have the right to obtain the same
and pay the premium therefor for a period not exceeding one (1) year in each
instance, and the premiums so paid by Landlord shall be immediately payable by
Tenant to Landlord as additional rent.
D. Except as otherwise specifically provided for herein, neither party shall be
liable to the other party or to any insurance company (by way of subrogation or
otherwise) insuring the other party for any loss or damage to any building,
structure or other tangible property, even though such loss or damage may have
been occasioned by the negligence of such parties, its agents or employees;
provided, however, that this release shall apply and be effective if and only to
the extent that the loss or damage in q uestion shall be covered by a policy or
policies containing a clause or endorsement substantially to the effect that any
such release by the insured shall not adversely affect, impair or prejudice the
right of the insured to recover for such loss or damage, and that the insurer
waives its right of subrogation. If by reason of the foregoing waiver either
party shall be unable to obtain any such insurance, such waiver shall be deemed
not to have been made by such party, and provided, further, that if either party
shall be unable to obtain any such insurance without the payment of an
additional premium therefor, then, unless the party claiming the benefit of such
waiver shall agree to pay such party for the cost of such additional premium
within thirty (30) days after notice setting forth such requirement and the
amount of the additional premium, such waiver shall be of no force and effect
between such party and such claiming party.
23. FORCE MAJEURE. Landlord shall not be liable for any failure or delay in
performing its obligations hereunder due to causes or conditions beyond
Landlord's control, nor shall there be any abatement or reduction of rent or
other charges payable by Tenant as a result of any inconvenience, interruption
or loss of business or other loss caused thereby. "Causes or conditions beyond
Landlord's control" shall include acts of God, the elements, weather conditions,
earthquakes,
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settlements, fires, acts of governmental authorities, wars, riots, shortages of
labor or materials, acts of third parties for which Landlord is not responsible,
strikes, picketing, work slowdowns or stoppages, and labor disputes.
24. DAMAGESTO LEASED PREMISES. of the Leased Premises or fifty percent (50%) or
more of the building are damaged by fire or other casualty, and if Landlord
notifies Tenant within sixty (60) days after such damage of its intention not to
repair same, this Lease shall thereupon terminate. If Landlord does not so
notify Tenant, and if such damage was not caused by the fault of Tenant,
Landlord shall repair the Leased Premises, provided that Landlord shall not be
required to repair or replace any of Tenant's f ixtures or equipment in the
Leased Premises; provided, further, that Landlord shall not be required to
expend for such repairs an amount in excess of the insurance proceeds made
available to Landlord for such purpose, after application of same in repayment
of any institutional deeds of trust, if required by the lender. If the damage
does not interfere with Tenant's use of the Leased Premises, there shall be no
abatement of rent. If the damage interferes with the Tenant's use of the Leased
Premises, the Min imum Rent shall be abated by the percentage that the unusable
rentable area of the Leased Premises bears to the total rentable area thereof,
for the period commencing with the damage and ending with substantial completion
by Landlord of the repairs; or, if the damage makes it impossible for Tenant to
carry on its business, all rent shall be abated in full during the period
commencing with the damage and ending with substantial completion by Landlord of
the repairs; provided, however, that if the damage was caused by the fault of
Tenant or its agents, employees, customers, invitees, subtenants,
concessionaires or licensees, then there shall be no abatement of rent.
25. ASSIGNMENT AND SUBLETTING. Tenant shall not assign, transfer, mortgage or
otherwise encumber this Lease or sublet or otherwise permit others to use all or
any part of the Leased Premises, whether voluntarily, by operation of law or
otherwise (collectively, an "Assignment"), without the prior written consent of
Landlord, such consent not to be unreasonably withheld (taking into account
Landlord's application of reasonable criteria such as those relating to credit
worthiness, reputation and experience), so long as the Leased Premises continues
to be used for the conduct of the business set forth in Section 1 (i) of the
Data Sheet, or any other business acceptable to Landlord, in Landlord's sole and
absolute discretion. Any attempted Assignment without Landlord's consent shall
be void and confer no rights upon any third party. If an Assignment is effected
without consent Landlord may collect rent from the assignee, transferee,
subtenant or occupant (collectively the "Assignee") and apply the net amount col
lected to the rent herein reserved, but no such Assignment or collection shall
be deemed a waiver of this covenant, acceptance of the Assignee as tenant, or
release of Tenant hereunder. If Landlord's consent is given, Tenant shall
nevertheless remain liable on this Lease and shall guarantee performance
hereunder by the Assignee, and Landlord's prior written consent to any further
Assignment shall be required. The sale or transfer of equitable control, if
Tenant is a non-natural person, or the sale or trans fer of substantially all
the inventory or assets of Tenant, shall constitute an Assignment.
26. SUBORDINATION, ATTORNMENT, NON-DISTURBANCE. This Lease shall be subordinate
to all deeds of trust, mortgages, assignments of rents and leases, UCC financing
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statements and other security agreements that may now or at any time hereafter
be placed against the Leased Premises, made by Landlord, its predecessors,
successors or assigns, to secure money borrowed, and which may now or hereafter
affect the Leased Premises, and to any renewals, modifications, consolidations,
replacements or extensions thereof Tenant hereby attorneys, in accordance with
the terms of this Lease, to the lender in any such deed of trust (the "Lender"),
such attornment to be effective upon Lender's acquisition of title to the Leased
Premises; provided, however, that Lender agrees in writing with Tenant, at the
time of Lender's acquisition of title, to recognize the validity of this Lease,
notwithstanding any foreclosure or deed in lieu thereof, but this proviso shall
be applicable only so long as Tenant is not in default hereunder and only so
long as Tenant's right to possession hereunder is not terminated in accordance
with the provisions of this Lease. Tenant's attornment shall not be term inated
by foreclosure of any such deed of trust or by deed in lieu thereof. At the
request of Landlord or Lender, Tenant shall promptly execute any certificate or
agreement in confirmation of this attornment or any subordination prescribed in
this Section, and Tenant appoints Landlord as Tenant's attorney-in-fact to
execute any such certificates or agreements on behalf of Tenant. In the event of
Lender's acquisition of title to the Leased Premises, Lender shall not be
responsible or liable for any deposits made by Tenant to Landlord unless such
deposits are specifically assigned to Lender.
27. BANKRUPTCY.
A. In the event that Tenant or any guarantor of this Lease shall become or be
adjudicated bankrupt or insolvent, or if Tenant shall file or acquiesce in a
petition in any court in any bankruptcy, reorganization, composition, extension,
arrangement or insolvency proceedings, or if Tenant shall make an assignment or
other conveyance in trust for the benefit of its creditors, or if any execution
or attachment shall be issued against Tenant or Tenant's property whereupon the
Leased Premises shall be taken or o ccupied or attempted to be taken or occupied
by someone other than Tenant and such execution or attachment shall not be
dismissed, vacated, discharged or bonded within sixty (60) days after issuance
of same, or if a receiver or Trustee shall be appointed for the property and
assets of the Tenant and such receivership be not discharged within twenty (20)
days from the date of such appointment, then upon the happening of any of said
events, the term hereby demised shall, at the option of the Landlord, cease (it
being expressly agreed that the covenant hereinafter contained against the
assignment of this Lease shall cover the case of the assignment of this Lease by
operation of law as well as the assignment of this Lease by a voluntary act of
the Tenant).
B. If this Lease shall be so canceled and terminated, neither Tenant nor any
person claiming through or under Tenant by virtue of any statute or order of any
court shall be entitled to remain in possession of the Leased Premises but shall
forthwith quit and surrender the Leased Premises. In no event, without the
written approval of Landlord, which approval may be granted or withheld at its
sole discretion, shall this Lease be or be considered an asset of Tenant's
estate in bankruptcy or insolvency, or any receiver or trustee (hereafter
referred to as a "Trustee") with respect thereto.
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C. To the extent that Landlord's right to cancel this Lease in accordance with
the provisions of Section 27(A) and Section 27(B) of this Lease is invalid or
unenforceable under the Bankruptcy Reform Act of 1978 (the "Act"), as the same
may be amended from time to time, or any other statute or rule of law, then the
following provisions shall apply, to the extent valid and enforceable:
(1) If there has been a default by Tenant under any provision of this Lease
(other than this Section 27), the Trustee may not assume this Lease, unless, at
the time of assumption of this Lease, the Trustee:
(A) cures, or provides adequate assurance (to Landlord's reasonable
satisfaction) that the Trustee will promptly cure such default; and
(B) provides adequate assurance (to Landlord's reasonable satisfaction) of
future performance under the Lease, which shall include, without limitation,
adequate assurance of the source of rent and other consideration due under such
Lease;
(2) If there has been a default by Tenant, the Trustee may not require the
Landlord to provide services or supplies incidental to this Lease before
assumption of this Lease unless the Landlord is compensated under the terms of
this Lease for any services and supplies provided under this Lease before
assumption of this Lease.
D . If this Lease is terminated under the provisions of this Section 27, or by
reason of rejection by the Trustee, Landlord shall be entitled to the recovery
of damages, and such other remedies, as are provided for in Section 29. The
foregoing sentence shall not, however, limit or prejudice the right of Landlord
to petition for and obtain as liquidated damages in any bankruptcy, insolvency,
receivership, reorganization or arrangement proceeding an amount equal to the
maximum allowed by the Act or any other statute or rule of law governing such
proceedings and in effect at the time when such damages are to be proved,
whether or not such amount be greater, equal to or less than the amount of the
damages referred to in the preceding sentence.
28. TENANT'S DEFAULTS. Tenant shall be in default hereunder if (a) Tenant fails
to pay any rent or other sum required hereunder on its due date, and such
default is not remedied within ten (10) days after written notice thereof from
Landlord; or (b) Tenant fails to furnish any statement required hereunder on its
due date; or (c) Tenant fails to maintain any insurance required hereunder; or
(d) Tenant abandons the Leased Premises or fails to conduct business therein for
a period of fifteen (15) or more cons ecutive days; or (e) Tenant neglects or
fails to perform or observe any of the other terms, covenants or conditions
contained in this Lease on Tenant's part to be performed or observed; or (f)
Tenant defaults under Section 27 of the Lease; or (g) Tenant fails to take
possession of the Leased Premises and open for business therein within thirty
(30) days after the Rent Commencement Date. Notwithstanding anything to the
contrary contained in Subparagraphs (b) through (g) of the immediately preceding
sentence , Tenant shall not be in default under said subparagraphs unless the
violation, neglect or failure referenced in said
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subparagraphs is not remedied by Tenant within fifteen (15) days after Landlord
shall have given to Tenant written notice specifying such violation, neglect or
failure.
29. LANDLORD'S REMEDIES IN CASE OF TENANT'S DEFAULT.
A. In addition to all other remedies allowed by law or equity, if Tenant is in
default hereunder Landlord may at any time and without further demand or notice
terminate this Lease and/or re-enter or otherwise take possession of the Leased
Premises summarily (and, if necessary, forcibly) remove all persons and property
therefrom (and store the property so removed at Tenant's expense) without being
deemed guilty of trespass and without liability for any loss or damage caused
thereby. Tenant waives service of notice of intention to re-enter. Should
Landlord so take possession of the Leased Premises, (a) the rent to the time of
such possession shall thereupon become due and shall be paid by Tenant, together
with all expenses of such possession, including legal and brokerage fees and the
cost of preparing the Leased Premises for reletting; (b) Landlord may at any
time thereafter terminate this Lease by notice to Tenant; (c) Landlord may
prepare the Leased Premises for reletting; (d) Landlord may relet the Leased
Premises, or any part thereof, for such term, at such rental, and upon such
conditions as Landlord deems advisable; (e) Tenant shall pay to Landlord, for
each month during the balance of the Lease Term, any deficiency between (i) all
the Minimum Rent and Additional Rent herein reserved, including Tenant's Real
Estate Taxes for such month, and (ii) the net rent received including the Real
Estate Taxes and other additional rent and for each such month collected upon
such reletting; (f) Tenant shall pay to L andlord the cost of providing
insurance during the balance of the Lease Term which Tenant is required to
provide; (g) the net rent collected upon such reletting shall be applied first
to the payment of any indebtedness of Tenant to Landlord other than for rent due
hereunder, second to the payment of the expenses of reletting (including legal
and brokerage fees and the cost of preparing the Leased Premises for reletting),
and third to the payment of rent due and unpaid hereunder; and (h) Tenant waives
all r ights of redemption granted by an present or future laws. Should Landlord
terminate this Lease at any time after default by Tenant, it may, in addition to
any other remedies, recover from Tenant all damages incurred by it as a result
of such default, including the value at the time of such termination of the
excess, if any, of the rent and additional rent herein reserved for the
remainder of the Lease Term(e) above multiplied by the number of Lease Years and
parts thereof during such remainder over the the n reasonable rental value of
the Leased Premises for such remainder.
B. If either Landlord or Tenant shall default in the performance of any covenant
on its part to be performed by virtue of any provision in this Lease (including,
without limitation, Landlord's maintenance obligation under Section 19 of this
Lease), and if in connection with the enforcement of the non-defaulting party's
rights or remedies, such non-defaulting party shall properly and reasonably
incur fees and expense for services rendered (including reasonable attorneys
fees), then such fees and expenses sh all, if said non-defaulting party shall
prevail in litigation, be immediately reimbursed by the defaulting party on
demand. The foregoing notwithstanding, no noteholder, mortgagee, other secured
party, purchaser at foreclosure or grantee under a deed in lieu of foreclosure
shall have any liability under the preceding sentence on account of any default
by Landlord. Notwithstanding the foregoing, in the event Landlord shall file any
legal action for the
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collection of rent or any eviction proceeding, whether summary or otherwise, for
the non-payment of rent, and Tenant shall make payment of such rent due and
payable prior to the rendering of any judgment, and not pursuant to any written
settlement agreement, then Landlord shall be entitled to collect, and Tenant
shall be obligated to pay, all court filing fees and the reasonable fees of
Landlord's attorneys.
30. CONDEMNATION. If the whole of the Leased Premises is taken in fee simple or
if there is a temporary taking in excess of ninety (90) days, under eminent
domain, the Lease Term shall terminate as of the date of such taking. If less
than the whole of the Leased Premises is so taken, and such partial taking
materially and adversely affects the continuance of Tenant's business on the
Leased Premises, the Lease Term may, at the election of either party, terminate
upon notice to the other within sixty (60) da ys after surrender of possession
pursuant to such taking; if neither party so elects, the Lease Term shall
terminate as to the part taken and shall continue as to the part not taken, and
the Minimum Rent shall be reduced by the percentage that the part taken bears to
the whole of the Leased Premises. If more than twenty percent (20%) of the
Leased Premises is so taken, the Lease Term may, at the election of Landlord,
terminate upon notice to Tenant within sixty (60) days after surrender of
possession pursu ant to such taking. If, as a result of a taking, the number of
parking spaces is reduced by one-third or more, the Lease Term may, at the
election of either party, terminate upon notice to the other party within sixty
(60) days after surrender of possession pursuant to such taking. In the event of
termination pursuant to this Section, rent and other sums due from Tenant to
Landlord shall be apportioned as of the date of termination. Landlord shall be
entitled to all damages and compensation awarded for any taking, and Tenant
assigns to Landlord all its right to any such award. Tenant, however, may claim
any award made specifically for fixtures and other equipment installed by it,
but only if such award shall be made by the condemnation court in addition to
and stated separately from the award made by it for the land and building or
part thereof so taken, but Tenant shall not claim any award for its leasehold.
31. HOLDING OVER. If Tenant, or anyone claiming under it, remains in possession
of the Leased Premises after the expiration of the Lease Term, Tenant shall be a
tenant from month to month, upon all the terms hereof which are not inconsistent
with such tenancy; provided, however, that Tenant covenants to pay to Landlord
as rent during such tenancy, in equal monthly installments in advance, one
hundred fifty percent (150%) of the Minimum Rent in effect immediately before
expiration of the Lease Term. Such te nancy may be terminated by Landlord or
Tenant upon thirty (30) days notice. Tenant's failure to give such notice shall
obligate it to pay rent for one full calendar month following the month in which
it vacates the Leased Premises. Except for purposes of the first sentence of
this Section, during any holdover term, references to the "Lease Term" shall
include the period of such holdover. The obligations of the parties under the
Lease shall continue during any holdover period.
32. TERMINATION OF LEASE. Upon termination of the Lease Term for any reason,
Tenant shall surrender the Leased Premises, remove its property, and deliver the
Leased Premises to Landlord in the condition required by Section 17. Tenant
shall have a reasonable period of time, not exceeding fifteen (15) days after
termination of the Lease Term, to restore the Leased Premises
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to its required condition. If Tenant fails to remove its property, the same
shall be the property of Landlord or, at Landlord's option, shall be removed and
stored for the account of and at the expense of Tenant, without Landlord being
liable for trespass, conversion or negligence in respect of such property.
33. NO PERSONAL LIABILITY. The parties agree that there shall be no personal
liability on the part of the President of Landlord, or any other agent or
officer of the Landlord, or any mortgagee in possession with respect to any
terms of this Lease, and that Tenant shall look solely to the assets of Landlord
(including without limitation, the equity of Landlord in the Leased Premises)
for the satisfaction of every remedy of Tenant for any breach by Landlord
hereunder. In the event of the sale or transfer of Landlord's interest in the
Leased Premises, (i) Landlord shall thereupon and without further act by either
party hereto be released and discharged of all covenants and obligations of
Landlord hereunder thereafter accruing, and (ii) it shall be deemed and
construed conclusively, without further agreement between the parties, that the
purchaser or other transferee or assignee has assumed and agreed to perform the
obligations of Landlord thereafter accruing.
34. NO WAIVER. Landlord's waiver of any breach of any covenant or condition of
this Lease shall not be construed as a waiver thereof or of any subsequent
breach thereof. The acceptance by Landlord of rent, with knowledge of any breach
by Tenant, shall not be deemed a waiver of such breach, nor shall the acceptance
by Landlord of rent after the termination in any way operate to reinstate,
continue or extend the Lease Term or affect any notices. No receipt of rent
after the commencement of suit, or after fin al judgment for possession of the
Leased Premises, shall reinstate, continue or extend the Lease Term or affect
said suit or said judgment. No waiver by Landlord shall be effective unless in
writing signed by Landlord.
35. NOTICES, DESIGNATION OF AGENT TO ACCEPT SERVICE OF PROCESS. All notices and
other communications hereunder shall be in writing, delivered in person or by
certified or registered U.S. mail, postage prepaid, to Landlord at its address
set forth in this Lease, and to Tenant to the address set forth in Paragraph
2(a) of this Lease, or, at Landlord's option, by posting same at the Leased
Premises, or to such place as designated by either party in writing. Either
party may designate in writing a change in its notice address, except that
Landlord may always give notice to Tenant by posting same at the Leased
Premises.
36. QUIET ENJOYMENT. Tenant, so long as it is not in default under this Lease,
shall have the quiet and peaceful use and possession of the Leased Premises,
subject to encumbrances and underlying leases to which this Lease is
subordinate.
37. SECURITY DEPOSIT, TENANT'S PERSONAL LIABILITY.
Tenant has deposited with Landlord the sum set forth in Section 1(g) of the Data
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Sheet as security for performance of its obligations hereunder. The security
deposit shall be returned to Tenant, without interest, within forty five (45)
days after the expiration of this Lease Term, provided that Tenant has
discharged all such obligations. Landlord may apply all or part of the security
deposit to cure any default of Tenant, and if Landlord does so, Tenant shall
deposit with Landlord the amount so applied within ten (10) days after written
demand therefor, and Tenant's failure to do so sh all be a default under this
Lease. Tenant shall provide Landlord with personal guaranties from entities and
in a form acceptable to Landlord's lender, in its sole discretion.
38. SEVERABILITY. If any provision of this Lease or any application thereof
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof and any other application
thereof shall not be impaired thereby.
39. RECORDATION. The parties agree to execute a short form of this Lease, which
either party may record at its expense.
40. ESTOPPEL CERTIFICATES. Tenant agrees that, upon five (5) days prior request
by Landlord, Tenant will execute, acknowledge and deliver to Landlord, or to
such person(s) as may be designated by Landlord, a written statement in the form
acceptable to Landlord's lender or future lender, or with such modifications as
Landlord may reasonably request. Any such statement delivered pursuant hereto
may be relied upon by any owner of the Leased Premises. Failure by Tenant to
deliver a requested statement to Landl ord, or state in writing the exceptions
to the requested statement, within ten (10) days of Landlord's request therefor,
shall for all purposes constitute Tenant's direction to Landlord to execute and
deliver such statement on Tenant's behalf, and Tenant hereby irrevocably
constitutes and appoints Landlord as Tenant's attorney-in-fact (which
appointment shall be deemed to be irrevocable and coupled with an interest) to
execute and deliver any such statement on Tenant's behalf, except that the
foregoing sha ll not relieve Tenant of the obligation to deliver any such
statement to Landlord and shall not be deemed to cure Tenant's default for
failure to deliver any such statement.
41. RULES AND REGULATIONS. Landlord may establish from time to time rules and
regulations which are reasonable.
42. JOINT AND SEVERAL OBLIGATIONS. Tenant and all guarantors shall be jointly
and severally liable for Tenant's obligations under this Lease following a
default by Tenant.
43. BINDING EFFECT. All covenants, conditions and terms hereof shall be binding
upon and inure to the benefit of the parties and their respective successors,
permitted assigns, heirs and legal representatives.
44. RELATIONSHIP OF PARTIES. The relationship between Landlord and Tenant shall
not be construed as that of a principal and agent or partners or joint
venturers.
45. ADDITIONAL RENT. If Landlord shall incur any charge or expense on behalf
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of Tenant under the terms of this Lease, or Landlord elects to cure any default
of Tenant under this Lease, or is forced to incur any other expense arising out
of such default by Tenant (including, without limitation, reasonable attorneys
fees and disbursements in successfully instituting, prosecuting or defending any
suits, actions or proceedings (including any bankruptcy or insolvency
proceedings) to enforce Landlord's rights under this or any other Section of
this Lease or otherwise) the sums so paid by Landlord with all interest, costs
and damages shall be paid by Tenant to Landlord upon written demand and if not
immediately paid shall be deemed to be additional rent, payable with the next
due installment of Minimum Rent; and in addition to and not in limitation of any
other rights and remedies which Landlord may have in case of the failure by
Tenant to pay such sums when due, such non-payment shall entitle Landlord to the
remedies available to it hereunder for non-payment of rent.
46. APPLICABLE LAW. This Lease shall be construed under the laws of the
Commonwealth of Virginia.
47. MODIFICATION, GENERAL INFORMATION SHEET.
A. This writing is intended by the parties as final expression of their
agreement and as a complete and exclusive statement of the terms thereof, all
negotiations, considerations and representations between the parties having been
incorporated herein. No course of prior dealings between the parties of their
affiliates shall be relevant or admissible to supplement, explain or vary any of
the terms of this Lease. Acceptance of, or acquiescence in, a course of
performance rendered under this or any prior agre ement between the parties or
their affiliates shall not be relevant or admissible to determine the meaning of
any of the terms of this Lease. No representations, understandings, or
agreements have been made or relied upon in the making of this Lease other than
those specifically set forth herein. This Lease can only be modified by a
writing signed by all of the parties of their duly authorized agents.
48. WAIVER OF JURY TRIAL. Tenant and Landlord hereby waive all right to trial by
jury in any claim, action, proceeding or counterclaim by either Landlord or
Tenant against the other or any matters arising out of or in any way connected
with this Lease, the relationship of Landlord and Tenant and/or Tenant's use or
occupancy of the Leased Premises.
49. LENDERS APPROVAL. This Lease is subject and conditioned upon the approval of
Landlord's lender on or before thirty (30) days from the date of this Lease. If
said approval is not obtained on or before thirty (30) days from the date of
this Lease, then either party may, by written notice to the other party,
terminate this Lease, in which event any money or security deposited hereunder
shall be returned to Tenant, and neither party shall thereafter have any further
liability or obligation to the other her eunder. Landlord agrees that it will
notify Tenant in writing within five (5) business days if Lender's approval is
not obtained.
50. LANDLORD'S DISTRAINT LIEN.
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INTENTIONALLY OMITTED
51. NO OPTION. The submission of this Lease for examination does not constitute
a reservation of or option for the Leased Premises, and this Lease becomes
effective only upon execution and delivery thereof by Landlord.
52. OPTION TO RENEW.
A. Provided that this Lease is in full force and effect and Tenant is not in
default under any of the terms, conditions or provisions hereof, Tenant shall
have an option to extend this Lease for one (1) additional period of five (5)
years (such additional period being hereinafter referred to as the "Renewal
Period"). Such renewal option shall be exercisable by Tenant giving written
notice of the exercise of such renewal option to Landlord at least nine (9)
months prior to the expiration of the original Lea se Term. In the event that
Tenant exercises the option to renew this Lease, then the Lease Term shall be
extended accordingly upon the same terms, covenants and conditions as set forth
in this Lease with respect to the original Lease Term as if the original term of
this Lease included the exercised Renewal Period, except that the Minimum Rent
during such Renewal Period shall be determined pursuant to the following
provisions of this Section 52.
B. Notwithstanding the provisions of Section 5(A), at the commencement of the
Renewal Period, and effective simultaneously with such date, the Minimum Rent
herein provided for (and the monthly installments thereof) shall be adjusted to
reflect the current market rate as reasonably determined by Landlord. The
Minimum Rent shall escalate annually during the renewal period in an amount
agreed to by the parties. If tenant fails to accept the new Minimum rent or the
escalation provisions, the renewal option sha ll terminate.
54. OPTION TO PURCHASE REAL ESTATE. Provided that Tenant shall not be in default
hereunder, and provided that Tenant shall have paid Landlord in full under the
terms of the Sales Contract, Tenant shall have the option to purchase the
Premises (current Fairfax County Tax Map No. 16-2-2-212C ). Tenant may exercise
the option during the initial Lease Term. Landlord shall convey the demised
Premises by special warranty deed, free and clear of all liens and encumbrances,
except those that Tenant may have created or suffered, and except any assess
ments, rates, duties, imposts, or charges that may have become a lien against
the Premises since the date of this lease. Landlord shall provide the deed and
an abstract of title, showing a good and unencumbered title, passing under and
by the resulting conveyance. Title to the Premises shall be marketable and
insurable at regular rates. Taxes shall be prorated as of the date of closing.
The Premises shall be properly zoned for the use permitted under this Lease with
requisite access to a public right of wa y and appropriate public parking. The
purchased price for the Premises shall be: $1,200,000 during the 1 Lease Year;
$1,23 6,000 during the 2 Lease Year; and 120% of the Fairfax County real estate
tax assessed value for the tax year in which the closing occurs, but in no event
less than $1,300,000, for the 3' Lease Year and thereafter. The
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purchase price shall be paid by certified or cashier's check at closing. Tenant
shall give Landlord 90 days written notice of intent to exercise the option and
shall pay a deposit of $50,000 to be applied toward the purchase price at the
time of closing. In the event that Tenant exercises the option and fails to
complete closing within the 90 period, then at the election of Landlord the
Tenant's option to purchase under this Lease shall terminate and the option
deposit shall be paid over to Landlord as liq uidated damages for Tenant's
default. Following notice of intent to exercise the option to purchase, Tenant
may assign the option to purchase the Premises, provided that Tenant and any
guarantor shall not be relieved of personal liability upon any such assignment.
At the time of closing the option to purchase the real estate may be assigned by
Tenant to a third party.
55. MISCELLANEOUS PROVISIONS.
A. Benefit and Burden. Except as otherwise expressly set forth herein, the
provisions of this lease shall be binding upon, and shall inure to the benefit
of, the parties hereto and each of their respective assigns and successors in
interest.
B. Governing Law. This Lease shall be construed and enforced in accordance with
the laws of the Commonwealth of Virginia.
C. No Partnership. Nothing contained in this Lease shall be deemed or construed
to create a partnership or joint venture of or between Landlord and Tenant, or
to create any other relationship between the parties other than that of Landlord
and Tenant.
D. Representations by Landlord. Neither Landlord nor any agent of Landlord has
made any representations or promises with respect to the Premises or the
Building except as herein expressly set forth, and no rights, privileges,
easements or licenses are granted to Tenant except as herein expressly set
forth.
E. Pronouns. Feminine or neuter pronouns shall be substituted for those of the
masculine form, and the plural shall be substituted for the singular number, in
any place or places in this Lease in which the context may require such
substitution or substitutions. For convenience the Landlord and Tenant have bee
referred to in neuter form in this Lease.
F. Captions. The captions used herein are for convenience of reference only and
are not part of this Lease, and shall in no way be deemed to define, limit,
describe, or modify the meaning of any provision of this Lease.
G. Meaning of Including. Whenever the word "including" is used herein, it shall
be deemed to mean "including but not limited to".
H. Invalidity of Particular Provisions. If any term or provision of this Lease
or applications thereof to any person or circumstances shall, to any extent, be
invalid or
Page 19 of 21
<PAGE> 181
unenforceable, the remaining terms and provisions of this Lease, or the
application of such term or provisions to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Lease shall be valid and enforced
to the fullest extent permitted by law.
I. Counterparts. This Lease has been executed in several counterparts, but all
counterparts shall constitute one and the same legal document.
J. Entire Agreement. Except as noted in this Lease, this Lease, and any exhibits
and addenda attached hereto, contain and embody the entire agreement of the
parties hereto, and no representations, inducements, or agreements, oral or
otherwise, between the parties not contained in this Lease or in the exhibits or
addenda, if any, shall be of any force or effect. This Lease may not be modified
except in writing duly signed by the parties. This Lease shall be construed
together with the Sales Contract, of eve n date herewith, and all other
instruments executed pursuant to that Agreement.
K. Mortgagee's Performance. Tenant shall accept performance of any of Landlord's
obligations hereunder by any Mortgagee, and shall attorn to such Mortgagee upon
its termination of Landlord's interest in the Premises.
L. Recordation. Landlord and request Tenant shall execute a short form of this
Lease for purposes of recordation. The party desiring recordation shall pay the
recording costs.
M. Time of the Essence. Time shall be of the essence in the performance of
obligations under this Agreement.
WITNESS the following signatures and seals:
LANDLORD:
CYCLE SPORT UNLIMITED, INC.
By:__________________
David E. Nees, President
TENANT:
V-TWIN ACQUISITIONS, INC.
Page 20 of 21
<PAGE> 182
By: ___________________
Ted L. Schwartzbeck, Chairman
and Authorized Representative
STATE OF
COUNTY OF
Before me, a Notary Public in and for the jurisdiction aforesaid, personally
came DAVID E. NEES, the President of CYCLE SPORT UNLIMITED, INC., the Landlord
in the foregoing Lease, and acknowledging the signing to be his voluntary act.
Witness my hand official seal __________this day ___________of 19______
____________________________
Notary Public
[Notarial Seal] My Commission Expires:_____________
STATE OF
COUNTYOF
Before me, a Notary Public in and for the jurisdiction aforesaid, personally
came TED L. SCHWARTZBECK, the Chairman and duly authorized representative for
V-TWIN ACQUISITIONS, INC., the Tenant in the foregoing Lease, and acknowledging
the signing to be his voluntary act.
Witness my hand official seal __________this day ______of '19________
Notary Public
[Notarial Seal] My Commission Expires:_______________________
Page 21 of 21
<PAGE> 183
SCHEDULE E-2
SPRINGFIELD LEASE
FOR
THE MOTOR CYCLE DIVISION
CYCLE SPORT UINLITMITED, INC.
<PAGE> 184
LEASE AGREEMENT
This Lease Agreement is made effective as of July 1, 1998, by and between "1998,
Ltd," Landlord") and Cycle Sport (Tenant"). The parties agree as follows:
1. LEASED PREMISES. Landlord, in consideration of the lease payments provided in
this Lease, leases to Tenant the building area located at Lee Center (herein
called the shopping center) - 6603 Backlick Road, Springfield, VA 22150 (the
premises).
2. TERM. This lease term will begin on July 1, 1998 and will terminate on June
30, 1998. The rent commencement date shall be July 1, 1998.
3. STORE PURPOSE. The leased premises shall be used by Tenant solely for the
purpose of conducting therein the business of. Sale & repair of motorcycles,
related equipment and accessories. Tenant will occupy the leased premises
promptly upon commencement of the term and will immediately begin the continuous
operation of the specified business in the leased premises, Tenant does further
understand and agree that the leased premises shall be used for no other purpose
than that specified above without the written consent of the Landlord. It is
further understood that the landlord has absolute and arbitrary discretion as to
approval of any proposed change of the use specified above.
No nuisances shall be allowed on the leased promises nor shall any use be
allowed which is a source of annoyance or embarrassment to the Landlord or other
tenants of the Shopping Center, or which is deemed by the Iandlord as not in
keeping with the character of the neighborhood, nor shall the [cased premises be
used for any unlawful, or improper purpose. Without limiting the generality of
the foregoing, in no event shall the leased premises be used as a so-called
"adult bookstore" selling obscene or pornog raphic books, magazines or movies,
or for the sale of drug paraphernalia or related items.
4. LEASE PAYMENTS. Tenant shall pay to Landlord for the first full year, the
amount of Four Thousand Five Hundred Dollars & 00/000 ($4,500.00) (base rent)
per month. All rent is payable in advance on the first day of each month, for a
total annual lease payment of Fifty Four Thousand Dollars & 00/000 ($54,000.00).
Payment of rent for years N/A through N/A of this lease agreement will be in
accordance with the following schedule: Base rent (with previous adjustments),
Consumer Price Index (CPI) plus one percent. If the CPI Index is discontinued or
altered, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, and if said parties are not able to agree upon such substitute, the CPI
average for the preceding five years will be used for the duration of lease
agreement. Te nant also agrees to pay, and the Landlord agrees to accept as
additional rent for each lease year of the term, the Tenant's proportionate
share of the increases in any real estate or other taxes as specified in this
least 7? agreement. Tenant also agrees to pay, and the Landlord agrees to accept
as additional rent for each lease year of the term, the Tenant's proportionate
share of the cost of maintenance and operation of common areas as defined
hereinafter The Landlord will provide Tenant, when appropriate, a detailed
invoice showing what additional amounts of money due. Said invoices will be
presented to Tenant twice during the calendar year, one for the period of
January through June and one for the period July through December. When
received, Tenant agrees to pay said 'invoice within ten (10) days of receipt.
5. LATE PAYMENTS. Rent due and payable on the first day of the month and
considered to be late if not receivced by the 10th day of the mouth. A five
percent late charge is due and payable for all rent not received by the fifth of
the month. A second late charge in the amount of $25.00 will be added for rent
not received by the sixteenth day of the month. Partial payment of rent is not
acceptable.
6. NON-SUMCEIENT FUNDS. Tenant shall be charged $25.00 for each check that is
returned to Landlord for lack of sufficient funds. After two returned chocks,
Landlord has the right to demand payments for form mat and services in the form
of a money order or certified check.
7. SECURITY DEPOSIT. At the time of the signing of this Lease, Tenant shall pay
to Landlord, in trust, a security deposit in the amount of Four Thousand Five
Hundred Dollars & 00/00 ($4,5000.00) to be held and disbursed for Tenant damages
to the Premises (if any) as provided by law. Tenant is in default in payment of
rent or other services, Landlord may use, apply or retain all or any part of the
Security Deposit for the payment of any rent-or apy.9ther so- of money which
Tenant was obligated to pay but did not pay. Should the entire deposit, or any
portion t4ercof, be applied by the Landlord as aforesaid, Tenant shall, upon the
written demand by Landlord, rent to landlord a sufficient amount to r estore
said deposit to the original sum deposited. Tenant's failure to make such
additional deposit within five (5) business days after receipt of such demand
shall constitute a breach of this Lease, Tenant complies with all of the terms,
covenants and conditions of this Lease, the said security deposit shall be
returned in full to Tenant at the end of the term of this or upon any later date
after which Tenant has vacated the premises. The security deposit shall bear no
interest.
(1)
<PAGE> 185
8. REAL ESTATE TAXES, "Real Estate Taxes" means real estate taxes, assessments
and governmental charges assessed levied or imposed against the Shopping Center
and includes real estate taxes, assessments, and other government charges which
are special extraordinary and unforeseen. The term "Base Year means calendar
year 1998. The term "real estate tax year means each successive twelve (12)
month period following and corresponding to the Base Year, irrespective of the
period or Periods which may from time to time in the future be established by
competent authority for the purpose of levying or imposing Real Estate Taxes.
Each real estate tax year after the Base Year, Tenant shall pay to the Landlord
within ten (10) days after demand in writing Tenant's Percentage Sham of
increases in Real Estate Taxes.
9. COMMON AREA MAINTENANCE COST& Common area maintenance costs means expenses
incurred with respect to the operation, maintenance, protection, replacement and
repair of the Shopping Center, including, without limitation, the costs and
expenses which belong within any one or more of the following categories:
Reasonable reserves for painting, resurfacing, and replacement of cubs and
gutters, water, sanitary, storm and other utility systems, roofs and parking.
Premiums and other charges for casualty. liability, fidelity and any other
maintain or is required to maintain with regard to the Shopping Center or the
maintenance of operation thereof the cost of cleaning supplies hand tools and
other materials used in the repair, maintenance or operation of the Shopping
Center. The cost of charges for any janitorial or security services that may be
used. Snow, ice and trash removal. Landscaping and striping of the parking areas
charges of independent contractors, HVAC repair and maintenance. Holiday or
other decorations. Reasonable legal, accounting and other professional fees
incurred in connection with the operation, maintenance or management of the
Shopping Center. Fees, dues and other contributions paid by Landlord to civic or
other organizations for the benefit of the Shopping, Center. Water, sewer
charges and other utility charges, except as billed directly to Tenants.
10. LAWS AND ORDINANCES At the time when Landlord lenders possession, in
accordance with its obligations under this Lease, to Tenant, landlord shall
certifies that said premises and all of the work Landlord has Performed therein
is in accordance with all State, County and municipal building and safety
requirements. From that point forward, Tenant will, at its own cost, promptly
comply with and carry out all orders, requirements or conditions now or
hereafter imposed upon it by the ordinances, laws and/or regulations of the
municipality, County and/or State in which the premises are located, whether
required of the Landlord or otherwise, in the conduct of Tenant's business,
except that landlord shall comply with any orders affecting structural walls and
columns unless due to Tenant's particular business or use of the premises.
Tenant will indemnify and save Landlord harmless from all penalties. claim, and
demands resulting from Tenant's failure or negligence in this respect
11. REPAIR The Tenant agrees to maintain the premises in good repair during the
term of this Lease at his own expense, including the floors and ceiling.
Landlord agrees that within a reasonable time after receipt of written notice
from the Tenant to make all repairs necessary to the structural portion and
roof, including gutters and downspouts, of the demised Premises. The Tenant also
agrees, at his own expense, to replace all plate glass in the demised premises
which shall be damaged or broken from any cause. The Tenant also agrees at his
own cost and expense to maintain his exterior sip face, sip box, sip lighting.
heating ventilating and air conditioning equipment servicing the demised
premises. AR new signage must be approved by the Landlord prior to being
installed.
12. ALTERATIONS. Tenant shall make no alterations, modifications or changes to
any pan of the demised premises either exterior or interior, without Landlord's
written consent which shall not be unreasonably withheld. In the event of any
such approved changes, Tenant shall have all work done at its own expense
Request for such consent shall be accompanied by plans stating in detail
precisely what is to be done. Tenant shall comply with the building codes
regulations and laws now or hereafter to be made or enforced in the
municipality, County and/or State in which said premises are located and which
Pertain to such work. Any approved additions, improvements, alterations and/or
installations made by Tenant (except for movable store and office furniture and
fixtures) shall become and remain a part of the building and be and remain
Landlord's property upon the termination of Tenant's occupancy of Premises;
Provided, however, that if Landlord gives written notice to Tenant at the
expiration or prior termination of this Lease to such Landlord way require
Tenant to remove said premises to its original condition. Tenant shall save
landlord harmless from and against all expenses. liens, claims or damages to
either Property or person which may or might arise by reason of the making of
any such additions, improvements, alterations and/or installations.
(2)
<PAGE> 186
13. DAMAGE. If the Shopping Center or the demised premises shall be partially
damaged by fire or other cause, without the fault of or neglect of the Tenant,
his servants, employees, agents, visitor or licensees, the damage to the
premises and that part of the demised premises shall be repaired by and at the
expense of the Landlord; tenant shall repair the damage to the remainder of the
demised premises at his own expense. Nothing in this agreement is intended to
relieve Tenant from his obligations arising from the neglect or fault of
himself or his servants, employees, agents, visitors or licensees. Until such
repairs shall have been made by the Landlord, the rent shall be apportioned
according to the part of the demised premises which is usable by the Tenant.
Due allowance shall be made for reasonable delay which may arise by reason of
adjustment of fire insurance on the part of the Landlord and/or the Tenant, and
for reasonable delay on account of "labor troubles" or any other cause beyond
the Landlord's control. If, however, the demised premises are rendered wholly
untenable by fire or other cause, and the Landlord shall decide not to rebuild
the same, or if the building be so damaged that the landlord shall decide to
demolish it or not to rebuild it, then, or in any of such events, the Landlord
may, at its option, cancel and terminate this Lease by giving to the Tenant,
within sixty (60) days from the date of such damage, notice in writing of its
intention to cancel this Lease, whereupon the term of this Lease shall cease
and determine upon the third day after such notice is given and the Tenant
shall vacate the demised premises and surrender the same to landlord, but in
neither of the certain contingencies in this paragraph mentioned shall there be
any liability on the part of the Landlord to the Tenant, its heirs or assigns,
covering or in respect to any period during which the occupation of said leased
premises by the Tenant because of the matters hereinabove stated, may not be
possible.
14. EMINENT DOMAIN. If the Shopping Center or any part thereof shall be taken by
any governmental or quasi-governmental authority pursuant to the power of
eminent domain, Tenant agrees to make no claim for compensation in the
proceedings, and hereby assigns to landlord any rights which Tenant may have to
any portion of any award made as a result of such taking and this Lease shall
terminate as to the portion of the premises taken by the condemning authority
and rent shall be adjusted to such date. The foregoing notwithstanding, the
Tenant shall be entitled to claim, prove and receive in the condemnation
proceedings such awards as may be allowed for relocation expenses and for
fixtures and other equipment installed by it which shall not, under the terms
of this Lease, be or become the property of Landlord at the termination hereof,
but only if such awards shall be made by the condemnation court in addition to
and stated separately from the award made by it for the land and the building
or part thereof so taken.
If the nature, location or extent of any proposed condemnation affecting
the Shopping Center is such that the Landlord elects in good faith to demolish
all or substantially all of the buildings in the Shopping Center, then the
Landlord may terminate this Lease by giving at least sixty (60) days' written
notice of termination to the Tenant at any time after such condemnation and
this Lease shall terminate on the date specified in such notice.
Should the Shopping Center be remodeled, refurbished or otherwise upgraded
in a manner that would necessitate a change in the amount of rent during the
period of this lease agreement, Landlord agrees to offer Tenant first right of
refusal of new rental rate. If Tenant does not agree to and accept the new
rental rate then Tenant agrees that his lease will be terminated and he must
vacate said Premises within sixty (60) days.
15. ROOF RIIGHTS. Landlord shall have the exclusive right to use all or any
portion of the roof of the leased premises for any purpose, and shall have the
right to erect additional stories or other structures over all or any part of
said premises.
16. HOURS OF LIGHTING. If requested by Landlord, Tenant shall keep the display
windows in the demised premises well-lighted from dusk until 10:00 p.m., or such
other reasonable time as determined by Landlord, during each and every day.
17. PARKING AND COMMON AREAS. All automobile parking areas, driveways, and other
facilities furnished by Landlord in or near the Shopping Center, including
employee parking areas the truckway or truckways, loading docks, package pick-up
stations, pedestrian sidewalks and ramps, landscaped areas, exterior stairways,
and other areas and improvements provided by Landlord for the general use, in
common, of tenants, their officers, agents, employees and customers, shall at
all times be subject to the exclusive control and management of the Landlord,
and Landlord shall have the right from time to time establish, modify and
enforce reasonable rules and regulations with respect to all facilities and
areas, the right to construct, maintain and operate lighting facilities on all
said areas and improvements, the right to change the area, level, location and
arrangement of parking areas and other facilities hereinabove referred to and
the right to restrict parking by tenants, their officers, agents and employees
to employee parking areas. Landlord shall not, however, have any duty to police
the traffic in the parking areas.
(3)
<PAGE> 187
Tenant further agrees that its employees will not park their cars or other
vehicles an the adjacent to the leased Premises, or in the space provided for
public use, but will use such space as Landlord shall designate from time to
time as parking space for the use of tenants and employee Landlord may designate
space provided for public parking for employee or term parking at specific
times. At Landlord's request, Tenant shall supply Landlord with the names of all
employees, along with the license numbers of their respective automobiles or
vehicles. In addition, Tenant agrees to supply Landlord with the license numbers
of all vehicles owned or operated by Tenant.
The parties agree that damages will accrue from the breach of the covenant
relating to parking and that amount of such damage will be difficuit to
establish, and that by reason thercol; liquidated damages in the amount of
$20.00 per day, per vehicle, parked in violation of said covenant may be
recovered by Landlord from Tenant, following written notification to Tenant
naming the vehicles in violation.
The parties agree that damages will accrue from the breach of the covenant
relating to loading or unloading of deliveries and that the amount of such
damage will be difficult to establish; that by reason there liquidated damages
in the amount of $20.00 per day, per vehicle, loaded or unloaded in violation of
said covenant may be recovered by Landlord from Tenant, following written
notification to Tenant naming the supplier violating this Covenant.
Vehicles parked on Lee Center property without current license tags, inspection
and county stickers displayed will be towed from Lee Center property without
notice and at no expense to the Landlord. All vehicles parked on Lee Center
property must be in operational condition at all times Vehicles not in
operational condition will be towed from Lee Center property without notice and
at no cxpense to the Landlord. is.
18. COMMON AREAS MAINTENANCE AND OPERATION. Landlord agrees to keep the parking
areas in the Shopping Center and the other common area (excepting service areas
immediately adjacent and contiguous to the demised premises, the maintenance of
which shall be Tenant's responsibility) reasonably free of snow, ice and debris
and to keep the same lighted during the business hours of a majority of the
tenants in the Shopping Center. Landlord further agrees to keep the parking
- -area in the Shopping Center and other common areas in good repair and order.
19. UTILITIES GENERAL Tenant shall, at its sole cost and expense, pay all
charges when due for water, sewer, gas, electricity, heat, air-conditioning and
any other utility or energy charges and taxes incurred by Tenant in the use of
the demised premises. in the event separate utility meters am installed for the
demised premises, Tenant shall maintain such meters, at its own expense, and pay
all charges and taxes measured thereby. If Landlord shall elm to supply water,
gas, electricity, sewer or any other utility service, Tenant shall pay within
ten (10) days all charges and taxes therefore upon the receipt of a bill for
such charges rendered at the applicable rates.
20. UTIOLMES - WATER. Tenant shall pay to Landlord, within ten (10) days after
rendition of a bill therefore by Landlord or the Fairfax County Water Authority,
or successor, in addition to ad other charges provided herein and as additional
rent, a sum equal to the amount provided herein and as additional rent, a sum
equal to the amount (or Tenant's pro-rata share, as reasonably determined by
Landlord) of any water or sewer rent or charge, or any other tax, rent, fee,
levy or charge, imposed in connection with Tenant's use, consumption or supply
of water, or Tenant's water system, or Tenant's sewage connection or system.
21. TRASH, Tenant will keep the demised premises free of trash. and dirt
accumulations and shall furnish adequate and proper receptacles for trash and
garbage in a locati6n designated by the Landlord.
22. KEEP CLEAN. The Tenant agrees to keep the sidewalks abutting the demised
premises in clean and orderly fashion, and agrees not to use any space, other
than within the walls of the demised premises, for the sale or storage of
merchandise or for service of any kind.
(4)
<PAGE> 188
23. HOLD HARMLESS. Tenant agrees that it will indemnify and Law the Landlord
harmless from any and all liabilities, damages, causes of action, suits, claims,
judgments, costs and expenses of any kind (including attorney fees) relating to
or arising from or in connection with the possession, use, occupation,
management repair, maintenance or control of the demised premises of any Portion
thereof, or arising from or in connection with any act " Commission of Tenant or
Tenant's agents, employees or invitees, or resulting from any fault, violation
of nonperformance, of this Term by Tenant, or resulting in injury to person or
property or loss of life sustained in or about the demised premises. To assure
such indemnity, Tenant shall carry and keep in JIM form and effect at all times
during the term of this low for the protection of the Landlord and Tenant
herein, public liability insurance with limits of at least One Thousand Dollars
($1,000, 000.00). for each accident and Five Hundred Thousand Dollars ($500,000.
00), for each separate injury, and property damage insurance in the amount of
One Hundred Thousand ($100,000.00). with an approved insurance company and to
deliver to Laundered a copy of said policy or a certificate showing the same to
be in force and effect. Insurance policy must indicate "1999, Lid," as
additional insured In the event Tenant shall fail to maintain such policy of
insurance then Landlord may, niter three (3) days written notice to Tenant,
obtain such policy and pay the premium thereon and the amount so paid shall be
added to the next installment of rent. In the event the Tenant shall operate
motor vehicles on the premises, whether private passenger type or commercial
type, and whether driven by Tenant or his agent (except vehicles used
exclusively for commuting to and from the demised premises), Tenant shall carry
automobile liability insurance either (a) with bodily injury liability limits of
Five Hundred Thousand Dollars ($500,000.00) each person; One Hundred Thousand
Dollars ($100,000.00) each accident, or (b) with a combined bodily injury and
property damage liability limit of not less than Five Hundred Thousand Dollars
($500,000.00). Tenant shall keep in force a policy covering leasehold
improvements, trade fixtures, equipment and personal property from time to time,
in, on or upon the demised premises, in an amount of not less than eighty
percent (80%) of the full replacement value of sad items, providing protection
against sprinkler damage, vandalism and malicious mischief. Tenant shall keep in
force a policy coming all plate glass in the demised premises Tenant shall be
and remain liable for the repair and restoration of all such plate glass.
24. INSURANCE MX The Tenant shall not keep gasoline or other inflammable UMUMW
or any other explosive in the building or use the demised premises in any which
will increase the rate of insurance on the building beyond the ordinary risk
established for the type of business hereinabove provided to be conducted
therein, and any such increase in the insurance rate shall be borne by the
Tenant Tenant shall not do any act or thing upon the premises or in or about the
building which may nuke void or voidable any insurance on the same premises or
building and the Tenant expressly agrees to concur to all rules and regulations
from time to time established by the Virginia Insurance Rating Bureau.
25. PROPERTY AT TENANT`S RISK. It is understood and agreed that all personal
property, goods, wares and merchandise in said premises shall be and remain at
the Tenant's sole risk and the Landlord shall not be liable for any damage to or
loss of such personal property, goods and merchandise arising from the bursting
overflowing. or leaking of the room or of water, sewer, or stem pipes, or from
heating or Plumbing wires or from the handling of electric wins or fixtures or
from any other cause whatsoever, unle ss said damages am caused through the
negligence of the Landlord, its servants, employees or contractors.
26. LANDLORD ACCESS, The Landlord and it Agent shall have access to the demised
premises at any and all reasonable times for the purpose of protecting said
premises against fire, for the prevention of damage and injury to the leased
premises, or for the purpose of inspecting the same.
27. BANKRUPTCY. It is further agreed between the parties hereto that in the
event that Tenant shall become or be adjudged bankrupt, or shall make an
assignment for the benefit of creditors or in any manner become insolvent and/or
cease to do and carry on business, then and in such even this Lease and all
things herein contained shall cease and determine and the tenancy terminate at
the option of the Landlord.
(5)
<PAGE> 189
28. LANDLORD'S RE-ENTRY. This Lease is subject to the limitation that if at
any time, either of the following events (hereafter called a "Default") shall
occur:
(i) if Tenant shall fail to pay any installment of rent or any other
charge required to be paid by Tenant hereunder, when the same shall
become due and payable (it being specifically understood and agreed
that the term rent includes the rent, the increases in any real estate
or other taxes or any other consideration under the Lease that is
identified as rent in this Lease) and such failure shall continue for
five (5) days; or
(ii) if Tenant shall fail to perform or observe any other term, provision,
covenant, condition or requirement of this Lease on the part of
Tenant to be performed or observed, and such failure shall continue
for thirty (30) days after written notice from landlord:
then upon the happening of either of the aforementioned defaults,
this Lease shall, at Landlord's option, cease and determine and shall
operate as a Notice to Quit, any written Notice to Quit being hereby
expressly waived. Landlord may proceed to recover possession of said
premises by virtue of any legal process as may at the time be in operation
and force in like cases relative to proceedings between Landlord and
Tenant, and Tenant shall pay for any Court costs relative to such
proceedings and reasonable attorney fees, or Landlord may at its option
re-enter and re-rent that demised premises for the account of the Tenant,
and in such event, Tenant shall remain liable to landlord for any and all
deficiencies in the rent under this Lease.
29. RE-LETTING. Should Landlord elect to re-enter, as herein provided, or
should it take possession pursuant to legal proceedings or pursuant to any
notice provided by law, it may either terminate this Lease or it may from time
to time without terminating this Lease, make such reasonable alterations and
reasonable repairs as may be necessary in order to re-let the premises, and
re-let said premises or any part thereof for such term or terms (which may be
for a term extending beyond the term of this Lease) and at such rental or
rentals and upon other terms and conditions as Landlord in its discretion may
deem advisable; upon each such re-letting all rentals received by the Landlord
from such re-letting shall be applied first to the payment of any indebtedness,
other than rent due hereunder from Tenant to Landlord; second, to the payment
of any costs and expenses of such re-letting, including brokerage fees and
attorneys' fees and of costs of such reasonable alterations and reasonable
repairs; third, to the payment of rent due and unpaid hereunder; and the
residue, if any, shall be held by Landlord and applied in payment of future
rent as the same may become due and payable hereunder. If such rentals
received from re-letting during any month be less than that to be paid during
that month by Tenant hereunder, Tenant shall pay any such deficiency to
Landlord. Such deficiency shall be calculated and paid monthly. No such
re-entry or taking possession of said premises by landlord shall be construed
as an election on its part to terminate this Lease unless written notice of
such intention be given to Tenant or unless the termination thereof be decreed
by a Court of competent jurisdiction. Notwithstanding any such re-letting
without termination, Landlord may at any time thereafter elect to terminate
this Lease for any such previous breach. Should Landlord at any time terminate
this Lease for any breach, in addition to any other remedies it may have, it
may recover from Tenant, damages it may incur by reason of such breach,
including reasonable attorneys' fees and other costs of recovering the leased
premises.
30. HOLD-OVER. If the Tenant shall not immediately surrender said premises on
the day after the end of the term hereby created, then the Tenant shall, by
virtue of this agreement, become a Tenant by the month at rental rate
established by the Landlord. Tenant agrees to provide the Landlord with a
minimum of thirty (30) days notice from the first day of the month of his
intention to vacate said premises. Upon notification of intent to vacate
Tenant agrees to give Landlord permission to place a "For Lease" sign in the
window and to advertise and show premises to prospective Tenants.
31. SUBORDINATION TO MORTGAGE. This Lease shall be subject and subordinate to
the lien of any mortgage or deed of trust now on the demised premises, and
subject and subordinate to the lien of any mortgage or deed of trust
encumbrance which may at any time hereafter be made a lien upon the premises.
The Tenant shall execute and deliver within ten (10) days after a request
therefore, such further instruments subordinating this lease to the lien of any
such mortgage or deed of trust encumbrance and/or estoppel certificates as
shall be desired by any mortgagee or party secured or proposed mortgagee or
proposed secured party.
32. ESTOPPEL CERTIFICATE BY TENANT. Tenant further agrees at any time and from
time to time, upon not less than ten (10) days' prior written request by
Landlord, to execute, acknowledge and deliver to Tenant a statement in writing,
certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as
modified, and stating the modifications), and the date to which the rental and
other charges have been paid in advance, if any, that the Tenant is in
possession and has accepted the premises and that the obligations of the
Landlord and Tenant have been performed and that there are no defaults under
the Lease, it being intended that any such statements delivered may be relied
upon by any prospective purchaser of the fee, or mortgagee or assignee of any
mortgage upon the fee, of the demised premises.
(6)
<PAGE> 190
33. NOTICES, All notices required or desired to be given hereunder by either
Fifty to the other shall be given by certified or registered mad. Notices to the
respective parties shall be addressed as follows:
If to Landlord- if to Tenant
1998 Ltd. Cycle Sport
6573 Backlick Road Attention: Mr. David Nees
Suite 201 632 Grant St.,
Springfield, VA 22150 Herndon, VA 22070
34. SUBLETTING AND ASSIGNMENT. Tenant will not sublet demised premises or any
pan thereof or transfer possession or occupancy thereof to any person (including
but not by way of limitation, concessionaires or licensees of Tenant)
corporation to transfer, assign, mortgage or encumber this Lease without the
prior written consent of landlord in each instance, nor shall any subletting or
assignment hereof be effected by merger, liquidation or otherwise by operation
of law or otherwise than by the prior written consent of the Landlord.
35. NOT PARTNERS, The parties hereto by this agreement expressly do not intend
as a matter of fact or law to create or constitute a partnership.
36. OMITTED.
37. ADDMONAL RENT, If Landlord shall incur any charge or expense on behalf of
Tenant under the terms of this Lease, such charge or expense shall be considered
additional rent hereunder, in addition to and am in limitation of any other
rights and remedies which Landlord may have in case of the failure by Tenant to
pay such sums when due, such nonpayment shall entitle Landlord to the remedies
available to it hereunder for non-payment of rent. All such charges or expenses
shall be paid to Landlord at its offi ce or its successor, assignee or nominee
in Springfield, Virginia, or at such other place and to such other person as
Landlord may from time to time designate in writing.
39. QUIET ENJOYMENT. Landlord covenants that if Tenant pays the rent and all
other charges provided for herein, performs all of its obligations provided for
hereunder, and observe all of the other provisions hereof, Tenant shall at all
times during the term hereof peaceably and quietly have, hold and enjoy the
defused premises, without any interruption or disturbance from Landlord, or
anyone claiming through or under Landlord, subject to the terms hereof.
39. JOINT AND SEVERAL LIABILITY. If two or more individuals, corporations,
partnerships or other business associations (or any combination of two or more
thereof) shall sip this Lease as Tenant, the liability of each such individual,
corporation, partnership, or other business association to pay rent and perform
all other obligations hereunder shall be deemed to be joint and several. In like
manner, if the Tenant names in this I case shall be a partnership or other
business association, die members of whic h am, by virtue of statue or general
law, subject to personal liability, the liability of each such member Shall be
joint and several.
40. MODIFICATION. This writing is intended by the parties as final expression of
their agreement and as a complete and exclusive statement of the terms here of
all negotiations, considerations and representations between the parties having
been incorporated herein. No course of prior dealings between the parties or
then affiliates shall be relevant or admissible to supplement, explain, or vary
any of the terms of this Lease No representations, understandings, or agreements
have been made " relied upon in t he making of this Lease other than those
specifically set forth herein. This Lease can only be modified in writing signed
by all of the parties or their duly authorized agents.
41. NO DISCRMINATTON. It is intended that the Shopping Center be operated so
that all prospective tenants tend, and all customers, employees, licensees and
invitees of all tenants shall have the opportunity to obtain all the goods,
services, accommodations, advantages, facilities and privileges of the Shopping
Center without discrimination because of race, creed, color, national origin or
ancestry. To that end, Tenant will not discriminate in the conduct and operation
of its business in the premises against any person or group of persons because
of the race, creed, color, national origin or ancestry of such person or group
of persons.
42. CAPTIONS AND READINGD Captions and headings are for convenience and
reference only.
43. APPLICABLE LAW. This Lease shall be construed under the laws of the State of
Virginia. Tenant hereby elects domicile at the premises for the purposes of
service of all notices, writs of summons, or other Legal documents, or process,
in any suit, action, or proceeding which Landlord may undertake under this lease
(7)
<PAGE> 191
44. GENDER. Feminine or neuter pronouns shall be substituted for those of the
masculine f a form, and the plural may be substituted for the singular number,
in any place or places herein in which the content may require such substitution
or substitutions-, and the covenants and agreement herein contained shall.
wherever appropriate, be binding upon the heirs, administrator executors,
personal representatives, successors and assigns of the parties hereto.
45. OPTION. The submission of this Lease for examination does not constitute a
reservation of or option for the premises, and this Lease becomes effective only
upon execution and delivery thereof by:Landlord
ADDENDA
It is further understood and agreed that any type of "candle burning" or
"Incense burning" of any "incense burning" on the demised premises is not
permitted under any circumstances. (INITIALS)
It is further understood and agreed that the use of or storage of any type of
illegal drugs or substances on the demised property will be cause for immediate
termination of lease agreement (INITIALS)
GIVEN under our hands and seals this __________day of______________
LANDLORD: 1998, Ltd
By. _______________-(Seal
TENANT:
By: ________________(SEAL)
By: _________________(SEAL)
By:__________________(SEAL)
By: ________________(SEAL)
<PAGE> 192
SCHEDULE F
BILL OF SALE
FOR THE MOTOR CYCLE DIVISION
OF
CYCLE SPORT UNLIMITED, INC.
<PAGE> 193
BILL OF SALE
FOR ASSETS
OF
THE MOTOR CYCLE DIVISION
OF
CYCLE SPORT UNLIMITED, INC.
IN CONSIDERATION for the sum of $300,000.00, the receipt of which is
hereby acknowledged, CYCLE SPORT UNLIMITED, INC., a Virginia corporation,
("Seller"), hereby does grant, sell, transfer and deliver to V-TWIN
ACQUISITIONS, INC., a Virginia corporation, ("Buyer"), all of Seller's right,
title and interest in all assets of Seller for the conduct of a business known
as "Cycle Sport Unlimited" located in Herndon and Springfield Virginia, as more
fully described in "SCHEDULE A" attached hereto and the trade name "Cycle Sport
Unlimited".
Seller warrants that it has good title to the goods sold, free from any
security interest or other lien or encumbrance of which the Buyer has no
knowledge, and that Seller has the right to sell and transfer the goods.
THE GOODS ARE SOLD "AS IS", WITHOUT ANY OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTY OR MERCHANTABILITY AND
USAGE OF TRADE OR IMPLIED WARRANTY OF FITNESS FOR PARTICULAR PURPOSE.
CYCLE SPORT UNLIMITED, INC.
A Virginia Corporation
By:
---------------------------------
David E. Nees, President
ACCEPTED:
V-TWIN ACQUISITIONS, INC.
A Virginia Corporation
By:
---------------------------
Ted L. Schwartzbeck, CEO
<PAGE> 194
SCHEDULE G
LICENSES
FOR
THE MOTOR CYCLE DIVISION
OF
CYCLE SPORT UNLIMITED, INC.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-31-1998
<PERIOD-END> JUL-31-1998
<CASH> 50,148
<SECURITIES> 612,500
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 662,648
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 662,648
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 781
<OTHER-SE> 661,867
<TOTAL-LIABILITY-AND-EQUITY> 662,648
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
August 2, 1989
- -------------------------------------------------
In the Matter of American Solid Fuel, Inc.
Issuer(s) 1209 Orange Street ORDER DECLARING THE
Wilmington, Delaware 19801 REGISTRATION STATEMENT
EFFECTIVE PURSUANT TO
SECTION 8(a) OF THE
SECURITIES ACT OF 1933,
AS AMENDED
File No(s) 33-26767
- -------------------------------------------------
Request having been made that the registration statement referred to in
the caption hereof be made effective pursuant to Section 8(a) of the Securities
Act of 1933.
IT IS ORDERED that the said statement is hereby declared effective at
12:00 NOON
August 2, 1989
For the Commission, by the Division of Corporation Finance, pursuant to
delegated authority.
/s/ SHIRLEY E. HOLLIS
By: Shirley E. Hollis
Assistant Secretary
Jonathan G. Katz
Secretary
<PAGE> 2
--------------
89 16 6509
--------------
-------------------------
OMB APPROVAL
-------------------------
OMB Number 3235 0098
Expires November 30, 1989
-------------------------
PRE-EFFECTIVE AMENDMENT #2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-18
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMERICAN SOLID FUEL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
Unknown
- --------------------------------------------------------------------------------
(Primary Standard Industrial Classification Code Number)
Applied for
- --------------------------------------------------------------------------------
(I.R.S. Employer Identification Number)
1209 Orange St. Wilmington, Delaware 19801
- --------------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
1610 So. Industrial Road, Salt Lake City, Utah 84104
- --------------------------------------------------------------------------------
(Address of principal place of business or intended principal place of business)
Telephone (3 3) 839-1785
The Corporation Trust Company, 1209 Orange St., Wilmington, Delaware 19801
- --------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
June 1989
- --------------------------------------------------------------------------------
(Approximate date of commencement of proposed sale to the public)
Calculation of Registration Fee
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to Amount to be Offering Aggregate Amount of
be Registered Registered Price Per Unit Offering Price Registration Fee
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common 10,000,000 $ .015 $150,000 $100
</TABLE>
Exhibit Index......44
<PAGE> 3
CROSS REFERENCE INDEX
<TABLE>
<CAPTION>
PART I
<S> <C>
ITEM 1. Forepart of the Registration Statement
And Outside Front Cover Page of
Prospectus Pages 1,4
ITEM 2. Inside Front and Outside Back Cover
Pages of Prospectus. Page 5,6
39
ITEM 3. Summary Information and Risk Factors. Page 7,8
ITEM 4. Use of Proceeds. Page 17
ITEM 5. Determination of Offering Price. Page 14
ITEM 6. Dilution. Page 15
ITEM 7. Selling Security Holders. PW R/A
ITEM 8. Plan of Distribution. Page 23
ITEM 9. Level Proceedings. Page 29
ITEM 10. Directors and Executive Officers. Page 18
ITEM 11. Security Ownership of Certain
Beneficial Owners and Management. Page 18
ITEM 12. Description of the Securities
to Be Registered Page 27
ITEM13 Interest of Named Experts and
Counsel. Page N/A
ITEM 14. Statement as to Indemnification Page N/A
</TABLE>
1
<PAGE> 4
<TABLE>
<S> <C> <C>
ITEM 15. Organization Within Five Years. Page 7
ITEM 16. Description of Business. Page 21
ITEM 17. Description of Property. Page N/A
ITEM 18. Interest of Management and
Owners In Certain Transactions. Page 18
ITEM 19. Certain Market Information. Page 21
ITEM 20. Executive Compensation. Page 26
ITEM 21. Financial Statements. Page 29 a
PART Il
ITEM 22. Indemnification of Directors
and Officers. Page 40
ITEM 23. Other Expenses of Issuance and
Distribution Page 42
ITEM 24. Recent Sales of Unregistered
Securities. Page 43
ITEM 25. Exhibit Index. Page 44
ITEM 26. Undertakings Page 66
ITEM 27 Signature Page 68
</TABLE>
2
<PAGE> 5
PROSPECTUS
FOR
AMERICAN SOLID FUEL, INC
1209 Orange Street
Wilmington, Delaware 19801
10,000,000 Shares of Common Stock ($.001 Par Value)
American Solid Fuel, Inc., (hereinafter the "Company") hereby offers for
sale through the Company's President, Tommy D. Masek, up to 10,000,000 shares
of Common Stock (the "Shares") at the cash price of $.015 per share.
Prior to this Offering, there has been no public market for the Company's
Shares of Common Stock and no assurance can be given that one will develop. The
offering price has been arbitrarily determined by the Company and bears no
relationship to the Company's worth, or any other recognized criteria of value.
The Shares are being offered on the "best efforts" minimum-maximum basis.
If less than the minimal shares are sold, all funds will be promptly returned
to the subscribers without deduction or interest. Subscribers' funds are
refundable only in the event the minimum shares offered hereunder are not
offered and sold prior to the expiration of nine months from the effective date
hereof. All checks for purchase of shares hereunder must be made payable to
Brighton Bank as Escrow Aden.. (See Plan of Distribution and Escrow".)
THESE SECURTIES INVOLVE A VERY HIGH DEGREE OF RISK AND SUBSTAMTIAL DILUTION.
THE ISSUER HA.S ABSOLUTELY NO PLAN FOR THE EXPENDITURE OF THE PUBLIC FUNDS
SOUGHT TO BE RAISED HEREUNDER. POTENTIAL PUCHASERS SHOULD NOT INVEST IN THESE
SECURITIES UNLESS THEY CAN AFFORD THE RISK OF LOSING THEIR ENTIRE INVESTMENT.
MEMBERS OF MANAGMENT HAVE NO SUBSTANTIAL EXPERIENCE WHATSOEVER IN MANAAGING A
PUBLIC COMPANY OR THE TYPE OF INVESTMENT BUSINESS CONTEMPLATED HEREIN (See
"Risk Factors.")
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANFE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECUTS. ANY REPRESENTATION TO THE CONTRACT IS A CRIMININAL
OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Underwriting Offering
Offering Discounts and Proceeds to
Price Commissions (2) Company (3)
<S> <C> <C> <C>
Per Share $ 0.015 -0- $ 0.015
Minimum (1) $ 75,000 -0- $75,000.00
Maximum $ 150,000.00 -0- $150,000.00
- ---------------------------------------------------------------------------
</TABLE>
(Footnotes are on the following pages
1
<PAGE> 6
UNDERWRITER:
THE COMPANY WILL ACT AS ITS OWN UNDERWRITER
AMERICAN SOLID FUEL, INC.
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801
The date of this Prospectus is __________, 1988.
Notes to Distribution Table
(1) Tommy D. Masek, the Company's President and a Director, has agreed to use
his "best efforts" to sell the Shares offered hereunder on a
minimum-maximum; basis within nine (9) months from the date of this
Prospectus. If at least Five million (5,00,000) Shares are not sold within
a nine (9) month period, funds received from subscriptions will be promptly
returned to subscribers in full without payment of interest thereon or
deduction therefrom. All funds received from this Offering will be
deposited within three business days following receipt with Brighten Bank,
as B3crow Agent. In the event the minimum amount of $75,000 is received
within nine (9) months from the effective date hereof, all funds will be
disbursed from the escrow to the Company, less the Escrow Agent's fees.
Provided the Shares offered are sold, all funds received thereafter prior
to the expiration of the nine (9) month period will not be subject to
escrow. This Offering will terminate on or before the expiration of nine
(9) months from the effective date hereof, regardless of whether the
minimum or maximum number of shares have been offered and Bold. (See "Plan
of Distribution and Escrow")
(2) No commission will be paid in connection with the offer and sale of the
Shares offered hereunder. All offers of the securities described herein
will be made through the Company's President, Tommy D. Masek, who has
agreed to pay his own day-to-day sales expenses.
(3) These amounts represent the proceeds to the Company after deduction of
offering expenses of approximately $12,500 for leg3l and accounting fees,
printing costs, filing fees, and other miscellaneous expenses.
THE SHARES ARE OFFERED SUBJECT TO PRIOR SALE, ACCEPTANCE OF AN OFFER TO
PURCHASE AND TO WITHDRAWAL OR CANCELLATION OF THE OFFERINC WITHOUT NOTICE.
UNTIL _____________, A DEALER AFFECTING TRANSACTIONS IN THE SHARE OF THE
COMPANY, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBITION MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSEPCTIUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLID
ALLOTMENTS OR SUBSCRIPTIONS.
2
<PAGE> 7
NO OFFICER OR DIRECTOR OF THE COMPANY OR ANY OTHER PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSECPTUS AND IF GIVEN OR MADE SUCH INFORMATION OR REPRESENTAION MUST BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AB OFFER OT SELL OT A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES TO ANY PERSON IN ANY JURSDICITION WHERE SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL.
3
<PAGE> 8
- --------------------------------------------------------------------------------
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
The following information is qualified in its entirety by the information
appearing elsewhere in this Prospectus.
THE COMPANY
American Solid Fuel, Inc., (the "Company"), whose principal office is
located at 1610 So. Industrial Road, Salt Lake City, Utah 84104 (801) 972-4488,
was incorporated on August 16, 1988 under the laws of the State of Delaware to
raise capital and to look for investments and business endeavors in any
industry. There are no present plans or commitments with respect to any given
business or industry and no assurance can be given that the Company will be
able to acquire an interest in an as yet unidentified industry, that, if
acquired, will be successful. (See "Proposed Business".)
THE OFFERING
ISSUER..................................American Solid Fuel, Inc.
1209 Orange Street
Wilmington, Delaware 19801
SECURITIES OFFERED......................10,000,000 Shares of Common Stock
PRICE PER SHARE.........................$0.015 ($.001 Par Value)
PROPOSED BUSINESS.......................The Company has not yet engaged in
any substantive business activities.
The Company will attempt to acquire
assets and properties in one or more
as yet unidentified industries. The
Company presently has no specified
type of business, asset or property
contemplated to be acquired.
USE OF PROCEEDS.........................The proceeds of this Offering are
not specifically allocated and the
net proceeds will be used to acquire
assets, properties, products or an
existing company, deemed by Management
in their best judgment to have a
profitable future.
UNDERWRITER.............................Tommy D. Masek, the Company's President,
has agreed to use his "best efforts"
to offer and sell the securities
described herein.
TRANSFER AGENT..........................OTC Stock Transfer Inc.
231 East 2100 South
........................................Salt Lake City, Utah 84105
4
<PAGE> 9
ESCROW AGENT............................Brighton Bank
7101 South Highland Drive
Salt Lake City, Utah 84121
<TABLE>
<S> <C> <C>
ALLOCATION OF GROSS PROCEEDS............Description Minimum Maximum
Gross proceeds from Underwriting $75,000 $150,00
Sale of Stock to Promoters $12,500 $12,500
TOTAL $87,500 $162,500
Expenses $12,500 $12,500
Net Proceeds $75,000 $150,000
</TABLE>
- --------------------------------------------------------------------------------
INTRODUCTORY STATEMTEMENTS AND RISK FACTORS
- --------------------------------------------------------------------------------
American Solid Fuel, Inc., (hereinafter "Company"), was organized for the
purpose of engaging in the transaction of any and all types of assets,
properties and businesses. The Company intends to look for acquisition
possibilities across the United States and to make such acquisitions as its
limited assets will allow. It is very likely that the Company will also issue
stock in connection with a business acquisition. (See "Proposed Business")
The Company has no operating history and no representation is made nor is
any Intended that the Company will be able to carry on its activities
profitably. The viability of the proposed business is dependent upon sufficient
funds being realized by the Company from this Offering, of which there is no
assurance. Management of the Company believes that the minimum proceed amounts
will be sufficient to allow the Company to engage in its proposed business. No
assurance can be given that the Company will have the ability to acquire
assets, businesses or properties with any value to the Company.
RISK FACTORS
Any person contemplating an investment In the securities offered herein
should be aware of the risk factors of the Offering and should consider, among
others, those factors set forth below.
RISKS DUE TO NATURE OF COMPANY'S PROPOSED PLAN OF OPERATIONS
1. NO PLAN FOR EXPENDITURE OF FUNDS. Except for the anticpipated
expenditure of certain funds derived from this Offering, if any, regarding
estimated costs for legal and accounting, consultants, telephone and travel,
and general and administrative overhead, no plans have been made by the
Management of the Company for the expedenture of the remaining funds received
in this Offering. (See "Use of Proceeds"). No specific industry or area of
business has been determined as a potential recipient of all or a portion of
the proceeds to be derived from this Offering. Management may not have the
experience or skills necessary to make a judgment in any industry chosen. The
nature of this
5
<PAGE> 10
Offering, therefore, involves a high degree of risk and should not be invested
in by anyone who cannot afford the loss of his or her entire investment,
2. BLIND POOL. Inasmuch as Management of the Company does not have any
specific assets, businesses or properties contemplated for purchase with the
proceeds of this Offering and therefore, the proceeds are not specifically
allocated, an investment in the common stock of the Company involves an
extremely high degree of risk. The Company's proposed business constitutes in
fact a "blind pool" over which the stockholders will have no control.
Stockholders must rely upon Management of the Company -to properly expend the
funds of the Company in accordance with the standards set forth herein. The
proceeds will be held until such time as assets or properties can be acquired,
or will be used to develop arty asset which is acquired. Pending property
acquisitions, the funds will be held in interest-bearing accounts or invested
in short-term government obligations. ("See Proposed Business").
3. SHAREHOLDERS LIABILITY TO APPROVE OR DISAPPROVE USE OF PROCEEDS. The
Company's officers and directors will determine how the proceeds derived from
this Offering, if any. are to be expended. Shareholders of the Company may be
excluded from the decision-making process as to now a material portion of the
proceeds derived from this Offering will be spent, and must therefore, depend
upon the prudent business judgment of the Company's officers and directors. The
Company's officers and directors are independent in terms of
identify/negotiating and developing the purchase of an interest in a product,
asset or existing business entity. Nevertheless, shareholders can be precluded
from interjecting their respective views and opinions as to the advisability of
acquiring an interest in as such product, asset or existing business entity.
("See Use of Proceeds").
4. SUBSTANTIAL TIME MAY PASS BEFORE THE COMPANY CONDUCTS ANY ACTIVE
BUSINESS. No estimates can be given as to the timing with respect to business
acquisitions. However, it is the intent of Management to look for and make
acquisitions within 12 months from -the close of this Offering. It is possible
however, that the Company may take several years before it finds a business
activity which Management selects to have the Company participate in. In such
an event a substantial portion of the proceeds of this Offering would be
expended for overhead expenses. (See "Proposed Business" and "Use of Proceeds".)
5. LACK OF EXPERIENCE OF MANAGEMENT. Management of the company has only
the limited business experience as set forth herein. The Company Management has
no substantive experience in managing a public company or in looking for
business investments. The Board of Directors may rely heavily on the advice of
independent consultants including attorneys and independent accountants to
evaluate proposed acquisitions. (See "Management.")
6. CONFLICTS OF INTEREST. The Officers and Directors of the Company will
devote the majority of their time to their own full-time employment, as well as
time expended on other business opportunities and
6
<PAGE> 11
projects that are not expected to compete directly or indirectly with the
Company.
It is not anticipated that in terms of future business operations there
will be any business activities or interdealing between any officer and
director of the Company, their affiliates and the Company. In the event an
officer, director or an affiliate of the Company is afforded the opportunity to
present to the Company a proposed business opportunity of whatever nature, it
would be anticipated the parties, the Company and any such officer, director or
affiliate would deal on terms similar to the competitive conditions existing in
the open marketplace. As of the effective date thereof, no officer, director or
affiliate of the Company has any assets or business opportunities for potential
review or any other business opportunity any such person contemplates offering
to the Company in which any officer, director or affiliate of the Company has a
material interest, either directly or indirectly.
Other conflicts may arise by virtue of business opportunities that become
known to one or more members of management or their affiliates, but are not
subsequently offered to the Company for one of many reasons. Management is
aware of its fiduciary responsibility to the Company and its shareholders, and
intends to offer to the Company all prospects of which they are aware that may
be of potential benefit to the Company, provided the Company has the realistic
financial capability to become involved with any business opportunity. The
officers and directors have Weed to provide the Company with the first right to
review future business opportunities provided the Company is capable of taking
advantage of the opportunity. The officers and directors hope to avoid
conflicts by discussing among themselves the available business opportunities
each has encountered and acting as rapidly as possible to utilize those
ventures which would benefit the Company.
No assurance can be given that any conflict of interest with respect to
time expended for and on behalf of the Company's affairs and each Officer's and
Director's full-time employment, or that any conflict with respect to the
fiduciary obligation of any member of management to present potential business
opportunities to the Company, will be resolved in favor of the Company.
Management of the Company has been advised that should Management fail to act
in the best interest of the Company and its shareholders with respect to
corporate opportunities, failure to do so could result in personal liability to
any one or more members of the Company's management. There are not formal
provisions which have been provided for resolving the actual and potential
conflicts of management beyond management's fiduciary responsibilities under
applicable state law.("See Conflicts of Interest").
7. LACK OF BUSINESS OPPORTUNITIES. Although the Company will use efforts
by consultants and by Management to attempt to locate potential business
prospects, there is no assurance that any business or assets worthy of even
preliminary investigation will come to its attention, or that any significant
amount of funds will be expended in the actual acquisition of assets. ("See
Proposed Business").
7
<PAGE> 12
8. LIMITED CAPITAL. The amount of capital necessary to acquire and/or
develop a successful business in today's economy will limit the Company's
participation in most ventures to those of modest cash requirements and
therefore, a limited potential return. With limited funds available, additional
financing may be required.
Any expenditure of a portion of the proceeds derived from this Offering
that is utilized in the investigation to determine the viability of a
particular business opportunity may substantially diminish the Company's cash
reserves should a particular business opportunity be deemed by Management to be
unsuitable for an investment of any further portion of the Company's funds, and
will accordingly, diminish the Company's ability to expend the required funds
to adequately investigate future business opportunities.
In all likelihood, any product, asset or existing business entity
acquired by the Company, will likely be a result of the desire of the persons
controlling such product, asset or existing business entity to establish a
public trading market for the Company's common stock, as opposed to desire such
persons to establish a business relationship with the Company for the sole or
primary reason of utilizing the Company's remaining cash reserves. (See "Use of
Proceeds").
9. LOSS FROM EXMINATION AND INVESTIGATION. The Company will probably
expend funds in the preliminary investigation or examination of assets,
business or properties and determine that the same has little or no value, in
which case the monies spent on investigation will be a total loss. It is
possible that the Company may expend all of the proceeds derived from this
Offering to locate, investigate and determine suitability of a business
opportunity and not actually consummate one or more transactions whereby the
Company would acquire any rights or property(s) at all. ("See Proposed
- -Business").
10. TIME DEVOTED BY MANAGEMENT AND OTHER PERSONNEL. All of the Officers
and Directors of the Company have other full-time employment and it is not
presently contemplated that any of the Company's Officers and Directors will
devote more than 10% (from 4 to 10 hours per week) of their time to the affairs
of the Company, except, on an "as needed" basis. Inasmuch as Management will
not receive any remuneration for their efforts until such time as revenues are
generated from operations, the only incentive to Management to make the Company
successful stems from being a shareholder. Management intends to analyze
potential business ventures themselves. However, in some circumstances, experts
or consultants may be retained and compensated by management. No one in
management is a professional business analyst, and in fact management has no
experience in analyzing potential business ventures. ("See Management").
11. COMPETITION. There is intense competition for assets, properties, and
businesses which have potential or are successful. Many firms or persons
competing for those business opportunities are far
8
<PAGE> 13
better financed and have a much larger staff of personnel than the Company. The
Company may also become involved in one or more specific businesses which also
face intense competition from entities and with greater overall resources than
the Company.("See Proposed Business").
12. UNKNOWN FACTORS. By its nature, the search for potentially
profitable assets and businesses is highly speculative and is subject to great
risks which even a combination of experience, market and business information,
or careful study cannot always overcome.("See Proposed Business").
13. SHAREHOLDERS', DISSENTERS' AND APPRAISAL RIGHTS. In the event the
Company enters into the business combination. the objective of which is to
acquire an existing business entity or substantially all of the assets of an
existing business entity, Delaware Law does not provide for dissenters' rights
or appraisal rights, except in the case of a "statutory merger" whereby the
Company would acquire all of the issued and outstanding shares of an existing
entity and in which it is contemplated the entity acquired by the Company
would. be immediately dissolved pursuant to law. Shareholders are not afforded
the opportunity to demand of the Company the right to dissent to as if such
proposed merger or otherwise demand an appraisal of the value of their existing
shares. Except in the case of a "statutory merger", shareholders are dependent
upon the business judgment of the Company's officers and directors as to the
decision to enter into any agreement that contemplates the acquisition of an
existing business entity as a wholly-owned subsidiary of the Company, or as the
case may be, the acquisition of all or substantially all of the assets of an
existing business entity and the assumption of the liabilities of that entity.
("See Description of Common Stocks").
14. PROBABLE LACK OF INVESTMENT DIVERSIFICATION. Considering the limited
capital resource of the Company, It is more likely than not the Company will
exhaust its limited capital resources in the acquisition of an interest In or
the ownership of a product, asset, or existing business entity, thereby
precluding the Company from diversifying its business interests in a related or
non-related field. No assurance can be given that the Company will in any event
acquire an interest in the ownership of any such product, asset or existing
business entity.("See Use of Proceeds").
15. CHANGE IN CONTROL. Based upon the historical performance of
companies having the same or similar purposes as these of the Company, it is
likely should the Company acquire the ownership or an Interest in a product,
asset or existing entity that a change In management and control of the Company
will occur, and that with respect to any such change in control, shareholders
of the Company my not be afforded the opportunity to approve future
management.("See Proposed Business").
RISKS INHERENT IN A NEW COMPANY
16. NO OPERATING HISTORY The Company has only been in existence since
August 16, 1968. It has no operational history and has
9
<PAGE> 14
yet to engage in any business of any kind. All risks inherent in a new and
inexperienced enterprise are inherent in the Company's business. The Company
has riot made a formal study of the economic potential of any business. The
Company has no assets or business opportunities presently being contemplated
for acquisition. ("See Proposed Business").
17. NO UNDERWRITING AGREEMENT. There is no commitment of any kind on the
part of anyone to purchase all or any part of the sham being offered.
Consequently, the Company can give no assurance that all or any part of the
shares will be sold. However, the escrow arrangements provide that unless the
minimum escrow of $75,000 is deposited within nine (9) months from the date of
this Prospectus, the proceeds will be returned promptly in full 'to the
subscribers without interest thereon or deduction therefrom. Thus, an investor
could invest money in the Company for as long as nine (9) months and have the
money returned without interest.("See Plan of Distribution").
18. ADVERSE EFFECT OF SALE OF LESS THAN THE MAXIMUM NUMBER OF SHARES. In
the event that at least the minimum number of shares are sold but less than the
maximum number, the proposed operations of the Company would be adversely
affected and reduced, and may require additional financing for which the
Company has not arranged. If the Company's initial business operations are not
successful and the Company is unable to generate revenues or obtain additional
financing, an investment in the Company's common stock could result in a total
loss. ("See Plan of Distribution").
GENERAL RISKS
19. BENEFITS REALIZED BY ORIGINAL Stockholder's Each purchaser of common
stock in this Offering will suffer a substantial dilution in the book value per
share as compared to the purchase price. The Company's presently outstanding
equity securities are owned by its original stockholders (see "Management"). If
the Company's future operations are successful, such persona will realize the
principal benefits, if any, of the Company's growth. If the Company's future
operations are unsuccessful, the persons who purchased the shares offered
hereby will sustain the principal losses of their cash investment (See
"Dilution").
20. POSSIBLE RULE 144 SALES. A total of 3,750,000 shares of common stock
have been issued by the Company prior to this Offering to its present Officers,
Directors and founders. These securities my be sold in compliance with Rule 144
adopted under the Securities Act of 1933, as amended, which provides, in
essence, that officers and directors and others holding restricted securities
(such as those described above may each sell through brokerage transactions, an
amount equal to 1% of the Company's outstanding securities every ninety days,
provided the saw have been held for a period of no less than two years from the
date the securities were fully paid for. Consequently, the possible sale of the
3,750,000 restricted shares held by Management under Rule 144, commencing in
__________, could have a depressive effect on the price of the Company stock in
the over-the-counter market, provided such a market exists. Shares of the
Company's
10
<PAGE> 15
stock first become eligible for Rule 144 sales in ________. ("See
Management").
21. ISSUANCE OF ADDITIONAL SHARES AND DILUTION OF OWNERSHIP TO PUBLIC
STOCKHOLDERS. In the event the maximum of 10,000,000 shares are sold, at the
conclusion of the Offering, there will be issued and outstanding an aggregate
of 13,750,000 common shares, leaving an aggregate of 36,250,000 authorized but
unissued common shares in the Company's treasury. It is probable that in the
course of the Company acquiring a product, assets, or existing business entity,
that an undetermined number of authorized but unissued shares will be to one or
more persons controlling any such products, asset or existing business entity,
the effect of which would likely reduce the total of control held by public
shareholders following the conclusion of the Offering. In addition, if
management of the Company determined to issue any substantial number of
authorized but unissued shares to any such person, public shareholders may
suffer additional substantial. dilution to the value of their shares
immediately following the conclusion of the Offering.
There are presently no commitments, contracts, understanding or
agreements with respect to the issuance of any additional common shares to any
persons.("See Proposed Business").
22. EFFECT IS LESS THAN MINIMUM SHARES ARE OFFERED AND SOLD. If, in
the event less than the minimum of 5,000,000 common shares are offered and sold
on or before the expiration of nine months from the effective daze hereof, all
funds received from public sales will promptly be returned to public investors
in full by the Company's Escrow Agent without interest or deduction. Should
less than the minimum number of shares be offered and sold, public investors'
funds could be held on deposit by the Company's Escrow Agent for a period of
approximately 9 months or less without interest accruing to the benefit of
public investors.("See Plan of Distribution").
23. ARBITRARY OFFERING PRICE OF SECURITIES. The offering price of $.015
per share was arbitrarily determined by the Company. The price has no
relationship to the assets of the Company or other recognized criteria of
value. rile price does not represent that the stock could be resold at that
price or that it will ever have a market value at that price.("See Dilution").
24. NO DIVIDENDS. The Company has paid no dividends to date and does not
intend to pay cash dividends in the foreseeable future. Management presently
intends to retain any earnings to help finance development of the Company's
business. Future dividend policy wil1 depend upon earnings, if any, capital
requirements and other factors. ("See Dividends").
25. LACK OF PUBLIC MARKET. There is presently no public market for the
Company's securities and no assurance can be given one will develop at the
conclusion of this Offering, or, if developed, that it will continue. No
broker-dealer has agreed to make a market in the company's stock and the
absence of an established broker-dealer in the
11
<PAGE> 16
public offering substantially reduces the likelihood that any broker-dealer
will be willing to cake a market in the stock in the future.("See Plan
Distribution").
26. INVESTMENT COMPANY ACT OF 1940. Management will make every effort to
keep the Company from being classified as an "Investment Company" under the
Investment Company Act of 1940. If deemed to be an investment company without
registration as such under the 1940 Act, it could result in civil liability and
criminal penalties to controlling persons in certain instances, as well as
civil liabilities and unenforcibility of contracts with regard to the
Company.("See Acquisition Restrictions").
- --------------------------------------------------------------------------------
DILUTION
- --------------------------------------------------------------------------------
As of September 1. 1988, the Company had a total 3,750,000 shares of
common stock issued and outstanding with a net tangible book value of $2,503 or
approximately $.00067 per share.
Assuming the sale of the maximum 10,000,000 shares offered at a price of
$.015 per share, a total of 13,750,000 shares vil.1 be issued and outstanding
with a net tangible book value of $150,00O or $.01091 per share. Assuming the
sale of the minimum 5,000,000 at as offered, a total of 8,750,ODO shares will
be issued and outstanding with a net tangible book value of approximately
$75,000 or $.00857 per share. Assuming the maximum shares sold, public
investors will experience an immediate dilution of $.00409 per share (27.3%).
Assuming the sale of the minimum shares offered, public investors will
experience an immediate dilution of $.00643 per share (42.9%). The Company's
present shareholder will experience an immediate increase In the net tangible
book value of the common shares held by them of maximum shares are sold, and
$.00524 per share If the minimum shares are sold.
Net tangible book value per share is obtained by subtracting the total
liabilities from total tangible assets (total assets less intangible assets).
Dilution is the difference between the public offering price and the net
tangible book value of shares immediately after the offering.
12
<PAGE> 17
The following charts illustrate the public offering price, dilution to
public investors, and gain in net tangible book value to existing investors.
MINIMUM
57.1% Amount of Equity Purchased by Public Investors for $75,000
42.9% Amount of Equity Purchased by One Present Shareholder for $12,500
MAXIMUM
72.7% Amount of Equity Purchased by Public for $150,000
27.3% Amount of Equity Purchased by One Present Shareholder for $12,500
<TABLE>
<CAPTION>
NET TANGIBLE BOOK VALUE
DILUTION PER SHARE Per Share, After Sale
Minimum Maximum Minimum Maximum
<S> <C> <C> <C> <C>
$.015
----------------------------------------------------------------------------
$.012
-------
$.009
-------
$.006
-------
$.003
-------
$.000
----------------------------------------------------------------------------
Offering Price $.00643 $.00409 $.00857 $.01091
$.015 Per Share
</TABLE>
13
<PAGE> 18
- --------------------------------------------------------------------------------
USE OF PROCEEDS
- --------------------------------------------------------------------------------
The net proceeds derived from this Offering will be no less than $75,000
and up to $150,000 depending on the total number of shares sold. It is not
anticipated that other funds will be necessary to accomplish the purposes of
the company. Management's allocation of proceeds as set forth below represents
only an estimate as to how the proceeds will be generally allocated for the
first twelve months after the completion of this offering. Inasmuch as
management of the Company has not as yet identified any specific business
endeavor, and is otherwise unable to predict precise allocations for use of any
proceeds derived from this Offering, the allocation set forth below is subject
to change if the Management in their sole discretion may so determine, based
upon prudent business judgment.
<TABLE>
<CAPTION>
MINIMUM AMOUNT MAXIMUM AMOUNT
DESCRIPTION OF OFFEREING OF OFFERING
<S> <C> <C>
Total Proceeds of Underwriting and
Sales Stock to Promoters (1) $87,500 $162,500
Offering Expenses: Filing Fees
Legal, Accounting, etc. (2) $12,500 $12,500
NET PROCEEDS ................. $75,000 $150,000
Legal & Accounting (3)........ $5,000 $5,000
Independent Consultants (4)... 2,000 6,000
Telephone and Travel (5)...... 3,000 6,000
General & Administrative Overhead (6) 3,000 6,000
Funds available for working
capital and investment purposes (7) 62,000 127,000
TOTAL EXPENDITURES AND
WORKIING CAPITAL. $87,500 $162,500
</TABLE>
(1) No commission will be paid in connection with the offer and sale of
the securities described herein. The Company's common stock will be offered and
sold by its President, Tommy D. Masek, who has agreed to pay his own day-to-day
sales expenses.
(2) This sum represents the estimated expenses of the Offering, including
legal, accounting, printing, filing fees, transfer agent fees and other
miscellaneous expenses.
(3) Inasmuch as the Company will be subject to the reporting requirements
of the Securities Exchange Act of 1934. they have estimated the amount
necessary, after discussions with attorneys and accountants, to meet these
obligations for one year.
(4) The Company may retain and compensate one or more independent
consultants to investigate, review, and analyze assets, properties, products,
and business for acquisition by the Company. No
14
<PAGE> 19
specific consultants are presently under consideration or identified by the
Company. Although the amount allocated for retaining consultants is relatively
small, Management believes that any such consultant can be retained on a
one-time basis that will cumulatively not exceed use amounts.
(5) Estimated costs based on the judgment of Management as to the
approximate sum needed for travel and phone expense to investigate, solicit and
review one or more various business proposals.
(6) The Company anticipates incurring office expenses such as telephone
expense, supplies, and part-time clerical help.
(7) The Company anticipates expending the greater portion of any
proceeds derived from this Offering to acquire an interest in one or More
properties, projects, or as the case may be, acquire a majority interest in an
ongoing existing business enterprise.
The major portion of the proceeds not required for immediate expenditure
will be deposited in an interest-bearing account or invested in short-term
government notes, treasury bills or similar obligations of financial
institutions.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
The Directors and Executive Officers of the Company are set forth below,
including information relative to their ownership or common stock and
remuneration:
<TABLE>
<CAPTION>
Present % Owned in Event
No. of Offering is Sold
Name and Shares Consideration
Resident Address Positions Owned & % Minimum Maximum Paid
<S> <C> <C> <C> <C> <C>
Tommy D. Masek President 3,750,000 42.9% 27.3% $12500
3810 So. Redwood Rd. Director (100%)
Suite 1031
West Valley City,
Utah 84119
William Shea Vice Pres. -0- -0- -0- -0-
2001 St. Mary's Dr. Director
Salt Lake City, Utah 84106
Robert E. Libby Sec./Tress. -0- -0- -0- -0
546 E. 100 S.#12 Director
Salt Lake City,
Utah 84102
TOTAL Officer & Directors 3,750,000 42.9% 27.3% $12500
as a Group (100%)
</TABLE>
15
<PAGE> 20
PERSONAL HISTORY
Tommy D. Masek
Since 1985, Tommy D. Masek (age 48) has been President and part owner of
Chippewa Traders, Ltd. Mr. Masek managed the manufacturing of high quality
stoker heating equipment. From January, 1984 to April 1965, Mr. Mask was the
Colorado representative for Prill Manufacturing, a coal stoker heating
manufacturer. Mr. Masek acted as a consultant from 1977-1984 in the area of
satellite positive ion beam systems. he consulted for Hughes Research
Laboratories and Tri-Con Associates From 1974-1977 Mr. Masek was head of the
thruster systems section for Hughes Research Laboratories and was responsible
for the design and fabrication activities relating 'to the 8-cm and 30-cm
diameter thruster. Between 1972-1974 he was Project Engineer for Rockwell
International Space Division and was involved in thermal control subsystems,
stress and dynamics analyses. During the years from 1963 through 1971, he also
worked actively in the field of electric propulsion and ion beam systems. Mr.
Masek earned a B.S. in Aeronautical Engineering from the University of Colorado
in 1962. He received a Master's degree from M.I.T. He has also taken Advanced
Studies at U.C.L.A. He is a published author with 21 professional papers.
William E. Shea
Since 1976 until the present, William E. Shea, (age 70) has been an
independent management consultant working with law firms and with loan and
trust departments of major banks. Mr. Shea has been involved in the evaluation,
sale, liquidation, reorganization and financing of various businesses. He has
been retained as a consultant by law firms and banks to deal with individual
companies, working closely with the management of the company following the
directions given him by the law firm or bank until the desired results have
been obtained. He usually is responsible for making the arrangements for
carrying out the liquidation, sale, reorganization or financing of the company
he is working with. When the desired result is obtained, his services are
terminated. From 1968 to 1976, Mr. Shea was Executive Vice-President of Wycoff
Trucking Company Prom Ma to 1968, he was the managing partner of Margetts Tool
and Casting Company. Between 1950 and 1958, he was the plant manager for the
Stokermatic Company. From 1946 to 1950, he was involved in accounting and
management for Charles Redd Enterprises.
Mr. Shea attended the University of California at Berkley, the University
of Nevada at Reno, and was graduated from the IDS Business College in Salt Lake
City, Utah. He also was in the United States Air Force, during World War II.
Robert E. Libby
Robert B. Libby (age 37) has an extensive background in accounting and
bookkeeping. Between 1977 and the present, he has kept for various companies.
These companies include B.I.G. & R. Auto Body, Inc.
16
<PAGE> 21
of Nashua, New Hampshire, Transport Tire, Inc. of Salt Lake City, Utah, Mad
Platter Imports of Salt Lake City, Utah, American &press Travel Related
Services of Salt Lake City, Utah and Eli's Records and Tapes of Salt Lake City,
Utah. From 1985 to tie present he has been responsible for the books for
Chippewa Traders, Ltd., whose president and part owner is Tommy D. Masek. Mr.
Libby also owned an interest in a retail record and tape store from 1981-1983.
He earned a B.S. degree in Business Administration from the University of New
Hampshire.
Each of the foregoing persons is expected to retain his respective
position until the next annual meeting of shareholders proposed to be held in
September of each year. There are no arrangements, understandings or
commitments between management and anyone else as to which management was or is
to be selected to a particular office or position.
It is not anticipated that any ore officer and director of the Company
will devote more than 10% of his time to the affairs of the Company, except
from time to time, as circumstances require.
The Company has no employees, and except for the Company's three officers
and directors, there are no other "promoters" or "parents", as those terms are
defined under the Federal securities laws.
CERTAIN TRANSACTIONS AND PRINCIPAL STOCKHOLDERS
As of the effective date of this Prospectus, the Company has no
stockholders other than the Officers and Directors of the Company.
The Company's officers and directors, in addition to acting in their
official capacities, have also acted as the "promoters" and "founders" of the
Company, and originally purchased Three Million Seven Hundred and Fifty
Thousand (3,750,000) shares of unregistered common stock from the Company an
September 1, 1988 for $12,500 or $.0033 per share. Certificates evidencing the
common stock issued by the Company to these persons have all been stamped with
a restrictive legend, with an subsequent transfer subject to a stop transfer
order of the Company on file with the Company's transfer agent.
None of the officers and directors have or proposes to have a direct or
indirect material interest of whatever nature in any asset, product, project or
existing business entity that may hereinafter be acquired by the Company other
than as described herein.
CONFLICTS OF INTEREST
Management does not expect to have any inter-dealings between themselves
or their respective affiliates. However, if there are such dealings, the
parties will deal on terms competitive in the market and on the same terms as
either party would deal with an independent third person. Presently, none of
the officers and directors of the Company have any assets or businesses for
potential review or which they contemplate offering to the Company in which any
officer or director of the Company has a material interest, either directly or
indirectly.
17
<PAGE> 22
Other conflicts could arise by virtue of business opportunities which
although presented to Management, are subsequently not offered to the Company,
for one of many reasons. Management does, however, intend to offer to the
Company all prospects of which they become aware and which they believe the
Company has 'the financial capability to become involved with. Conflicts may
also arise by virtue of the limited time the Company's officers and directors
have to conduct the affairs of the Company.
Although Management will make every effort to resolve any future
conflicts of interest in favor of the Company, no assurance can be given that
such will be the case. Generally recognized equitable principles of common law
impose upon the Company's Management a fiduciary duty and obligation to act in
the best interests of -the Company and its shareholders, and upon their failure
to do so, Management could be subject to civil and criminal sanctions. Delaware
law allows for derivative shareholders' duties and class action shareholders'
suits that are calculated to afford shareholders both equitable and monetary
relief in the event management of a company abuses its fiduciary obligations to
the Company and its Shareholders. The cost of any derivative class action suit
against the Company or any one of its members of Management is ordinarily
prohibitive, and therefore, may not be an adequate remedy for a Shareholder(s)
seeking to enforce a specific right or redress a specific complaint against the
Company or any member of Management.
PROPOSED BUSINESS
INTRODUCTION
The Company was organized for the purpose of seeking out one or more
potential business ventures, without regard to biographical considerations,
which, in the best prudent judgment of Management may warrant involvement, by
the Company. Except as to the general restrictions discussed herein, discretion
of the Company's Management is unrestricted and it may participate in any
business venture it so determines. The company recognizes that because of its
limited financial, analytical, managerial and other resources, the number of
suitable potential business ventures which may be available to it will be
extremely limited. A principal business objective will be to seek long-term.
growth potential in the business venture in which it participates rather than
to seek immediate, short-term earnings. The Company does not intend to restrict
its search to any particular business or industry, and may include, but not be
limited to high technology, manufacturing, natural resource, service, research
and development, communications, transportation, insurance, brokerage, and
finance, among others. In the event the Company acquires an existing
18
<PAGE> 23
business entity, only those business entities that can generate or provide no
less than an audited balance sheet for its last fiscal year, and income
statements and statements of changes in financial condition for that entity's
last two (2) fiscal years will be considered. This restrictive criteria will
limit the types of business entities which the Company could acquire to those
firms which have previously had audited financial statements or that could
without unreasonable delay or expense produce the minim- required audited
balance sheet and required writing schedules.
Even though management is inexperienced with respect to seeking out
potential business ventures, it does not anticipate engaging to any material
extent professional firms or persons specializing in business acquisitions or
reorganizations. The Company intends to rely heavily on U-2 personal contacts
of its officers and directors as well as indirect associations between them and
other business and professional people. Each officer and director intends to
contact business associates and business entities informing them of the desire
of we Company to review good business ventures. . The officers and directors
will outline the requirements which must be met to qualify as a business in
which the Company may have interest. Any businesses which meet the requirements
will be referred to the officers or board of directors of the Company. The
Company may also publish notices or advertisements seeking potential business
ventures in financial or trade publications.
It is possible that in the investigation of one or more specific business
endeavors, the subsequent negotiation and drafting of relevant agreements,
disclosure documents and other instruments will require substantial Management
time and attention, as well as the incurring of substantial costs for
accountants, attorneys and others. If the decision is made not to participate
in a specific business endeavor, costs previously incurred in the related
investigation would not be recoverable. Furthermore, even if an agreement is
reached for the participation in a specific business venture, failure to
consummate the transaction would likely in the loss to the Company of the
related costs incurred.
It is impossible to predict as of the date of this Prospectus, the status
of any business venture in -which the Company may participate. Various unknown
material factors include, among a myriad of others, whether a particular
venture may need additional capital, merely desire to have its shares publicly
traded, the venture's previous track record, the fitness of management, the
present economic viability of the venture's business, as well as the long-term
outlook for that venture to be profitable. The Company will not restrict its
search for any specific kind of business ventures, but may acquire an interest
in part of all of a venture that is in its preliminary development stage, or
may participate in a business which is already in operation. or in a business
in various stages of its corporate existence. The Company's proposed business
endeavors may involve the acquisition of. or merger with a corporation which
does not need substantial additional cash, but which desires to establish a
public trading market for its common stock. The acquisition of complete
ownership or interest in a product, asset or existing business entity that
requires as part of the transaction an
19
<PAGE> 24
issuance of a large number of shares relative to the shares that will be issued
and outstanding at the termination of the Offering, will most likely result in
a change of control, voting power, and a likely dilution of the public
shareholders: equity interest in the Company.
Should the Company seek out or be solicited to participate in a company's
operations through a reorganization, asset acquisition or merger, or some other
means, it should be understood by prospective investors that the soliciting
firma usually desire to do so to avoid what such firms may deem to be adverse
factors related to becoming public company or undertaking a public offering.
The most prevalent factors include substantial time requirements, legal and
accounting costs, along with other conditions or requirements imposed by
various state and federal laws. If the Company determines to reorganize or
merge with an existing private company, public investors should recognize that
the purchase of the shares offered hereunder may ultimately be less favorable
under the foregoing criteria than If such an investor were investing in a
private firm with. a specific business which was undertaking its own public
offering.
There are a number of factors that will be considered in the Company's
decision to participate in a .9pecific business endeavor, including
Management's analysis of the quality of the other firm's management personnel,
the anticipated acceptability of new products or marketing concepts, the merit
of technological- changes, present financial condition, projected growth
potential, and numerous owner factors which are difficult, if not impossible,
to properly analyze using objective criteria. The results of operations of any
specific firm to date, may not necessarily be indicative of what may occur in
the future, by reason of changing marketing strategies, n1ant or product
expansion, changing product emphasis, future management personnel and other
factors. In the case of Business venture or one that is in a research and
development mode, it should be emphasized that the Company -will incur further
risks since the firm's management in many Instances will not have proved its
abilities or effectiveness. A firm market for its products or services may yet
to be establish, and no post track record exists, all of which indicate the
profitability of the firm will be unproved and cannot be predicted with any
certainty.
The Company's Management, none of whom is a professional business
analyst, will generally undertake to review and investigate W proposed business
venture. No member of Management has any significant business experience or
expertise in any type of business which is likely to be reviewed or
investigated by the Company. Management will have to rely on their own, common
sense and business judgment, as well as, from time to time, upon the advice of
consultants to examine the various factors described herein. The recitation of
the various factors to be considered by Management with regard to the
acquisition of a potential business venture should not read as implying any
experience or expertise on behalf of Management with respect to those factors.
In analyzing a prospective business venture, Management will consider such
matters as the firms available technical, financial and managerial resources,
its working capital and other financial requirement, its history of operations,
if any. Prospects for the future, the nature of
20
<PAGE> 25
present and expected competition, the quality and experience of the management
services which way be available, the depth of the firm's management, the
potential for further research, development or exploration, risk factors,
potential for growth and expansion, potential for profit, the perceived public
recognition or acceptance of products, services, trademarks, new
identification, among other relevant factors. To the extent of the Company's
limited financial, management and technical resources, as part of the Company's
Investigation, Management will meet personally with management and key
personnel of the firm sponsoring the business opportunity, visit and inspect
material facilities, obtain independent analysis or verification of certain
information provided, check references of management and key personnel, and
conduct other reasonably prudent measures calculated to ensure a reasonably
thorough review of any particular business opportunity.
The Company is unable to predict the timing as to when it may participate
in any specific business endeavor, but fully expects that the review and
investigation of one or more business endeavors may take several months or
more. The Company anticipates that various proposed business ventures will be
made available to the Company from not only its officers and directors, but
professional advisors, securities broker-dealers, venture capitalists, members
of the financial community, and others who may present unsolicited proposals.
In certain cases, the Company may agree to pay a finder's fee or to otherwise
compensate persons who are unaffiliated with the Company, but who submit a
potential business endeavor in which the Company participates.
No finder's fee or other fees will be paid to any person who is an
officer, director or owner of record or to the knowledge of the Company owns
beneficially ten percent (10%) or more of the Company's issued and outstanding
stock.
It is conceivable that the Company may acquire a business venture through
a reorganization or merger that calls for the issuance of a part of the
authorized but of the Company. Typically, it is the requirement of certain
provisions of the United States Internal Revenue Code of 1954, as amended,
particularly Sections 361 and 368, which specifically deal with business
combinations, reorganizations and mergers, and the requirements thereof in
order to obtain certain beneficial tax consequences, that is it highly
probable, should the Company enter into such a business combination,
reorganization or merger under either of the foregoing Sections, that
sufficient unregistered Common Shares of the Company will be issued to those
persons controlling a product, asset or existing business entity that would be
equal to no less than eighty percent (") ownership of the then issued and
outstanding shares of the Company at the conclusion of the business's
transaction. eighty percent (80%) ownership of the Company would be transferred
to any such persons in order to comply with the foregoing Sections of the
Internal Revenue Code, as well as other sections of the Code and regulations
promulgated thereunder. The issuance by the Company of sufficient shares equal
to an eighty percent (80%) control of the Company may result in substantial
dilution of the present public
21
<PAGE> 26
investors' equity in the Company. Vie Company's By-Laws, and Articles of
Incorporation provide that the Company's board of Directors may issue from the
authorized but unissued shares of the Company, any number of shares to persons
related or not related to the Company, provided there is present valid
consideration paid for the shares. In the event of arty of the foregoing
transactions, a decision as to the issuance of any shares from the Company's
authorized but unissued shares may be made at the sole discretion of
Management, without any vote or approval by the shareholders of the Company.
The issuance of any additional large block of shares may have an adverse affect
on any trading market which may develop in the Company's securities in the
future.
The Company will not participate in a business endeavor wherein it
invests the proceeds of -this offering in an affiliate of the Company or an
affiliate of any one of its officers and directors.
The Company has no formal business plan, and has conducted no economic
studies relative to any particular area of business that it may ultimately
engage in. Management has made the decision to pursue a public offering at this
time inasmuch as it believes that if it has funds on hand, it can act core
quickly and take advantage of business opportunities that may not be able to be
postponed pending a public offering. No representation is made that Management
of the Company has any particular expertise in connection with the proposed
activities of the Company or any particular industry or business field.
Management will attempt to locate, for and on behalf of the Company, assets,
properties, products or ongoing businesses which it believes have the potential
for successful development, and may include businesses, or assets related to
manufacturing, retail and wholesale sales, investment development, natural
resource development, or any other field of business or endeavor which
Management may solicit or is presented with.
The shareholders of the Company will be required to rely on the business
judgment of Management in connection with the proper expenditure of the funds
raised in this offering. It is not expected that shareholders for the Company
will be consulted with respect to the expenditure of the proceeds of this
offering, or in connection with any acquisition engaged in by the Company
unless Management deems in its to be appropriate under the circumstances to ask
for such shareholder approval.
In the acquisition of any given business the Company may incur
substantial indebtedness of that business. Which could alter the financial
structure of the Company and expose a Company's shareholders to a greater risk
of loss of their investment in the event of financial difficulty by the
Company.
Management intends to keep its shareholders appraised as to all material
developments, which includes the entering into of a material transaction,
changes in management the acquisition of a substantial asses, and other such
matters.
22
<PAGE> 27
ACQUISITION RESTRICTIONS
As part of, its general business plan, the Company may engage in the
business of acquiring other businesses, or art interest in one or more business
ventures. It is the stated intention of Management to not acquire investment
securities of another company except in those instances where that company
would become wholly owned by the Company. Management will make every effort to
keep the Company from being classified as an "Investment Company" under the
Investment Company Act of 1940. If deemed to be an investment company without
registration as such under the 1940 Act, it could result in civil liability and
criminal penalties to controlling persons in certain instances, as well as
civil liabilities and unenforcibility of contracts with regard to the Company.
In this regard, the Company has not engaged and does not intend to engage in
the business of (1) investing. reinvesting, or trading in securities as its
primary business, (2) of issuing face-amount certificates of the installment
type, or (3) of investing, reinvesting. owning, holding or tr3ding securities
nor shall it own. or propose to acquire investment securities having a value
exceeding 40% of the value of its total assets (exclusive of government
securities and cash items) on an unconsolidated basis. The Company does not
intend to pursue any business opportunity or transaction which would render the
Company an "Investment Company" as that term is defined in the investment
Company Act of 1940".
The Company does not intend to engage in the business of advising others,
either directly or through publications or writings, as to the value of the
securities or as to the advisability of investing, purchasing, or selling
securities for compensation nor as a part of regular business to issue or
promulgate analysis or reports concerning securities for compensation. The
Company does not intend to pursue any course of business which would render it
an "investment advisor", as that term is defined in the "Investment Advisor's
Act of 1940."
OFFICE AND EMPLOYEES
The Company maintains its principal place of business at 1610 So.
Industrial Rd., Salt Lake City, Utah 84104 (801) 972-4488. No rent is being
charged to the Company for the use of the office. The Company's
Secretary-Treasurer, Robert E. Libby, will provide most of the clerical help
needed by the Company. The Company has no employees, and does not anticipate
the employment of such, except on a temporary and as-needed basis.
- --------------------------------------------------------------------------------
CAPITALIZATION
- --------------------------------------------------------------------------------
23
<PAGE> 28
The following table sets forth the capitalization for the Company as of
September 1, 1988 and as adjusted to reflect the issuance of all
shares offered hereby.
<TABLE>
<CAPTION>
Amount Amount
Present Outstanding Outstanding
Title of Amount Amount If Minimum If Maximum
Class Authorized Outstanding Is Sold Is Sold
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 50,000,000 3,750,000 8,750,000 13,750,000
($.001 Par
Value)
- -------------------------------------------------------------------------------
</TABLE>
The foregoing figures are subject to change at any time after the Offering
is closed. The Company has not granted and does not intend to grant any stock
options. The Company does not have any present intent to sell any debt
securities.
- -------------------------------------------------------------------------------
PLAN OF DISTRIBUTION AND ESCROW
- -------------------------------------------------------------------------------
The Company will act as its own underwriter and all shares will be offered and
sold through the Company's President:, Tommy D. Masek. No commission will be
paid in connection with the offer and sale of the Company's common shares, and
the Company's President has otherwise agreed to pay his own day-to-day sales
expenses. Tommy D. Masek has agreed to offer and sell the common shares
offered hereby on a "best efforts - minimum or maximum" basis with a minimum of
5,000,000 shares, and the maximum of 10,000,000 shares. The Company's officers
and directors do not intend to purchase any of the shares offered hereby. In
the event the minimum 5,000,000 shares are not offered and sold within nine (9)
months from the date of this Prospectus, all funds received from subscribers
will be returned promptly to them, in full, without deduction or interest. If
5,000,000 or more common shares are sold before the expiration of the nine (9)
month period, additional subscribers' funds will not be the subject or any
further escrow obligation or subject to refund. All funds received by the
Company with respect to the offer and sale of the minimum 5,000,000 shares will
be deposited within three business days following receipt with Brighton Bank,
7101 South Highland Dr., Salt Lake City, Utah 84121, as Escrow Agent, pursuant
to an Escrow Agreement entered into between the Company and Brighton Bank Share
certificates will be issued to purchasers only if the purchase price for the
minimum number of shares is released to the Company under that Agreement.
Provided the minimum shares have been sold and the proceeds therefrom deposited
with the Company's Escrow Agent on or before nine (9) months from the date of
this Prospectus, the escrow will be terminated and the escrow funds released to
the Company,
24
<PAGE> 29
less the Escrow Agent's fees. Thereafter, up to the offer and sale of the
maximum 10,000,COO shares, all proceeds therefrom will not be subject to an
escrow, and subscribers will receive their share certificates as reasonably
soon as possible upon receipt of their subscription. All checks for purchase of
shares must be made payable to Bank of Utah as Escrow Agent.
Pursuant to the Escrow Agreement as between the Company to pay Brighton
Bank as Escrow Agent, a total sum of fifty Dollars for its escrow services, to
be paid from the proceeds of this Offering. In the event the minimum shares are
not offered and sold prior to the expiration of nine (9) months from the
effective date hereof, the bank is entitled to charge the Company Five Dollars
($5.00) per check for all refund checks returned to public subscribers.
DESCRIPTION OF COMMON STOCK
The Company is presently authorized to issue 50,000,COD shares of its
S.001 par value common stock, of which 3,750,COD shares are presently issued
and outstanding and an additional 10,000,000 shares are being offered pursuant
to this Prospectus. The officers and directors of the Company do not presently
intend to purchase any additional shares of the authorized common stock, but
some of the authorized common stock may be used in the purchase of a business
venture.
A majority of the issued and outstanding shares of the Company's common
stock must be present at a duly called shareholders' meeting in order to have a
quorum. Under Delaware law, amendments to 'the Company's Articles of
Incorporations, as well as certain other matter require an affirmative vote of
at least a majority of the outstanding shares. The present officers and
directors of the Company will own 27.3% of the outstanding shares of the
Company, if the maximum shares are sold, and if only the minimum shares are
sold, the Company's present officers and directors will own approximately 42.9%
of the issued and outstanding shares.
All shares of stock, when issued, will be fully-paid and nonassessable.
All shares are equal to each other with respect to voting, liquidation, and
dividend rights. Owners of sham of Common stock are entitled to one vote for
each share they own at any shareholders' meeting. Holders of shares of common,
stock are entitled to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefore, and upon liquidation are
entitled to participate pro-rata in a distribution of assets available for such
a distribution to shareholders. There are no conversion, preemptive or other
subscription rights or privileges with respect to any shares. Reference is made
to the Company's Articles of Incorporation and its By-Laws as well as to the
applicable statutes of the state of Delaware for a more complete description of
the rights liabilities of the holders of common stock. The common stock of the
Company does
25
<PAGE> 30
not have cumulative voting rights which means that the holders of more than 50%
of the shams voting for the election of directors may elect all of the
directors if they chose to do so. In such event, the holders of the remaining
shares aggregated less than 50% would not be able to elect any directors.
DIVIDENDS
The Company can give no assurance that it will generate earning from
which cash dividends can be paid. However, management may follow a policy of
retaining all such earnings to finance the development of its business. Such a
policy could be maintained so long, as necessary to provide working capital for
the Company's operations. Any dividends that may be paid in the future will be
dependent upon the financial requirements of the Company and all other relevant
factors.
REPORTS TO SHAREHOLDERS
The Company will furnish annual reports to its shareholders which will
include audited financial statements and such other interim reports as
management deems appropriate.
TRANSFER AGENT AND REGISTRAR
OTC Stock Transfer Inc. has agreed to act as transfer agent and registrar
for the Company's common shares. Its address is 231 East 2100 South, Salt Lake
City, Utah 84106.
LEGAL PROCEEDING AND OTHER MATTERS
To the best knowledge of the Company, its officers and directors, neither
the Company nor any of its officers and directors are a party to any material
legal proceeding or litigation and the officers ad directors know of no
material legal proceeding or litigation contemplated or threatened. There are
no judgments against the Company or its officers and directors.
Legality of the shares of common stock being offered hereunder in
connection with the corporation laws of the State of Delaware have been passed
upon for the Company by Steven L. Godwin, 4055 South 7co East, suite 106, salt
Lake city, Utah 84107.
26
<PAGE> 31
In connection with this Offering, additional information relating to the
Company, including any legal opinions or the Articles of Incorporation, are
available for inspection at the office of the Company.
FINANCIAL STATEMENTS
The April 28, 1989 financial statements of the Company appearing in this
Prospectus and Registration Statement have been examined by Val Stirling,
Independent Certified Public Accountant, 4055 South 700 East, Suite 106, Wt
Lake City, Utah 84107. His report on the financial statements is included in
this Prospectus in reliance upon the report and upon the authority of Mr.
Stirling as an expert in auditing and accounting.
27
<PAGE> 32
AMERICAN SOLID FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
APRIL 28, 1989
<PAGE> 33
TABLE OF CONTENTS
<TABLE>
<S> <C>
ACCOUNTANT'S REPORT 3
BALANCE SHEET 4
STATEMENT OF OPERATIONS 5
STATEMENT OF STOCKHOLDER'S EQUITY 6
STATEMENT OF CASH FLOWS 7
NOTES TO THE FINANCIAL STATEMENTS 8
</TABLE>
<PAGE> 34
REPORT OF INDEPENDENT ACCOUNTANT
Board of Directors
American Solid Fuel, Inc.
Salt Lake City
I have audited the accompanying balance sheet of American Solid Fuel, Inc. (a
development stage company) as of April 28, 1989, and the related statements of
operations, stockholders' equity and cash flows for the period from August 16,
1988, the date of inception, to April 28, 1989. These financial statements are
the responsibility of the company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion the financial statements referred to above present fairly in all
material respects the financial position of American Solid Fuel, Inc. as of
April 28, 1989, and the results of its operations and its cash flows for the
period from August 16, 1988 the date of inception to April 28 1989, in
conformity with generally accepted accounting principles.
/s/ VAL M. STIRLING
Val M. Stirling,
Certified Public Accountant
Salt Lake City, Utah
June 9, 1989
3
<PAGE> 35
AMERICAN SOLID FUEL, INC.
(A Development Stage Company)
BALANCE SHEET
as of
April 28, 1989
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Current Assets:
Cash In Bank - Checking $ 4,997
---------
Total Current Assets $ 4,997
Other Assets:
Organization Costs, Net of $85
Accumulated Amortization $ 515
Deferred offering Costs $ 7,400
---------
Total Other Assets $ 7,915
---------
Total Assets $12,912
=========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued Liabilities $ 500
---------
Total Current Liabilities $ 500
Stockholders' Equity:
Common Stock, $0.001 par value,
Authorized 50,000,000 shares;
Issued and outstanding 3,750,000
shares (Note 3) $ 3,750
Capital In Excess of Par Value $ 8,750
Deficit accumulated during the
Development stage $ ( 88)
---------
Total Stockholders' Equity $12,412
---------
Total Liabilities & Stockholders' Equity $12,912
=========
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE> 36
AMERICAN SOLID FUEL, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
from Inception
August 16, 1988 through April 28, 1989
<TABLE>
<S> <C>
REVENUES:
EXPENSES:
Amortization 85
Bank Charges 3
Total Expenses $ 88
NET INCOME:
Net Loss $( 88)
</TABLE>
EARNINGS PER SHARE COMPUTATION
<TABLE>
<S> <C>
EARNINGS PER SHARE .000
WEIGHTED AVERAGE NUMBER OF SHARES $750,000
</TABLE>
The accompanying notes are an Integral part of these financial statements
5
<PAGE> 37
AMERICAN SOLID FUEL, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
from inception
August 16, 1988 through April 28, 1989
<TABLE>
<CAPTION>
Common Stock Capital
--------------------- in Excess of Accumulated
Shares Amount Par Value Deficit
---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
BALANCE, August 16, 1988 --- $ --- $ --- $ ---
Shares issued to initial
stockholders for cash,
August, 1988
at $.001 per share 3,750,000 3,750 8,750 ---
Proposed public stock
offering of the Company's
common stock --- --- --- ---
Net loss for the period
ended April 28, 1989 --- --- --- ( 88)
--------- -------- -------- -------
BALANCE, April 28, 1989 3,750,000 $ 3,750 $ 8,750 $( 88)
========= ======== ======== =======
</TABLE>
The accompanying notes are an integral part
of these financial statements
6
<PAGE> 38
AMERICAN SOLID FUEL, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
from inception
August 16, 1988 through April 28, 1989
<TABLE>
<S> <C> <C>
Cash flows from operating activities:
Net loss $( 88)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization $ 85
----------
Total adjustments $ 85
---------
Net cash provided by operating
activities $( 3)
Cash flows from financing activities:
Proceeds from issuance of common
stock $ 12,500
Deferred offering and organization
costs $( 7,500)
----------
Net cash provided by financing
activities $ 5,000
---------
Net increase in cash $ 4,997
Cash at beginning of period $ 0
---------
Cash at end of period $ 4,997
=========
</TABLE>
The accompanying notes are an integral part
of these financial statements
7
<PAGE> 39
AMERICAN SOLID FUEL, INC
(A Development Stage Company
NOTES TO FINANCAIL STATEMENTS
NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTTNG POLICIES
Organization - The Company was organized under the laws of the State of
Delaware on August 16, 1988. The Company has not commenced planned principal
operations and Is proposing to sell Its common stock to the public (See Note
2). Further, the Company is considered a development stage company as defined
In SFAS No. 7 and has not thus far engaged In any business activities of any
kind. Its principal activities since inception have consisted of the offer and
sale of common shares to private investors and the engagement of- legal counsel
and other professionals in connection with a proposed public offering of
additional common shares. The Company has not paid any dividends and any
dividends that may be paid in the future will depend upon the financial
requirements of the Company arid other relevant factors. Management has elected
a fiscal year end of December 31.
Organization. Costs - The Company Is amortizing Its organization costs, which
reflect amounts expended to organize the Company, over sixty (60) months using
the straight-line method.
Income Taxes - No provision for Income taxes has been provided due to operating
losses at April 28, 1989.
Earnings Per Share - The computation of loss per share of common stock is based
on the weighted average number of shares outstanding through the financial
statement date, April 28, 1989.
NOTE 2 - PROPOSED PUBLIC OFFERING OF COMMON STOCK
The Company Is In the process of preparing a registration statement through
which It proposes to sell 10,000,000 shares of its previously authorized but
unissued common stock. The offering Is submitted pursuant to the regulations of
an S-18 offering in accordance, with the Securities Act of 1933. An offering
price of $0.015 per share has been arbitrarily determined by the Company.
Unless the sale of a minimum of 5,000,000 shares Is made within nine (9) months
of the commencement of the offering, all proceeds will be refunded and no
shares will be sold to the public. The
8
<PAGE> 40
AMERICAN SOLID FUEL, INC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Company will, through Its management, act as Its own underwriter and sales
agent and there will be no sales commissions on such sales.
Any expenditures Incident to the proposed public offering, which will consist
primarily of legal, accounting and sales expenses of registration, will be
deferred. All such expenditures will be charged against the proceeds of the
offering or, In the event the offering is not consummated, to operating
expense.
NOTE 3 - RELATED PARTY TRANSACTIONS
On August 16, 1988 the Company accepted subscriptions from the three members of
the board of directors for an aggregate of 3,750,000 shares of its common
stock, par value $0.001, for a total purchase price of $12,500 or an average of
$0.0033 per share.
All of the original shares issued are "restricted" shares and may not be resold
except in compliance with the provisions of Rule 144 promulgated by the
Securities and Exchange Commission.
Management Compensation - Each officer and director will not be paid any
Compensation for services rendered or reimbursed for expenses Incurred on
behalf of the Company until such time the Company receives revenues from Its
operations. Management has not rendered any services nor have they incurred any
expenses on behalf of The Company to date.
Except as disclosed above, no officer, director, organizer of affiliate of the
Company presently has any direct or Indirect material Interest by security
holdings, contracts, options or otherwise in the Company, or any asset proposed
to be acquired by the Company, or In any purchase, the value of which will be
affected by the operations of the Company.
9
<PAGE> 41
TABLE OF CONTENTS
<TABLE>
<CAPTION>
AMERICAN SOLID FUEL INC.
PAGE
<S> <C>
Cover Page I
Note 3 2
Prospectus Summary 4
Introductory Statements 5
Risk Factors 5
Dilution 12
Use of Proceeds 14
10,000,000 Common Shares
Management 15
Directors & Officers 15
Personal History 16
Certain Transactions
and Principal Stock
holders 17
Conflicts of Interest 17
Proposed Business 18
Introduction 18
Acquisition
Restrictions 23
Office & Employees 23
Capitalization 23
Plan of Distribution
and Escrow 24
PROSPECTUS
Description of Common
Stock 25
Dividends 26
Reports to Shareholders 26
Transfer Agent &
Registrar 26
Legal Proceedings and Efective Date
other Matters 26
Financial Statements 27
Financial Information 28
</TABLE>
FURTHER INFORMATION
The Company has filed with the Securities and Exchange Commission, 450 Fifth
Street, H.W., Washington D.C. 20549, a Registration Statement on Form S-18
under the Securities Act of 1933, as amended, with respect to the common shares
to which this Prospectus relates. As permitted hr the Rules and Regulations of
the Securities and Exchange Commission. this Prospectus does not contain all of
the information set forth in the Registration Statement, including exhibits
thereto, which any be examined and copies obtained, upon payment of the
appropriate fee, from the Public Reference Branch, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington D.C. 20549.
29
<PAGE> 42
Regulation S.-K [17CFR 229-702]
IDEMNIFICATION OF DIRECTORS AND OFFICERS
The Business Corporation Act of Delaware provides that a director, officer,
employee or agent of the Corporation Act be indemnified against suit or other
proceeding; whether it were civil, criminal, administrative or investigative if
he becomes a party to said lawsuit or proceeding by reason of the fact that he
is a director, officer, employee or agent of the corporation. The compensation
for indemnification includes judgments, fines and amounts paid in settlement
actual by him in connection with such action, suit or proceeding if tie acted
in good faith and in a manner he reasonably believed to be in or not. opposed
to the best interest of the corporation.
However, no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged liable for negligence
or misconduct in the performance of his duty to the corporation, unless the
court. in which the action or suit is brought shall determine that despite his
liability but in view of all the circumstances of the case such person is
fairly and reasonably entitled to be indemnified for expenses such court shall
deem proper.
Article 9 (a) (b) (c) of the By-Laws of the corporation outlines the conditions
under which arty director or officer of the registrant may be indemnified.
Article 9(a) provides that if any of party is involved In an action, suit or
proceeding because he is a director, officer, or employee of the corporation he
shall be indemnified against reasonable expenses, including attorney's fees
actually and necessarily incurred by him in connection with the defense of such
action, suit, or proceeding or in connection with any appeal therein. However,
this protection does
<PAGE> 43
not apply if said person, director, or officer is liable for negligence or
misconduct in the performance of his duties.
Article 9(b) states that the indemnification outlined in 9(a) shall not be
deemed exclusive of other rights which an officer or director may have.
Article 9(c) provides that the amount of indemnification shall to determined by
the board of directors unless there is no disinterested majority of the board
available, in Witch case the amount shall be fixed by arbitration pursuant to
the rules of the American Arbitration Association.
<PAGE> 44
Regulation S-K C 17 CFR 229-5111
EXPENSES OP AMERICAN SOLID WEL, IWC.
The following is an itemized list of e3timated expenses in correction with the
issuance and distribution of the securities to be Registered:
I. Incorporation, Filing Fees, Accounting and legal
Fees $13,200
2. Printing $ 500
3. Transfer Agent Fees $ 500
4. Escrow Agent Fees $ 400
TOTAL $14,600
<PAGE> 45
Regulation S-K [17 CFR 229.701]
RECENT SALES OF UNREGISTERED SECURITIES
The following information is given concerning all securities of the
registrant sold by the registrant within the past three (3) years.
a. On September 1, 1988, 3,750,000 shares of common stock were sold to
Tommy D. Masek for the purchase price of $12,500.
b. There were no underwriters involved.
c. The consideration for the sale of the securities was as stated above.
d. Section 4.2 of the Securities Act 1933 is relied upon by the parties
for the exemption of registration for the sale of the 3,750,000 shares of stock.
<PAGE> 46
Regulation S-K (17 CFR 229.601)
EXHIBIT INDEX
<TABLE>
<CAPTION>
ITEMS COMMENT AND/OR MORE
<S> <C>
1. UNDERWRITING AGREEMENT NONE
3. ARTICLES OF INCORPORAION AND BY-LAWS PAGE 45, 48
4. INSTRUMENTS DEFININE THE RIGHTS IF SECURITY HOLDERS, INCLUDING INDENTURES
IS INCORPORATED BY REFERENSE TO EXHIBIT3, ARTICLE IV OF THE ARTICLES OF
INCOPORATION AND ARTICELS II, V AND X IOF THE BY-LAWS
5. OPINION RE LEGALITY PAGE 59
6. OPINION RE DISCOUNT ON CAPITAL SHARES NONE
7. OPINION RE LIQUIDATION REFERENCE NONE
8. OPINION RE TAX MATTERS NONE
10. MATERIALS CONTRACTS (ESCROW AGREEMENT) PAGE 60
14. MATERIAL FOREIGN PATENTS NONE
15. LETTER RE AUDITED INTERIM FINANCIAL INFORMATION NONE
16. LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION NONE
24. CONSENTS OF EXPERTS AND COUSEL PAGE 63, 64
25. POWER OF ATTORNEY NONE
26. STATEMENT OF ELIGIBILITY OF TRUSTEE NONE
27. INVITATIONS FOR COMPETITIVE BIDS NONE
28 STOCK CERTIFICATES PAGE 65
</TABLE>
<PAGE> 1
EXHIBIT 99.2
Motorcycle Industry Page 1 of 4
THIS IS A FINAL PROJECT FOR BUSINESS 292/ UNIVERSITY 292 SPRING 1997 BY MIKE
PASCHKE.
THE MOTORCYCLE INDUSTRY
[PHOTO]
Motorcycling is a huge part of American life. According to the Motorcycle
Industry Council 31 million people rode a motorcycle, scooter or ATV in 1992.
There is such a huge variety of vehicles in this market that motorcycling is
such a popular activity. As a comparison to other popular activities such as
golfing (23 million) fishing (41 million) and camping (47 million) it is almost
surprising to see how popular motorcycling is as a past-time.
BACKGROUND
This industry developed as an affordable alternative to the automobile. The
United States had an extremely active market with more than 150 brands in 1911.
These machines were basically bicycles with small engines. By the end of the
depression only two manufactories were still around. These were Harley Davidson
and Indian. The only real competition left was Henry Ford's Model T. Indian
closed down shop in 1953.
Harley Davidson started production in 1903. The company survived by having a
diverse product line, technological advancements and government contracts. They
grew to be one of the most recognized names in the US.
In the late 50's and early 60's Harley Davidson saw its next major competition.
Japan started exporting motorcycles. These motorcycles were small, efficient,
and inexpensive. Honda was the first in the US market in 1959. They were
followed by Yamaha in 1960, Suzuki in 1963, the Europeans with BMW in 1965, and
Kawasaki in 1967.
INDUSTRY FIGURES
<PAGE> 2
Motorcycle Industry Page 2 of 4
The motorcycle Industry generated $5.1 billion in 1992. This revenue was
created by $2.1 billion of new vehicle sales; $1.65 billion from parts,
accessories and apparel; $685 million in used vehicle sales; $489 million in
labor services; and $110 million in insurance and extended warranties.
In the United States there are approximately 22 manufactories doing business. Of
these there are only six majors. They are BMW, Honda, Harley, Kawasaki, Suzuki
and Yamaha. There are approximately 9,300 independent dealers consisting of
6,000 non-franchised and 3,300 franchised dealerships. Over 80% of the
industries business is done by the franchised dealerships. Roughly 25% of
franchised dealers have sales over $1.5 million per year. The average franchised
dealer had $800,000, but, the second largest segment had sales of less then
$300,000. Over half of the dealerships income is from the sales of new vehicle
sales. Accessories, parts and apparel make up about 25% and the rest is from
service, insurance and extended warranties.
[PHOTO]
The majority of the non-franchised dealers had sales between $50,000 and
$99,000. The next highest segment had sales of less then $25,000. Only 14.3% had
sales greater than $250,000. The reason that these dealers sales are so much
smaller is due to the fact that 72% of there sales are from parts, accessories,
and apparel. They don't sell nearly as many big ticket items.
At first motorcycles were seen as very practical and economical means of
transportation. This led to the original competition the forced the industry to
evolve and innovate. After W.W.I the practicality of the motorcycle gave way to
the automobile. During the following decades motorcyclists were seen as rebels
who led a alternative lifestyle. This led to Harley's "Bad Boy" image. This
image allowed Harley to maintain its base even as production quality slipped.
Their machines were no longer seen as reliable or safe. This led to a great slip
of motorcycling as a past time.
The oil crisis of the 70's and the constant "Nice People on motorcycles"
advertising from Japan started the Industry back up. From the mid 60's through
the 70's motorcycling was becoming more and more popular. The 80's saw a slip in
sales again due the economy and a safety concern over 3 wheeled ATVs. But
overall, sales were still good and the popularity of motorcycling continued to
rise. By 1990 Harley was again a major player in the world and domestic markets.
Their image has led to many people buying them to escape corporate life and feel
great on the weekends. These customers have helped Harley continually sell
everything it can produce.
Public opinion effects this market greatly. During the safety concern in the
80's sales fell. Now in the 90's there is an increased safety awareness. There
is support and endorsements for the MOTORCYCLE SAFETY FOUNDATION
(800 447-4700)from every manufacture. These safety classes have helped
motorcycle related accidents to continuously decline. Also mandated safety
classes for younger riders has also become more popular and effective. The
American Motorcyclist Association is also very
<PAGE> 3
Motorcycle Industry Page 3 of 4
active in promoting motorcycling safety and support. There are six main players
in this indusrty. They are Honda with 27.2% of the market. Harley Davidson with
20.4% and Yamaha,Suzuki, Kawasaki and BMW following in order. The market shares
have changed dramatically over the last few years. The only constant in the last
ten years is Honda with the #1 spot. The pertentage within that spot has changed
considerably. Many of these companies have had share increases and dereases of
over ten points.
HONDA MOTOR CO., LTD.
Originally a piston ring company formed in 1937 by Soichiro Honda. Honda is now
one of the largest automobile and motorcycle manufactors in the world. His
piston ring company was destroyed by bombs and an earthquake. He sold it to
Toyota for in 1945 for almost $800,000. After spending a year drinking and
entertaining he established what became the Honda Motor. (Hoover's Handbook of
World Business '95-'96) Honda started producing motorcycles in 1948. By 1952 it
had 70% of the Japan's motorcycle market. In 1994 it had sales of $5,302 million
in its motorcycle division. (A mere 14% of its total sales for the year.
[PHOTO]
HARLEY DAVIDSON
[PHOTO]
William S. Harley, Arthur and Walter Davidson sold three motorcycles in 1903.
Arthur and William started experiments with engines and designs while they
worked in a bicycle shop in Milwaukee. They tricked Arthur's brother Walter into
to moving nearby to help them created their designs. Before the move out of
their 10 by 15 foot shed in 1905 their production had risen to 50 units per
year. There move put them in their first factory which is now the company's
headquarters.
The Harley Davidson motorcycle built to be tougher than anything else. It was
the first to have heavy duty wheels and a heavyweight loop frame. Their
reputation for having tough motorcycles allowed them to have more commercial
sales then their competition. During both WWI and WWII they churned out machines
for the US military. It was their commercial endeavors that kept them afloat
during the Great Depression. By 1953 Harley Davidson was the only American
survivor in the motorcycle industry.
In 1965 facing an image problem and intense foreign competition Harley Davidson
went public and nearly lost the company in a hostile takeover. Instead it merged
with American Machine and Foundry.
<PAGE> 4
Motorcycle Industry Page 4 of 4
Over the next ten years the production went from 25,328 to 75,403. During the
massive addition of production capabilities Harley Davidson reputation for
quality was severely hurt.
In 1981 eighteen Harley executives bought the company back from AMF. With this
change and a massive change in how the company was managed Harley is once again
known for its quality.
In 1992 Harley Davidson had 63.2% of the heavyweight motorcycle market. The
closest competition is Honda with 16.2%. Total sales were $940 million and are
continuing to increase.
Harley is also supporting its roots by owning 49% of Buell motorcycle company.
Eric Buell was fabricating sport motorcycles out of a shed in his yard for many
years. Unable to raise enough money on his own Buell now gets research and
development money from Harley Davidson. Buell also now has a huge distribution
network to help deliver his bikes around the globe.
KAWASAKI MOTOR CORP.
[PHOTO]
Kawasaki Motor Corp. does $800 million in annual revenues. Its parent company
Kawasaki Heavy Industries does about $10 billion in annual revenues. This huge
presence helped usher Japan into the modern industrial world. It started with
Shozo Kawasaki in 1836 when he borrowed 30,00 yen and leased a harbor. While it
is not the most popular bike available it does have a reputation for having an
extremely powerful engine. Until recently the Kawasaki ZX11 was the fastest
production bike available. It had maintained this position for years and it will
surely have it again.
ARE YOU CURIOUS? SEARCH MOTORCYCLE ONLINE!
ENTER YOUR SEARCH EXPRESSION AND CLICK ON SEARCH.
SEARCH EXPRESSION: Search
-------------------------------- ------
(Boolean searches using AND, BUT or OR are allowed.)
OR TRY THEIR HOME PAGE Motorcycle Online
THIS REPORT GENERATED APRIL 1997 BY MIKE PASCHKE, SONOMA STATE UNIVERSITY. TALK
TO ME!
[PHOTO]
<PAGE> 1
Yahoo - FEATURE-Harley rides out U.S. motorcycle boom Page I of 3
Wednesday September 30, 10:56 pm Eastern Time
FEATURIE-Harley rides out U.S. motorcycle boom
By Kevin Drawbaugh delayed 20 mins - disclaimer
CHICAGO, Sept 29 (Reuters) - Move over Hell's Angels. Soccer Mom and Dad are
coming through -- on a Harley.
Motorcycling in America is being transformed from a fringe obsession into a
trendy weekend hobby for respectable baby-boomers, thanks largely to
Harley-Davidson Inc.
The Milwaukee monster is driving a surge in the $8-billion motorcycle business,
with new bike sales up 20 percent in the first seven months of 1998 over a year
ago, analysts said.
Street cruisers -- the loud, chrome-heavy beasts currently in vogue and
popularized by Harley -- are expected to account for two-thirds of dollar volume
in 1998 U.S. new bike sales.
Harley still comfortably leads the cruiser class with a 47-percent market share,
but its success inevitably is attracting attention and rivals are emerging.
"Harley has had an unbelievable run," said Don Brown, an independent motorcycle
industry analyst, referring to the company's comeback from near oblivion in the
1980s and its march to undisputed dominance in its category.
"They haven't been seriously challenged until recently. But their test lies just
ahead. It will be interesting," he said.
Harley under assault
Harley's opponents are attacking on two fronts.
First, arch-enemy Honda Motor Co. Ltd. and other Japanese bike builders are
finally building cruisers the way Americans like them. As a result, they are
grabbing market share in the important lightweight, entry-level cruiser class.
<PAGE> 2
Yahoo - FEATURE-Harley rides out U.S. motorcycle boom Page 2 of 3
"With seven months' retail data, it appears that Harley's share of the total
cruiser market will be down this year an estimated 6.5 points by year-end, while
the Japanese brands are expected to gain 6.5 points by year-end," Brown said.
Second, two American bike builders, both based in Minnesota, are gunning for
Harley's heavy cruiser franchise.
Minneapolis-based Polaris Industries Inc. (NYSE:PII - news), already the world's
largest snowmobile maker, in July introduced its Victory cruiser. Priced at
about $13,000 and powered by a massive, 1,507-cc engine, the Victory has
received favorable reviews from the trade press and is arriving in showrooms.
Excelsior-Henderson Motorcycle Manufacturing (Nasdaq:BIGX - news), a Belle
Plaine, Minn.-based start-up, expects to begin mass production later this year
of its Super X. The 1,386-cc cruiser, priced at $17,000 and up, takes dead aim
at Harley.
Meeting the challenge
Always a battler, Harley acknowledged that it recognizes a threat and said it is
responding.
"We created this opportunity for others because demand for our motorcycles has
shifted the market," said Rod Copes, Harley spokesman. "Now there's a couple of
American companies that are trying to ride on our coattails."
To fight them, in July Harley unveiled its first new engine in 15 years. The
1,450-cc,Twin Cam 88 is the largest motor ever built by the company.
In addition, Harley opened two factories earlier this year. A new plant in
Kansas City is building the lightweight Sportster model, which is Harley's lead
Honda fighter. A new Milwaukee plant is making other components.
Getting the new plants going and launching the new engine were costly and
distracting. "That's why Harley's earnings growth was slower in the first six
months of '98," said Shawn Milne, industry analyst at investment bank Hambrecht
& Quist.
But the plants should do much to relieve the output constraints that have
limited Harley's growth, while helping it arrest its market share erosion,
analysts said.
"Going back to the late 1980s, Harley gained share hand over fist. Over the last
three to five years, it's been kind of fiat. Now it's starting to pick up. I
think you will see a clear upward trend here for the next few years," said
industry analyst Timothy Reiland at investment bank Cleary Gull.
Although pressured on the product front, analysts noted that Harley enjoys an
advantage none of its challengers can match -- a wildly successful marketing
program.
Bikes, burgers and baby clothes
At the Route 43 Harley-Davidson dealership in Sheboygan, Wis., customers can buy
custom Harley
<PAGE> 3
Yahoo - FEATURE-Harley rides out U.S. motorcycle boom Page 3 of 3
baby clothes, teddy bears, dolls, chinaware, backpacks, jewelry, boots, frozen
custard, cheeseburgers and ... oh yes, motorcycles.
This innovative outlet is 50 miles north of company headquarters and exemplifies
the marketing machine that is going full blast across America.
"Harley sells image and a lot more than just a motorcycle," said Gil Niv,
manager of the motorsports group at J.D. Power & Associates, a motor vehicles
market consultancy.
Other companies are taking note. Excelsior-Henderson is following Harley's lead
by offering a line of accessories with a distinctly open-road, born-to-be-wild
look.
But the Harley brand is so powerful that analysts said it gives the company a
strong defense against competitors.
"People who ride motorcycles are usually emotionally involved with their
machines," Niv said. "No one else understands this as well as Harley Davidson."
More Quotes * Excelsior-Henderson Motorcycle Manufacturing Co (Nasdaq:BIGX -
news) and News:
e Harley-Davidson Inc (NYSE:HDI - news)
* Polaris Industries Partners LP (NYSE:Pll - news)
Related News Categories: US Market News
Copyright 1998 Reuters Limited. All rights reserved. Republication or
redistribution of Reuters content is expressly prohibited without the prior
written consent of Reuters. Reuters shall not be liable for any effors or delays
in the content, or for any actions taken in reliance thereon. See our important
Disclaimers and Legal Information. Questions or Comments?
<PAGE> 1
EXHIBIT 99.4
ii-05 Page 1 of 7
[ARTWORK]
ANTITRUST LAW & ECONOMICS REVIEW
- --------------------------------------------------------------------------------
Vol. 26, No. 1
EXCLUSIVE DEALING WITH 70% SHARE:
HARLEY-DAVIDSON'S RESTRICTED OUTPUT,
INFLATED PRICES, AND
INFERIOR QUALITY
CHARLES E. MUELLER
- --------------------------------------------------------------------------------
The following was submitted in response to the FTC's invitation (above) for
public comment on the Harley petition to lift a 1954 order banning its exclusive
dealing.
March 23, 1995
Federal Trade Commission
Office of the Secretary
6th & Pennsylvania Ave.
Washington, DC 20580
In re: Harley-Davidson Motor Co., Dkt. 5698
Dear Sir/Madam:
MISLEADING PETITION
<PAGE> 2
ii-05 Page 2 of 7
Harley-Davidson Motor Company (Harley) petitioned the Federal Trade Commission
on February 8, 1995, to reopen and set aside an order entered against it on June
29, 1954, prohibiting Harley from selling its motorcycles on the condition that
the buyer "shall not use, or deal in, or sell motorcycles, motorcycle equipment,
parts, accessories, oil, or other similar or related products supplied by any
competitor or competitors of [Harley]." This letter is submitted in response to
the Commission's invitation of February 24, 1995, for public comment. I have
been a specialist in antitrust law and policy for 37 years, including 15 years
with the Federal Trade Commission (10 of those on the staffs of a chairman and
two commissioners), and 20 years as editor of the Antitrust Law & Economics
Review. I am also, and have been for many years, a motorcycle enthusiast and
thus an interested observer of the industry. The petition filed by Harley on
February 8, 1995, is misleading in several vital respects:
THE 'HEAVYWEIGHT' MARKET
1. HARLEY'S SHARE OF THE RELEVANT MARKET IS 60% OR MORE. According to Harley's
petition (page 18, above), its 1993 share of the U.S. motorcycle industry is
only 20.1% (behind Honda's alleged 29.5%). There are two things wrong with this
Harley claim of only a 20.1% market share. First, there is no such thing as a
"motorcycle" market, i.e., one that includes all motorcycles, as Harley has
presented the figures here. The industry recognizes as an economically-separate
market, for example, "heavyweight" motorcycles (e.g., over 800cc engine sizes).
The smallest motorcycle manufactured by Harley is an 883cc, which means it
competes solely in this "heavyweight" market, one in which it holds a market
share estimated by all industry observers at over 60% and probably well over
75%.
BIG 'STREET' BIKES
The problem of correctly defining the relevant market here is illustrated in
Charts 1 through 3, below. Referring first to Chart 1, Harley makes no ATVs
(all-terrain vehicles), no dirt bikes, no scooters, and no dual-purpose bikes.
It competes solely in the street segment (37%) of the "motorcycle" industry.
Similarly, within that "street" category (Chart 2), it makes, for example, no
"sport" bikes, focusing instead on the "cruiser" and "touring" classifications.
Finally, within its major market--the "cruiser" class--Harley makes no
motorcycles in the under-600cc (lightweight) category and devotes only about 25%
of its production to the 600cc-900cc (middleweight) group.
HARLEY'S TARIFF REPRESENTATIONS
In 1982, Harley's petition for a 5-year tariff against the Japanese big
bikes--beginning at 45% the first year, then 35% the second, and so on--was
granted by the International Trade (Tariff) Commission and in 1988 its board
chairman, announcing that Harley no longer needed that tariff protection,
reported that its "share of the heavyweight motorcycle market has climbed...
from a record low of 12.5% in 1983 to 19.4% in 1986." 'Transformed' Monopoly,
Antitrust Law & Economics Review, Vol. 19, No. 3, p. 48. It defined its
"heavyweight" market interest to the tariff authorities at the time as the
over-700cc category and today claims in its dealer communications (and on its
Milwaukee home office bulletin board, per one recent visitor) over 60% of that
same market.
60% UNIT SHARE
Industry consultant and member of the board of the Motorcycle Industry Council
(MIC) Tony McAndrew reports (American Big Twin Dealer, April 1995) that "the
1994 MIC Statistical Annual at
<PAGE> 3
ii-05 Page 3 of 7
page 16 clearly shows the total of all imported [e.g., Japanese] motorcycles
over 790cc was 37,300 units. Harley built 81,696 motorcycles over 790cc in 1994
[and] 24,513 [of them] were shipped overseas. The remaining 57,183 [Harley]
units were sold domestically, over 20,000 more than all of their competitors
combined." Adding Harley's 57,183 heavyweights to the 37,300 imports yields a
total of 94,483 machines, with a Harley share of 60.5%. (While Honda, for
example, produces some heavyweight bikes at its Marysville, Ohio, plant, the
import heavyweight figure of 37,000 includes a substantial portion of the 54,871
sport bikes, all imported, that were sold in the U.S. in 1994, a category in
which Harley does not compete and which is thus not part of the relevant market.
See Chart 2.)
5 TIMES SHARE OF LARGEST RIVAL
The industry consensus, including its own dealers, is that after these factors
are properly taken into account, Harley holds some 67.1% of the motorcycle
market in which it actually competes, the 800cc and up heavyweight market for
cruisers and touring bikes (see Chart 4, above.) In this economically relevant
market, the shares of Harley and its competitors (again, Chart 4) are: Harley,
67.1%; Honda, 13.0%; Kawasaki, 6.4%; Suzuki, 5.3%; Yamaha, 4.4%; BMW, 2.1%;
other, 1.7%. (In the market where Harley concentrates 3/4ths of its production,
the over-900cc category, its 1994 share is 74%. American Big Twin Dealer, April
1995.) Harley is thus at least 5 times the size of its nearest competitor in the
relevant market.
$17,500 'LIST' PRICE
2. HARLEY POSSESSES 'MARKET POWER' AND EXERCISES IT BY RESTRICTING OUTPUT BELOW,
AND MAINTAINING PRICES ABOVE, COMPETITIVE LEVELS. Harley produces motorcycles in
20 "models," divided into 3 sizes, all heavyweights. At the bottom end or
"entry" level, it makes 3 models of its 883cc "Sportster" with suggested list
prices of around $6,000, plus one 1200cc model of it that lists at $7,395. These
bikes carry little profit for the Harley dealers (even at the substantially
higher prices actually charged at retail) and are used by Harley as a "hook" for
drawing beginning riders to the Harley line. (As noted, these entry bikes
represent only 25% of Harley's production and, in the view of its dealers, are
largely a drain on their profits.) Harley's real market is built around its
biggest bike, a 1340cc motorcycle sold in 16 models with suggested list prices
from $10,000 to $17,500. Harley has 600 franchised dealers in the U.S. and sells
some 60,000 Harley machines (of all sizes) per year, for an average of 100
motorcycles sold per dealer each year. Actual retail prices, as noted, greatly
exceed Harley's "suggested" prices.
$185,000 DEALER NET
Thus one relatively small dealer related to me in a recent interview that his
yearly "allocation" of Harley motorcycles--the maximum number Harley will ship
him in a year--is 60; that he sells those 60 bikes at an average price of
$15,000 (yielding him $900,000 in bike sales last year); and that his Harley
dealership had gross sales of $1.5 million in '94, with $400,000 of that being
gross profit and $185,000 of it being net take-home profit to him. (His non-bike
sales of $600,000 included repair services, $100,000, and sales of parts,
accessories, and riding apparel, $500,000. His retail margin is 20% on the
machines, higher on the rest.) The $15,000 average price for all Harley models
confirms that its real market is at the top end of the heavyweights.
POWER TO PROFITABLY RAISE PRICE BY 5% TO 12%
Harley's dealers are uniformly agreed that it is restricting its output far
below the demand for both
<PAGE> 4
ii-05 Page 4 of 7
Harley motorcycles and parts. They have, for example, a "waiting list" covering
their "allocation" of Harley bikes for the next 12 months, i.e., they've already
received deposits from consumers for all of the machines they'll be shipped by
Harley within the next year. A form of "grey market" thus operates in new
Harleys: Shoppers at the top of the waiting list take delivery, resell (at a
premium) to a non-franchised retailer, who in turn resells it again (reportedly
at $5,000 or so above the "suggested" retail price) to the ultimate consumer.
Harley is quite aware that it has the power to raise its prices still further at
any time. Its Vice President for Sales, Mr. Jerry Wilke, explained in a recent
interview (American Big Twin Dealer, August 1994, p. 17) that Harley "could
probably have raised prices 5%, 10%, 12% or more and we probably still could
have sold out for 1995 without any problem whatsoever."
RESTRICTING OUTPUT TO AVOID MONOPOLY CHARGE?
Harley could of course increase its output. (It has two plants, one in Milwaukee
where it produces primarily engines, and a second one in York, Pennsylvania,
where it assembles the bikes for final shipment to its dealers. Both operate
with only a single shift and could obviously put on a second one.) When I've
asked its dealers why it doesn't expand its output to meet the demand at its
chosen price level, the answer has been: "If it did make all the bikes we need,
it would have a monopoly, close to 100% of the market." Officially, Harley
explains that it's restricting its output to prevent the current "bubble" from
bursting. Wilke, supra. Harley's exercise of market power in the pricing of its
motorcycles--its charging of a price that exceeds the competitive level--is
illustrated by a recent evaluation of the 6 leading heavyweight cruisers
(Harley's major market) sold in the U.S. The table below lists the 6 big
cruisers in the order of the performance evaluation they received by the group
of expert riders/testers, along with their sizes and prices:
The average list price of the 5 non-Harley heavyweight motorcycles evaluated
here is $8,179 and, since they are sold largely in multi-brand dealerships
(e.g., a Honda dealer who also carries Kawasaki, Yamaha, and so on), they are
typically available at discounts from those manufacturer-suggested prices. The
Harley list price, $13,425, on the other hand, is thus not only 64% higher than
the average of its direct competitors' machines but, as noted, can't actually be
bought even at that dramatically higher-than-competitive price. Notice also that
it is smaller than two of the others, 1340cc versus Suzuki's 1400cc and the
1st-place winner, Kawasaki's 1500cc.
'CLUMSY, UNDER-POWERED, AND ANTIQUATED'
3. HARLEY MOTORCYCLES AND PARTS ARE, ON AVERAGE, INFERIOR IN QUALITY TO THOSE OF
ITS COMPETITORS. Harley maintains in its petition here that it has a 90-year-old
"reputation for quality" to uphold and that forcing its 600 dealers to stop
buying from its competitors is necessary in order to protect them and the
ultimate consumer from ending up with "inferior" motorcycles, parts, and
accessories. Consider the performance evaluation of the Harley machine reported
above. Is Harley's 64% higher price in this comparison explainable in terms of
quality superiority? On the contrary. Even a Harley veteran in the testing group
noted depressingly "that for roughly the same amount [of money] we could buy any
two of the other cruisers." Id., 16. And even for a tester who "gets a kick" out
of riding it, the performance was rated poor: "Okay, the Harley is a clumsy,
underpowered, antiquated design bike with awkward controls," acceptable as a
"pure toy, for jazzing around town on a Sunday afternoon. Just don't ask me to
ride it more than about 150 miles in a day..." Id., p. 19. Another:
"Honestly, I have ridden Harleys that were at least tolerable but this is not
one of them." But "okay, so you're only buying the bike to impress your
buddies and the babes, and you're never going to ride over 45 mph." Id., p. 20.
<PAGE> 5
ii-05 Page 5 of 7
'ALWAYS OVERLOADED'
A longstanding joke among Harley riders is that the motorcycle "is always
overloaded, thanks to the pounds of tools one has to carry around to keep it
operational on the road." See 'Transformed' Monopoly, Antitrust Law & Economics
Review, supra. Then came Harley's decline during the '70s as higher-quality and
lower-priced machines were brought in by its Japanese competitors, with its
share of the heavyweight market dropping from over 90% to, as noted above, a
record low of 12.5% in 1983. With the 45% tariff wall imposed in 1982, its share
had recovered to 19.4% in 1986 and its board chairman explained the
transformation in terms of quality improvement: "This 'new' Harley-Davidson runs
its plants with 2/3rds less inventory than in 1981, has improved productivity by
50%, lowered scrap and rework by 2/3rds, and cut defects per unit by 70%. The
company's annual revenues per employee have doubled since 1981. We've taken a
company that was on the brink of disaster and transformed it." Id.
'THEY'RE STILL JUNK'
Does this mean Harley has finally succeeded in solving its longstanding
motorcycle "quality" problem? When I put that question directly to one of its
dealers a few days ago, his answer was: "They're still junk." Even the new one
he personally rides uses oil. They "shake, rattle, leak, and bolts and fenders
fall off." They constantly need repair and, because Harley is almost as far
behind in meeting the demand for parts as for the bikes themselves, they spend
weeks at a time in the shop. Interviews with not only franchised Harley dealers
but with independent (non-franchised) Harley repair/accessory shops bring out
the same story, a tale of poorly-made, bone-shaking motorcycles that, outrun and
out-performed in every dimension by the machines of their competitors, still
spend more time in the repair shop than on the street.
5.26 TIMES HIGHER PARTS PRICES
Why would such an inefficient monopoly as Harley-Davidson want an
exclusive-dealing arrangement with its 600 U.S. dealers? The answer is
presumably illustrated by the prices it charges those dealers for parts. A
poorly-made motorcycle is a virtual black hole for the consumption of
replacement parts. The head of the National Association of Harley-Davidson
Dealers (NAHD), in a letter of March 7, 1995, to the Federal Trade Commission
opposing this Harley petition to lift the 1954 order in question, gave these 4
examples of parts supplied by Harley versus the same parts (or of equal or
better quality) obtained from an after-market supplier, Custom Chrome, Inc.
(CCI): (1) A mainshaft second gear for a Harley motorcycle, with a $175.95
Harley suggested retail price, versus CCI's $29.19 suggested price; (2) a
countershaft low gear for a Harley motorcycle, Harley's $163.05 price versus
CCI's $29.95; (3) a rocker assembly for the engine of a Harley motorcycle,
Harley price of $110.35 versus CCI's $29.95; and (4) a rocker arm for the engine
of a Harley motorcycle, Harley's $167.75 price versus CCI's $31.95. The Harley
suggested prices to the consumer here are, on average, 5.26 times those of the
competing parts supplier, CCI, and again the latter's quality is reportedly as
high as or higher than Harley's.
30% RAKEOFF?
With the lifting of the order, Harley will be free to extend this kind of
skimming operation to the full array of parts and accessories handled by its 600
U.S. dealers. It will presumably go to the now price-cutting after-market
producers with a "licensing" offer, one under which--for a hefty licensing fee
(or override commission) of, say, 15%, 30% or more--Harley will put their names
on its "approved" list
<PAGE> 6
ii-05 Page 6 of 7
of suppliers to its dealers. The latter, in turn, will presumably add Harley's
new 30% or so rakeoff to their own price to the ultimate consumer, the owner of
the Harley motorcycle. The after-market supplier who refuses to cooperate will
get cut off from the 600 Harley dealers. The Harley dealer who refuses to
cooperate either can expect his supply of Harley motorcycles to be cut off, his
"allocation" of bikes reduced, or find his deliveries "unavoidably" slowed to a
trickle.
HARLEY BUYERS 'INSENSITIVE TO PRICE'
There are of course some small (non-franchised) shops that also provide repairs
and accessories for Harley motorcycles and, not being subject to Harley's new
price-raising operation, will remain free to serve any price-conscious Harley
consumers. The willingness of Harley consumers to pay 64% more for an inferior
motorcycle, however (p. 39, above)--and their willingness to pay 5 times as much
for Harley parts of the same or lower quality than competing parts (above)--are
strong evidence that the Harley buyer is, in the main, relatively insensitive to
price. The Harley management may well be correct, then, in believing that a very
large amount of additional money can be extracted from its price-insensitive
consumers and affluent dealers (e.g., the $185,000 take-home profits of the
small Harley dealer mentioned above), particularly on the vast parts and
accessories after-market, before encountering any serious resistance. (Parts,
accessories, and riding apparel constitute 68.6% of the sales of the
non-franchised retail outlets, versus 23% of sales of the franchised dealers.
Motorcycle Industry Council, April 1994.)
ONE DEALER, 5 BRANDS
4. LIFTING THE HARLEY ORDER WILL LIKELY RAISE PRICES AND LOWER QUALITY OF
COMPETING PRODUCERS. Harley claims in its petition (p. 26, above) that the 1954
order "denies Harley-Davidson the opportunity to avail itself of lawful,
procompetitive types of distribution arrangements that... are freely available
to its competitors," thus falsely implying that its competitors engage in
exclusive dealing. This is not the case. Virtually all of the non-Harley
producers--Honda, Kawasaki, BMW, and so on--sell in the U.S. through multi-brand
dealerships. In Ft. Pierce, Florida, for example, the Honda dealer is also
franchised by Kawasaki and the Yamaha dealer, located some 4 blocks away, is
similarly franchised by Suzuki. In Yucca Valley, California, a single dealer is
franchised by Honda, Kawasaki, Suzuki, and Yamaha--with its Harleys kept in a
separate building.
'RESTRICTED OUTPUT, SHODDY PRODUCTS, AND WILDLY INFLATED PRICES'
The Japanese (and European) motorcycle manufacturers have in the main been quite
respectful of the American antitrust laws, a respect based in large part on the
continuing order barring America's own dominant motorcycle firm, Harley, from
engaging in exclusive arrangements with its dealers. When that order is lifted,
the lawyers for Honda, Kawasaki, and the other foreign producers will naturally
advise their clients that the U.S. rules have now changed, that what Harley the
giant can lawfully do, the smaller members of the industry are by definition
free to emulate. Exclusive dealing will become universal in the U.S. motorcycle
industry, then, for those manufacturers who find it profitable. The industry as
a whole will be pushed in the direction of the lowest common denominator, the
Harley model of restricted output, shoddy products, and wildly inflated prices.
A precedent will have been set that will inevitably spread to other, even larger
U.S. industries.
The Harley petition should be denied as patently contrary to the public
interest.
Respectfully submitted,
<PAGE> 7
ii-05 Page 7 of 7
Charles E. Mueller
Editor
Antitrust Law & Economics Review
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[GRAPHIC]
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Copyright(C) 1997 Antitrust Law & Economics Review, inc.
<PAGE> 1
In The Wind Page 1 of 7
[GRAPHIC]
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MIC NUMBERS ADD UP TO GOOD NEWS IN '98
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Based on sales numbers, motorcycling appears to be in a pretty healthy state,
according to the most recent data from the Motorcycle Industry Council.
With its figures tallied through March of 1998, the MIC reports that motorcycle
sales are up 20 percent across the board, with perhaps the most interesting
change coming in the playbike and competition/off-road segments, which posted
the highest percentage increase in the market, at just over 26 percent. Despite
roadblocks such as the recent emissions laws that have been put into effect in
California, year-to-date sales from the same September-to-March evaluation
period show a jump from 20,527 units sold in 1997 to 25,284 units sold in 1998,
with Honda leading the way via its XR lineup of motorcycles, and accounting for
roughly half of the total unit sales in the category as of March.
In the competition/off-road segment of the market, which includes but is not
limited to such bikes as Kawasaki KXs, Suzuki RMs and Yamaha YZs, the numbers
are equally as strong. Some 31,126 units have been sold from September to March
of '98, up from the 26,171 units sold during the same time period in '97. Yamaha
was posting the strongest numbers as of March, with 9495 units sold - 1800 of
those being YZ400F models. Also of interest was KTM, whose 1562 units sold
nearly double its 818 figure for the same time period one year ago. Factoring in
street bikes, total sales are up to 91,776 total units sold, well ahead of the
76,413 units sold in the same time period one year ago.
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HONDA EMPLOYEES KILLED IN TESTING ACCIDENT
- --------------------------------------------------------------------------------
Two longtime members of Honda Motor Co.'s product-development division were
killed during a motorcycle evaluation at Willow Springs Raceway in Rosamond,
California, on Wednesday, May 27.
Killed in the accident were Dirk Vandenberg, 48, of Mission Viejo, California,
and Josef Boyd, 48, of Redondo Beach, California. Vandenberg was manager of
product evaluation from American Honda's product evaluation and press department
and a 21-year associate of Honda. Boyd was a senior engineer in the motorcycle
division of Honda R&D Americas and had been with the company for 16 years.
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<PAGE> 2
In The Wind Page 4 of 7
new "evolution" of its V-twin World Superbike engine at the Mugello circuit
on May 25 and 26. Directed by engineer Corrado Cechinelli, the "Reparto
Esperience" has built a new type of engine that could be in use as early as the
German round of the series on June 7. Ducati refused to comment on the tests,
but speculation is that the Italians were concerned with the speed of the
factory Honda RC45s at Monza, thus forcing them to accelerate the development of
some new engine parts.
After four years of denying health-insurance benefits to helmetless
employees injured in motorcycle accidents, Connecticut firearms manufacturer
STURM, RUGER AND COMPANY has decided to eliminate its helmet restriction and
provide health benefits to all motorcycling employees. In 1995, the AMA
instituted a program called "Riding Ruger," intended to persuade the company to
reevaluate its health-insurance restrictions. The cornerstone of the program was
a call for all interested motorcyclists to purchase shares of the company stock
and then attend stockholder meetings to challenge the discriminatory policy. AMA
representatives have attended the past four stockholder meetings to object to
Ruger's unfair policy. Simultaneously, a letter-writing campaign was mounted,
with individuals, clubs and entire police departments pledging not to purchase
Ruger firearms until motorcyclists were treated like other company employees.
Motorcyclists pointed out that the three states in which Ruger maintains offices
do not require adult motorcyclists to wear helmets; that the company's
requirement for its motorcycling employees to wear helmets interferes with these
employees' rights to engage in legal activities while away from the workplace;
and that the company has no similar policy regarding seat-belt use for
motorists. "We are very pleased that Ruger has decided to extend health-care
benefits to all their employees who ride," vice president of AMA government
relations Robert Rasor said. "It took a lot of patience and hard work on the
part of everyone who participated in the 'Riding Ruger' campaign, but that
patience has now paid off."
In other legislative news, the U.S. Congress has approved an omnibus LEGISLATION
that will BENEFIT MOTORCYCLISTS. The legislation, titled the Transportation
Equity Act for the 21st Century (TEA 21), provides $270 million for recreational
trails over a six-year period; ensures that motorcyclists' needs are represented
in the development of the nation's Intelligent Transportation Systems (ITS)
technology; curtails helmet-law lobbying efforts by National Highway
Transportation Safety Administration (NHTSA) officials and directs the agency to
focus on programs that will reduce motorcycle accidents. Additionally, TEA 21
ensures motorcycle access to all roads built with federal highway funds, thus
ensuring continued access to the growing number of high-occupancy vehicle lanes
in many of the nation's urban transportation corridors. "The legislation
represents almost a complete victory for all motorcyclists," AMA representative
Edward Moreland said. "However, we would have preferred stronger language in the
final version of the bill to ensure that NHTSA was out of the lobbying business
altogether. Despite this one shortcoming, motorcyclists stand to benefit greatly
from the enactment of the new highway bill."
Industry duffers may be interested in taking part in the inaugural STROKER'S
GOLF TOURNAMENT, hosted by former Team Kawasaki off-road legend LARRY ROESELER
at the Hesperia Golf & Country Club in Hesperia, California, on August 19. The
tournament will utilize a scrambles format, with four-man teams. Cash prizes are
being offered for the first- through fifth-place teams, and hole-in-one prizes
will include a Jet Ski with trailer and vacations to Florida or Germany. The
entry fee is $200 per team, and the sign-up dealine is August 10. For more
information, call 714/948-2871.
SPORT BIKE NIGHT in Sacramento, California, is looking for interested parties to
display custom, exotic or unique sport or road racing motorcycles at its June 8
event. To participate, contact Mike Summers, 916/373-1557, or e-mail him at
http://www.sportbikenight.com.
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<PAGE> 3
In The Wind Page 5 of 7
Reigning AMA 125cc National MX Champion RICKY CARMICHAEL was profiled in the May
27 edition of the USA Today newspaper. The two-column story told of the
18-year-old Floridian's victory at the recent Mount Morris 125cc National in
spite of the pain still brought from his shoulder injury at Hangtown, and also
gave a brief recap of his amateur and professional career.
Corbin Pacific Inc. and CALIFORNIA CUSTOM CYCLES have teamed up to produce the
world's first practical custom touring motorcycle. The Nomad is a 96-inch
S&S-powered machine that features Corbin's saddlebags, fairing and chinspoiler.
The parts can be rapidly removed from the machine for around-town use. For more
information, call 650/941-5212.
Similarly, TITAN MOTORCYCLE CO. of America has announced the introduction of its
first touring model, the Roadrunner Sport RM. The bike is said to be fully
convertible from touring to cruiser configuration in minutes. Power for the
Roadrunner Sport RM will come from a 107-inch S&S motor.
Multi-time amateur National MX Champion JUSTIN BUCKELEW broke his lower leg
(tibia and fibula), while practicing in Marysville, California, before the
Hangtown Amateur MX. Buckelew, who broke the same leg last year, will be out the
rest of the amateur MX season.
Following the outcome of the recent fuel tests carried out at the Malaysian
Grand Prix, the FIM will be conducting a meeting at its Swiss headquarters,
inviting members of the Grand Prix Manufacturer's Association and various fuel
and oil manufacturers involved in GRAND PRIX road racing to exchange views on
the compulsory use of UNLEADED FUEL in the Grand Prix World Championship. The
meeting is scheduled for June 8.
The Isle of Man Post Office will be releasing its 1998 TT DREAMS STAMP
COLLECTION, celebrating the historic road race, on June 1. The stamp collection
features Isle of Man racing legends Mike Hailwood, Dave Molyneux, Namoi
Taniguchi and Joey Dunlop, as well as a stamp commemorating the Purple Helmets
precision riding team. The stamp collection is available in various
presentations, ranging from single stamps to limited-edition souvenir brochure
with a special Honda 50th-anniversary coin. For more information, contact the
Isle of Man Post Office Philatelic Bureau, P.O. Box l0M, Douglas, Isle of Man,
British Isles IM99 lPB, or e-mail: [email protected].
The UNITED STATES CLASSIC RACING ASSOCIATION is scheduled to hold an
AMA-sanctioned vintage motorcycle race at the original Laconia race track at the
Gunstock Recreational Arena area in Gilford, New Hampshire, on June 14. Past
race winners are expected to take part in the historic event on the 1-mile
course, including Ed Fisher (1951) and Dick Klamfoth (1954). Ben Campanale, who
finished second in 1938, is also scheduled to attend. For more information on
the event and surrounding activities, call 603/226-5858.
KENNY ROBERTS TRAINING RANCH will be offering a two-day racing class as part of
the TravelCraft GP trip, September 13-21. The class is open to riders of all
levels, and humiliation is guaranteed. Former AMA champion and GP winner Jimmy
Filice is tentatively scheduled to lead the class, which will take place in
Barcelona, Spain. The group will also take in the Barcelona Grand Prix that same
week. Non-riders are also welcome. For more information or to sign up, call
TravelCraft at 800/241-1223
Actor LARRY HAGMAN will be making an appearance on an upcoming edition of Bike
Week on the
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<PAGE> 4
In The Wind Page 6 of 7
Speedvision network. Hagman, who had leading roles in the "Dallas" and "I Dream
of Jeannie" television series, will join Speedvision's Genevieve Marie for a
cruise along Southern California's Malibu coastline, and will discuss the
importance that motorcycling has played in his life. The show is scheduled to
air on July 14 at 8 p.m. eastern time. Check your local listings for show times
in your area.
Speaking of SPEEDVISION, motorcyclists who somehow failed to get their fill of
"B-GRADE" BIKER MOVIES in the '60s can review such silver-screen classics as
"The Wild Angels," "Hells Angels on Wheels" and "Chopper Chicks in Zombietown"
on Speedvision's "Lost Drive-In." Hosted by actor Bruce Dern, "Lost Drive-In"
takes an irreverent look at the "B" movies that haunt "A" actors. In addition to
these and other biker flicks, "Lost Drive-In" also showcases films centered
around motorsports. "Lost Drive-In" airs on Fridays and Saturdays in the late
evenings. Check your local listings.
AMERICAN SUZUKI will be the title sponsor of the inaugural SUZUKI ROCK 'N' ROLL
MARATHON to be held in San Diego, California, on June 21. Nearly 18,000 runners
are expected to participate in the event, and will be competing for a prize
package worth more than $175,000, including a 1999 Suzuki Grand Vitara sport
utility vehicle, the choice of a Suzuki Bandit 600 or Marauder 800 motorcycle, a
Suzuki DF60 outboard motor and a Suzuki LT-F500F all-terrain vehicle. Suzuki
will also be supplying all of the motorcycles and automobiles that will act as
lead/chase vehicles for the event. Former World Champion Kevin Schwantz is
scheduled to be on hand for the event.
Bremerton Raceway in Bremerton, Washington, will be the site for the "SUPER TT
NORTHWEST CHALLENGE," June 13-14. Those who are set to compete include TT
veteran Joe Kopp and former National MX Champion Chuck Sun. A special clay/dirt
compound is being hauled in to comprise roughly 35 percent of the asphalt/dirt
race surface. Post entries will be excepted the day of the event at $40 for the
first class and $20 for any additional classes. For more information, see
"http://www.supertt.com" on the World Wide Web for track layout and class
information.
Former Central Roadracing Association Series Champion MARK MCCALL, 36, was
killed in a streetbike crash in his native Minnesota on Thursday, May 28. McCall
is survived by his wife and three children.
PROMOTED: Cycle News, advertising sales representative Greg Mitchell, to the
position of manager, Cycle News eastern advertising office. Mitchell takes the
position of brother Mark Mitchell, who has departed Cycle News to join Seals
Communications.
HIRED: Jim Clark, as advertising sales representative, Cycle News eastern
advertising office. Clark will be working closely with the Cycle News
advertising staff to develop regional accounts.
OFFERED: Pit service support for the June 26-27 Best in the Desert race in
Mesquite, Nevada, by Montclair Yamaha/Ty Davis Racing. For more information,
call 1-877-TY-DAVIS.
OPENED: Mach 1 Vintage Road Racing, a service shop specializing in Ducati
single-cylinder engines. Mach 1 also offers vintage road race tuning and
preparation for Yamaha, Honda, BSA, Triumph, Harley-Davidson and other makes of
vintage road race motorcycles. For more information, call Peter Talabach,
413/623-6022.
MARRIED: Longtime Checkers MC member Scott Stearns, to his girlfriend, Diana
Menke, on May
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<PAGE> 1
EXHIBIT 99.6
1998
INDUSTRY COMPARISON
DATA
<PAGE> 2
<TABLE>
<CAPTION>
Region: 080 YAMAHA MOTOR CORPORATION, U.S.A For the 7 months from September 1997
District: 027 INDUSTRY COMPARISON DATA through March 1998
MD., DE., VA., WVA. Based on MIC Statistics from Warranty Registrations Report: C027
Wednesday, April 29, 1998
Product For the Month For the Season-to-Date
----------------------------------------------- ----------------------------------------------
Line Manufacturer Last Year This Year Difference Last Year This Year Difference
--------------- --------------- ---------- --------------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ATV Artic Cat 10 1.3% 35 3.6% 25 72 1.1% 184 2.3% 112
Honda 262 35.2% 313 32.3% 51 2242 33.9% 2797 35.5% 555
Kawaski 80 10.7% 99 10.2% 19 893 13.5% 1117 14.2% 224
Polaris 139 18.7% 207 21.4% 68 1344 20.3% 1365 17.3% 21
Suzuki 72 9.7% 113 11.7% 41 712 10.8% 760 9.6% 48
Yamaha 182 24.4% 201 20.8% 19 1354 20.5% 1682 21.1% 308
------ ------ ------ ------ ------ ------
ATV Totals 748 968 223 6,617 7,885 1,268
------ ------ ------ ------ ------ ------
MCY BMW 32 2.1% 39 1.9% 7 110 1.6% 178 2.2% 68
Ducati 7 0.5% 10 0.5% 3 28 0.4% 50 0.6% 22
Harley 433 28.1% 443 21.6% 10 2414 34.8% 2645 32.0% 231
Honda 375 24.4% 565 27.5% 190 1805 26.0% 2029 24.5% 224
Kawasaki 222 14.4% 250 12.2% 26 781 11.3% 984 11.9% 203
KTM 8 0.5% 19 0.9% 11 54 0.8% 86 1.0% 32
Suzuki 317 20.6% 459 22.4% 142 978 14.1% 1132 13.7% 154
Triumph 7 0.5% 9 0.4% 2 32 0.5% 47 0.6% 15
Yamaha 139 9.0% 258 12.6% 119 739 10.6% 1114 13.5% 375
------ ------ ------ ------ ------ ------
MCY Totals 1,540 2,052 512 6,941 8,265 1,324
------ ------ ------ ------ ------ ------
</TABLE>
THIS INDUSTRY IS IN A RENAISSANCE -- 19% INCREASE!
<PAGE> 1
EXHIBIT 99.7
VILLA BEAU HOLDINGS, LTD.
43 Elizabeth St.
Nassau, NP, Bahamas
September 27, 1998
Board of Directors
V-Twin Acquisitions, Inc.
1707 H St., N.W., Suite 200
Washington, DC 20006
Gentlemen:
Please consider my $20,000 consideration paid to V-Twin as additional paid in
capital, as outlined in the V-Twin audited balance sheet at July 31, 1998.
I will consider my $20,000 as a portion of my cost for my 219,030 Common Class A
V-Twin shares.
Very truly yours,
Vila Beau Holdings, Ltd.
/s/ CLARA CESPEDES
Clara Cespedes
A Control Shareholder
<PAGE> 2
TED L. SCHWARTZBECK
43783 Michener Drive
Ashburn, VA 20147
September 27, 1998
V-Twin Acquisitions, Inc.
1707 H St., NW, Suite 200
Washington, DC 20006
Gentlemen:
Please consider my $8,000 consideration paid to V-Twin as additional paid in
capital, as outlined in the V-Twin audited balance sheet at July 31, 1998.
I will consider my $8,000 as a portion of my cost for my 109,515 Common Class A
V-Twin shares.
Very truly yours,
/s/ TED L. SCHWARTZBECK
Ted L. Schwartzbeck
A Control Shareholder
<PAGE> 3
A. JAY PIGNATELLO
4334 Gingham Court.
Alexandria, VA 22310
September 27, 1998
Board of Directors
V-Twin Acquisitions, Inc.
1707 H St., NW, Suite 200
Washington, DC 20006
Gentlemen:
Please consider my $22,148 consideration paid to V-Twin as additional paid in
capital, as outlined in the V-Twin audited balance sheet at July 31, 1998.
I will consider my $22,148 as a portion of my cost for my 109,515 Common Class A
V-Twin shares.
Very truly yours,
/s/ A. JAY PIGNATELLO
A. Jay Pignatello
A Control Shareholder
