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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 10, 1997
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Cross-Continent Auto Retailers, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 333-06585 75-2653095
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1201 South Taylor Street, Amarillo, TX 79101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (806) 374-8653
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not applicable
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets.
On April 10, 1997, Cross-Continent Auto Retailers, Inc., a Delaware
corporation (the "Company"), purchased (i) all of the outstanding capital stock
(the "Dealership Shares") of each of (A) Douglas Toyota, Inc., a Colorado
corporation (the "Colorado Dealership"), and (B) Toyota West Sales and Service,
Inc., a Nevada corporation (the "Nevada Dealership," and together with the
Colorado Dealership, the "Dealerships"); (ii) certain real estate to be used in
connection with the Colorado Dealership (the "Colorado Property"); and (iii)
certain real estate to be used in connection with the Nevada Dealership (the
"Nevada Property").
The Dealership Shares were purchased in exchange for an aggregate
consideration consisting of 279,720 shares of common stock, par value $.01 per
share, of the Company (the "Common Stock"), cash in the amount of $28,000,000
and a promissory note in the principal amount of $7,000,000. The Colorado
Property was purchased for consideration consisting of a promissory note in the
principal amount of $2,000,000, secured by certain assets. The Nevada Property
was purchased for consideration consisting of a promissory note in the principal
amount of $5,500,000, secured by certain assets. The cash portion of the
purchase price for the Dealerships was provided by $22,000,000 of the proceeds
from the Company's initial public offering of the Common Stock in September 1996
and $6,000,000 of borrowings from Amarillo National Bank evidenced by a
promissory note.
In connection with the foregoing transactions, Mr. R. Douglas Spedding, the
sole shareholder of each of the Dealerships, entered into an employment
agreement with the Company under which he agreed to be employed by the Company
until April 1, 2000. Additionally, the Company entered into an employment
agreement with Mr. Douglas J. Spedding under which he agreed to be employed by
the Company until June 1, 2000. The Company also granted Mr. R. Douglas Spedding
the right to include his shares of Common Stock acquired in the acquisition of
the Dealerships in certain registrations of the Common Stock.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
(b) Pro Forma Financial Information.
As of the date of this Report, it is impracticable to provide the required
financial statements and pro forma financial information relating to the
Dealerships. Such statements and information will be filed as soon as they
become available, and in any event not later than 60 days after the date this
Report is filed with the Securities and Exchange Commission.
(c) Exhibits.
2.1 Stock Purchase Agreement, dated as of January 23, 1997, by and between
Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding (omitting
schedules and exhibits thereto, which will be furnished supplementally
to the Commission upon request) (previously filed as an exhibit to
Cross-Continent Auto Retailers, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1996, incorporated herein by
reference)
2.2 Amendment to Stock Purchase Agreement, dated as of April 1, 1997, by
and between Cross-Continent Auto Retailers, Inc. and
R. Douglas Spedding
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2.3 Purchase Agreement, dated as of March 1, 1997, between RDS, Inc. and
Cross-Continent Auto Retailers, Inc. (omitting exhibits thereto,
which will be furnished supplementally to the Commission upon
request)
2.4 Purchase Agreement, dated as of March 1, 1997, between R. Douglas
Spedding and Cross-Continent Auto Retailers, Inc. (omitting exhibits
thereto, which will be furnished supplementally to the Commission
upon request)
4.1 Registration Rights Agreement, dated as of April 1, 1997, by and
between Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding
10.1 Employment Agreement, dated as of April 1, 1997, by and between R.
Douglas Spedding and Cross-Continent Auto Retailers, Inc.
10.2 Employment Agreement, dated as of April 1, 1997, by and between
Douglas J. Spedding and Cross-Continent Auto Retailers, Inc.
10.3 Promissory Note, dated April 1, 1997, by Cross-Continent Auto
Retailers, Inc. to the order of R. Douglas Spedding in the principal
amount of $7,000,000
10.4 Promissory Note, dated April 4, 1997, by Cross-Continent Auto
Retailers, Inc. to Amarillo National Bank in the principal amount of
$6,000,000
10.5 Documents, dated April 10, 1997, relating to promissory note by
Cross-Continent Auto Retailers, Inc. to the order of RDS, Inc. in
the principal amount of $2,000,000
10.5.1 Promissory Note by Cross-Continent Auto Retailers, Inc. to the
order of RDS, Inc.
10.5.2 Security Agreement between Cross-Continent Auto Retailers, Inc.
and RDS, Inc.
10.5.3 Deed of Trust between Cross-Continent Auto Retailers, Inc. and
RDS, Inc.
10.6 Documents, dated April 10, 1997, relating to promissory note by
Cross-Continent Auto Retailers, Inc. to the order of R. Douglas
Spedding in the principal amount of $5,500,000
10.6.1 Promissory Note by Cross-Continent Auto Retailers, Inc. to the
order of R. Douglas Spedding
10.6.2 Security Agreement between Cross-Continent Auto Retailers, Inc.
and R. Douglas Spedding
10.6.3 Deed of Trust between Cross-Continent Auto Retailers, Inc. and R.
Douglas Spedding
10.7 Release and Indemnification Agreement, dated as of April 10, 1997,
between Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding
99.1 Copy of press release issued by Cross-Continent Auto Retailers, Inc.
on April 10, 1997
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
CROSS-CONTINENT AUTO RETAILERS, INC.
Date: April 25, 1997 By: /s/ James F. Purser
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Name: James F. Purser
Title: Chief Financial Officer
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EXHIBIT INDEX
2.1 Stock Purchase Agreement, dated as of January 23, 1997, by and between
Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding (omitting
schedules and exhibits thereto, which will be furnished supplementally to
the Commission upon request) (previously filed as an exhibit to Cross-
Continent Auto Retailers, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, incorporated herein by reference)
2.2 Amendment to Stock Purchase Agreement, dated as of April 1, 1997, by and
between Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding
2.3 Purchase Agreement, dated as of March 1, 1997, between RDS, Inc. and
Cross-Continent Auto Retailers, Inc. (omitting exhibits thereto, which
will be furnished supplementally to the Commission upon request)
2.4 Purchase Agreement, dated as of March 1, 1997, between R. Douglas
Spedding and Cross-Continent Auto Retailers, Inc. (omitting exhibits
thereto, which will be furnished supplementally to the Commission upon
request)
4.1 Registration Rights Agreement, dated as of April 1, 1997, by and between
Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding.
10.1 Employment Agreement, dated as of April 1, 1997, by and between R.
Douglas Spedding and Cross-Continent Auto Retailers, Inc.
10.2 Employment Agreement, dated as of April 1, 1997, by and between Douglas
J. Spedding and Cross-Continent Auto Retailers, Inc.
10.3 Promissory Note, dated April 1, 1997, by Cross-Continent Auto Retailers,
Inc. to the order of R. Douglas Spedding in the principal amount of
$7,000,000
10.4 Promissory Note, dated April 4, 1997, by Cross-Continent Auto Retailers,
Inc. to Amarillo National Bank in the principal amount of $6,000,000
10.5 Documents, dated April 10, 1997, relating to promissory note by Cross-
Continent Auto Retailers, Inc. to the order of RDS, Inc. in the principal
amount of $2,000,000
10.5.1 Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
of RDS, Inc.
10.5.2 Security Agreement between Cross-Continent Auto Retailers, Inc. and
RDS, Inc. Deed of Trust between Cross-Continent Auto Retailers, Inc.
and RDS, Inc.
10.5.3 Deed of Trust between Cross-Continent Auto Retailers, Inc. and RDS,
Inc.
10.6 Documents, dated April 10, 1997, relating to promissory note by Cross-
Continent Auto Retailers, Inc. to the order of R. Douglas Spedding in the
principal amount of $5,500,000
10.6.1 Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
of R. Douglas Spedding
10.6.2 Security Agreement between Cross-Continent Auto Retailers, Inc. and R.
Douglas Spedding
10.6.3 Deed of Trust between Cross-Continent Auto Retailers, Inc. and R.
Douglas Spedding
10.7 Release and Indemnification Agreement, dated as of April 10, 1997,
between Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding
99.1 Copy of press release issued by Cross-Continent Auto Retailers, Inc. on
April 10, 1997
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EXHIBIT 2.2
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment to Stock Purchase Agreement (the "Amendment") is made and
entered into this 1st day of April, 1997, by and between CROSS-CONTINENT AUTO
RETAILERS, INC., a Delaware corporation ("C-CAR"), and R. DOUGLAS SPEDDING
("RDS").
RECITALS
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A. By that certain Stock Purchase Agreement (the "Agreement") dated
January 23, 1997, RDS agreed to sell all of the issued and outstanding shares of
capital stock of Douglas Toyota, Inc., a Colorado corporation, and Toyota West
Sales and Service, Inc., a Nevada corporation, to C-CAR.
B. C-CAR and RDS desire to amend the Agreement.
Agreement
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, C-CAR and RDS agree as follows:
1. The Agreement is amended as follows:
(a) The number $12,000,000 in subparagraph 4(b) is deleted and the
number $5,000,000 is substituted therefor.
(b) The following shall be added to the Agreement as subparagraph 4(d):
Purchaser shall execute and deliver to Seller a promissory note in
the original principal amount of $7,000,000, bearing interest at a
variable rate equal to the prime rate of interest announced by Bank
of America from time to time, such interest being payable monthly
as it accrues, with the principal balance being due and payable
sixty (60) months after the date of the promissory note.
(c) The second sentence of subparagraph 7(1) is deleted in its entirety
and the following sentence is substituted therefor:
The Financial Statements fairly present the financial condition of
each Corporation at the dates mentioned and the results of its
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operations for the periods specified and were prepared in
accordance with its normal and customary accounting procedures.
(d) The following shall be added to Paragraph 7(aa):
Purchaser acknowledges the receipt of Phase I environmental site
audits for each real property leasehold interest used by either
Corporation and each parcel of real property owned by RDS and
purchased by C-Car under the Purchase Agreements as defined in the
Agreement. Except as disclosed in the Phase I environmental site
audits, Seller restates the representations and warranties found in
subparagraph 7(aa).
(e) Subparagraphs 10(f)(iii) and (iv) are deleted in their entirety.
(f) Subparagraph 10(g) is deleted in its entirety and the following
sentence is substituted therefor:
This Agreement and the transactions contemplated by this Agreement
shall have received all required approvals and consents from all
(i) lenders, (ii) lessors, (iii) manufacturers represented by each
Corporation, (iv) the FTC and the Justice Department under the HSR
Act and the regulations promulgated thereunder, (v) the New York
Stock Exchange, (vi) Morgan, Stanley & Co. Incorporated, (vii) the
Colorado Department of Transportation, and (viii) the Department of
Motor Vehicles of the State of Nevada.
(g) Subparagraph 10(p) is deleted in its entirety and the following
sentence is substituted therefor:
The Aggregate Adjusted Net Worth, as adjusted by the Post 1996
Adjustments, shall not be less than $6,000,000, and the Aggregate
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1996 Earnings shall not be less than $10,000,000.
(h) Subparagraph 11(e) is hereby deleted in its entirety
(i) Subparagraphs 11(j)(iii) and (iv) are deleted in their entirety.
2. As modified by this Amendment, the Agreement shall remain in full force
and effect, enforceable in accordance with its terms.
3. This Amendment shall be governed by and construed and enforced in
accordance with the laws of the State of Texas.
4. This Amendment shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, administrators, executors,
successors, and assigns.
CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
By: /s/ Bill A. Gilliland
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Bill A. Gilliland,
Chairman & Chief Executive Officer
/s/ R. Douglas Spedding
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R. DOUGLAS SPEDDING
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EXHIBIT 2.3
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PURCHASE AGREEMENT
BETWEEN
RDS, INC.
a Colorado corporation
AS SELLER
AND
CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
AS PURCHASER
As of March 1, 1997
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is made to be effective as of the
Effective Date (as hereinafter defined) by and between RDS, INC., a Colorado
corporation ("Seller"), and CROSS-CONTINENT AUTO RETAILERS, INC., a Delaware
corporation ("Purchaser").
WITNESSETH:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement of Purchase and Sale. Subject to the terms and conditions
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hereinafter set forth, Seller agrees to sell and convey and Purchaser agrees to
purchase the following:
(a) that certain tract or parcel of land situated in Adams
County, Colorado, more particularly described by metes and bounds on
Exhibit A attached hereto and made a part hereof, together with all
improvements located thereon and all rights and appurtenances pertaining to
such property, including any right, title and interest of Seller in and to
adjacent streets, alleys or rights-of-way (the property described in clause
(a) of this Section 1.1 being herein referred to collectively as the
"Land");
(b) all of Seller's right, title and interest in and to (i) all
assignable contracts and agreements relating to the Land or the
improvements to be constructed on the Land; (ii) all licenses, permits,
certificates of occupancy and other consents or approvals from governmental
authorities or private parties which relate to the Land or the improvements
to be constructed on the Land; and (iii) all plans, specifications,
drawings, reports, studies, books, records and other documents pertaining
to the Land or the improvements to be constructed on the Land (the property
described in this Section 1.1(b) being sometimes herein referred to
collectively as the "Intangibles").
1.2 Property Defined. The Land and the Intangibles are hereinafter
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sometimes referred to collectively as the "Property."
1.3. Permitted Exceptions. The Property shall be conveyed subject to the
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matters which are deemed to be Permitted Exceptions pursuant to Section 2.3
hereof (herein referred to collectively as the "Permitted Exceptions").
1.4 Purchase Price. Seller is to sell and Purchaser is to purchase the
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Property for a total of TWO MILLION DOLLARS ($2,000,000.00) (the "Purchase
Price").
1.5 Payment of Purchase Price. The Purchase Price shall be payable in
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full at Closing in cash or immediately available funds.
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1.6 Independent Contract Consideration. Upon the Effective Date hereof,
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Purchaser shall deliver to Seller a check in the amount of Five Hundred and
No/100 Dollars ($500.00) ("Independent Contract Consideration"), which amount
the parties hereby acknowledge and agree has been bargained for and agreed to as
consideration for Seller's execution and delivery of this Agreement. The
Independent Contract Consideration is in addition to and independent of any
other consideration or payment provided in this Agreement, and is nonrefundable
in all events.
ARTICLE II
TITLE AND SURVEY
2.1 Commitment for Title Insurance. Within fifteen (15) days after the
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Effective Date, Seller shall deliver to Purchaser and the surveyor described in
Section 2.2 below (a) a current title commitment for a 1992 ALTA Extended
Owner's Policy (the "Title Commitment") covering the Property, showing all
matters affecting title to the Property and binding the Title Company to issue
at Closing a 1992 ALTA Extended Owner's Policy of Title Insurance issued by Land
Title Guarantee Company (the "Title Company") in the full amount of the Purchase
Price pursuant to Section 2.5 hereof, and (b) legible copies of all instruments
(the "Exception Instruments") referenced in Schedule B and Schedule C of the
Title Commitment. In addition to the Title Commitment and the Exception
Instruments, Seller shall deliver, at its own expense, a copy of the most
current tax certificate covering the Property.
2.2 Survey. Within ten (10) days after the Effective Date, Seller shall,
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at Seller's expense, furnish to Purchaser a current Survey (the "Survey") of the
Property prepared by a reputable surveyor or surveying firm licensed by the
State of Colorado. The Survey shall be an ALTA/ACSM Urban Land Title Survey and
shall (a) locate all easements (whether of record or apparent from an inspection
of the Property) and rights of way on or adjacent to the Property (identified by
recording data, if applicable), (b) show any improvements on the Land and the
dimensions thereof, (c) show the location and size of all streets (existing or
proposed) on or adjacent to the Property, (d) show any encroachments or
protrusions, railroads, rivers, creeks, or other water courses, fences,
utilities (including size and location), and other matters located on or
affecting the Property (and any recording information relating thereto), (e) set
forth the number of square feet comprising the Property, together with a legal
description of the boundaries of the Property by metes and bounds, (f) certify
that the Property does not lie within the 100-year flood plain as established by
the U.S. Army Corps of Engineers, (g) contain a certification by the surveyor in
the form of Exhibit B attached hereto, and (h) in general, comply with the
highest standards of surveyors in the State of Colorado. Unless otherwise
agreed by Seller and Purchaser, the metes and bounds description contained in
the Survey shall be the legal description employed in the documents of
conveyance of the Property. The Survey shall be certified to Purchase and the
Title Company.
2.3 Title Review Period. After receipt of the last of the Title
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Commitment, legible copies of the Exception Instruments, and the Survey,
Purchaser shall have a period of five (5) days to review the state of Seller's
title to the Property (the "Title Review Period"). If the Survey, the Title
Commitment or the Exception Instruments reflect or disclose any defects,
exceptions, or other matters affecting the Property ("Title Defects") that
render or will render the Property unmerchantable or that
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materially, adversely affect or will affect the operation of the Property in
accordance with its proposed use as an automobile dealership location, then
prior to the expiration of the Title Review Period, Purchaser may provide Seller
with written notice of its objections, and Seller shall have five (5) days (the
"Cure Period") from the date of the notice to remove or cure any Title Defects
to the satisfaction of Purchaser. Seller shall use its reasonable, good faith
efforts to remove or cure the Title Defects to Purchaser's satisfaction, but
shall not be required to institute litigation. If Seller does not cure any or
all of the Title Defects within the Cure Period, Seller shall notify Purchaser
in writing, prior to the expiration of the Cure Period, of its failure to cure
such Title Defects, and Purchaser may, prior to the later of (a) five (5)
business days after receipt of Seller's notice of its failure to cure, or (b)
the expiration of the Inspection Period (hereinafter defined) either (i)
terminate this Agreement by written notice delivered to Seller, or (ii) elect to
waive any uncured Title Defect. If Purchaser fails to terminate the Agreement by
written notice delivered to Seller prior to the expiration of the time period
referenced in the immediately preceding sentence, then any Title Defects that
Seller has not cured shall be deemed waived by Purchaser. If Purchaser shall
fail to notify Seller in writing of any objections to the state of Seller's
title to the Property as shown by the Title Commitment, the Exception
Instruments or the Survey, or if Purchaser elects to waive all or any of the
Title Defects, or is deemed to have waived all or any of the Title Defects, then
any exceptions to Seller's title to which Purchaser has not objected or which
have been objected to and waived by Purchaser and which are disclosed by the
Title Commitment shall be considered to be "Permitted Exceptions". If Purchaser
terminates this Agreement pursuant to this section, then neither Seller nor
Purchaser shall have any further rights or obligations under this Agreement.
2.4 Obligation to Cure Liens. Notwithstanding anything to the contrary
------------------------
contained in this Article II, if at Closing there are any mechanic's or
materialmen's liens or mortgages, deeds of trust or other instruments creating a
lien against all or any part of the Property (collectively, "Liens"), Seller
shall discharge the same of record and apply such portions of the Purchase Price
or Seller's funds as may be necessary to accomplish the same.
2.5 Owner's Policy of Title Insurance. At Closing, Seller shall cause the
---------------------------------
Title Company to issue to Purchaser, at Seller's expense, a 1992 ALTA Extended
Owner's Policy of Title Insurance (the "Title Policy") covering the Property, in
the full amount of the Purchase Price, insuring that Purchaser is the owner of
good and indefeasible fee simple title to the Property, subject only to the
Permitted Exceptions, and with the standard printed exceptions deleted and the
exception for ad valorem taxes shall be modified to reflect only taxes for the
current year and subsequent years. In addition, any reference to submitting
claims under the Title Policy to arbitration shall be deleted.
ARTICLE III
INSPECTION PERIOD
3.1 Right of Inspection. During the period beginning upon the Effective
-------------------
Date and ending at 5 p.m., Denver, Colorado time, on the thirtieth (30th) day
following the Effective Date (hereinafter referred to as the "Inspection
Period"), Purchaser shall have the right to make a physical inspection of the
Property, to conduct tests thereon (including specifically, without limitation,
environmental tests and soil borings), to review the Due Diligence Materials
(hereinafter defined), the Environmental Site
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Audit (hereinafter defined) and all other books, records and documents
maintained by Seller relating to the Property, and to make inquiries to
governmental authorities and other appropriate parties, so as to determine, in
the reasonable discretion of Purchaser, whether any condition, activity, or
event has occurred, exists, or will occur or exist (a) that affects or will
affect the Property and for which there is any material risk of loss or
liability for the owner of the Property, or (b) that materially, adversely
affects or will affect the operation of the Property in accordance with its
proposed use as an automobile dealership location. Purchaser agrees to indemnify
and hold Seller harmless of and from any claim for physical damages or physical
injuries arising from Purchaser's inspection of the Property, and
notwithstanding anything to the contrary in this Agreement, such obligation to
indemnify shall survive Closing or any termination of this Agreement. All
inspections shall occur at reasonable times and shall be conducted so as not to
unreasonably interfere with use of the Property by Seller or its tenants.
3.2 Right of Termination. Seller agrees that in the event Purchaser
--------------------
determines, in Purchaser's reasonable discretion, that any condition, activity,
or event has occurred, exists, or will occur or exist (a) that affects or will
affect the Property and for which there is any material risk of loss or
liability to the owner of the Property, or (b) that materially, adversely
affects or will affect the operation of the Property in accordance with its
proposed use as an automobile dealership location, then Purchaser shall have the
right to terminate this Agreement by sending written notice thereof (hereinafter
referred to as the "Notice of Termination") to Seller prior to the expiration of
the Inspection Period. Upon delivery by Purchaser of such Notice of Termination
within the Inspection Period, this Agreement shall terminate. If Purchaser
fails to send Seller a Notice of Termination prior to the expiration of the
Inspection Period, Purchaser shall no longer have any right to terminate this
Agreement under this Article III.
ARTICLE IV
CLOSING
4.1 Time and Place. Unless otherwise mutually agreed in writing between
--------------
Seller and Purchaser, the Closing of the transaction contemplated hereby
("Closing") shall be held at the offices of Burg & Eldredge, P.C. on March 1,
1997, or such other date as Purchaser and Seller shall mutually agree, (the
"Closing Date"). At Closing, Seller and Purchaser shall perform the obligations
set forth in, respectively, Section 4.2 and Section 4.3, the performance of
which obligations shall be concurrent conditions.
4.2 Seller's Obligations at Closing. At Closing, Seller shall:
-------------------------------
(a) deliver to Purchaser a Special Warranty Deed (the "Deed") in the
form of Exhibit C attached hereto and made a part hereof, executed and
acknowledged by Seller and in recordable form, conveying the Land to
Purchaser, subject only to the Permitted Exceptions;
(b) deliver to Purchaser a Bill of Sale and Assignment (the "Bill of
Sale") in the form of Exhibit D attached hereto and made a part hereof,
executed and acknowledged by Seller and in recordable form;
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(c) join with Purchaser in the execution and acknowledgment of an
Assignment and Assumption of Contracts (the "Assignment of Contracts") in
the form of Exhibit E attached hereto and made a part hereof;
(d) deliver to Purchaser a FIRPTA Affidavit in the form of Exhibit F
attached hereto and made a part hereof, duly executed by Seller;
(e) deliver to Purchaser a "bills paid affidavit" verifying that
there are no unpaid bills, expenses or claims with respect to the Property
and indemnifying Purchaser from any loss, liability or expense resulting
from or incident to any such matters;
(f) deliver to Purchaser such evidence as Purchaser's counsel and/or
the Title Company may reasonably require as to the authority of the person
or persons executing documents on behalf of Seller;
(g) deliver to Purchaser possession and occupancy of the Property,
subject to the Permitted Exceptions;
(h) deliver to Purchaser the Extended Owner's Policy of Title
Insurance pursuant to Section 2.5 hereof.
4.3 Purchaser's Obligations at Closing. At Closing, Purchaser shall:
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(a) pay to Seller the amount of the Purchase Price in cash or
immediately available wire transferred funds;
(b) join Seller in execution of the instrument described in Sections
4.2(c) above;
(c) deliver to Seller such evidence as Seller's counsel and/or the
Title Company may reasonably require as to the authority of the person or
persons executing documents on behalf of Purchaser.
4.4 Credits and Prorations. The following provisions shall govern the
----------------------
apportionment of income and expenses with respect to the Property between Seller
and Purchaser:
(a) Real estate taxes shall be prorated between Seller and Purchaser
at Closing. If the Closing shall occur before the amount of taxes is
fixed, the apportionment of taxes shall be made based upon one hundred five
percent (105%) of the tax rate for the preceding year, applied to the
latest assessed valuation of the Property. Upon receipt of the actual tax
bill for the Property, the proration of taxes made at Closing shall be
subject to adjustment pursuant to Section 4.4(d) below.
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(b) Seller shall arrange for final meter readings on all utilities at
the Property to be taken on the day preceding Closing. Seller shall be
responsible for the payment of utilities used through the day preceding the
Closing Date and Seller shall be responsible for the payment of utilities
used on or after the Closing Date. With respect to any utility for which
there is no meter, the expenses for such utility shall be prorated between
Seller and Purchaser at Closing based upon the most current bill for such
utility. Any deposits for utilities shall inure to the benefit of and be
deemed assigned to Purchaser. Seller and Purchaser shall cooperate to cause
the transfer of utility company accounts from Seller to Purchaser.
(c) If Purchaser elects to accept a transfer to Seller's insurance
coverage on the Property (which election may be made at Purchaser's sole
discretion), the insurance premium for such insurance coverage shall be
prorated between Seller and Purchaser at Closing.
(d) The prorations described in this Section 4.4 shall be made as of
12:01 a.m. on the Closing Date, as if Purchaser were vested with title to
the Property during the entire day upon which Closing occurs. All
prorations described in this Section 4.4 shall be effected by increasing or
decreasing, as the case may be, the amount of cash to be paid by Purchaser
to Seller at Closing. Seller and Purchaser agree to adjust between
themselves after Closing any errors or omissions in the prorations made at
Closing; provided, however, that such prorations shall be deemed final and
not subject to further post Closing adjustments if no such adjustments have
been requested within one hundred twenty (120) after the Closing Date.
4.5 Closing Costs. Seller shall pay (a) the fees of any counsel
-------------
representing it in connection with this transaction; (b) the cost of the Title
Policy; (c) the cost of the Survey; (d) the fees for recording the deed
conveying the Property to Purchaser; and (e) one-half (1/2) of any escrow fee
which may be charged by the Title Company. Purchaser shall pay (y) the fees of
any counsel representing Purchaser in connection with this transaction; and (z)
one-half (1/2) of any escrow fees charged by the Title Company. All other costs
and expenses incident to this transaction and the closing thereof shall be paid
by the party incurring same.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 Representations and Warranties of Seller. Seller hereby represents
----------------------------------------
and warrants to Purchaser as follows:
(a) Seller has the full right, power and authority to enter into this
Agreement and to perform all of its obligations under this Agreement, and
the execution and delivery of this Agreement and the performance by Seller
of its obligations under this Agreement require no further action or
approval of Seller's partners or of any other person in order to constitute
this Agreement as a binding and enforceable obligation of Seller.
7
<PAGE>
(b) To the best of Seller's knowledge, the Property is not in
violation of any governmental order, regulation, statute, code or
ordinance, and all existing zoning and building codes and other applicable
laws and governmental regulations will permit the operation of the Property
in accordance with its proposed usage.
(c) To the best of Seller's knowledge, there has been no written
demand by any mortgagee, insurance underwriter or governmental authority
for work to be done or other action to be taken by Seller which has not
been complied with to the satisfaction of the entity making such demand. To
the best of Seller's knowledge, no defect or condition exists with respect
to the Property which would adversely affect the insurability of the
Property.
(d) There is no pending condemnation, expropriation, eminent domain,
litigation, administrative action or other legal proceeding affecting all
or any portion of the Property, and Seller has not received any written or
oral notice of any of the same and has no knowledge that any such
proceeding is contemplated.
(e) To the best of Seller's knowledge, all obligations of Seller
arising from the ownership of the Property, including but not limited to
taxes, assessments, charges, and other costs and expenses, have been paid
as they became due or will be paid at or prior to Closing. Except for
obligations for which provisions are herein made for proration or other
adjustment at Closing, there will be no obligations of Seller with respect
to the Property outstanding as of the Closing Date.
(f) No person, firm or entity, other than Purchaser has any right to
acquire the Property or any part thereof.
(g) This Agreement and the conveyance of the Property will not cause
to be imposed on Purchaser any liability to withhold any amount pursuant to
Section 1445 of the Internal Revenue Code or the implementing regulations.
(h) To the best of Seller's knowledge, Seller has not disposed of or
otherwise released or allowed to be released any hazardous or toxic
substances, petroleum products, chemicals, or wastes of any kind on, in, or
under the Property, including any surface waters or groundwater located on
such Property, nor has Seller caused or allowed to be released or
discharged any hazardous or toxic substances, petroleum products,
chemicals, or wastes of any kind on, in, or under any tracts in proximity
to the Property, including the surface or groundwaters thereof. To the best
of Seller's knowledge, there are no hazardous or toxic substances,
petroleum products, chemicals, or wastes on, in, or under the Property,
including surface or groundwaters, regardless of source or cause, and there
are no underground storage tanks on the Property.
8
<PAGE>
(i) To the best of Seller's knowledge, all licenses, permits,
certificates of occupancy and other consents or approvals from governmental
authorities or private parties which relate to the Land or the improvements
to be constructed on the Land are assignable.
5.2 Covenants of Seller. Seller hereby covenants with Purchaser as
-------------------
follows:
(a) Within twenty (20) days after the Effective Date, Seller shall
deliver to Purchaser the documents and other items (the "Due Diligence
Materials") listed on Exhibit G attached hereto and made a part hereof.
(b) Within thirty (30) days after the Effective Date, Seller shall
deliver to Purchaser a Phase I Environmental Site Audit (the "Environmental
Site Audit") of the Property prepared by a reputable environmental
engineering firm licensed by the State of Colorado.
(c) So long as this Agreement remains in effect, Purchaser will be
allowed access to the Property and the books and records related to the
Property under the terms and conditions set forth in Section 3.1 hereof.
(d) Seller shall not enter into any other contract (or an extension
or modification of any other contract) with respect to the Property which
will survive the Closing or otherwise affect the use, operation or
enjoyment of the Property after the Closing, without first obtaining
Purchaser's prior written consent thereof.
(e) After the date hereof and prior to Closing, no part of the
Property, nor any interest therein, will be alienated, liened, encumbered
or otherwise transferred.
(f) Pending Closing, Seller shall manage the Property in a normal
businesslike manner, maintaining present services and insurance policies,
and shall perform when due, all of Seller's obligations under any contracts
affecting the Property and otherwise in accordance with applicable laws,
ordinances, rules and regulations affecting the Property. Seller shall
remedy any violation of any law, ordinance, order or other requirement of
any governmental authority having jurisdiction over or affecting all or any
part of the Property. Seller shall deliver the Property at Closing in
substantially the same condition as it was on the Effective Date,
reasonable wear and tear excepted.
(g) Seller has paid or will pay in full, prior to Closing, all bills
and invoices for labor, goods, materials and services of any kind with
respect to the Property and utility charges relating to the period prior to
Closing.
(h) Seller shall promptly notify Purchaser of any change in any
condition with respect to the Property or of any event or circumstance
which makes any representation or
9
<PAGE>
warranty of Seller to Purchaser under this Agreement untrue or misleading,
or any covenant of Seller under this Agreement incapable of being
performed.
(i) With respect to any existing or potential liability arising out
of any condition, activity, or event existing or occurring prior to the
Closing Date with respect to the Property for which there is any material
risk of liability to any governmental entity or agency or any other person
or entity for the violation of any environmental law or for which there may
be liability in tort, or otherwise, and which is related to or arises out
of an environmental condition, the Seller agrees that Seller shall
indemnify, defend, and hold harmless the Purchaser from and against all
claims, damages, liabilities, penalties, actions, suits, proceedings,
demands, assessments, costs and expenses, including reasonable attorneys'
fees and expenses of investigation, incurred by Purchaser as a result of
such environmental condition and further including, if necessary, the costs
and expenses of any remediation, transportation, incineration, treatment,
or other necessary and appropriate disposition or mitigation of such
environmental condition. In the event that any claim relating to a
violation of environmental laws shall arise, Seller, upon notice from
Purchaser, shall have the first right to address and implement remediation
of the environmental condition. In no event shall Seller=s obligation
hereunder exceed $1,000,000. The limitation set forth herein is subject
to and part of the terms, conditions and limitations set forth in Section
15(k) of the Stock Purchase Agreement between Purchaser and Seller of even
date herewith.
5.3 Representations and Warranty of Purchaser. Purchaser hereby
-----------------------------------------
represents and warrants to Seller as follows:
(a) Purchaser has the full right, power and authority to enter into
this Agreement and to carry out Purchaser's obligations hereunder, and to
perform all of its obligations under this Agreement, and the execution and
delivery of this Agreement and the performance by Purchaser of its
obligations under this Agreement requires no further action or approval of
Purchaser's partners or of any other person in order to constitute this
Agreement as a binding and enforceable obligation of Purchaser.
5.4 Survival of Representations and Warranties. Seller and Purchaser
------------------------------------------
agree as follows:
(a) The representations and warranties made by Seller herein shall be
continuing and shall be deemed to be made by Seller as of the Closing Date
with the same force and effect as if made at and as of that time. All
representations, and warranties made by Seller herein shall survive Closing
for a period of one (1) year. Seller shall indemnify and hold Purchaser
free and harmless from and against all losses, costs, damages and expenses
of every kind and nature whatsoever (including reasonable attorneys' fees
and costs) sustained by Purchaser as a result of any breach of any
representation or warranty made by Seller in this Agreement.
(b) The representations and warranties made by Purchaser herein shall
be continuing and shall be deemed to be made by Purchaser as of the Closing
Date with the same
10
<PAGE>
force and effect as if made at and as of that time. All representations and
warranties made by Purchaser herein shall survive Closing for a period of
one (1) year. Purchaser shall indemnify and hold Seller free and harmless
from and against all losses, costs, damages, and expenses of every kind and
nature whatsoever (including reasonable attorneys' fees and costs)
sustained by Seller as a result of any breach of any representation or
warranty made by Purchaser.
ARTICLE VI
Conditions Precedent to the Closing
6.1 Conditions Precedent of Purchaser. Purchaser's obligation to
---------------------------------
consummate the transaction contemplated herein is conditioned upon satisfaction
of each of the following conditions at or prior to the Closing (or such earlier
date as is specified with respect to a particular condition), any one or more of
which conditions precedent may be waived by Purchaser in Purchaser's sole
discretion:
(a) All representations of Seller set forth in Section 5.1 shall be
true, correct and complete in all material respects as of the Effective
Date and shall be true, correct and complete in all material respects as of
the Closing Date.
(b) Seller shall have performed in all material respects all
obligations required to be performed by Seller hereunder prior to or in
connection with the Closing.
(c) Purchaser shall have acquired all of the issued and outstanding
shares of capital stock of Toyota West Sales and Service, Inc., a Nevada
corporation, and Douglas Toyota Sales and Service, Inc., a Colorado
corporation, under that certain Stock Purchase Agreement dated January 23,
1997, by and between Purchaser and Seller.
6.2. Conditions Precedent of Seller. Seller's obligation to consummate the
------------------------------
transaction contemplated herein is conditioned upon satisfaction of each of the
following conditions at or prior to the Closing (or such earlier date as is
specified with respect to a particular condition), any one or more of which
conditions precedent may be waived by Seller in Seller's sole discretion:
(a) All representations of Purchaser set forth in Section 5.3 shall
be true, correct and complete in all material respects as of the Effective
Date and shall be true, correct and complete in all material respects as of
the Closing Date; and
(b) Purchaser shall have performed in all material respects all
obligations required to be performed by Purchaser hereunder prior to or in
connection with the Closing.
(c) Purchaser shall have acquired all of the issued and outstanding
shares of capital stock of Toyota West Sales and Service, Inc., a Nevada
corporation, and Douglas Toyota Sales and Service, Inc., a Colorado
corporation, under that certain Stock Purchase Agreement dated January 23,
1997, by and between Purchaser and Seller.
11
<PAGE>
ARTICLE VII
DEFAULT
7.1 Default by Purchaser. In the event that Purchaser fails to consummate
--------------------
this Agreement for any reason, except Seller's default or the permitted
termination of this Agreement by either Seller or Purchaser as herein expressly
provided, Seller shall be entitled, as its sole remedy, to terminate this
Agreement. In the event that Purchaser closes under this Agreement and then
fails to fully and timely perform any of its other obligations under this
Agreement that survive or are performable after the Closing, Seller may seek all
remedies available at law or in equity.
7.2 Default by Seller. In the event that Seller fails to consummate this
-----------------
Agreement for any reason, except Purchaser's default or the permitted
termination of this Agreement by Seller or Purchaser as herein expressly
provided, or in the event that, at the Closing, any of Seller's representations,
warranties, or covenants contained herein is not true or has been breached in
any material respect, Purchaser shall be entitled, as its exclusive remedies,
either (i) to terminate this Agreement by giving written notice thereof to
Seller, whereupon neither party shall have any further rights or obligations
under this Agreement, or (ii) to enforce specific performance of Seller's
obligations under this Agreement; provided, however, if Seller's default is such
that specific performance cannot be granted as a judicial remedy, then Purchaser
may seek any and all other remedies available at law or in equity. In the event
Purchaser closes under this Agreement and then Seller fails to fully perform any
of its other obligations under this Agreement that survive or are performable
after the Closing, Purchaser may seek all remedies available at law or in
equity.
ARTICLE VIII
RISK OF LOSS
8.1 Minor Damage. In the event of loss or damage to the Property or any
------------
portion thereof (the "premises in question") which is not "major" (as
hereinafter defined), this Agreement shall remain in full force and effect
provided Seller performs any necessary repairs or, at Seller's option, reduces
the cash portion of the Purchase Price in an amount equal to the cost of such
repairs, Seller thereby retaining all of Seller's right, title and interest to
any claims and proceeds Seller may have with respect to any casualty insurance
policies or condemnation awards relating to the premises in question. In the
event that Seller elects to perform repairs upon the Property, Seller shall use
reasonable efforts to complete such repairs promptly and the date of Closing
shall be extended a reasonable time (but in no event more than thirty (30) days)
in order to allow for the completion of such repairs.
8.2 Major Damage. In the event of a "major" loss or damage, Purchaser may
------------
terminate this Agreement by written notice to Seller.. If Purchaser does not
send written notice to Seller that Purchaser has elected to proceed with Closing
within ten (10) days after Seller sends Purchaser written notice of the
occurrence of major loss or damage, then Purchaser shall be deemed to have
elected to terminate this Agreement. If Purchaser sends notice to Seller within
such ten (10) day period that Purchaser desires to proceed with Closing, this
Agreement shall remain in effect, provided that the Purchase Price shall be
reduced by an amount equal to the cost of repairing the Property to its
condition prior to the occurrence of the major loss or damage. Upon Closing,
full risk of loss with
12
<PAGE>
respect to the Property shall pass to Purchaser. For purposes of Sections 8.1
and 8.2, "major" loss or damage refers to the following: (i) loss or damage,
including (without limitation) environmental damage, to the Property or any
portion thereof such that the cost of repairing, restoring, or remediating the
premises in question to a condition substantially identical to that of the
premises in question prior to the event of damage would be, in the certified
opinion of a mutually acceptable appraiser, equal to or greater than One Million
Dollars ($1,000,000), and (ii) any loss due to a condemnation.
ARTICLE IX
COMMISSIONS
9.1 Brokerage Commissions. Each party represents to the other party that
---------------------
it has not used a broker in connection with the Transaction contemplated by this
Agreement. Each party further agrees that should any claim be made for
brokerage commissions or finder's fees by any broker or finder by, through or on
account of any acts of said party or its representatives, said party will hold
the other party free and harmless from and against any and all loss, liability,
cost, damage and expense in connection therewith. The provisions of this
paragraph shall survive Closing.
ARTICLE X
MISCELLANEOUS
10.1 Effective Date. The date of delivery to the Title Company of a fully
--------------
executed counterpart of this Agreement, as evidenced by the Title Company's
notation in the space set forth below, shall be deemed the effective date of
this Agreement (the "Effective Date").
10.2 Title Policy or Abstract. Purchaser is hereby given notice that it
------------------------
should have an attorney examine an abstract of title to the property being
purchased or obtain a title insurance policy.
10.3 Notices. Any notice pursuant to this Agreement shall be given in
-------
writing by (a) personal delivery, or (b) expedited delivery service with proof
of delivery, or (c) United States Mail, postage prepaid, registered or certified
mail, return receipt requested, or (d) prepaid telegram, telex or telecopy sent
to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designated by written notice sent in accordance herewith, and shall be deemed to
have been given either at the time of personal delivery, or, in the case of
expedited delivery service or mail, as of the date of first attempted delivery
at the address and in the manner provided herein, or, in the case of telegram,
telex or telecopy upon receipt. Unless changed in accordance with the preceding
sentence, the addresses for notices given pursuant to this Agreement shall be as
follows:
If to Seller: RDS, Inc.
------------- c/o R. Douglas Spedding
4380 E. Alameda Avenue
Glendale, Colorado 80222
13
<PAGE>
WITH A COPY TO: BURG & ELDREDGE, P.C.
40 Inverness East
Englewood, Colorado 80112
Attn: Michael S. Burg
If to Purchaser: Cross-Continent Auto Retailers, Inc.
---------------- 1201 S. Taylor
Amarillo, Texas 79101
Attn: Robert W. Hall
WITH A COPY TO: SPROUSE, MOZOLA, SMITH & ROWLEY, P.C.
P.O. Box 15008
Amarillo, Texas 79105-5008
Attn: R. Wayne Moore
10.4 Calculation of Time Periods. Unless otherwise specified, in computing
---------------------------
any period of time described in this Agreement, the day of the act or event
after which the designated period of time begins to run is not to be included
and the last day of the period so computed is to be included, unless such last
day is a Saturday, Sunday or legal holiday under the laws of the State of
Colorado, in which event the period shall run until the end of the next day
which is neither a Saturday, Sunday or legal holiday.
10.5 Time of Essence. Seller and Purchaser agree that time is of the
---------------
essence of this Agreement.
10.6 Successors and Assigns. The terms and provisions of this Agreement
----------------------
are to apply to and bind the successors and assigns of the parties hereto.
10.7 Entire Agreement. This Agreement, including the Exhibits, contains
----------------
the entire agreement between the parties pertaining to the subject matter hereof
and fully supersedes all prior agreements and understandings between the parties
pertaining to such subject matter.
10.8 Further Assurances. Each party agrees that it will without further
------------------
consideration execute and deliver such other documents and take such other
action, whether prior or subsequent to Closing, as may be reasonably requested
by the other party to consummate more effectively the purposes or subject matter
of this Agreement.
10.9 Attorneys' Fees. In the event of any controversy, claim or dispute
---------------
between the parties affecting or relating to the subject matter or performance
of this Agreement, the substantially prevailing
14
<PAGE>
party shall be entitled to recover from the nonprevailing party all of its
reasonable expenses, including reasonable attorneys' fees.
10.10 Counterparts. This Agreement may be executed in several
------------
counterparts, and all such executed counterparts shall constitute the same
agreement. It shall be necessary to account for only one such counterpart in
proving this Agreement.
10.11 Severability. If any provision of this Agreement is determined by a
------------
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement shall nonetheless remain in full force and effect.
10.12 Applicable Law. The construction, enforcement, interpretation, and
--------------
validity of this Agreement shall be governed by the laws of the State of
Colorado. The obligations of the parties are performable and venue for any
legal action arising out of this Agreement shall lie in Potter County, Texas.
10.13 No Third Party Beneficiary. The provisions of this Agreement and of
--------------------------
the documents to be executed and delivered at Closing are and will be for the
benefit of Seller and Purchaser only and are not for the benefit of any third
party, and accordingly, no third party shall have the right to enforce the
provisions of this Agreement or of the documents to be executed and delivered at
Closing.
10.14 Exhibits and Schedules. The following schedules or exhibits
----------------------
attached hereto shall be deemed to be an integral part of this Agreement:
(a) Exhibit A -Legal description of the Land
(b) Exhibit B -Form of Surveyor's Certificate
(c) Exhibit C -Form of Special Warranty Deed
(d) Exhibit D -Form of Bill of Sale and Assignment
(e) Exhibit E -Form of Assignment and Assumption of Contracts
(f) Exhibit F -FIRPTA Affidavit
(g) Exhibit G -Due Diligence Materials
10.15 Captions. The section headings appearing in this Agreement are for
--------
convenience of reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
10.16 Construction. The parties acknowledge that the parties and their
------------
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any exhibits or amendments hereto.
10.17 Survival of Obligations. To the extent necessary to carry out the
-----------------------
terms and provisions of this Agreement, the obligations and rights arising from
or related to this Agreement shall survive the
15
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Closing and shall not be merged into the various documents executed and
delivered at the time of the Closing.
10.18 Special Taxing Districts. SPECIAL TAXING DISTRICTS MAY BE SUBJECT
------------------------
TO GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY REVENUES PRODUCED FROM ANNUAL
TAX LEVIES ON THE TAXABLE PROPERTY WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN
SUCH DISTRICTS MAY BE PLACED AT RISK FOR INCREASED MILL LEVIES AND EXCESSIVE TAX
BURDENS TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES ARISE
RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE SUCH INDEBTEDNESS
WITHOUT SUCH AN INCREASE IN MILL LEVIES. BUYER SHOULD INVESTIGATE THE DEBT
FINANCING REQUIREMENTS OF THE AUTHORIZED GENERAL OBLIGATION INDEBTEDNESS OF SUCH
DISTRICTS, EXISTING MILL LEVIES OF SUCH DISTRICT SERVICING SUCH INDEBTEDNESS,
AND THE POTENTIAL FOR AN INCREASE IN SUCH MILL LEVIES.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement to
be effective as of the Effective Date.
SELLER:
Executed by Seller RDS, INC., a Colorado corporation
this 23rd day of /s/ R. DOUGLAS SPEDDING,
January, 1997 --------------------------------------
R. Douglas Spedding, President
PURCHASER:
Executed by Purchaser CROSS-CONTINENT AUTO RETAILERS, INC.,
this 23rd day of a Delaware corporation
January, 1997
By: /s/ BILL GILLILAND
-----------------------------------
Name: Bill Gilliland
---------------------------------
Title: Chairman of the Board and
Chief Executive Officer
-------------------------------
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<PAGE>
EXHIBIT 2.4
================================================================================
PURCHASE AGREEMENT
BETWEEN
R. DOUGLAS SPEDDING
AS SELLER
AND
CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
AS PURCHASER
As of March 1, 1997
================================================================================
<PAGE>
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is made to be effective as of the
Effective Date (as hereinafter defined) by and between R. DOUGLAS SPEDDING
("SELLER"), AND CROSS-CONTINENT AUTO RETAILERS, INC., a Delaware Corporation
("Purchaser").
WITNESSETH:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement of Purchase and Sale. Subject to the terms and conditions
------------------------------
hereinafter set forth, Seller agrees to sell and convey and Purchaser agrees to
purchase the following:
(a) that certain tract or parcel of land situated in ____________
County, Nevada, more particularly described by metes and bounds on Exhibit
A attached hereto and made a part hereof, together with all and singular
the rights and appurtenances pertaining to such property, including any
right, title and interest of Seller in and to adjacent streets, alleys or
rights-of-way (the property described in clause (a) of this Section 1.1
being herein referred to collectively as the "Land");
(b) all of Seller's right, title and interest in and to (i) all
assignable contracts and agreements relating to the Land or the
improvements to be constructed on the Land; (ii) all licenses, permits,
certificates of occupancy and other consents or approvals from governmental
authorities or private parties which relate to the Land or the improvements
to be constructed on the Land; and (iii) all plans, specifications,
drawings, reports, studies, books, records and other documents pertaining
to the Land or the improvements to be constructed on the Land (the property
described in this Section 1.1(b) being sometimes herein referred to
collectively as the "Intangibles").
1.2 Property Defined. The Land and the Intangibles are hereinafter
----------------
sometimes referred to collectively as the "Property."
1.3. Permitted Exceptions. The Property shall be conveyed subject to the
--------------------
matters which are deemed to be Permitted Exceptions pursuant to Section 2.3
hereof (herein referred to collectively as the "Permitted Exceptions").
1.4 Purchase Price. Seller is to sell and Purchaser is to purchase the
--------------
Property for a total of FIVE MILLION FIVE HUNDRED THOUSAND DOLLARS
($5,500,000.00) (the "Purchase Price").
2
<PAGE>
1.5 Payment of Purchase Price. The Purchase Price shall be payable in
-------------------------
full at Closing in cash or immediately available funds.
1.6 Independent Contract Consideration. Upon the Effective Date hereof,
----------------------------------
Purchaser shall deliver to Seller a check in the amount of Five Hundred and
No/100 Dollars ($500.00) ("Independent Contract Consideration"), which amount
the parties hereby acknowledge and agree has been bargained for and agreed to as
consideration for Seller's execution and delivery of this Agreement. The
Independent Contract Consideration is in addition to and independent of any
other consideration or payment provided in this Agreement, and is nonrefundable
in all events.
ARTICLE II
TITLE AND SURVEY
2.1 Commitment for Title Insurance. Within fifteen (15) days after the
------------------------------
Effective Date, Seller shall deliver to Purchaser and the surveyor described in
Section 2.2 below (a) a current preliminary title report (the "Title Report")
covering the Property, showing all matters affecting title to the Property and
binding the Title Company to issue at Closing an ALTA Owner's Policy of Title
Insurance issued by __________________ (the "Title Company") in the full amount
of the Purchase Price pursuant to Section 2.5 hereof, and (b) legible copies of
all instruments (the "Exception Instruments") referenced in Schedule B and
Schedule C of the Title Report. In addition to the Title Report and the
Exception Instruments, Seller shall deliver, at its own expense, a copy of the
most current tax certificate covering the Property.
2.2 Survey. Within ten (10) days after the Effective Date, Seller shall,
------
at Seller's expense, furnish to Purchaser a current Survey (the "Survey") of the
Property prepared by a reputable surveyor or surveying firm licensed by the
State of Nevada. The Survey shall (a) locate all easements (whether of record
or apparent from an inspection of the Property) and rights of way on or adjacent
to the Property (identified by recording data, if applicable), (b) show any
improvements on the Land and the dimensions thereof, (c) show the location and
size of all streets (existing or proposed) on or adjacent to the Property, (d)
show any encroachments or protrusions, railroads, rivers, creeks, or other water
courses, fences, utilities (including size and location), and other matters
located on or affecting the Property (and any recording information relating
thereto), (e) set forth the number of square feet comprising the Property,
together with a legal description of the boundaries of the Property by metes and
bounds, (f) certify that the Property does not lie within the 100-year flood
plain as established by the U.S. Army Corps of Engineers, (g) contain a
certification by the surveyor in the form of Exhibit B attached hereto, and (h)
in general, comply with the highest standards of surveyors in the State of
Nevada. Unless otherwise agreed by Seller and Purchaser, the metes and bounds
description contained in the Survey shall be the legal description employed in
the documents of conveyance of the Property. The Survey shall be certified to
Purchaser and the Title Company.
2.3 Title Review Period. After receipt of the last of the Title Report,
-------------------
legible copies of the Exception Instruments, and the Survey, Purchaser shall
have a period of five (5) days to review the state of Seller's title to the
Property (the "Title Review Period"). If the Survey, the Title Report or the
3
<PAGE>
Exception Instruments reflect or disclose any defects, exceptions, or other
matters affecting the Property ("Title Defects") that render or will render the
Property unmerchantable or that materially, adversely affect or will affect the
operation of the Property in accordance with its proposed use as an automobile
dealership location, then prior to the expiration of the Title Review Period,
Purchaser may provide Seller with written notice of its objections, and Seller
shall have five (5) days (the "Cure Period") from the date of the notice to
remove or cure any Title Defects to the satisfaction of Purchaser, but shall
not be required to institute litigation. If Seller does not cure any or all of
the Title Defects within the Cure Period, Seller shall notify Purchaser in
writing, prior to the expiration of the Cure Period, of its failure to cure such
Title Defects, and Purchaser may, prior to the later of (a) five (5) business
days after receipt of Seller's notice of its failure to cure, or (b) the
expiration of the Inspection Period (hereinafter defined) either (i) terminate
this Agreement by written notice delivered to Seller, or (ii) elect to waive any
uncured Title Defect. If Purchaser fails to terminate the Agreement by written
notice delivered to Seller prior to the expiration of the time period referenced
in the immediately preceding sentence, then any Title Defects that Seller has
not cured shall be deemed waived by Purchaser. If Purchaser shall fail to notify
Seller in writing of any objections to the state of Seller's title to the
Property as shown by the Title Report, the Exception Instruments or the Survey,
or if Purchaser elects to waive all or any of the Title Defects, or is deemed to
have waived all or any of the Title Defects, then any exceptions to Seller's
title to which Purchaser has not objected or which have been objected to and
waived by Purchaser and which are disclosed by the Title Report shall be
considered to be "Permitted Exceptions". If Purchaser terminates this Agreement
pursuant to this section, then neither Seller nor Purchaser shall have any
further rights or obligations under this Agreement.
2.4 Obligation to Cure Liens. Notwithstanding anything to the contrary
------------------------
contained in this Article II, if at Closing there are any mechanic's or
materialmen's liens or mortgages, deeds of trust or other instruments creating a
lien against all or any part of the Property (collectively, "Liens"), Seller
shall discharge the same of record and apply such portions of the Purchase Price
or Seller's funds as may be necessary to accomplish the same.
2.5 Owner's Policy of Title Insurance. At Closing, Seller shall cause the
---------------------------------
Title Company to issue to Purchaser, at Seller's expense, an ALTA Owner's Policy
of Title Insurance (the "Title Policy") covering the Property, in the full
amount of the Purchase Price, insuring that Purchaser is the owner of good and
indefeasible fee simple title to the Property, subject only to the Permitted
Exceptions, without Schedule B printed exceptions, together with such
endorsements as Purchaser reasonably requests. In addition, any reference to
submitting claims under the Title Policy to arbitration shall be deleted.
ARTICLE III
INSPECTION PERIOD
3.1 Right of Inspection. During the period beginning upon the Effective
-------------------
Date and ending at 5 p.m., Las Vegas, Nevada time, on the thirtieth (30th) day
following the Effective Date (hereinafter referred to as the "Inspection
Period"), Purchaser shall have the right to make a physical inspection of the
Property, to conduct tests thereon (including specifically, without limitation,
environmental tests and soil borings), to review the Due Diligence Materials
(hereinafter defined), the Environmental Site
4
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Audit (hereinafter defined) and all other books, records and documents
maintained by Seller relating to the Property, and to make inquiries to
governmental authorities and other appropriate parties, so as to determine, in
the reasonable discretion of Purchaser, whether any condition, activity, or
event has occurred, exists, or will occur or exist (a) that affects or will
affect the Property and for which there is any material risk of loss or
liability for the owner of the Property, or (b) that materially, adversely
affects or will affect the operation of the Property in accordance with its
proposed use as an automobile dealership location. Purchaser agrees to indemnify
and hold Seller harmless of and from any claim for physical damages or physical
injuries arising from Purchaser's inspection of the Property, and
notwithstanding anything to the contrary in this Agreement, such obligation to
indemnify shall survive Closing or any termination of this Agreement. All
inspections shall occur at reasonable times and shall be conducted so as not to
unreasonably interfere with use of the Property by Seller or its tenants.
3.2 Right of Termination. Seller agrees that in the event Purchaser
--------------------
determines, in Purchaser's reasonable discretion, that any condition, activity,
or event has occurred, exists, or will occur or exist (a) that affects or will
affect the Property and for which there is any material risk of loss or
liability for the owner of the Property, or (b) that materially, adversely
affects or will affect the operation of the Property in accordance with its
proposed use as an automobile dealership location, then Purchaser shall have the
right to terminate this Agreement by sending written notice thereof (hereinafter
referred to as the "Notice of Termination") to Seller prior to the expiration of
the Inspection Period. Upon delivery by Purchaser of such Notice of Termination
within the Inspection Period, this Agreement shall terminate. If Purchaser fails
to send Seller a Notice of Termination prior to the expiration of the Inspection
Period, Purchaser shall no longer have any right to terminate this Agreement
under this Article III.
ARTICLE IV
CLOSING
4.1 Time and Place. Unless otherwise mutually agreed in writing between
--------------
Seller and Purchaser, the Closing of the transaction contemplated hereby
("Closing") shall be held at the offices of the Title Company on March 1, 1997,
or such other date as Purchaser and Seller shall mutually agree, (the "Closing
Date"). At Closing, Seller and Purchaser shall perform the obligations set
forth in, respectively, Section 4.2 and Section 4.3, the performance of which
obligations shall be concurrent conditions.
4.2 Seller's Obligations at Closing. At Closing, Seller shall:
-------------------------------
(a) deliver to Purchaser a Special Warranty Deed (the "Deed") in the
form of Exhibit C attached hereto and made a part hereof, executed and
acknowledged by Seller and in recordable form, conveying the Land to
Purchaser, subject only to the Permitted Exceptions;
(b) deliver to Purchaser a Bill of Sale and Assignment (the "Bill of
Sale") in the form of Exhibit D attached hereto and made a part hereof,
executed and acknowledged by Seller and in recordable form;
5
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(c) join with Purchaser in the execution and acknowledgment of an
Assignment and Assumption of Contracts (the "Assignment of Contracts") in
the form of Exhibit E attached hereto and made a part hereof;
(d) deliver to Purchaser a FIRPTA Affidavit in the form of Exhibit F
attached hereto and made a part hereof, duly executed by Seller;
(e) deliver to Purchaser a "bills paid affidavit" verifying that
there are no unpaid bills, expenses or claims with respect to the Property
and indemnifying Purchaser from any loss, liability or expense resulting
from or incident to any such matters;
(f) deliver to Purchaser such evidence as Purchaser's counsel and/or
the Title Company may reasonably require as to the authority of the person
or persons executing documents on behalf of Seller;
(g) deliver to Purchaser possession and occupancy of the Property,
subject to the Permitted Exceptions;
(h) deliver to Purchaser an Owner's Policy of Title Insurance
pursuant to Section 2.5 hereof.
4.3 Purchaser's Obligations at Closing. At Closing, Purchaser shall:
----------------------------------
(a) pay to Seller the amount of the Purchase Price in cash or
immediately available wire transferred funds;
(b) join Seller in execution of the instrument described in Sections
4.2(c) above;
(c) deliver to Seller such evidence as Seller's counsel and/or the
Title Company may reasonably require as to the authority of the person or
persons executing documents on behalf of Purchaser.
4.4 Credits and Prorations. The following provisions shall govern the
----------------------
apportionment of income and expenses with respect to the Property between Seller
and Purchaser:
(a) Real estate taxes shall be prorated between Seller and Purchaser
at Closing. If the Closing shall occur before the amount of taxes is
fixed, the apportionment of taxes shall be made based upon one hundred five
percent (105%) of the tax rate for the preceding year, applied to the
latest assessed valuation of the Property. Upon receipt of the actual tax
bill for the Property, the proration of taxes made at Closing shall be
subject to adjustment pursuant to Section 4.4(d) below.
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(b) Seller shall arrange for final meter readings on all utilities at
the Property to be taken on the day preceding Closing. Seller shall be
responsible for the payment of utilities used through the day preceding the
Closing Date and Seller shall be responsible for the payment of utilities
used on or after the Closing Date. With respect to any utility for which
there is no meter, the expenses for such utility shall be prorated between
Seller and Purchaser at Closing based upon the most current bill for such
utility. Any deposits for utilities shall inure to the benefit of and be
deemed assigned to Purchaser. Seller and Purchaser shall cooperate to cause
the transfer of utility company accounts from Seller to Purchaser.
(c) If Purchaser elects to accept a transfer to Seller's insurance
coverage on the Property (which election may be made at Purchaser's sole
discretion), the insurance premium for such insurance coverage shall be
prorated between Seller and Purchaser at Closing.
(d) The prorations described in this Section 4.4 shall be made as of
12:01 a.m. on the Closing Date, as if Purchaser were vested with title to
the Property during the entire day upon which Closing occurs. All
prorations described in this Section 4.4 shall be effected by increasing or
decreasing, as the case may be, the amount of cash to be paid by Purchaser
to Seller at Closing. Seller and Purchaser agree to adjust between
themselves after Closing any errors or omissions in the prorations made at
Closing; provided, however, that such prorations shall be deemed final and
not subject to further post Closing adjustments if no such adjustments have
been requested within one hundred twenty (120) after the Closing Date.
4.5 Closing Costs. Seller shall pay (a) the fees of any counsel
-------------
representing it in connection with this transaction; (b) the cost of the Title
Policy (specifically including the cost of modifying the survey exception); (c)
the cost of the Survey; (d) the fees for recording the deed conveying the
Property to Purchaser; and (e) one-half (1/2) of any escrow fee which may be
charged by the Title Company. Purchaser shall pay (y) the fees of any counsel
representing Purchaser in connection with this transaction; and (z) one-half
(1/2) of any escrow fees charged by the Title Company. All other costs and
expenses incident to this transaction and the closing thereof shall be paid by
the party incurring same.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 Representations and Warranties of Seller. Seller hereby represents
----------------------------------------
and warrants to Purchaser as follows:
(a) Seller has the full right, power and authority to enter into this
Agreement and to perform all of its obligations under this Agreement, and
the execution and delivery of this Agreement and the performance by Seller
of its obligations under this Agreement
7
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require no further action or approval of Seller's partners or of any other
person in order to constitute this Agreement as a binding and enforceable
obligation of Seller.
(b) To the best of Seller's knowledge, the Property is not in
violation of any governmental order, regulation, statute, code or
ordinance, and all existing zoning and building codes and other applicable
laws and governmental regulations will permit the operation of the Property
in accordance with its proposed usage.
(c) To the best of Seller's knowledge, there has been no written
demand by any mortgagee, insurance underwriter or governmental authority
for work to be done or other action to be taken by Seller which has not
been complied with to the satisfaction of the entity making such demand. To
the best of Seller's knowledge, no defect or condition exists with respect
to the Property which would adversely affect the insurability of the
Property.
(d) There is no pending condemnation, expropriation, eminent domain,
litigation, administrative action or other legal proceeding affecting all
or any portion of the Property, and Seller has not received any written or
oral notice of any of the same and has no knowledge that any such
proceeding is contemplated.
(e) To the best of Seller's knowledge, all obligations of Seller
arising from the ownership of the Property, including but not limited to
taxes, assessments, charges, and other costs and expenses, have been paid
as they became due or will be paid at or prior to Closing. Except for
obligations for which provisions are herein made for proration or other
adjustment at Closing, there will be no obligations of Seller with respect
to the Property outstanding as of the Closing Date.
(f) No person, firm or entity, other than Purchaser has any right to
acquire the Property or any part thereof.
(g) This Agreement and the conveyance of the Property will not cause
to be imposed on Purchaser any liability to withhold any amount pursuant to
Section 1445 of the Internal Revenue Code or the implementing regulations.
(h) To the best of Seller's knowledge, Seller has not disposed of or
otherwise released or allowed to be released any hazardous or toxic
substances, petroleum products, chemicals, or wastes of any kind on, in, or
under the Property, including any surface waters or groundwater located on
such Property, nor has Seller caused or allowed to be released or
discharged any hazardous or toxic substances, petroleum products,
chemicals, or wastes of any kind on, in, or under any tracts in proximity
to the Property, including the surface or groundwaters thereof. To the best
of Seller's knowledge, there are no hazardous or toxic substances,
petroleum products, chemicals, or wastes on, in, or under the Property,
including surface or groundwaters, regardless of source or cause, and there
are no underground storage tanks on the Property.
8
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(i) To the best of Seller's knowledge, all licenses, permits,
certificates of occupancy and other consents or approvals from governmental
authorities or private parties which relate to the Land or the improvements
to be constructed on the Land are assignable.
5.2 Covenants of Seller. Seller hereby covenants with Purchaser as
-------------------
follows:
(a) Within twenty (20) days after the Effective Date, Seller shall
deliver to Purchaser the documents and other items (the "Due Diligence
Materials") listed on Exhibit G attached hereto and made a part hereof.
(b) Within thirty (30) days after the Effective Date, Seller shall
deliver to Purchaser a Phase I Environmental Site Audit (the "Environmental
Site Audit") of the Property prepared by a reputable environmental
engineering firm licensed by the State of Nevada.
(c) So long as this Agreement remains in effect, Purchaser will be
allowed access to the Property and the books and records related to the
Property under the terms and conditions set forth in Section 3.1 hereof.
(d) Seller shall not enter into any other contract (or an extension
or modification of any other contract) with respect to the Property which
will survive the Closing or otherwise affect the use, operation or
enjoyment of the Property after the Closing, without first obtaining
Purchaser's prior written consent thereof.
(e) After the date hereof and prior to Closing, no part of the
Property, nor any interest therein, will be alienated, liened, encumbered
or otherwise transferred.
(f) Pending Closing, Seller shall manage the Property in a normal
businesslike manner, maintaining present services and insurance policies,
and shall perform when due, all of Seller's obligations under any contracts
affecting the Property and otherwise in accordance with applicable laws,
ordinances, rules and regulations affecting the Property. Seller shall
remedy any violation of any law, ordinance, order or other requirement of
any governmental authority having jurisdiction over or affecting all or any
part of the Property. Seller shall deliver the Property at Closing in
substantially the same condition as it was on the Effective Date,
reasonable wear and tear excepted.
(g) Seller has paid or will pay in full, prior to Closing, all bills
and invoices for labor, goods, materials and services of any kind with
respect to the Property and utility charges relating to the period prior to
Closing.
(h) Seller shall promptly notify Purchaser of any change in any
condition with respect to the Property or of any event or circumstance
which makes any representation or
9
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warranty of Seller to Purchaser under this Agreement untrue or misleading,
or any covenant of Seller under this Agreement incapable of being
performed;
(i) With respect to any existing or potential liability arising out
of any condition, activity, or event existing or occurring prior to the
Closing Date with respect to the Property for which there is any material
risk of liability to any governmental entity or agency or any other person
or entity for the violation of any environmental law or for which there may
be liability in tort, or otherwise, and which is related to or arises out
of an environmental condition, the Seller agrees that Seller shall
indemnify, defend, and hold harmless the Purchaser from and against all
claims, damages, liabilities, penalties, actions, suits, proceedings,
demands, assessments, costs and expenses, including reasonable attorneys'
fees and expenses of investigation, incurred by Purchaser as a result of
such environmental condition and further including, if necessary, the costs
and expenses of any remediation, transportation, incineration, treatment,
or other necessary and appropriate disposition or mitigation of such
environmental condition. In the event that any claim relating to a
violation of environmental laws shall arise, Seller, upon notice from
Purchaser, shall have the first right to address and implement remediation
of the environmental condition. In no event shall Seller=s obligation
hereunder exceed $1,000,000. The limitation set forth herein is subject to
and part of the terms, conditions and limitations set forth in Section
15(k) of the Stock Purchase Agreement between Purchaser and Seller of even
date herewith.
5.3 Representations and Warranty of Purchaser. Purchaser hereby
-----------------------------------------
represents and warrants to Seller as follows:
(a) Purchaser has the full right, power and authority to enter into
this Agreement and to carry out Purchaser's obligations hereunder, and to
perform all of its obligations under this Agreement, and the execution and
delivery of this Agreement and the performance by Purchaser of its
obligations under this Agreement requires no further action or approval of
Purchaser's partners or of any other person in order to constitute this
Agreement as a binding and enforceable obligation of Purchaser.
5.4 Survival of Representations and Warranties. Seller and Purchaser
------------------------------------------
agree as follows:
(a) The representations and warranties made by Seller herein shall be
continuing and shall be deemed to be made by Seller as of the Closing Date
with the same force and effect as if made at and as of that time. All
representations, and warranties made by Seller herein shall survive Closing
for a period of one (1) year. Seller shall indemnify and hold Purchaser
free and harmless from and against all losses, costs, damages and expenses
of every kind and nature whatsoever (including reasonable attorneys' fees
and costs) sustained by Purchaser as a result of any breach of any
representation, or warranty made by Seller in this Agreement.
(b) The representations and warranties made by Purchaser herein shall
be continuing and shall be deemed to be made by Purchaser as of the Closing
Date with the same
10
<PAGE>
force and effect as if made at and as of that time. All representations and
warranties made by Purchaser herein shall survive Closing for a period of
one (1) year. Purchaser shall indemnify and hold Seller free and harmless
from and against all losses, costs, damages, and expenses of every kind and
nature whatsoever (including reasonable attorneys' fees and costs)
sustained by Seller as a result of any breach of any representation or
warranty made by Purchaser.
ARTICLE VI
Conditions Precedent to the Closing
6.1 Conditions Precedent of Purchaser. Purchaser's obligation to
---------------------------------
consummate the transaction contemplated herein is conditioned upon satisfaction
of each of the following conditions at or prior to the Closing (or such earlier
date as is specified with respect to a particular condition), any one or more of
which conditions precedent may be waived by Purchaser in Purchaser's sole
discretion:
(a) All representations of Seller set forth in Section 5.1 shall be
true, correct and complete in all material respects as of the Effective
Date and shall be true, correct and complete in all material respects as of
the Closing Date.
(b) Seller shall have performed in all material respects all
obligations required to be performed by Seller hereunder prior to or in
connection with the Closing.
(c) Purchaser shall have acquired all of the issued and outstanding
shares of capital stock of Toyota West Sales and Service, Inc., a Nevada
corporation, and Douglas Toyota Sales and Service, Inc., a Colorado
corporation, under that certain Stock Purchase Agreement dated January 23,
1997, by and between Purchaser and Seller.
6.2. Conditions Precedent of Seller. Seller's obligation to consummate the
------------------------------
transaction contemplated herein is conditioned upon satisfaction of each of the
following conditions at or prior to the Closing (or such earlier date as is
specified with respect to a particular condition), any one or more of which
conditions precedent may be waived by Seller in Seller's sole discretion:
(a) All representations of Purchaser set forth in Section 5.3 shall
be true, correct and complete in all material respects as of the Effective
Date and shall be true, correct and complete in all material respects as of
the Closing Date; and
(b) Purchaser shall have performed in all material respects all
obligations required to be performed by Purchaser hereunder prior to or in
connection with the Closing.
(c) Purchaser shall have acquired all of the issued and outstanding
shares of capital stock of Toyota West Sales and Service, Inc., a Nevada
corporation, and Douglas Toyota Sales and Service, Inc., a Colorado
corporation, under that certain Stock Purchase Agreement dated January 23,
1997, by and between Purchaser and Seller.
11
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ARTICLE VII
DEFAULT
7.1 Default by Purchaser. In the event that Purchaser fails to consummate
--------------------
this Agreement for any reason, except Seller's default or the permitted
termination of this Agreement by either Seller or Purchaser as herein expressly
provided, Seller shall be entitled, as its sole remedy, to terminate this
Agreement. In the event that Purchaser closes under this Agreement and then
fails to fully and timely perform any of its other obligations under this
Agreement that survive or are performable after the Closing, Seller may seek all
remedies available at law or in equity.
7.2 Default by Seller. In the event that Seller fails to consummate this
-----------------
Agreement for any reason, except Purchaser's default or the permitted
termination of this Agreement by Seller or Purchaser as herein expressly
provided, or in the event that, at the Closing, any of Seller's representations,
warranties, or covenants contained herein is not true or has been breached in
any material respect, Purchaser shall be entitled, as its exclusive remedies,
either (i) to terminate this Agreement by giving written notice thereof to
Seller, whereupon neither party shall have any further rights or obligations
under this Agreement, or (ii) to enforce specific performance of Seller's
obligations under this Agreement; provided, however, if Seller's default is such
that specific performance cannot be granted as a judicial remedy, then Purchaser
may seek any and all other remedies available at law or in equity. In the event
Purchaser closes under this Agreement and then Seller fails to fully perform any
of its other obligations under this Agreement that survive or are performable
after the Closing, Purchaser may seek all remedies available at law or in
equity.
ARTICLE VIII
RISK OF LOSS
8.1 Minor Damage. In the event of loss or damage to the Property or any
------------
portion thereof (the "premises in question") which is not "major" (as
hereinafter defined), this Agreement shall remain in full force and effect
provided Seller performs any necessary repairs or, at Seller's option, reduces
the cash portion of the Purchase Price in an amount equal to the cost of such
repairs, Seller thereby retaining all of Seller's right, title and interest to
any claims and proceeds Seller may have with respect to any casualty insurance
policies or condemnation awards relating to the premises in question. In the
event that Seller elects to perform repairs upon the Property, Seller shall use
reasonable efforts to complete such repairs promptly and the date of Closing
shall be extended a reasonable time (but in no event more than thirty (30) days)
in order to allow for the completion of such repairs.
8.2 Major Damage. In the event of a "major" loss or damage, Purchaser may
------------
terminate this Agreement by written notice to Seller. If Purchaser does not
send written notice to Seller that Purchaser has elected to proceed with Closing
within ten (10) days after Seller sends Purchaser written notice of the
occurrence of major loss or damage, then Purchaser shall be deemed to have
elected to terminate this Agreement. If Purchaser sends notice to Seller within
such ten (10) day period that Purchaser desires to proceed with Closing, this
Agreement shall remain in effect, provided that the Purchase Price shall be
reduced by an amount equal to the cost of repairing the Property to its
condition prior to the occurrence of the major loss or damage. Upon Closing,
full risk of loss with
12
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respect to the Property shall pass to Purchaser. For purposes of Sections 8.1
and 8.2, "major" loss or damage refers to the following: (i) loss or damage,
including (without limitation) environmental damage, to the Property or any
portion thereof such that the cost of repairing, restoring or remediating the
premises in question to a condition substantially identical to that of the
premises in question prior to the event of damage would be, in the certified
opinion of a mutually acceptable appraiser, equal to or greater than One Million
Dollars ($1,000,000), and (ii) any loss due to a condemnation.
ARTICLE IX
COMMISSIONS
9.1 Brokerage Commissions. Each party represents to the other party that
---------------------
it has not used a broker in connection with the transaction contemplated by this
Agreement. Each party further agrees that should any claim be made for
brokerage commissions or finder's fees by any broker or finder by, through or on
account of any acts of said party or its representatives, said party will hold
the other party free and harmless from and against any and all loss, liability,
cost, damage and expense in connection therewith. The provisions of this
paragraph shall survive Closing.
ARTICLE X
MISCELLANEOUS
10.1 Effective Date. The date of delivery to the Title Company of a fully
--------------
executed counterpart of this Agreement, as evidenced by the Title Company's
notation in the space set forth below, shall be deemed the effective date of
this Agreement (the "Effective Date").
10.2 Title Policy or Abstract. Purchaser is hereby given notice that it
------------------------
should have an attorney examine an abstract of title to the property being
purchased or obtain a title insurance policy.
10.3 Notices. Any notice pursuant to this Agreement shall be given in
-------
writing by (a) personal delivery, or (b) expedited delivery service with proof
of delivery, or (c) United States Mail, postage prepaid, registered or certified
mail, return receipt requested, or (d) prepaid telegram, telex or telecopy sent
to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designated by written notice sent in accordance herewith, and shall be deemed to
have been given either at the time of personal delivery, or, in the case of
expedited delivery service or mail, as of the date of first attempted delivery
at the address and in the manner provided herein, or, in the case of telegram,
telex or telecopy upon receipt. Unless changed in accordance with the preceding
sentence, the addresses for notices given pursuant to this Agreement shall be as
follows:
If to Seller: R. Douglas Spedding
------------- 4380 E. Alameda Avenue
Glendale, Colorado 80222
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WITH A COPY TO: Burg & Eldredge, P.C.
40 Inverness East
Englewood, Colorado 80112
Attn: Michael S. Burg
If to Purchaser: Cross-Continent Auto Retailers, Inc.
---------------- 1201 S. Taylor
Amarillo, Texas 79101
Attn: Robert W. Hall
WITH A COPY TO: Sprouse, Mozola, Smith & Rowley, P.C.
P.O. Box 15008
Amarillo, Texas 79105-5008
Attn: R. Wayne Moore
10.4 Calculation of Time Periods. Unless otherwise specified, in computing
---------------------------
any period of time described in this Agreement, the day of the act or event
after which the designated period of time begins to run is not to be included
and the last day of the period so computed is to be included, unless such last
day is a Saturday, Sunday or legal holiday under the laws of the State of
Nevada, in which event the period shall run until the end of the next day which
is neither a Saturday, Sunday or legal holiday.
10.5 Time of Essence. Seller and Purchaser agree that time is of the
---------------
essence of this Agreement.
10.6 Successors and Assigns. The terms and provisions of this Agreement
----------------------
are to apply to and bind the successors and assigns of the parties hereto.
10.7 Entire Agreement. This Agreement, including the Exhibits, contains
----------------
the entire agreement between the parties pertaining to the subject matter hereof
and fully supersedes all prior agreements and understandings between the parties
pertaining to such subject matter.
10.8 Further Assurances. Each party agrees that it will without further
------------------
consideration execute and deliver such other documents and take such other
action, whether prior or subsequent to Closing, as may be reasonably requested
by the other party to consummate more effectively the purposes or subject matter
of this Agreement.
10.9 Attorneys' Fees. In the event of any controversy, claim or dispute
---------------
between the parties affecting or relating to the subject matter or performance
of this Agreement, the substantially prevailing party shall be entitled to
recover from the nonprevailing party all of its reasonable expenses, including
reasonable attorneys' fees.
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10.10 Counterparts. This Agreement may be executed in several
------------
counterparts, and all such executed counterparts shall constitute the same
agreement. It shall be necessary to account for only one such counterpart in
proving this Agreement.
10.11 Severability. If any provision of this Agreement is determined by a
------------
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement shall nonetheless remain in full force and effect.
10.12 Applicable Law. The construction, enforcement, interpretation, and
--------------
validity of this Agreement shall be governed by the laws of the State of Nevada.
The obligations of the parties are performable and venue for any legal action
arising out of this Agreement shall lie in Potter County, Texas.
10.13 No Third Party Beneficiary. The provisions of this Agreement and of
--------------------------
the documents to be executed and delivered at Closing are and will be for the
benefit of Seller and Purchaser only and are not for the benefit of any third
party, and accordingly, no third party shall have the right to enforce the
provisions of this Agreement or of the documents to be executed and delivered at
Closing.
10.14 Exhibits and Schedules. The following schedules or exhibits
----------------------
attached hereto shall be deemed to be an integral part of this Agreement:
(a) Exhibit A - Legal description of the Land
(b) Exhibit B - Form of Surveyor's Certificate
(c) Exhibit C - Form of Special Warranty Deed
(d) Exhibit D - Form of Bill of Sale and Assignment
(e) Exhibit E - Form of Assignment and Assumption of Contracts
(f) Exhibit F - FIRPTA Affidavit
(g) Exhibit G - Due Diligence Materials
10.15 Captions. The section headings appearing in this Agreement are for
--------
convenience of reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
10.16 Construction. The parties acknowledge that the parties and their
------------
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any exhibits or amendments hereto.
10.17 Survival of Obligations. To the extent necessary to carry out the
-----------------------
terms and provisions of this Agreement, the obligations and rights arising from
or related to this Agreement shall survive
15
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the Closing and shall not be merged into the various documents executed and
delivered at the time of the Closing.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement to
be effective as of the Effective Date.
SELLER:
Executed by Seller
this 23rd day of
June, 1997 /s/ R. DOUGLAS SPEEDING
---------------------------------------
R. Douglas Spedding
PURCHASER:
Executed by Purchaser CROSS-CONTINENT AUTO RETAILERS, INC.,
this 23rd day of a Delaware corporation
June, 1997
By: /s/ BILL GILLILAND
------------------------------------
Name: Bill Gilliland
----------------------------------
Title: Chairmand of the Board & CEO
---------------------------------
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EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into this 1st day of April, 1997, by and between Cross-Continent Auto Retailers,
Inc., a Delaware corporation (the "Company"), and R. DOUGLAS SPEDDING (the
"Stockholder").
Introduction
------------
In accordance with the Stock Purchase Agreement dated January 23, 1997 (the
"Stock Purchase Agreement"), by and between the Company and the Stockholder, the
Stockholder is being issued shares of restricted common stock, par value $.01
per share, of the Company (the "Common Stock") in connection with the
consummation of the transactions contemplated thereby.
As a condition to the consummation of the transactions contemplated by the
Stock Purchase Agreement, the Company and the Stockholder are entering into this
Agreement.
The parties hereto agree as follows:
1. Definitions. As used herein, the following terms have the following
respective meanings:
"Commission" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act.
"Distribution Period" means (a) in the case of a distribution of
Registrable Shares in a firm commitment underwritten public offering, the period
of time as each underwriter has completed the distribution of all securities
purchased by it, but in any case not more than 30 days, or (b) in the case of
any other distribution of Registrable Shares, the period ending on the earlier
of (i) the sale of all Registerable Shares covered by such registration, or (ii)
21 days following the effective date of the registration statement utilized in
connection with such registration under the Securities Act.
"Registrable Shares" means(a) on the date hereof, 25% of, and (b) on each
subsequent anniversary of the date hereof, the following cumulative amount of;
the shares of Common Stock issued to the Stockholder pursuant to the Stock
Purchase Agreement, including any additional shares issued as a stock dividend
thereon or any shares issued as the result of a stock split (including reverse
stock split), recapitalization, reorganization, stock exchange or other
combination).
Anniversary Date Cumulative Amount
----------------- -----------------
First 50%
Second 75%
Third 100%
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended.
2. Incidental Registration.
(a) If the Company proposes to register any Common Stock under the
Securities Act (other than on Forms S-4, S-8 or any other form which does not
permit registration of securities by selling stockholders for sale to the public
for cash) in connection with the proposed offer and sale for cash either for its
own account or on behalf of any holder of Common Stock, it will give written
notice to the Stockholder of its intention to do so at least 10 business days
prior to the earliest date on which the Company anticipates that such
registration will be declared effective by the Commission. Upon the
Stockholder's written request to the Company, given within 10 business days
after receipt of any such notice, to register any of such Stockholder's
Registrable Shares, the Company will use reasonable efforts to cause the
Registrable Shares as to which registration shall have been so requested to be
included in the shares of Common Stock to be covered by the registration
statement proposed to be filed by the Company; provided that nothing set forth
in this Agreement shall prevent the Company from, at any time, withdrawing,
abandoning or delaying any registration of such Common Stock.
(b) The Company shall have the sole right to select the underwriter or
underwriters for any underwritten offering, including (without limitation) the
managing underwriter. The managing underwriter for such offering shall have the
authority, in its sole discretion, to reduce the number of Registrable Shares to
be included in such registration if and to the extent that it determines that
inclusion of such Registrable Shares would adversely affect the marketing of the
other Common Stock to be sold thereunder or would limit the number of shares of
Common Stock to be included in such registration by the Company. Any such
reduction in the shares included in any such offering shall be effected (i)
first, by excluding (A) shares ("Piggyback Shares") of Common Stock that
otherwise would be included by virtue of incidental or piggyback registration
rights (but not demand registration rights) granted to stockholders of the
Company (including the Stockholder), and (B) shares ("Executive Shares") of
Common Stock that are beneficially owned by Bill A. Gilliland, Robert W. Hall,
or Emmett M. Rice, Jr. and that otherwise would be included, which exclusion
shall be effected on a pro rata basis based upon the number of shares of Common
Stock so requested to be registered in such offering by all such stockholders
proposing to sell Piggyback Shares or Executive Shares, and (ii) second, only to
the extent necessary and after the exclusion of all Piggyback Shares and
Executive Shares, by excluding shares of Common Stock included in such
registration by the Company and any stockholder of the Company who shall have
exercised a demand registration right in connection with such offering, which
exclusion shall be effected on a pro rata basis based upon the number of shares
of Common Stock proposed to be registered on behalf of the Company and on behalf
of any such holder of demand registration rights.
(c) On any offering that is not underwritten, the Company shall have the
authority, in its sole discretion, to reduce the number of Registrable Shares to
be included in such registration if and to the extent that it determines that
inclusion of such Registrable Shares would
2
<PAGE>
adversely affect the marketing of the other Common Stock to be sold thereunder
or would limit the number of shares of Common Stock to be included in such
registration by the Company. Any such reduction in the shares included in any
such offering shall be effected (i) first, by excluding Piggyback Shares and
Executive Shares, which exclusion shall be effected on a pro rata basis based
upon the number of shares of Common Stock so requested to be registered in such
offering by all such stockholders proposing to sell Piggyback Shares or
Executive Shares, and (ii) second, only to the extent necessary and after the
exclusion of all Piggyback Shares and Executive Shares, by excluding shares of
Common Stock included in such registration by the Company and any stockholder of
the Company who shall have exercised a demand registration right in connection
with such offering, which exclusion shall be effected on a pro rata basis based
upon the number of shares of Common Stock proposed to be registered on behalf of
the Company and on behalf of any such holder of demand registration rights.
(d) If any registration pursuant to this Section 2 shall be underwritten,
in whole or in part, the Company or the managing underwriter or underwriters may
require that the Registrable Shares requested for inclusion pursuant to this
Section 2 be included in the underwriting on the same terms and conditions as
the securities otherwise being sold through the underwriters.
3. Preparation and Filing. If and whenever the Company is under an
obligation pursuant to the provisions of Section 2 to effect the registration of
any Registrable Shares, the Company shall, as expeditiously as practicable:
(a) prepare and diligently pursue the filing with the Commission of a
registration statement with respect to such securities and use reasonable
efforts to cause such registration statement to become and remain effective for
the Distribution Period, but no longer;
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for the
Distribution Period, but no longer;
(c) furnish to the Stockholder such number of copies of a summary
prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as the Stockholder may reasonably request in order to facilitate the public sale
or other disposition of such Registrable Shares;
(d) use reasonable efforts to register or qualify the Registrable Shares
covered by such registration statement under the securities or "blue sky" laws
of such states as the Stockholder shall reasonably request (provided, that the
Company shall not be required to consent to general service of process for all
purposes in any jurisdiction where it is not then qualified) and do any and all
other acts or things which may be necessary or advisable to enable the
Stockholder to consummate the public sale or other disposition in such
jurisdictions of such securities;
3
<PAGE>
(e) notify the Stockholder at any time during the Distribution Period when
a prospectus relating thereto covered by such registration statement is required
to be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and at
the request of such Stockholder, prepare and furnish to such Stockholder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing; and
(f) use reasonable efforts to furnish, at the request of the Stockholder on
the date that such Registrable Shares are delivered to the underwriters for sale
in connection with a registration pursuant to Section 2, if such securities are
being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, stating
that such registration statement has become effective under the Securities Act
and that (A) to the best of such counsel's knowledge, no stop order suspending
the effectiveness thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Securities Act,
(B) the registration statement, the related prospectus, and each amendment or
supplement thereof, comply as to form in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder (except no opinion or statement is required regarding
financial statements and other financial and statistical data), and (C) to such
other matters as may reasonably be requested by counsel for the underwriters, if
any, and (ii) a letter dated such date, from the independent certified public
accountants of the Company, stating that they are independent public accountants
within the meaning of the Securities Act and that, in the opinion of such
accountants, the financial statements of the Company included or incorporated by
reference in the registration statement or the prospectus, or any amendment or
supplement thereof, comply as to form in all material respects with the
applicable accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters with respect to the registration
in respect of which such letter is being given as such underwriters, if any, may
reasonably request.
(g) Notwithstanding anything to the contrary contained herein, the Company
shall have the right to deregister any Registerable Shares that remain unsold at
the conclusion of any Distribution Period.
4. Stockholder's Lock-Up; Cooperation. If any Registrable Shares of the
Stockholder are included in an underwritten registration pursuant to Section 2,
the Stockholder, as a condition to receiving the rights granted hereunder, may
be required to, and if required the Stockholder shall, enter into an agreement
with the managing underwriter or underwriters (a "Lock-up
4
<PAGE>
Agreement"), pursuant to which such Stockholder shall refrain from selling any
shares of Common Stock not included in such registration during the period of
distribution of Common Stock by such underwriters and for a period of up to 180
days following the effective date of such registration. In connection with each
registration pursuant to Section 2 hereof, the Stockholder selling Registrable
Shares shall furnish in writing to the Company and any underwriter participating
in such offering such information with respect to themselves and the proposed
distribution by them as shall be reasonably necessary in order to assure
compliance with Federal and applicable state securities laws.
5. Underwriting Agreement. In connection with each registration pursuant
to Section 2 covering an underwritten public offering, the Company and the
Stockholder agree to enter into a written agreement with the managing
underwriter or underwriters in such form and containing such provisions as are
usual and customary in the securities business for such an arrangement between
reputable underwriters and companies of the Company's size and investment
stature; provided that such agreement shall not contain any such provision
applicable to the Company or the Stockholder which is inconsistent with the
provisions of this Agreement; and provided, further, that the time and place of
the closing under said underwriting agreement shall be as mutually agreed upon
between the Company and such managing underwriter.
6. Expenses. All expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration and filing fees, fees
and expenses of complying with securities and "blue sky" laws, printing
expenses, and fees and disbursements of the Company's counsel and of the
Company's independent certified public accountants shall be paid by the Company;
provided that counsel to the Stockholder and all underwriting discounts and
selling commissions applicable to the Registrable Shares covered by
registrations effected hereunder shall not be borne by the Company but shall be
borne by the Stockholder.
7. Indemnification.
(a) In the event of any registration of any Registrable Shares under the
Securities Act pursuant to this Agreement or registration or qualification of
any Registrable Shares under state securities or "blue sky" laws pursuant to
this Agreement, the Company shall indemnify and hold harmless the Stockholder
against any losses, claims, damages or liabilities, joint or several, to which
the Stockholder may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or any document prepared or furnished by the Company
incident to the registration or qualification of any Registrable Shares pursuant
to this Agreement, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or, with respect to any
prospectus, necessary to make the statements therein in light of the
circumstances under which
5
<PAGE>
they were made, not misleading, or any violation by the Company of the
Securities Act or state securities or "blue sky" laws applicable to the Company
and relating to action or inaction required of the Company in connection with
such registration or qualification under such state securities or "blue sky"
laws; and shall reimburse the Stockholder for any legal or any other expenses
reasonably incurred by him in connection with investigating or defending any
such loss, claim, damage, liability or action; provided that the Company shall
not be liable (i) in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
registration statement, any preliminary prospectus or final prospectus or any
amendment or supplement or any document incident to the registration or
qualification of any Registrable Shares pursuant to this Agreement in reliance
upon and in conformity with written information furnished to the Company by such
Stockholder or such underwriter specifically for use in the preparation thereof,
and (ii) to any broker or other person acting on behalf of such Stockholder to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any representation or other statement of such broker or other person
that is not in conformity with the preliminary prospectus or final prospectus.
(b) Stockholder hereby indemnifies and holds harmless the Company, each
director of the Company, each officer of the Company who shall sign such
registration statement and any person who controls the Company within the
meaning of the Securities Act, and before Registrable Shares held by such
Stockholder shall be included in any registration pursuant to this Agreement,
any underwriter acting on such Stockholder's behalf shall agree to indemnify and
hold harmless the Company, each director of the Company, each officer of the
Company who shall sign such registration statement and any person who controls
the Company within the meaning of the Securities Act (in each case in the same
manner and to the same extent as set forth in (a) above) with respect to any
untrue statement or omission from such registration statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, if such untrue statement or omission was made in reliance upon and in
conformity with written information furnished to the Company by such Stockholder
specifically for use in the preparation of such registration statement,
preliminary prospectus, final prospectus or amendment or supplement; provided
that the maximum amount of liability in respect of such indemnification shall be
limited, in the case of the Stockholder who, at any time during the registration
or the year preceding the registration, was not an officer or director of the
Company or any of its subsidiaries, to the amount paid for such Registrable
Shares upon the sale thereof pursuant to such registration.
(c) Each party entitled to indemnification hereunder (the "indemnified
party") shall give notice to the party required to provide indemnification (the
"indemnifying party") promptly after such indemnified party has actual knowledge
of any claim as to which indemnity may be sought, and shall permit the
indemnifying party (at its expense) to assume the defense of any claim or any
litigation resulting therefrom; provided that counsel for the indemnifying
party, who shall conduct the defense of such claim or litigation, shall be
reasonably satisfactory to the indemnified party, and the indemnified party may
participate in such defense, but only at such indemnified party's expense; and
provided, further, that the failure of any indemnified party to
6
<PAGE>
give notice as provided herein shall not relieve the indemnifying party of its
obligations under this Section 7 except to the extent that the omission results
in a failure of actual notice to the indemnifying party and such indemnifying
party is damaged as a result of the failure to give notice. It is understood
that the indemnifying party shall not, in connection with any action or related
actions in the same jurisdiction, be liable for the fees and disbursements of
more than one separate firm qualified in such jurisdiction to act as counsel for
the indemnified party. No indemnifying party, in the defense of any such claim
or litigation, shall, except with the consent of each indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
8. Rule 144 Matters. For so long as the Stockholder holds Registrable
Shares, or shares of Common Stock that will become Registrable Shares, that may
not be sold, without restriction, under Rule 144 under the Securities Act or any
successor rule, the Company shall (a) make and keep public information generally
available, as those terms are defined in Rule 144 under the Securities Act, and
(b) file with the Commission in a timely manner reports and other documents
required of the Company under the Securities Act and the Securities Exchange Act
of 1934, as amended.
9. Representations and Warranties.
(a) The Company hereby represents and warrants to the Stockholder
that:
(i) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Company. The
Company has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby and has duly
executed and delivered this Agreement. This Agreement constitutes the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general equitable principles.
(ii) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby nor compliance by the
Company with any of the provisions hereof will (A) conflict with or result in a
breach of the charter, by-laws or other constitutive documents of the Company,
(B) conflict with or result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the provisions of any
note, bond, lease, mortgage, indenture, license, franchise, permit, agreement or
other instrument or obligation to which the Company is a party, or by which the
Company or the Company's properties or assets, may be bound or affected, except
for such conflict, breach or default as to which requisite waivers or consents
shall be obtained before the Closing, (C) violate any law, statute, rule or
regulation or order, writ, injunction or decree applicable to the Company or the
Company's properties or
7
<PAGE>
assets, or (D) result in the creation or imposition of any security interest,
lien or other encumbrance upon any of the Company's properties or assets. No
consent or approval by, or any notification of or filing with, any person, firm,
corporation, partnership, joint venture, association or entity (governmental or
private) (each, a "person" and collectively, "persons") is required in
connection with the execution, delivery and performance by the Company of this
Agreement or the consummation of the transactions contemplated hereby, except as
set forth in the Stock Purchase Agreement.
(b) Representations and Warranties of the Stockholder. The Stockholder
represents and warrants to the Company that:
(i) The Stockholder has all requisite power, capacity and authority to
enter into this Agreement and to consummate the transactions contemplated hereby
and has duly executed and delivered this Agreement. This Agreement constitutes
the valid and binding obligation of the Stockholder, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors' rights and to general equitable principles.
(ii) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby nor compliance by the
Stockholder with any of the provisions hereof will (A) conflict with or result
in a default (or give rise to any right of termination, cancellation or
acceleration) under any of the provisions of any note, bond, lease, mortgage,
indenture, license, franchise, permit, agreement or other instrument or
obligation to which the Stockholder is a party, or by which the Stockholder or
the Stockholder's properties or assets may be bound or affected, except for such
conflict, breach or default to which requisite waivers or consents shall be
obtained before the Closing, (B) violate any law, statute, rule, regulation or
order, writ, injunction, or decree applicable to the Stockholder or the
Stockholder's properties or assets, or (C) result in the creation or imposition
of any security interest, lien or other encumbrance upon any property or assets
of the Stockholder. No consent or approval by, or any notification of or filing
with, any person is required in connection with the execution, delivery and
performance by the Stockholder of this Agreement or the consummation of the
transactions contemplated hereby, except as set forth in the Stock Purchase
Agreement.
10. Termination of Registration Rights. The Stockholder shall not be
entitled to execute any registration right provided for in this Agreement at any
time during which all the Registrable Shares, or shares that will become
Registrable Shares, held by such Stockholder may be sold without restriction of
any kind under Rule 144.
8
<PAGE>
11. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Stockholder with respect to the transactions
contemplated hereby and supersedes all prior agreements or understandings among
the parties with respect thereto.
(b) Headings. Descriptive headings are for convenience only and shall
not control or affect the meaning or construction of any provision of this
Agreement.
(c) Notices. All notices or other communications provided for in this
Agreement shall be in writing and shall be sent by confirmed telecopy to the
telecopy number set forth below (with an undertaking to provide a hard copy) or
delivered by hand or sent by overnight courier service prepaid to the address
specified below, or to such other telecopy number or address as the party to
whom notice is to be given may have furnished to the other party in writing in
accordance with this subsection.
If to the Company:
Cross-Continent Auto Retailers, Inc.
1201 S. Taylor
Amarillo, Texas 79101
Telecopy Number: (806) 374-3818
If to the Stockholder:
R. Douglas Spedding
4380 E. Alameda Avenue
Glendale, Colorado 80222
Telecopy Number: (303) 355-2209
(d) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(e) Amendments. This Agreement shall not be altered or otherwise
amended except pursuant to an instrument in writing signed by the Company and
the Stockholder.
(f) Transferability. The registration and other rights granted to the
Stockholder hereunder are non-transferable and cannot be assigned or transferred
in any manner to any third party without the prior written consent of the
Company. Notwithstanding the foregoing, the
9
<PAGE>
Stockholder may assign the registration rights granted to the Stockholder herein
to the Stockholder's spouse or children or trusts, partnerships or corporations
for the sole benefit of such persons and, upon the Stockholder's death to the
Stockholder's estate or to no more than two: (i) private or public foundations
exempt from federal income taxation pursuant to Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended, to which shares of Common Stock
issued to the Stockholder pursuant to the Stock Purchase Agreement have been
transferred in transactions that do not result in the recognition of taxable
income or capital gain for federal income tax purposes, or (ii) revocable or
irrevocable inter vivos trusts, partnerships or other entities to which shares
of Common Stock issued to the Stockholder pursuant to the Stock Purchase
Agreement have been transferred in transactions that do not result in the
recognition of taxable income or capital gain for federal income tax purposes.
(g) CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
COMPANY: CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Bill Gilliland
----------------------------------
Bill Gilliland, Chairman
STOCKHOLDER:
/s/ R. Douglas Spedding
--------------------------------------
R. Douglas Spedding
10
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
April, 1997, by and between R. Douglas Spedding (hereinafter referred to as the
"Employee") and Cross-Continent Auto Retailers, Inc. ("C-Car") (sometimes
hereinafter collectively referred to as the "Employer").
IN CONSIDERATION of the mutual covenants hereinafter made by each party to
the other, the Employee and the Employer agree as follows:
EMPLOYMENT AND REMUNERATION
1. Employer agrees to employ and to continue to employ Employee in
accordance with the terms of this Agreement.
2. TERM OF EMPLOYMENT. By this Employment Agreement, Employer employs
Employee and Employee accepts employment with Employer for a period of three (3)
years, beginning on April 1, 1997.
3. SCOPE OF EMPLOYMENT AND COMPENSATION. Employee will be employed by
Employer as a Regional Manager. Under this Employment Agreement, Employee will
be supervising the operation of, and will assist in the acquisition of
automobile dealerships for Employer within an area to include the states of
Colorado and Nevada; and such other locations as Employer may direct. As
compensation for these duties, Employee shall receive from Employer base
compensation of $500,000.00 per year ("Base Compensation"), to be payable in
equal monthly installments of $41,666.66 on the last day of each month during
the period of employment. Additionally, Employee will receive as "Bonus
Compensation" (a) 2% of the Employer's Net Earnings (as defined below) for each
calendar quarter, to be paid in cash 30 days after the close of each calendar
quarter, and (b) stock options equal to 2% of the Employer's Net Earnings for
each year. The stock options will be granted to Employee at the end of each
year during the Employee's term of employment. The number of options to be
granted for 1997 will be based on the closing price for Employer's stock quoted
in The Wall Street Journal for April 1, 1997. The number of stock options to be
granted for 1998, 1999 and 2000 will be based on the closing price for
Employer's stock quoted in The Wall Street Journal for January 2/nd/ of the
applicable year. The number of stock options to be granted Employee for each
year shall be calculated using the methodology set forth on Exhibit "A," which
is attached hereto and made a part hereof for all purposes.
4. NET EARNINGS. "Net Earnings" shall mean gross revenues less all costs
of sales; general and administrative expenses; salaries, bonuses, commissions,
and other compensation; depreciation; amortization; interest; dealership
overhead; and C-Car corporate overhead. Net Earnings shall be calculated on the
accrual method of accounting and determined by Employer's accounting staff.
5. COMPENSATION PRORATIONS. For purposes of calculating compensation set
forth in Paragraph 3, all such amounts will be prorated for any partial calendar
quarter or year during the period of employment.
<PAGE>
6. EMPLOYEE BENEFITS. In addition to the compensation addressed above,
Employer agrees to include Employee and his spouse in any hospital, surgical,
medical and dental benefit plan adopted by Employer. Employer will pay one half
of Employee's monthly premium for the above. Employee shall be eligible to
participate in the Employers retirement plan after one year from the date of
execution by Employer and Employee of this Employment Agreement.
7. REIMBURSEMENT OF BUSINESS EXPENSES. Employee is authorized to incur
reasonable business expenses for promoting the business of Employer, and for
performing the duties contemplated by this Employment Agreement, including, but
not limited to, expenditures for mobile and/or cellular telephones, business
entertainment, and travel. Employer shall reimburse Employee for all such
reasonable expenditures upon Employee's presentation of an itemized account of
and receipts for the expenditures. The itemized account will be submitted by
Employee on a monthly basis.
DUTIES OF THE EMPLOYEE
8. Employee shall be a Regional Manager of C-Car. Employee shall also
be responsible for serving as General Manager of Toyota West, oversight of other
dealerships as assigned by Employer, as well as assisting Employer in its growth
strategy and acquisition activities. Employee will report directly to Bill
Gilliland, Chairman, Chief Executive Officer and Director of Employer.
9. The Employee agrees to devote his general energies, abilities,
attention and business time to the performance of his employment obligations and
responsibilities.
10. NONDISCLOSURE OF CONFIDENTIAL INFORMATION AND TRADE SECRETS. During
the term of employment, Employee will have access to and become familiar with
various trade secrets, consisting of formulas, and compilations of information,
records and specifications owned by Employer and regularly used in the operation
of the business of Employer. Employee must not disclose any such trade secrets,
directly or indirectly, nor use them in any way, either during the term of this
Contract or for a term of one (1) year from the date of Employee's termination
of employment with Employer, except as required in the course of his employment.
All files, records, documents, drawings, specifications, equipment, and similar
items relating to the business of Employer, whether or not prepared by Employee,
will remain the exclusive property of Employer and must not be removed from the
premises of Employer under any circumstances without the prior written consent
of Employer. Employer and Employee understand and agree that the restrictions
expressed in this Paragraph shall not apply, however, to information that is in
the public domain without breach of this Employment Agreement.
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11. RETURN OF EMPLOYER'S PROPERTY. Upon the termination of employment,
Employee must immediately deliver to Employer all property belonging to Employer
in Employee's possession, or under Employee's control, in good condition,
ordinary wear and tear excepted.
OBLIGATION OF EMPLOYER
12. INDEMNIFICATION OF EMPLOYEE. Employer shall indemnify Employee
for all losses sustained by Employee as a direct result of the discharge of his
duties required by this Employee Employment Agreement, except for losses caused
by Employee's willful misconduct or gross negligence. "Gross negligence," as
used in this Agreement, shall mean an act or omission that involves an
intentional disregard or failure to perform any job duty or function in reckless
disregard of the consequences whether or not those consequences were
foreseeable.
13. Employee will maintain his current office and clerical
services, and any other facilities and services. Employer agrees to reimburse
Employee for (a) office rent in the amount of $12,000 per annum, and (b) all
reasonable other expenses related thereto.
TERMINATION OF
EMPLOYMENT RELATIONSHIP
14. DEFINITION OF FOR CAUSE. The term "for cause," as used in this
Agreement, shall mean any form of dishonesty or fraud; theft of property;
vandalism, abuse or destruction of Employer property or equipment; disseminating
confidential information concerning Employer, its employees, or its customers to
any person, firm or entity who is not authorized or within any privilege to
receive the confidential information; acts, attempts or threats of violence,
intimidation, or abuse directed at Employer's customers, employees, vendors, or
contractors; intentional or willful violation of federal, state or local law
which could subject Employer, its officers, employees, agents, or customers to
liability or any such violation which has any connection with Employee's
employment with Employer; reporting to work under the influence of alcohol or
controlled substances (other than prescription medication which is possessed and
being taken pursuant to a current and valid physician's prescription), or
possessing the same on Employer's property; engaging in any conduct which
constitutes unlawful discrimination, harassment or any other unlawful employment
practice; gross negligence or incompetence in the performance of the Employee's
job duties, whether or not it results in actual loss to Employer, it's
customers, vendors or contractors; intentionally making any false accusation or
complaint to any person, agency, commission or entity regarding Employer, its
officers, employees, vendors, customers or contractors; wilful neglect or
failure to perform job responsibilities; inability to be bonded; or material
violations of the terms and conditions of this Agreement.
15. TERMINATION OF EMPLOYEE FOR CAUSE. If Employee is terminated
for cause by Employer in Employer's reasonable discretion, upon the date of
termination, Employer shall be
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relieved of its duties and obligations to pay Employee any remaining base
compensation that would thereafter be due under Paragraph 3 of this Employment
Agreement. The parties understand and agree that any additional Bonus
Compensation due to Employee pursuant to Paragraph 3 of this Employment
Agreement shall be prorated to the date of termination. Such Bonus Compensation
shall be determined as soon as practicable after December 31st of the year of
termination and paid no later than March 1st of the following year. Upon such
payment, Employer is then relieved of the obligation to pay any additional Bonus
Compensation that would be due under Paragraph 3. If Employee is terminated for
cause by Employer, Employee shall not be bound by the non-compete provisions of
Paragraphs 23 and 24.
16. TERMINATION OF EMPLOYEE WITHOUT CAUSE. If Employee is
terminated by Employer at any time without cause, the unearned balance of
Employee's annual Base Compensation due under Paragraph 3 of this Employment
Agreement shall be due and payable to Employee at quarterly intervals over the
remaining term of this Employment Agreement. The parties additionally
understand and agree that if Employee is terminated by Employer at any time
without cause, any Bonus Compensation due to Employee pursuant to Paragraph 3 of
this Employment Agreement shall be prorated to the date of Employee's
termination, and shall be determined as soon as practicable after December 31st
of the year of termination and paid no later than March 1st of the following
year. Employer is then relieved of its obligation to pay any additional Bonus
Compensation that would be due under Paragraph 3.
17. TERMINATION OF EMPLOYEE WITHOUT CAUSE - EFFECT OF NON-COMPETE
PROVISIONS. If Employee is terminated by Employer at any time without cause,
all non-compete provisions of Paragraphs 23 and 24 shall immediately be null and
void, with no binding applicability to Employee. It is understood and agreed by
the parties that operation of this Paragraph, and the consequent voiding of
Paragraphs 23 and 24, shall not otherwise affect the validity, legality or
enforceability of the remaining provisions of this Employment Agreement.
18. VOLUNTARY TERMINATION BY EMPLOYEE. If Employee voluntarily
terminates his employment with Employer, upon the date of termination, Employer
shall be relieved of its duties and obligations to pay Employee any remaining
Base Compensation that would thereafter be due under Paragraph 3 of this
Employment Agreement. The parties to this Employment Agreement understand and
agree that any Bonus Compensation due to Employee pursuant to Paragraph 3 of
this Employment Agreement shall be prorated to the date of Employee's
termination. Such Bonus Compensation shall be determined as soon as practicable
after December 31st of the year of termination and paid no later than March 1st
of the following year. Employer is then relieved of its obligation to pay any
additional Bonus Compensation that would be due under Paragraph 3. The parties
further agree that if Employee voluntarily terminates his employment with
Employer, Employee shall be bound by the non-compete provisions of Paragraphs 23
and 24.
19. NOTICE OF TERMINATION. The Employee and the Employer
understand and agree that each has the right, upon thirty (30) days' written
notice (hereinafter referred to as the "Notice Period"), to terminate the
employment relationship. It is understood and agreed that a party's exercise of
its rights under this paragraph shall be without prejudice to any other right or
remedy
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which it may have at law, in equity, or under this Agreement, including,
without limitation, the Employer's right to terminate such employment without
notice for "cause." In the event Employer in its reasonable discretion
determines Employee should be dismissed for cause, Employer has the right to
terminate Employee immediately.
20. The Employer agrees to continue in effect during the Notice
Period the Compensation and benefits to which the Employee may be otherwise
entitled under this Employment Agreement.
21. The Employee agrees that during the Notice Period, he will
cooperate fully with the Employer in all matters relating to the winding up of
any pending work and the orderly transfer to other employees of Employer of the
work for which he has most recently been responsible.
22. The Employee understands and agrees that, at or about the
expiration of the Notice Period, or upon the immediate termination of Employee,
the Employer may convene an exit interview to review the status of work for
which the Employee has most recently been responsible; to ensure that the
Employee has fully obtained his entitlements under this Employment Agreement at
the time of termination, and that Employee will receive the remaining
entitlements, if any, under this Employment Agreement by the end of the year of
termination; and/or to confirm that the Employee clearly understands the nature
and scope of his post-employment obligations.
POST-EMPLOYMENT OBLIGATIONS
23. COVENANT NOT TO COMPETE. Employee agrees that he will not,
either directly or indirectly, alone or with others, either as an employee,
owner, partner, agent, contractor, stockholder, member, director, officer or
otherwise, enter into or engage in the business of owning or operating a car
dealership, warranty repair business or other related business which may compete
directly or indirectly with Employer (Competitive Business) within the Non-
compete Area, as defined below, during the term of this Agreement, and for a
term of one (1) year from the date of Employee's termination of employment with
Employer. Employee agrees that in the event of breach of this covenant,
Employer may protect its rights under this Employment Agreement by injunction or
otherwise, such remedies being cumulative and not exclusive.
24. NON-COMPETE AREA DEFINED. The term Non-compete Area as used in
Paragraph 22, shall mean the area within a thirty (30) mile radius surrounding
the location of (i) any dealership which Employee supervises, (ii) Douglas
Toyota, Inc. and (iii) Toyota West Sales and Service, Inc.
25. NON-COMPETE PROVISIONS VOID UPON HOSTILE CHANGE IN CONTROL OF
C-CAR. Notwithstanding anything contained herein to the contrary, the Post-
Employment obligations of the Employee contained in Paragraphs 23 and 24 shall
become null and void and have no further effect immediately upon a Hostile
Change in Control of C-Car as defined herein. The Employer shall send written
notice to the Employee within ten (10) days of a Hostile Change in Control of
C-Car, notifying the Employee that such an event has taken place. Failure of the
Employer to send such notice shall not preclude the release of the Employee from
the Post-Employment Obligations
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contained in Paragraphs 23 and 24. For the purposes of this Paragraph, the
following definitions apply:
A. The term "Hostile Change in Control" means a transaction, event or
election constituting a Change in Control, which was not approved by a majority
of the Incumbent Board. "Incumbent Board" means the individuals who, as of the
date hereof, constitute the Board of Directors of C-Car (the "Board"); provided
that any individual who becomes a member of the Board subsequent to the date
hereof whose election, or nomination for election by C-Car's stockholders, was
approved by a vote of at least a majority of those individuals who are at such
time members of the Board and who were also members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be considered a member of the
Incumbent Board; but provided further that any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board shall not be so considered as a member of the Incumbent Board.
B. The term "Change in Control" of C-Car means and includes each and
all of the following occurrences:
(i) any merger or consolidation of C-Car with or into any
individual, corporation, partnership or other person or entity,
(ii) any sale, lease, exchange, transfer or other disposition,
including without limitation a mortgage or any other security device, of all or
any Substantial Part of the assets of C-Car (including, without limitation, the
voting securities of its subsidiaries),
(iii) any merger or consolidation of any individual, corporation,
partnership or other person or entity with or into C-Car,
(iv) the issuance of any securities of C-Car to any individual,
corporation, partnership or other person or entity,
(v) the acquisition by C-Car of any securities issued by any
individual, corporation, partnership or other person or entity,
(vi) any reclassification of securities, recapitalization or other
transaction designed to decrease the number of holders of C-Car's voting
securities, and
(vii) any agreement, contract or other arrangement providing for
any of the transactions described in this definition.
C. The term "Substantial Part" shall mean more than 30% of the fair
market value of the total assets of C-Car, determined on a consolidated basis,
as of the end of its most recent fiscal quarter ending prior to the time the
determination is being made.
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ENFORCEMENT
26. The Employee and the Employer understand and agree that any
breach of or failure to perform any term of this Employment Agreement will give
rise to an action for breach of contract, and/or injunctive relief, which may be
brought in any court of competent jurisdiction.
27. This Employment Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
28. The provisions of this Employment Agreement are intended to be
interpreted and construed in a manner which makes such provisions valid, legal
and enforceable. In the event any provision of this Employment Agreement is
found to be partially or wholly invalid, illegal or unenforceable, such
provision shall be modified or restricted to the extent and in the manner
necessary to render such provision valid, legal and enforceable. It is
expressly understood and agreed between the parties that this modification or
restriction may be accomplished by mutual accord between the parties or,
alternatively, by disposition of a court of law. If such provision cannot under
any circumstances be so modified or restricted, it shall be excised from this
Employment Agreement without affecting the validity, legality or enforceability
of any remaining provisions.
29. The Employee and Employer understand and agree that, in the
event of the breach of this Employment Agreement by either party, the
substantially prevailing party shall be entitled to reimbursement by the non-
prevailing party of any attorneys' fees and costs incurred in enforcing the
party's rights hereunder. It is the intention of the parties that the Employer
shall enjoy the faithful performance by Employee of the covenants specified in
this Agreement for the full time periods specified therein.
MISCELLANEOUS
30. To the extent that this Employment Agreement is inconsistent
with any existing Employer policies or any agreements between the parties, this
Employment Agreement shall prevail.
31. This Employment Agreement shall inure to the benefit of and
shall be binding upon the successors and assigns of the Employer and may be
enforced by any subsidiary of the Employer for whom Employee has provided
services hereunder.
ACKNOWLEDGMENT
The Employee and the Employer, by its designated representative, hereby
acknowledge that they have read and understand each of the provisions of this
Employment Agreement, that they have executed this Employment Agreement
voluntarily and with full knowledge of its significance, and that they intend to
be fully bound by the same.
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Executed on this 1st day of April, 1997.
THE EMPLOYEE CROSS-CONTINENT AUTO
RETAILERS, INC.
/s/ R. Douglas Spedding By: /s/ Bill Gilliland
- ------------------------------- ------------------------------
R. Douglas Spedding Bill Gilliland, Chairman and
Chief Executive Officer
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EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT is made and entered into as of the 1st
day of April, 1997, by and between Douglas J. Spedding (hereinafter referred to
as the "Executive") and Cross-Continent Auto Retailers, Inc., a Delaware
corporation (hereinafter referred to as the "Employer").
IN CONSIDERATION of the mutual covenants hereinafter made by each party to
the other, the Executive and the Employer agree as follows:
EMPLOYMENT AND REMUNERATION
1. Employer agrees to employ and to continue to employ Executive in
accordance with the terms of this Agreement.
2. TERM OF EMPLOYMENT. By this Executive Employment Agreement, Employer
employs Executive and Executive accepts employment with Employer for a period of
three (3) years, beginning on June 1, 1997.
3. COMPENSATION. As compensation for all services rendered under this
Agreement, Executive shall receive 7% of the net earnings (as hereafter defined)
of Toyota West Sales and Service, Inc., and any other automobile dealership
purchased by Employer in the metropolitan Las Vegas, Nevada area (the
"Metropolitan Dealerships") calculated on a monthly basis ("Compensation"). On
the last day of each month, Executive will receive, as a draw against
Compensation, fifteen thousand dollars ($15,000). Within 10 days of submission
by Executive of a financial statement for each month, Executive will receive
payment for the Compensation for the month, less the draw Compensation of
$15,000. For purposes of determining Compensation under this Paragraph, net
earnings shall mean gross revenues less all costs of sales; general and
administrative expenses; salaries, bonuses, commissions, and other compensation;
depreciation; amortization; interest; dealership overhead; and certain Employer
corporate overhead allocated to the Metropolitan Dealerships. In no event will
the Employer corporate overhead allocation to any Metropolitan Dealership exceed
$35,000 per month. Net earnings shall be calculated on the accrual method of
accounting as determined by Employer's accounting staff. All Compensation
provided for hereunder, if not paid sooner, shall be paid in cash within ninety
(90) days of the end of Employer's tax year. Additionally, within 45 days after
the end of each calendar year or partial calendar year, the amount of
Compensation paid to Executive during such calendar year or partial calendar
year shall be reconciled with the amount of Compensation that should have been
paid to Executive for the calendar year or partial calendar year. Executive
agrees to promptly refund to Employer any over-payment, and Employer agrees to
promptly pay Executive any deficiency.
4. EXECUTIVE BENEFITS. In addition to the Compensation addressed above,
Employer agrees to include Executive in any hospital, surgical, medical and
dental benefit plan adopted by Employer. Executive shall pay fifty percent of
Executives health insurance premiums carried
<PAGE>
through Employer. Executive shall be eligible to participate in any Employer
retirement programs pursuant to the terms and conditions of such programs.
5. REIMBURSEMENT OF BUSINESS EXPENSES. Executive is authorized to incur
reasonable business expenses for promoting the business of Employer, and for
performing the duties contemplated by this Executive Employment Agreement,
including, but not limited to, expenditures for mobile and/or cellular
telephones, business entertainment, and business travel. Employer shall
reimburse Executive monthly for all such reasonable expenditures upon
Executive's presentation of an itemized account of and receipts for the
expenditures.
DUTIES OF THE EXECUTIVE
6. Executive will be employed by Employer as City Manager for Las Vegas,
Nevada. Under this Executive Employment Agreement, Executive's primary
responsibilities will include supervising all daily operations of the
Metropolitan Dealerships. Employer and Executive understand and agree that, in
light of Executive's retention in the position of City Manager, Executive is
considered to be part of the executive personnel and professional and management
staff of Employer. As a member of Employer's executive personnel and
professional and management staff, Executive's duties are to include assisting
in the formulation and execution of the Metropolitan Dealership's management
policy, including decisions regarding the hiring and firing of the Metropolitan
Dealerships' employees and the determination of employee compensation.
7. The Executive agrees to devote his full time, general energies,
abilities, attention and business time to the performance of his employment
obligations and responsibilities. The Executive further agrees that, during the
term of this Executive Employment Agreement, he will not, directly or
indirectly, render any services of a business, commercial, or professional
nature to any other person or organization, whether or not for Compensation,
which is in a competitive business with Employer.
8. Executive agrees to furnish all information and take any other steps
necessary to enable Employer to obtain a fidelity bond conditioned on the
rendering of a true account by Executive of all money, goods, or other property
that may come into the custody, charge, or possession of Executive during the
term of employment. All premiums on the fidelity bond are to be paid by
Employer. Failure by the Executive to qualify for such bond shall constitute
good cause for termination of the services of Executive under this Executive
Employment Agreement.
9. NONDISCLOSURE OF CONFIDENTIAL INFORMATION AND TRADE SECRETS. During
the term of employment, Executive will have access to and become familiar with
various trade secrets. This information (hereinafter referred to as
"Confidential Information") includes, but is not limited to: the whole or any
portion or phase of any technical information, process, procedure, formula,
improvement; confidential business or financial information; listing of names,
addresses, or telephone numbers, or other information relating to the Employer's
business which is secret and of value, including, but not limited to, a list of
individual and corporate clients and customers; contact
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persons at client companies; the clients policies and requirements; direct
telephone numbers and addresses; data relating to the Employer's unique
marketing and servicing programs, procedures and techniques; business,
management and personnel strategies; lists of prospects compiled by the
Employer's management and research staff; the identity, authority and
responsibilities of key contacts; and commission rates. The Executive recognizes
that this Confidential Information constitutes a valuable property of the
Employer, developed over a long period of time at substantial expense,
continuously updated and containing information from personal contacts.
Executive agrees that he will not disclose any such Confidential Information or
trade secrets, directly or indirectly, nor use them in any way, either during
the term of this Employment Agreement or for a term of one (1) years from the
date of Executive's termination of employment with Employer, except as required
in the course of his employment. All files, records, documents, drawings,
specifications, equipment, and similar items relating to the business of
Employer, whether or not prepared by Executive, will remain the exclusive
property of Employer and must not be removed from the premises of Employer under
any circumstances without the prior written consent of Employer. Employer and
Executive understand and agree that the restrictions expressed in this Paragraph
shall not apply, however, to information that is in the public domain without
breach of this Executive Employment Agreement.
10. EXECUTIVE PERFORMANCE CRITERIA. Each year each Metropolitan
Dealership will be required to meet or exceed 80% of the Metropolitan
Dealership's average gross sales revenues for the preceding three years.
11. RETURN OF EMPLOYER'S PROPERTY. Upon the termination of employment,
Executive must immediately deliver to Employer all property belonging to
Employer in Executive's possession, or under Executive's control, in good
condition, ordinary wear and tear excepted.
OBLIGATION OF EMPLOYER
12. INDEMNIFICATION OF EXECUTIVE. Employer shall indemnify Executive
for all losses sustained by Executive as a direct result of the discharge of his
duties required by this Executive Employment Agreement, except for losses caused
by Executive's willful misconduct or gross negligence. "Gross negligence," as
used in this Agreement, shall mean an act or omission that involves an
intentional disregard or failure to perform any job duty or function in reckless
disregard of the consequences whether or not those consequences were
foreseeable.
13. Employer will provide Executive with an office and clerical
services, and any other facilities and services as are presently used by
Executive in the performance of his job responsibilities for Employer.
TERMINATION OF
EMPLOYMENT RELATIONSHIP
14. DEFINITION OF FOR CAUSE. The term "for cause," as used in this
Agreement, shall mean any form of dishonesty or fraud; theft of property;
vandalism, abuse or destruction of
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Employer property or equipment; disseminating confidential information
concerning Employer, its employees, or its customers to any person, firm or
entity who is not authorized or within any privilege to receive the confidential
information; acts, attempts or threats of violence, intimidation, or abuse
directed at Employer's customers, employees, vendors, or contractors;
intentional or willful violation of federal, state or local law which could
subject Employer, its officers, employees, agents, or customers to liability or
any such violation which has any connection with Executive's employment with
Employer; reporting to work under the influence of alcohol or controlled
substances (other than prescription medication which is possessed and being
taken pursuant to a current and valid physician's prescription), or possessing
the same on Employer's property; engaging in any conduct which constitutes
unlawful discrimination, harassment or any other unlawful employment practice;
gross negligence or incompetence in the performance of the Executive's job
duties, whether or not it results in actual loss to Employer, it's customers,
vendors or contractors; intentionally making any false accusation or complaint
to any person, agency, commission or entity regarding Employer, its officers,
employees, vendors, customers or contractors; wilful neglect or failure to
perform job responsibilities; inability to be bonded; or material violations of
the terms and conditions of this Agreement.
15. TERMINATION OF EXECUTIVE FOR CAUSE. If Executive is terminated for
cause by Employer, upon the date of termination, Employer shall be relieved of
its duties and obligations to pay Executive any additional draws that would
otherwise be due under Paragraph 3 of this Executive Employment Agreement. Upon
termination, Employer will calculate the Compensation based upon net earnings
for the dealership to the date of termination of employment. If Executive's
draw has exceeded Compensation as set forth in Paragraph 3 hereof, Executive
will reimburse Employer for such excess draw paid. If Compensation as set forth
in Paragraph 3 hereof has exceeded Executive's draw, Employer will make payment
of the difference to Executive within 15 days after termination, and such
payment will discharge all further obligations of Employer to Executive. If
Executive is terminated for cause by Employer, Executive shall not be bound by
the non-compete provisions of Paragraphs 22 and 23 of this Agreement.
16. VOLUNTARY TERMINATION BY EXECUTIVE. If Executive voluntarily
terminates his employment with Employer, Employer shall be relieved of its
duties and obligations to pay Executive any remaining draws against Compensation
that would otherwise be due under Paragraph 3 of this Executive Employment
Agreement. Any Compensation otherwise due to Executive by Employer shall be
paid on a prorated basis to the date of termination and such payment by Employer
will relieve Employer of any further obligation to pay Compensation to
Executive. If Executive's draw has exceeded Compensation, Executive will
reimburse Employer for such excess draw paid. The parties further agree that if
Executive voluntarily terminates his employment with Employer, Executive shall
be bound by the non-compete provisions of Paragraphs 22 and 23.
17. TERMINATION OF EXECUTIVE WITHOUT CAUSE. If Executive is terminated
by Employer at any time without cause, Executive shall be entitled to payment by
Employer of all unearned draws against Compensation as well as all Compensation
addressed in Paragraph 3,
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through the end of the year of Executive's termination. After such payment
Employer will be relieved of any further obligation to pay additional
Compensation to Executive. Such draw and Compensation shall be due and payable
to Executive under the terms of Paragraph 3. The parties further agree that if
Executive is terminated without cause, the non-compete provisions of Paragraphs
22 and 23 shall be null and void and unenforceable against Executive.
18. NOTICE OF TERMINATION. The Executive and the Employer understand
and agree that each has the right, upon thirty (30) days' written notice
(hereinafter referred to as the "Notice Period"), to terminate the employment
relationship. It is understood and agreed that a party's exercise of its rights
under this Paragraph shall be without prejudice to any other right or remedy
which it may have at law, in equity, or under this Agreement, including, without
limitation, the Employer's right to terminate such employment without notice for
cause. In the event Employer in its reasonable discretion determines Executive
should be dismissed for cause, Employer has the right to terminate Executive
immediately.
19. The Employer agrees to continue in effect during the Notice Period
the Compensation and benefits to which the Executive may be otherwise entitled
under this Executive Employment Agreement.
20. The Executive agrees that during the Notice Period, he will
cooperate fully with the Employer in all matters relating to the winding up of
any pending work and the orderly transfer to other employees of Employer of the
work for which he has most recently been responsible.
21. The Executive understands and agrees that, at or about the
expiration of the Notice Period, or upon the immediate termination of Executive,
the Employer may convene an exit interview to review the status of work for
which the Executive has most recently been responsible; to ensure that the
Executive has fully obtained his entitlements under this Executive Employment
Agreement at the time of termination, and that Executive will receive the
remaining entitlements, if any, under this Executive Employment Agreement by the
end of the year of termination; and/or to confirm that the Executive clearly
understands the nature and scope of his post-employment obligations.
POST-EMPLOYMENT OBLIGATIONS
22. COVENANT NOT TO COMPETE. Employer and Executive understand and
agree that Executive is considered to be part of the executive personnel and
professional and management staff of Employer, and that this Covenant Not to
Compete is valid and enforceable against Executive. Executive agrees that he
will not, either directly or indirectly, alone or with others, either as an
Executive, owner, partner, agent, stockholder, member, director, officer or
otherwise, enter into or engage in the business of operating a car dealership,
warranty repair business or other related business which may compete directly or
indirectly with Employer (Competitive Business) within the Non-compete Area, as
defined below, during the term of this Agreement or for a term
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of one (1) year from the date of Executive's termination of employment with
Employer. Executive agrees that in the event of breach of this covenant,
Employer may protect its rights under this Executive Employment Agreement by
injunction or other appropriate legal remedy.
23. NON-COMPETE AREA DEFINED. The term Non-compete Area as used in
Paragraph 22, shall mean the area within a thirty (30) mile radius surrounding
any dealership for which Executive serves as a General Manager or City Manager.
24. NON-COMPETE PROVISIONS VOID UPON HOSTILE CHANGE IN CONTROL OF
EMPLOYER. Notwithstanding anything contained herein to the contrary, the Post-
Employment obligations of the Executive contained in Paragraphs 22 and 23 shall
become null and void and have no further effect immediately upon a Hostile
Change in Control of Employer. The Employer shall send written notice to the
Executive within ten (10) days of a Hostile Change in Control of Employer,
notifying the Executive that such an event has taken place. Failure of the
Employer to send such notice shall not preclude the release of the Executive
from the Post-Employment Obligations contained in Paragraphs 22 and 23. For the
purposes of this Paragraph, the following definitions apply:
A. The term "Hostile Change in Control" means a transaction, event or
election constituting a Change in Control, which was not approved by a majority
of the Incumbent Board. "Incumbent Board" means the individuals who, as of the
date hereof, constitute the Board of Directors of Employer (the "Board");
provided that any individual who becomes a member of the Board subsequent to the
date hereof whose election, or nomination for election by Employer's
stockholders, was approved by a vote of at least a majority of those individuals
who are at such time members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered a member of the Incumbent Board; but provided further that any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Board shall not be so considered as a member
of the Incumbent Board.
B. The term "Change in Control" of Employer means and includes each and
all of the following occurrences:
(i) any merger or consolidation of Employer, with or into any individual,
corporation, partnership or other person or entity,
(ii) any sale, lease, exchange, transfer or other disposition, including
without limitation a mortgage or any other security device, of all or any
Substantial Part of the assets of Employer (including without limitation the
voting securities of a subsidiary), to any individual, corporation, partnership
or other person or entity,
6
<PAGE>
(iii) any merger or consolidation of any individual, corporation,
partnership or other person or entity with or into Employer,
(iv) the issuance of any securities of Employer, to any individual,
corporation, partnership or other person or entity,
(v) the acquisition by Employer, of any securities issued by any
individual, corporation, partnership or other person or entity,
(vi) any reclassification of securities, recapitalization or other
transaction designed to decrease the number of holders of Employer's voting
securities, and
(vii) any agreement, contract or other arrangement providing for any of
the transactions described in this definition.
C. The term "Substantial Part" shall mean more than 30% of the fair market
value of the total assets of Employer, determined on a consolidated basis, as of
the end of its most recent fiscal quarter ending prior to the time the
determination is being made.
ENFORCEMENT
25. The Executive and the Employer understand and agree that any breach
of or failure to perform any term of this Executive Employment Agreement will
give rise to an action for breach of contract, and/or injunctive relief, which
may be brought in any court of competent jurisdiction.
26. This Agreement shall be governed by and construed in accordance with
the laws of the State of Nevada.
27. The provisions of this Agreement are intended to be interpreted and
construed in a manner which makes such provisions valid, legal and enforceable.
In the event any provision of this Agreement is found to be partially or wholly
invalid, illegal or unenforceable, such provision shall be modified or
restricted to the extent and in the manner necessary to render such provision
valid, legal and enforceable. It is expressly understood and agreed between the
parties that this modification or restriction may be accomplished by mutual
accord between the parties or, alternatively, by disposition of a court of law.
If such provision cannot under any circumstances be so modified or restricted,
it shall be excised from this Agreement without affecting the validity, legality
or enforceability of any remaining provisions.
28. The Executive and Employer understand and agree that, in the event
of the breach of this Agreement by either party, the substantially prevailing
party shall be entitled to reimbursement by the non-prevailing party of any
attorneys' fees and costs incurred in enforcing the party's rights hereunder.
It is the intention of the parties that the Employer shall enjoy the
7
<PAGE>
faithful performance by Executive of the covenants specified in this Agreement
for the full time periods specified therein.
MISCELLANEOUS
29. Except as hereinafter provided, this Executive Employment Agreement
supersedes all existing Employer policies, and all previous agreements between
the parties; to the extent that such policies and agreements consider subject
matters herein addressed.
30. This Executive Employment Agreement shall inure to the benefit of
and shall be binding upon the successors and assigns of the Employer and may be
enforced by any subsidiary of the Employer for whom Executive has provided
services hereunder.
ACKNOWLEDGMENT
The Executive and the Employer, by its designated representative, hereby
acknowledge that they have read and understand each of the provisions of this
Executive Employment Agreement, that they have executed this Executive
Employment Agreement voluntarily and with full knowledge of its significance,
and that they intend to be fully bound by the same.
Executed on this 10th day of April, 1997.
EXECUTIVE: CROSS-CONTINENT AUTO RETAILERS, INC.
/s/ Douglas J. Spedding By: /s/ Bill Gilliland
- ------------------------------- ----------------------------------
Douglas J. Spedding Bill Gilliland, Chairman and
Chief Executive Officer
8
<PAGE>
EXHIBIT 10.3
PROMISSORY NOTE
$7,000,000
April 1, 1997
FOR VALUE RECEIVED the undersigned ("Maker") promises to pay to the order of R.
Douglas Spedding (the "Lender"), or order, on or before March 31, 1002, the
principal sum of $7,000,000, together with interest on the unpaid principal per
annum at the prime rate quoted from time to time by Bank of America, as
published in the daily Western Edition of the Wall Street Journal (the "Loan").
Interest shall accrue as of the last day of each month, compounding monthly, and
shall be due and payable to Lender no later than the fifth (5th) day of the
following month and at the maturity of this Note, and shall be calculated on the
basis of a 365-day year and the actual number of days elapsed. If interest is so
paid in a timely manner, no compounding of interest will take place. Maker shall
pay all interest and principal due upon this Note directly to R. Douglas
Spedding, c/o RDS, Inc., 4380 East Alameda Avenue, Glendale, Colorado 80222, or
such other place as Lender may designate to Maker in writing during the term of
this Note.
This Note is issued to evidence the loan of $7,000,000 in principal amount made
by the Lender to the Maker, and such loan shall be governed specifically by the
terms of this Note, as amended in writings executed by Maker and Lender from
time to time (the "Note"). This Note is given as partial consideration by Maker
to Lender as part of that certain Stock Purchase Agreement entered into by and
between Lender and Maker dated January 23, 1997, and any and all amendments,
supplements, and documents given in connection therewith (hereafter the
"Purchase Documents").
The principal amount of this Note is payable in accordance with the terms of
this Note and in full on or before March 31, 2002. Maker shall pay interest
monthly as set forth herein, with the full amount of all principal set forth
hereunder to be paid by Maker to Lender on or before March 31, 2002. There shall
be no penalty hereunder for Maker prepaying any portion or all of the principal
and interest due hereunder.
At the discretion of Lender, overdue principal and (to the extent permitted
under applicable law) interest and all amounts due to the Lender under the terms
of this Note not paid when the same is due, whether caused by acceleration of
maturity or otherwise, shall bear interest at the rate of eighteen percent
(18%) per annum.
<PAGE>
The amount evidenced by this Note shall include all amounts loaned by Lender to
Maker for the purchase of certain shares of stock as set forth in the Stock
Purchase Agreement described above.
It is not intended hereby to charge interest at a rate in excess of the maximum
rate of interest permitted to be charged to Maker under applicable law, but if,
notwithstanding, interest in excess of such maximum rate shall be paid
hereunder, the excess shall be retained by the Lender and applied against and to
reduce the outstanding principal balance of the Note, unless such retention is
not permitted by law, in which case the interest rate on this Note shall be
adjusted to the maximum permitted under applicable law during the period or
periods that the interest rate otherwise provided herein would exceed such rate.
All payments of interest and principal due Lender under this Note shall be made
in lawful money of the United States of America to R. Douglas Spedding, c/o RDS,
Inc., at 4380 East Alameda Avenue, Glendale, Colorado 80222, or such other place
as Lender may designate to Maker in writing during the term of this Note, and
shall be sent via first class United States mail, postage prepaid.
This Note is unsecured and there are no other instruments or documents given by
Maker for the benefit of the Lender to secure this Note.
Time is of the essence hereof. Upon the occurrence of any event of default under
this Note, then the whole principal sum plus accrued interest shall, at the
option of the Lender, become immediately due and payable without notice or
demand, and the Lender, shall have and may exercise any or all of the rights and
remedies provided herein, as they may be amended, modified or supplemented from
time to time.
The following shall be deemed to be events of default by Maker under this Note:
(1) Maker shall fail to pay when due any installment of interest or principal or
any other payment required pursuant to this Note, or shall fail to comply with
any other term, provision or covenant of this Note or of the Purchase Documents,
and the failure is not cured within ten (10) days after written notice to Maker,
Maker hereby acknowledging that all defaults under this Note are material; or
(2) Maker shall file a petition or be adjudged bankrupt or insolvent under any
applicable federal or state bankruptcy or insolvency law or admit that it cannot
meet its financial obligations as they become due; or a receiver or trustee
shall be appointed for all or substantially
2
<PAGE>
all of the assets of Maker; or Maker shall make a transfer in fraud of creditors
or shall make an assignment for the benefit of creditors.
If Maker fails to pay any amount due under this Note or is otherwise in default
hereunder and Lender takes any action to collect the amount due or to exercise
its rights under the Note, including without limitation retaining attorneys for
collection of this Note, or if any suit or proceeding is brought for the
recovery of all or any part of or for protection of the indebtedness or to
enforce the Lender' rights under the Note, then Maker agrees to pay on demand
all reasonable attorney's fees, costs and expenses of any such action, suit or
proceeding, and any appeal of any such action, suit or proceeding, incurred by
Lender in undertaking such action against Maker.
Maker and any endorser hereof waive presentment for payment, protest, notice of
dishonor and protest, and consent to any extension of time with respect to any
payment due under this Note, to any substitution or release of collateral now or
hereafter taken pursuant to the Note, and to the addition or release of any
party. No waiver of any payment under this Note shall operate as a waiver of any
other payment.
No delay or failure of the holder of this Note in the exercise of any right or
remedy provided for hereunder shall be deemed a waiver of such right by the
holder hereof, and no exercise of any right or remedy shall be deemed a waiver
of any other right or remedy which the holder may have.
This Note and every covenant, agreement and other provision hereof shall be
binding upon Maker, and shall inure to the benefit of Lender. Maker shall have
no right to assign, convey, bargain, sell or otherwise transfer to any other
person or entity any of Maker's rights, privileges, powers, options, benefits,
duties or obligations under this Note without the prior written consent of
Lender, which consent may be granted or denied at the sole and absolute
discretion of Lender. For purposes of this Agreement, any change in control of
more than a 51% ownership stake in Maker's common stock equity or assets shall
constitute an assignment requiring the prior written consent of Lender.
In the event of any default or breach by Maker under the terms of this Note: (i)
if the amount of any proceeds collected by Lender in any foreclosure or similar
action is not sufficient to pay all amounts then due and owing under the Note,
all of such proceeds shall be paid to Lender, and Lender may assert a legal
claim
3
<PAGE>
against Maker for any difference still owed to Lender; and (ii) if the amount of
any proceeds collected by Lender in any foreclosure or similar action exceeds
the amount sufficient to pay all amounts then due and owing under the Note, an
amount of the proceeds sufficient to pay all amounts then due and owing under
the Note shall be paid to Lender and the excess or remainder of the proceeds
distributed and paid by Lender to Maker.
Any notice required to be given under this Note shall be in writing and shall be
hand delivered, sent by overnight courier or sent by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to Maker:
Cross-Continent Auto Retailers, Inc.
1201 S. Taylor
P.O. Box 750
Amarillo, Texas 79105-0750
Attn: Robert W. Hall
R. Wayne Moore
Lender:
R. Douglas Spedding
c/o RDS, Inc.
4380 E. Alameda Avenue
Glendale, Colorado 80222
With a copy to:
Burg & Eldredge, P.C.
40 Inverness Drive East
Englewood, Colorado 80112
Attn: Michael S. Burg
Any notice shall be deemed effective upon receipt by a party. For purposes of
this Note, receipt of notice shall be deemed effective (i) at the time the
written notice is hand delivered, (ii) one day after written notice is given to
an overnight courier (as evidenced by receipt from the overnight courier) for
next-day delivery to the other party, or (iii) five (5) days after the same is
deposited with the U.S. Postal Service. Either Maker or Lender may change its
address for the giving of notice hereunder by providing written notice to the
other parties hereunder.
4
<PAGE>
At the option of Lender, an action may be brought to enforce this Note in the
District Court in and for the County of Adams, State of Colorado, in the United
States District Court for the District of Colorado, or in any other court in
which venue and jurisdiction are proper. Maker and all signers or endorsers
hereof consent to venue and jurisdiction in the District Court in and for the
County of Adams, State of Colorado and in the United States District Court for
the District of Colorado and to service of process under Sections 13-1-124(1)(a)
and 13-1-125, Colorado Revised Statutes (1973), as amended, in any action
commenced to enforce this Note.
This Note to be governed by and construed according to the laws of the State of
Colorado.
DATED as of the day and year first set forth above.
"MAKER"
CROSS-CONTINENT AUTO RETAILERS, INC., a Delaware corporation
By /s/ Bill Gilliland
-------------------------------------
Title Chairman
----------------------------------
RECEIPT
Lender hereby states that on or about April 1, 1997, Lender received and agreed
to the terms of the original Promissory Note, dated April 1, 1997, payable to
Lender under that $7,000,000 loan made by R. Douglas Spedding, Lender to
Cross-Continent Auto Retailers, Inc., Maker.
By: /s/ R. Douglas Spedding
-------------------------------------
R. Douglas Spedding
<PAGE>
EXHIBIT 10.4
PROMISSORY NOTE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------------
| PRINCIPAL | LOAN DATE | MATURITY | LOAN NO. | | | ACCOUNT | OFFICER | |
| $6,000,000.00 | 04-04-1997 | 03-30-2000 | 7000014487 | CALL | COLLATERAL | 220181 | 187 | INITIALS |
|----------------------------------------------------------------------------------------------------------------------------------|
| References in the shaded area are for Lender's use only and do not limit the applicability of this document to any loan or item. |
----------------------------------------------------------------------------------------------------------------------------------
Borrower: Cross Continent Auto Retailers, Inc. Lender: AMARILLO NATIONAL BANK
P.O. Box 760 Plaza One, Box 1
Amarillo, TX 79105 Amarillo, Potter Co., TX 79105
===================================================================================================================================
PRINCIPAL AMOUNT: $6,000,000.00 INITIAL RATE: 7.813% DATE OF NOTE: APRIL 4, 1997
</TABLE>
PROMISE TO PAY. CROSS CONTINENT AUTO RETAILERS, INC. ("BORROWER") PROMISES TO
PAY TO AMARILLO NATIONAL BANK ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE
UNITED STATES OF AMERICA, THE PRINCIPAL AMOUNT OF SIX MILLION & 00/100 DOLLARS
($6,000,000.00), TOGETHER WITH INTEREST ON THE UNPAID PRINCIPAL BALANCE FROM
APRIL 4, 1997, UNTIL MATURITY.
PAYMENT. SUBJECT TO ANY PAYMENT CHANGES RESULTING FROM CHANGES IN THE INDEX,
BORROWER WILL PAY THIS LOAN IN 11 REGULAR PAYMENTS OF $667,085.41 EACH AND ONE
IRREGULAR LAST PAYMENT ESTIMATED AT $673,368.42. BORROWER'S FIRST PAYMENT IS
DUE JUNE 30, 1997, AND ALL SUBSEQUENT PAYMENTS ARE DUE ON THE SAME DAY OF EACH
QUARTER AFTER THAT. BORROWER'S FINAL PAYMENT DUE MARCH 30, 2000, WILL BE FOR
ALL PRINCIPAL AND ALL ACCRUED INTEREST NOT YET PAID. PAYMENTS INCLUDE PRINCIPAL
AND INTEREST. Interest on this Note is computed on a 365/360 simple interest
basis; that is, by applying the ratio of the annual interest rate over a year of
360 days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding, unless such
calculation would result in a usurious rate, in which case interest shall be
calculated on a per diem basis of a year of 365 or 366 days, as the case may be.
Borrower will pay Lender at Lender's address shown above or at such other place
as Lender may designate in writing. Unless otherwise agreed or required by
applicable law, payments will be applied first to accrued unpaid interest, then
to principal, and any remaining amount to any unpaid collection costs and late
charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an independent index which is the three
months LONDON INTERBANK OFFERED RATES (LIBOR) as published in the Wall Street
Journal on the first business day of each calendar month (the "Index"). The
Index is not necessarily the lowest rate charged by Lender on its loans. If the
Index becomes unavailable during the term of this loan, Lender may designate a
substitute index after notice to Borrower. Lender will tell Borrower the
current index rate upon Borrower's request. Borrower understands that Lender
may make loans based on other rates as well. The interest rate change will not
occur more often than each QUARTER. THE INDEX CURRENTLY IS 5.813% PER ANNUM.
THE INTEREST RATE TO BE APPLIED
<PAGE>
PRIOR TO MATURITY TO THE UNPAID PRINCIPAL BALANCE OF THIS NOTE WILL BE AT RATE
OF 2.000 PERCENTAGE POINTS OVER THE INDEX, RESULTING IN AN INITIAL RATE OF
7.813% PER ANNUM. NOTICE: Under no circumstances will the interest rate on this
Note be more than the maximum rate allowed by applicable law. For purposes of
this Note, the "maximum rate allowed by applicable law" means the greater of (a)
the maximum rate of interest permitted under federal or other law applicable to
the indebtedness evidenced by this Note, or (b) the "Indicated Rate Ceiling" as
referred to in Article 5069-1.04(a)(1) V.T.C.S. Whenever increases occur in the
interest rate, Lender, at its option, may do one or more of the following: (a)
increase Borrower's payments to ensure Borrower's loan will pay off by its
original final maturity date, (b) increase Borrower's payments to cover accruing
interest, (c) increase the number of Borrower's payments, and (d) continue
Borrower's payments at the same amount and increase Borrower's final payment.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue to make
payments under the payment schedule. Rather, they will reduce the principal
balance due and may result in Borrower making fewer payments.
POST MATURITY RATE. The Post Maturity Rate on this Note is the maximum rate
allowed by applicable law. Borrower will pay interest on all sums due after
final maturity, whether by acceleration or otherwise, at that rate, with the
exception of any amounts added to the principal balance of this Note based on
Lender's payment of insurance premiums, which will continue to accrue interest
at the pre-maturity rate.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due, (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender, (c) Any representation or statement made or furnished to Lender
by Borrower or on Borrower's behalf is false or misleading in any material
respect either now or at the time made or furnished, (d) Borrower becomes
involvent, a receiver is appointed for any part of Borrower's property, Borrower
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by Borrower or against Borrower under any bankruptcy or insolvency laws,
(e) Any creditor tries to take any of Borrower's property on or in which Lender
has a lien or security interest. This includes a garnishment of any of
Borrower's accounts with Lender, (f) Any guarantor dies or any of the other
events described in this default section occurs with respect to any guarantor of
this Note, (g) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
indebtedness is impaired, (h) Lender in good faith deems itself insecure.
If any default, other than a default in payment, is curable, it may be cured
(and no event of default will have occurred) if Borrower, after receiving
written notice from Lender demanding cure of such default: (a) cures the
default within fifteen (15) days; or (b) if the cure requires more than fifteen
(15) days, immediately initiates steps which Lender deems in Lender's sole
-2-
<PAGE>
discretion to be sufficient to cure the default and thereafter continues and
completes all reasonable and necessary steps sufficient to produce compliance as
soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire indebtedness,
including the unpaid balance on this Note, all accrued unpaid interest, and all
other amounts, costs and expenses for which Borrower is responsible under this
Note or any other agreement with Lender pertaining to this loan, immediately
due, without notice, and then Borrower will pay that amount. Lender may hire an
attorney to help collect this Note if Borrower does not pay, and Borrower will
pay Lender's reasonable attorneys' fees. Borrower also will pay Lender all
other amounts actually incurred by Lender as court costs, lawful fees for
filing, recording, or releasing to any public office any instrument securing
this loan; the reasonable cost actually expended for repossessing, storing,
preparing for sale, and selling any security; and fees for noting a lien on or
transferring a certificate of title to any motor vehicle offered as security for
this loan, or premiums or identifiable charges received in connection with the
sale of authorized insurance. THIS NOTE HAS BEEN DELIVERED TO LENDER AND
ACCEPTED BY LENDER IN THE STATE OF TEXAS. IF THERE IS A LAWSUIT, AND IF THE
TRANSACTION EVIDENCED BY THIS NOTE OCCURRED IN POTTER COUNTY, BORROWER AGREES
UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF POTTER
COUNTY, THE STATE OF TEXAS. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. In particular, this section means (among other
things) that Borrower does not agree or intend to pay, and Lender does not agree
or intend to contract for, charge, collect, take, reserve or receive
(collectively referred to herein as "charge or collect"), any amount in the
nature of interest or in the nature of a fee for this loan, which would in any
way or event (including demand, prepayment, or acceleration) cause Lender to
charge or collect more for this loan than the maximum Lender would be permitted
to charge or collect by federal law or the law of the State of Texas (as
applicable). Any such excess interest or unauthorized fee shall, instead of
anything stated to the contrary, be applied first to reduce the principal
balance of this loan, and when the principal has been paid in full, be refunded
to Borrower. The right to accelerate maturity of sums due under this Note does
not include the right to accelerate any interest which has not otherwise accrued
on the date of such acceleration, and Lender does not intend to charge or
collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to Lender for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the loan evidenced by
this Note until payment in full so that the rate or amount
-3-
<PAGE>
of interest on account of the loan evidenced hereby does not exceed the
applicable usury ceiling. Lender may delay or forgo enforcing any of its rights
or remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest, notice of dishonor, notice of intent
to accelerate the maturity of this Note, and notice of acceleration of the
maturity of this Note. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral without the consent of or notice to anyone. All such
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
Cross Continent Auto Retailers, Inc.
By:
------------------------------------
Bill Gilliand, President
-4-
<PAGE>
EXHIBIT 10.5.1
Promissory Note
$2,000,000
Denver, Colorado
April 10, 1997
FOR VALUE RECEIVED, Cross-Continent Auto Retailers, Inc., a Delaware
corporation ("Maker"), promises to pay to the order of RDS, Inc. ("Holder") at
4380 E. Alameda Avenue, Glendale, Colorado 80222 (or, at the option of the legal
holder of this Note, at such other place as said holder shall designate in
writing), in coin or currency which, at the time or times of payment, is legal
tender for public or private debts in the United States, the principal sum of
TWO MILLION DOLLARS ($2,000,000) with interest thereon from the date hereof at
the prime or reference rate announced by the Bank of America and published in
the Western addition of the Wall Street Journal. The interest rate of this Note
will adjust as the Bank of America prime or reference rate adjusts.
Monthly payments of interest shall be payable in arrears on the first day of
each month commencing May 1, 1997 ("Interest Payment Date"). Any payment not
received by the tenth day of any month shall, at the option of Holder,
constitute a default hereunder. All principal and accrued interest shall become
due and payable without notice on October 1, 1997.
The payment of this Note and all interest hereon is secured by a deed of
trust ("Deed of Trust"), security agreement, assignment of rents and lien
instruments (the "Security Instruments") executed by Maker. This Note is to be
construed according to the laws of the State of Colorado.
This loan may be prepaid in whole or in part at any time without penalty.
If there shall be any default in the making of any payment as herein
provided, or any part thereof, or in the performance of any of the terms,
agreements, covenants, or conditions contained in said Deed of Trust or the
Security Instruments after the expiration of any applicable cure period, then
the entire principal amount hereof, together with all accrued interest and any
additional sums to be paid under the Deed of Trust, or advanced by the holder
hereof, at the election of the holder hereof, shall at once become due and
payable and shall bear interest at the rate of 18% per annum. The failure to
exercise this election upon a default shall not constitute a waiver of the right
to exercise this option in the event of any subsequent or continuing default.
By acceptance of this Note, Maker for itself, its successors and assigns,
agrees that a deficiency judgment hereon or on any of the Security Instruments
may be sought or taken against Maker for the purpose of obtaining satisfaction
in payment hereof, or for breach of any warranty, representation or covenant
contained in any of the Security Instruments or the Deed of Trust.
The provisions of this Note and of all agreements between Maker and the
Holder hereof are hereby expressly limited so that in no contingency or event
whatsoever shall the amount of interest paid or agreed to be paid to the Holder
for the use, forebearance, or detention of the money to be
<PAGE>
loaned under this Note or secured by the Deed of Trust exceed the maximum amount
permissible under applicable law. If from any circumstance whatsoever the
performance or fulfillment of any provision hereof or of any other agreement
between Maker and the Holder hereof shall, at the time performance or
fulfillment of such provision shall be due, involve transcending the limit or
validity prescribed by law, then, the obligation to be performed or fulfilled
shall be reduced to the limit of such validity, and if from any circumstance
whatsoever the Holder hereof should ever receive as interest an amount which
would exceed the highest lawful rate, the amount which would be excessive
interest shall be applied to the reduction of the principal balance owing
hereunder (or, at the Holder's option, be paid over to Maker) and not to the
payment of interest.
In the event that any monthly installment of interest shall not be received
within 10 days of the Interest Payment Date, the Maker shall pay an amount equal
to 10% of the amount of such past due installment as a late charge for the loss
of the use of the funds and for the expense of handling the delinquent payment.
The rights and remedies of the Holder as provided in this Note, the Security
Instruments, including without limitation, the Deed of Trust shall be cumulative
and concurrent and may be pursued singly, successively, or together against
Maker, the property described in said Deed of Trust, and any other funds,
property, or security held by the Holder for the payment hereof at the sole
discretion of the Holder. The failure to exercise any such right or remedy
shall in no event be construed as a waiver or release of said rights or remedies
or of the rights to exercise them at any later time.
The Maker and all endorsers, guarantors, sureties, accommodation parties
hereof, and all other persons liable or to become liable for all or any part of
this indebtedness, jointly and severally waive diligence, presentment, protest,
and demand, and also notice of protest, of demand, of dishonor, and of maturity;
and they also jointly and severally hereby consent to any and all renewals,
extensions, or modifications of the terms hereof, including time for payment,
and further agree that any such renewal, extension, or modification of the terms
hereof or the release or substitution of any security for the indebtedness
evidenced hereby shall not affect the liability of any of said parties for the
indebtedness evidenced by this Note. Any such renewals, extensions, or
modifications may be made without notice to any of said parties.
The Maker, endorsers, guarantors, sureties, accommodation parties hereof,
and all other persons liable or to become liable on this Note agree jointly and
severally to pay all costs of collection, including reasonable attorneys' fees
and all costs of suit, in case the unpaid principal sum of this Note or any
payment of interest or principal and interest thereon or premium is not paid
when due, or in case it becomes necessary to protect the security for the
indebtedness evidenced hereby, or for the foreclosure by the Holder of the Deed
of Trust, or in the event the Holder is made a party to any litigation because
of the existence of the indebtedness evidenced by this Note, or because of the
existence of the Deed of Trust, whether suit be brought or not, and whether
through courts of original jurisdiction, as well as in courts of appellate
jurisdiction, or through a bankruptcy court or other legal proceedings.
2
<PAGE>
This Note may not be amended, modified, or changed, nor shall any waiver of
any provision hereby be effective, except only by an instrument in writing and
signed by the party against whom enforcement of any waiver, amendment, change,
modification, or discharge is sought.
Whenever used herein, the words "Maker" and "Holder" shall be deemed to
include their respective heirs, personal representatives, successors, and
assigns.
MAKER:
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Bill Gilliland
-----------------------------------------
Bill Gilliland, Chairman of the Board and
Chief Executive Officer
3
<PAGE>
EXHIBIT 10.5.2
SECURITY AGREEMENT
AGREEMENT made this 10th day of April, 1997, between Cross-Continent
Auto Retailers, Inc., a Delaware corporation, as debtor (hereinafter
collectively referred to as "Debtor") and RDS. INC., a Delaware corporation
("Lender"), as secured party.
RECITALS
This Security Agreement and pledge of collateral is given in
conjunction with that certain sale of real property from Lender to Debtor.
Now therefore, in recognition of the exchange of good and valuable
consideration, Debtor hereby agrees for the benefit of Lender as follows:
1. Debtor hereby grants the Lender a security interest (collectively
referred to as the "Security Interests") in the property described below, as
security for the payment and performance of the terms and conditions of that
certain Promissory Note of even date herewith in the principal amount of
$2,000,000 (the "Obligation"). The Security Interests shall attach to the
following property of Debtor (the "Collateral"), and all proceeds thereof:
PERSONAL PROPERTY: All equipment, furniture and fixtures, owned by
Debtor and located on or used exclusively in conjunction with the
property described in Exhibit A attached hereto (the "Property"), and
all licenses and permits related thereto;
together with all substitutions and replacements for and products of any of the
foregoing property and together with proceeds of any and all of the foregoing
property and, in the case of all tangible Collateral, together with all
accessions and together with all accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed to or used in connection with any
such goods.
2. Debtor represents, warrants and agrees that:
a. Debtor has (or will have at the time it acquires rights in
Collateral hereafter arising) and will maintain so long as the Security
Interests may remain outstanding, absolute title to each item of Collateral and
all proceeds thereof, free and clear of all interests, liens, attachments,
encumbrances and security interests except the Security Interests and except as
provided herein or in the Deed of Trust of even date herewith between the Debtor
and the Lender or as the Lender may otherwise agree in writing. Debtor will
defend the Collateral against all claims or demands of all persons (other than
the Lender or the holder of any security interest permitted by this subsection)
claiming the Collateral or any interest therein. Debtor will not sell or
otherwise dispose of the Collateral or any interest therein, except the sale of
inventory in the ordinary course of Debtor's business, without the Lender's
prior written consent.
b. Each right to payment and each instrument, document, chattel
paper and other agreement constituting or evidencing Collateral is (or, in the
case of all future Collateral, will be when arising or issued) the valid,
genuine and legally enforceable obligation, subject to no defense, set-off or
counterclaim, of the account debtor or other obligor named therein or in
Debtor's records pertaining thereto as being obligated to pay such obligation.
Debtor will not modify, amend, subordinate, cancel or terminate the obligation
of any such account debtor or other obligor without the Lender's prior written
consent.
<PAGE>
c. Debtor will keep all tangible Collateral in good repair, working
order and condition, normal wear and tear excepted, and will, from time to time,
replace any worn, broken or defective parts.
d. Debtor will promptly pay all taxes and other governmental
charges levied or assessed upon or against any Collateral or upon or against the
creation, perfection or continuance of the Security Interests.
e. Debtor will keep all Collateral free and clear of all security
interests, liens and encumbrances except the Security Interests and other
security interests permitted hereby or otherwise approved in writing by the
Lender.
f. Debtor will at all reasonable times permit the Lender or its
representatives to examine or inspect any Collateral, or any evidence of
Collateral, wherever located, and Debtor will at any time and from time to time
send requests for verification of accounts or notices of assignment to account
debtors and other obligors.
g. Debtor will keep accurate and complete records pertaining to the
Collateral and pertaining to Debtor's business and financial condition, prepared
on the basis of generally accepted accounting principles consistently
maintained; will submit to the lender such monthly and other periodic reports
concerning the Collateral and Debtor's business and financial condition as the
Lender may from time to time reasonably request; and will permit the Lender, or
its employees, accountants, attorneys or agents, to examine and copy any or all
of its records at any time during Debtor's business hours. Lender agrees to use
reasonable efforts to maintain the confidentiality of information concerning the
Debtor or its business indicated by the Debtor to be confidential but nothing
contained herein shall prevent the use by Lender of any such information
(including the disclosure of such information by Lender if deemed necessary by
Lender in the exercise of its reasonable judgment) in the administration or
collection by Lender of the Obligation or shall constitute a defense by Debtor
to repayment of such Obligation in full.
h. Debtor will promptly notify the Lender of any loss of or
material damage to any Collateral or of any substantial adverse change, known to
Debtor, in any Collateral or the prospect of payment thereof.
i. Upon request by the Lender, whether such request is made before
or after the occurrence of an Event of Default, Debtor will promptly deliver to
the Lender in pledge all instruments, documents and chattel papers constituting
Collateral, duly endorsed or assigned by Debtor.
j. Debtor will at all times keep all tangible Collateral insured
against risks of fire (including so-called extended coverage), theft and such
other risks and in such amounts as the Lender may reasonably request, with any
loss payable to the lender to the extent of its interest.
k. Debtor will pay or reimburse the Lender on demand for all costs
of collection of any of the Obligation and all other out-of-pocket expenses
(including in each case all reasonable attorneys' fees and legal expenses)
incurred by the Lender in connection with the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interests or the
creation, continuance or enforcement of this Agreement or any or all of the
Obligation.
2
<PAGE>
l. Debtor will use and keep the Collateral, and will require that
others use and keep the Collateral, only for lawful purposes, without violation
of any federal, state or local law, statute or ordinance.
m. Debtor from time to time will execute and deliver or endorse any
and all instruments, documents, conveyances, assignments, security agreements,
financing statements and other agreements and writings which the Lender may
reasonably request in order to secure, protect, perfect or enforce the Security
Interests or the rights of the Lender under this Agreement (but any failure to
request or assure that Debtor executes, delivers or endorses any such item shall
not affect or impair the validity, sufficiency or enforceability of this
Agreement and the Security Interests, regardless of whether any such item was or
was not executed, delivered or endorsed in a similar context or on a prior
occasion).
If Debtor at any time fails to perform or observe any of the foregoing
agreements, and if such failure shall continue for a period of ten calendar days
after the Lender gives Debtor written notice thereof (or in the case of the
agreements contained in clauses (e) and (j) above, immediately upon the
occurrence of such failure, without notice or lapse of time), the Lender may,
but need not, perform or observe such agreement on behalf and in the name, place
and stead of Debtor (or, at the Lender's option, in the lender's name) and may,
but need not, take any and all other actions which the Lender may reasonably
deem necessary to cure or correct such failure (including, without limitation,
the payment of taxes, the satisfaction of security interests, liens or
encumbrances, the performance of Obligation owed to account debtors or other
obligors, the procurement and maintenance of insurance, the execution of
assignments, security agreements and financing statements, and the endorsement
of instruments); and Debtor shall thereupon pay to the Lender on demand the
amount of all monies expended and all costs and expenses (including reasonable
attorneys' fees and legal expenses) incurred by the Lender in connection with or
as a result of the performance or observance of such agreements or the taking of
such action by the Lender, together with interest thereon from the date expended
or incurred at the rate of 18%.
3. Debtor agrees to deliver to the Lender, or, at the Lender's option,
to deposit in one or more special collateral accounts maintained for the Lender
by any bank reasonably satisfactory to the lender, all cash proceeds of
Collateral, immediately upon receipt thereof, in the form received, except for
Debtor's endorsement when deemed necessary. Amounts deposited in a collateral
account shall bear interest but shall not be subject to withdrawal by Debtor,
except after full payment and discharge of all Obligation. Until delivered to
the Lender or deposited in a collateral account, all proceeds or collections of
Collateral shall be held in trust by Debtor for and as the property of the
Lender and shall not be commingled with any funds or property of Debtor. The
Lender may deposit out of any collateral account in the lender's general account
and may commingle such collections with other property of the Lender. All items
shall be delivered to the Lender or deposited in any collateral account subject
to final payment. If any such item is returned uncollected, Debtor will
immediately pay the Lender, or, for items deposited in a collateral account, the
bank maintaining such account, the amount of the items, or such bank at its
discretion may charge any uncollected item to Debtor's commercial account or
other account. The Lender from time to time at its discretion may apply funds on
deposit in any collateral account to the payment of any or all Obligation, in
any order or manner of application satisfactory to the Lender.
4. In addition to the rights of the Lender under paragraph 3 with
respect to any and all rights to payment constituting Collateral the Lender may
at any time (either before or after the occurrence of an Event of Default under
paragraph 6) notify any account debtor or other person obligated to pay the
amount due that such right to payment has been assigned or transferred to the
Lender for security and shall be paid directly to the Lender. Debtor will join
in giving such notice, if the Lender so requests. At any time after Debtor or
the Lender gives such notice to an account debtor or other obligor, the Lender
may, but need not, in the Lender's
3
<PAGE>
name or in Debtor's name, demand, sue for, collect or receive any money or
property at any time payable or receivable on account of, or securing, any such
right to payment, or grant any extension to, make any compromise or settlement
with or otherwise agree to waive, modify, amend or change the Obligation
(including collateral obligations) of any such account debtor or other obligor;
and (ii) as agent and attorney in fact of Debtor, notify the United States
Postal Service to change the address for delivery of Debtor's mail to any
address designated by the Lender, otherwise intercept Debtor's mail, and
receive, open and dispose of Debtor's mail, applying all Collateral as permitted
under this Agreement and holding all other mail for Debtor's account or
forwarding such mail to Debtor's last known address.
5. As additional security for the payment and performance of the
Obligation, Debtor hereby assigns to the Lender any and all monies (including,
without limitation, proceeds of insurance and refunds of unearned premiums) due
or to become due under, and all other rights of Debtor with respect to, any and
all policies of insurance now or at any time hereafter covering the Collateral
or any evidence thereof or any business records or valuable papers pertaining
thereto, and Debtor hereby directs the issuer of any such policy to pay all such
monies directly to the lender. If Debtor has not settled any insurance claim
within 60 days of the occurrence resulting in such claim, or at any time after
the occurrence of any Event of Default, the Lender may (but need not), in the
Lender's name or in Debtor's name, execute and deliver proof of claim, receive
all such monies, endorse checks and other instruments representing payment of
such monies, and adjust, litigate, compromise or release any claim against the
issuer of any such policy.
6. Each of the following occurrences shall constitute an Event of
Default under this Agreement (herein called an "Event of Default"): (i) Debtor
shall fail to pay any or all of the Obligation within 10 days of the date
payment is due; or (ii) Debtor shall fail to observe or perform any covenant or
agreement binding on Debtor under this Agreement or under any other assignment,
conveyance, instrument or agreement now in effect or hereafter made between
Debtor and the Lender within 20 days of written notice from Lender of such non-
performance or default; or (iii) any representation or warranty made by Debtor
in this Agreement or in any such other assignment, conveyance, instrument or
agreement, or in any financial statements, or reports or certificates heretofore
or at any time hereafter submitted by or on behalf of Debtor to the Lender,
shall prove to have been false or materially misleading when made; or (iv)
payment of any substantial indebtedness of Debtor, other than the Obligation,
shall be demanded or the maturity of any such indebtedness shall be accelerated,
or any precondition or circumstance permitting any creditor of Debtor, acting
individually or with the consent of other creditors, to accelerate the maturity
of any such indebtedness shall have occurred (for this purpose indebtedness
shall be deemed substantial if it exceeds $5,000,000); or (v) Debtor shall
become insolvent or shall file or have filed against it, voluntarily or
involuntarily, a petition in bankruptcy or for reorganization or for the
adoption of an arrangement or plan under the United States Bankruptcy Code or
shall procure or suffer the appointment of a receiver for any substantial
portion of its properties, or shall initiate or have initiated against it,
voluntarily or involuntarily, any act, process or proceeding under any
insolvency law or other statute or law providing for the modification or
adjustment of the rights of creditors; (vi) there shall be any default under the
Note or Deed of Trust given by Debtor of even date herewith to Lender.
7. Upon the occurrence of an Event of Default under paragraph 6 and at
any time thereafter, the lender may exercise one or more of the following rights
and remedies; (i) declare all unmatured Obligation to be immediately due and
payable, and the same shall thereupon be immediately due and payable, without
presentment or other notice or demand; (ii) exercise and enforce any and all
rights and remedies available upon default to a secured party under the Uniform
Commercial Code, including, without limitation, the right to take possession of
Collateral, or any evidence thereof, proceeding without judicial process or by
judicial process (without a prior hearing or notice thereof, which Debtor hereby
expressly waives) and the right to sell, lease
4
<PAGE>
or otherwise dispose of any or all of the Collateral, and in connection
therewith Debtor will on demand assemble the Collateral and make it available to
the Lender as a place to be designated by the lender which is reasonably
convenient to both parties. If notice to Debtor of any intended disposition of
Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given (in the
manner specified in paragraph 9) at least ten calendar days prior to the date of
intended disposition or other action; (iii) without notice or demand offset any
indebtedness the Lender or any of its participants, successors or assigns then
owes to Debtor, whether or not then due, against any Obligation then owed to the
Lender or any of its participants, successors or assigns by Debtor, whether or
not then due; and (iv) exercise or enforce any and all other rights or remedies
available by law or agreement against the Collateral, against Debtor, or against
any other person or property.
8. This Agreement does not contemplate a sale of accounts, contract
rights or chattel paper, and, as provided by law, Debtor is entitled to any
surplus and shall remain liable for any deficiency. The lender's duty of care
with respect to Collateral in its possession (as imposed by law) shall be deemed
fulfilled if it exercises reasonable care in physically keeping such Collateral,
or in the case of Collateral in the custody or possession of a bailee or other
third person, exercises reasonable care in the selection of the bailee or other
third person, and the Lender need not otherwise preserve, protect, insure or
care for any Collateral. The Lender shall not be obligated to preserve any
rights Debtor may have against prior parties, to realize on the Collateral at
all or in any particular manner or order or to apply any cash proceeds of the
Collateral in any particular order of application.
9. This Agreement can be waived, modified, amended, terminated or
discharged, and the Security Interests can be released, only explicitly in
writing signed by the Lender. A waiver so signed shall be effective only in the
specific instance and for the specific purpose given. Mere delay or failure to
act shall not preclude the exercise or enforcement of any rights or remedies
available to the Lender. All rights and remedies of the Lender shall be
cumulative and may be exercised singularly in any order or sequence, or
concurrently, at the Lender's option, and the exercise or enforcement of any
such right or remedy shall neither be a condition to nor bar the exercise or
enforcement of any other. All notices to be given to Debtor shall be deemed
sufficiently given if delivered or mailed by registered, certified or ordinary
mail, postage prepaid, to Debtor at its address set forth below or at its most
recent address shown on the Lender's records.
10. The Lender and its participants, if any, are not partners or joint
venturers, and the Lender shall not have any liability or responsibility for any
obligation, act or omission of any of its participants.
11. This Agreement, and the Security Interests granted hereby, shall
be binding upon Debtor, its successors and assigns, and shall inure to the
benefit of and be enforceable by the Lender and each and all of its
participants, successors and assigns, and shall be effective when executed by
Debtor and delivered to the lender whether or not this Agreement is executed by
the Lender. All rights and powers specifically conferred upon the Lender may be
transferred or delegated to any of the participants, successors or assigns of
the Lender. Except to the extent otherwise required by law, this Agreement and
the transaction evidenced hereby shall be governed by the substantive laws of
the State of Colorado. If any provision or application of this Agreement is held
unlawful or unenforceable in any respect, such illegality or unenforceability
shall not affect other provisions or applications which can be given effect, and
this Agreement shall be construed as if the unlawful or unenforceable provision
or application had never been contained herein or prescribed hereby. All
representations and warranties contained in this Agreement or in any other
agreement between Debtor and the Lender shall survive the execution, delivery
and performance of this Agreement and the creation and payment of the
Obligation. Debtor waives notice of the acceptance of this Agreement by the
Lender.
5
<PAGE>
12. A carbon, photographic or other reproduction of this Security
Agreement or of any financing statements signed by the Debtor is sufficient as a
financing statement and may be filed as a financing statement in any state to
perfect the security interests granted hereby.
IN WITNESS WHEREOF, this Security Agreement has been duly executed and
delivered by the proper officers thereunto duly authorized on the day and year
first above written.
DEBTOR:
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Bill Gilliland
-------------------------------------------
Bill Gilliland, Chairman of the Board
and Chief Executive Officer
Address: 1201 S. Taylor
Amarillo, Texas 79101
6
<PAGE>
EXHIBIT 10.5.3
IF THIS FORM IS USED IN A CONSUMER CREDIT TRANSACTION, CONSULT
LEGAL COUNSEL.
THIS IS A LEGAL INSTRUMENT. IF NOT UNDERSTOOD, LEGAL, TAX OR
OTHER COUNSEL SHOULD BE CONSULTED BEFORE SIGNING.
DEED OF TRUST
(DUE ON TRANSFER - STRICT)
THIS DEED OF TRUST is made on this day of April 10, 1997, between CROSS-
-------------- ------
CONTINENT AUTO RETAILERS, INC., A DELAWARE CORPORATION (Borrower). Whose
- ------------------------------------------------------
address is ___________________________________________________; and the Public
Trustee of the County in which the Property (see paragraph 1) is situated
(Trustee); for the benefit of RDS, INC., A DELAWARE CORPORATION (Lender), whose
---------------------------------
address is 4380 E. Alameda Ave., Glendale, CO 80222
----------------------------------------
Borrow and Lender covenant and agree as follows:
1. Property in Trust. Borrower, in consideration of the indebtedness
herein recited and trust herein created, hereby grants and conveys to Trustee
with trust, with power of sale , following described property located in the
___________________ county of ADAMS, State of Colorado:
-----
LOT 2, TURNPIKE-INTERSTATE ADDITION, FILING NO. 1, COUNTY OF ADAMS, STATE
OF COLORADO.
which has the address of 7300 NORTH BROADWAY, DENVER, CO
-------------------------------
(Complete Address)
(Property Address), together with all its appurtenances (Property).
2. Note; Other Obligations Secured. This Deed of Trust is given to
secure to Lender:
A. the repayment of the indebtedness evidenced by Borrower's note (Note)
dated April 10, 1997, in the principal sum of TWO MILLION DOLLARS AND NO/100
-------------- ------------------------------
U.S. Dollars, with interest on the unpaid principal balance from April 10, 1997,
--------------
until paid, at the rate of * percent per annum, with principal and interest
-----
payable at 4380 E. ALAMEDA AVE., GLENDALE, CO 80222 or such either place as the
----------------------------------------
Lender may designate, in MONTHLY INTEREST payments of: * Dollars
---------------- -----
(U.S.______) due on the 1st, day of each MONTH beginning May 01, 1997; such
----- ------------
payments to continue until the entire indebtedness evidenced by said Note is
fully paid; however, if not sooner paid, the entire principal amount outstanding
and accrued interest thereon, shall be due and payable on October 01, 1997;
----------------
* INTEREST AT THE PRIME OR REFERENCE RATE ANNOUNCED BY THE BANK OF AMERICA
AND PUBLISHED IN THE WESTERN ADDITION OF THE WALL STREET JOURNAL. THE INTEREST
RATE OF THIS NOTE WILL ADJUST AS THE BANK OF AMERICA PRIME OR REFERENCE RATE
ADJUSTS.
and Borrower is to pay to Lender a late charge of 10% of any payment not
---
received by the Lender within 10 days after payment is due; and Borrower has the
--
right to prepay the principal amount outstanding under said Note, in whole or in
part, at any time without penalty except
<PAGE>
THIS LOAN MAY BE PREPAID IN WHOLE OR IN PART AT ANY TIME WITHOUT PENALTY. ANY
PAYMENT NOT RECEIVED BY THE TENTH DAY OF ANY MONTH SHALL, AT THE OPTION OF
HOLDER, CONSTITUTE A DEFAULT HEREUNDER. DEFAULT RATE SHALL BE 18 PERCENT, SEE
PROMISSORY NOTE FOR ALL ADDITIONAL TERMS.
B. The payment of all other sums, with interest thereon at 18% per annum,
---
disbursed by Lender in accordance with this Deed of Trust to protect the
security of this Deed of Trust; and
C. The performance of the covenants and agreements of Borrower herein
contained.
3. Title. Borrower covenants that Borrower owns and has the right to
grant and convey the Property, and warrants title to the same, subject to
general real estate taxes for the current year, easements of record or in
existence, and recorded declarations, restrictions, reservations, and covenants,
if any, as of this date and except EXCEPTIONS AS LISTED ON EXHIBIT "A" ATTACHED
AND MADE A PART HEREOF AS IF FULLY SET FORTH HEREIN
4. Payment of Principal and Interest. Borrower shall promptly pay when
due the principal of and interest on the indebtedness evidenced by the Note, and
late charges as provided in the Note and shall perform all of Borrower's other
covenants contained in the Note.
5. Application of Payments. All payments received by Lender under the
terms hereof shall be applied by Lender first in payment of amounts due pursuant
to paragraph 23 (Escrow Funds for Taxes and Insurance) then to amounts disbursed
by Lender pursuant to paragraph 9 (Protection of Lender's Security), and the
balance in accordance with the terms and conditions of the Note.
6. Prior Mortgages and Deeds of Trust; Charges; Liens. Borrower shall
perform all of Borrower's obligations under any prior deed of trust and any
prior liens. Borrower shall pay all taxes, assessments and other charges,
fines and impositions attributable to the Property which have or attain a
priority over this Deed of Trust, and leasehold payments or ground rents, if
any, in the manner set out in paragraph 23 (Escrow Funds for Taxes and
Insurance) or, if not required to be paid in such manner, by Borrower making
payment when due, directly to the payee thereof. Despite the foregoing,
Borrower shall not be required to make payments otherwise required by this
paragraph if Borrower, after notice to Lender, shall in good faith contest such
obligation by, or defend enforcement of such obligation in, legal proceedings
which operate to prevent the enforcement of the obligation or forfeiture of the
Property or any part thereof, only upon Borrower making all such contested
payments and other payments as ordered by the court to the registry of the court
in which such proceedings are filed.
7. Property Insurance. Borrower shall keep the improvements now existing
or hereafter erected on the Property insured against loss by fire or hazards
included within the term "extended coverage" in an amount at least equal to the
lesser of (1) the insurable value of the Property or (2) an amount sufficient
to pay the sum secured by this Deed of Trust as well as any prior encumbrances
on the Property. All of the foregoing shall be known as "Property Insurance".
The insurance carrier providing the insurance shall be qualified to write
Property Insurance in Colorado and shall be chosen by Borrower subject to
Lender's right to reject the chosen carrier for reasonable cause. All
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<PAGE>
insurance policies and renewals thereof shall include a standard mortgage clause
in favor of Lender, and shall provide that the insurance carrier shall notify
Lender at least ten (10) days before cancellation, termination or any material
change of coverage. Insurance policies shall be furnished to Lender at or before
closing. Lender shall have the right to hold the policies and renewals thereof.
In the event of loss, Borrower shall give prompt notice to the insurance
carrier and Lender. Lender may make proof of loss if not made promptly by
Borrower.
Insurance proceeds shall be applied to restoration or repair of the
Property damaged, provided such restoration or repair is economically feasible
and the security of this Deed of Trust is not thereby impaired. If such
restoration or repair is not economically feasible or if the security of this
Deed of Trust would be impaired, the insurance proceeds shall be applied to the
sums secured by this Deed of Trust, with the excess, if any, paid to Borrower.
If the Property is abandoned by Borrower, or if Borrower fails to respond to
Lender within 30 days from the date notice is given in accordance with paragraph
16(Notice) by Lender to Borrower that the insurance carrier offers to settle a
claim for insurance benefits. Lender is authorized to collect and apply the
insurance proceeds, at Lender's option, either to restoration or repair of the
Property or to the sums secured by this Deed of Trust.
Any such application of proceeds to principal shall not extend or postpone
the due date of the installments referred to in paragraph 4 (Payment of
Principal and Interest) and 23 (Escrow Funds for Taxes and Insurance) or change
in the amount of such installments. Notwithstanding anything herein to the
contrary, if under paragraph 18 (Acceleration; Foreclosure; Other Remedies) the
Property is acquired by Lender, all right, title and interest of Borrower in and
to any insurance policies and in and to the proceeds thereof resulting from
damage to the Property prior to the sale or acquisition shall pass to Lender to
the extent of the sums secured by this Deed of Trust immediately prior to such
sale or acquisition.
All of the rights of Borrower and Lender hereunder with respect to
insurance carriers, insurance policies and insurance proceeds are subject to the
rights of any holder of a prior deed of trust with respect to said insurance
carriers, policies and proceeds.
8. Preservation and Maintenance of Property. Borrower shall keep the
Property in good repair and shall not commit waste or permit impairment or
deterioration of the Property and shall comply with the provisions of any lease
if this Deed of Trust is on a leasehold. Borrower shall perform all of
Borrower's obligations under any declarations, covenants, by-laws, rules, or
other documents governing the use, ownership or occupancy of the Property.
9. Protection of Lender's Security. Except when Borrower has exercised
Borrower's rights under paragraph 6 above, if the Borrower fails to
perform the covenants and agreements contained in this Deed of Trust,
or if a default occurs in a prior lien, or if any action or proceeding
is commenced which materially affects Lender's interest in the
Property, then Lender, at Lender's option, with notice to Borrower if
required by law, may make such appearances, disburse such sums and take
such action as is necessary to protect Lender's interest, including,
but not limited to:
a) any general or special taxes or ditch or water assessments levied
or accruing against Property;
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<PAGE>
b) the premiums on any insurance necessary to protect any improvements
comprising a part of the Property;
c) sums due on any prior lien or encumbrance on the Property;
d) if the Property is a leasehold or is subject to a lease, all sums due
under such lease;
e) the reasonable cost, and expenses of defending, protecting, and
maintaining the Property and Lender's interest in the Property,
including repair and maintenance costs and expenses, costs and expenses
of protecting and securing the Property, receiver's fees and expenses,
inspection fees, appraisal fees, court costs, attorney fees and costs
of an attorney in the employment of the Lender or holder of the
certificate of purchase;
f) all other costs and expenses allowable by the evidence of debt or this
Deed of Trust, and
g) such other costs and expenses which may be authorized by a court of
competent jurisdiction.
Borrower hereby assigns to Lender any right Borrower may have by reason of
any prior encumbrance on the Property or by law or otherwise to cure any default
under said prior encumbrance.
Any amounts disbursed by Lender pursuant to this paragraph 9, with interest
thereon, shall become additional indebtedness of Borrower secured by this Deed
of Trust. Such amounts shall be payable upon notice from Lender to Borrower
requesting payment thereof, and Lender may bring suit to collect any amounts so
disbursed plus interest specified in paragraph 28 (Note: Other Obligations
Secured). Nothing contained in this paragraph 9 shall require Lender to incur
any expense or take any action hereunder.
10. Inspection. Lender may make or cause to be made reasonable entries
upon and inspection of the Property, provided that Lender shall give Borrower
notice prior to any such inspection specifying reasonable cause therefore
related to Lender's interest in the Property.
11. Condemnation. The proceeds of any award or claim for damage, direct
or consequential, in connection with any condemnations or other taking of the
Property, or part thereof, or for any conveyance in lieu of condemnation are
hereby assigned and shall be paid to Lender as herein provided. However, all of
the rights of Borrower and Lender hereunder with respect to such proceeds are
subject to the rights of any holder of a prior deed of trust.
In the event of a total taking of the Property, the proceeds shall be
applied to the sums secured by this Deed of Trust, with the excess, if any, paid
to Borrower. In the event of a partial taking of the Property, the proceeds
remaining after taking out any part of the award due any prior lien holder (net
award) shall be divided between Lender and Borrower, in the same ratio as the
amount of the sums secured by this Deed of Trust immediately prior to the date
of taking bears to Borrower's equity in the Property immediately prior to the
date of taking. Borrower's equity in the Property means the fair market value
of the Property less the amount of sums secured by both this Deed of Trust and
all prior liens (except taxes) that are to receive any of the award, all at the
value immediately prior to the date of the taking.
-4-
<PAGE>
If the Property is abandoned by Borrower, or if, after notice by Lender to
Borrower that the condemnor offers to make an award or settle a claim for
damages, Borrower fails to respond to Lender within 30 days after the date such
notice is given. Lender is authorized to collect and apply the proceeds, at
Lender's option, either to restoration or repair of the Property or to the sums
secured by this Deed of Trust.
Any such application of proceeds to principal shall not extend or postpone
the due date of the installments referred to in paragraph 4 (Payment of
Principal and Interest) and 23 (Escrow Funds for Taxes and Insurance) nor change
the amount of such installments.
12. Borrower Not Released. Extension of the time for payment or
modification of amortization of sums secured by this Deed of Trust granted by
Lender to any successor in interest of Borrower shall not operate to release, in
any manner, the liability of the original Borrower, nor Borrower's successors in
interest, from the original terms of this Deed of Trust. Lender shall not be
required to commence proceedings against such successor or refuse to extend time
for payment or otherwise modify amortization of the sums secured by this Deed of
Trust by reason of any demand made by the original Borrower's successors in
interest.
13. Forbearance by Lender Not a Waiver. Any forbearance by Lender in
exercising any right of remedy hereunder, or otherwise afforded by law, shall
not be a waiver or proclude the exercise of any such right or remedy.
14. Remedies Cumulative. Each remedy provided in the Note and this Deed
of Trust is distinct from any cumulative to all other rights or remedies under
the Note and this Deed of Trust or afforded by law or equity, and may be
exercised concurrently, independently or successively.
15. Successor's and Assigns Bound; Joint and Several Liability; Captions.
The covenants and agreements herein contained shall bind, and the rights
hereunder shall inure to, the respective successors and assigns of Lender and
Borrower, subject to the provisions of paragraph 24 (Transfer of the Property;
Assumption). All covenants and agreements of Borrower shall be joint and
several. The captions and headings of the paragraphs in this Deed of Trust are
for convenience only and are not to be used to interpret or define the
provisions hereof.
16. Notice. Except for any notice required by law to be given in another
manner, (a) any notice to Borrower provided for in this Deed of Trust shall be
in writing and shall be given and be effective upon (1) delivery to Borrower or
(2) mailing such notice by first-class U.S. mail, addressed to Borrower at
Borrower's address stated herein or at such other address as Borrower may
designate by notice to Lender as provide herein, and (b) any notice to Lender
shall be in writing and shall be given and be effective upon (1) delivery to
Lender or (2) mailing such notice by first-class U.S. mail, to Lender's address
stated herein or to such other address as Lender may designate by notice to
Borrower as provided herein. Any notice provided for in this Deed of Trust
shall be deemed to have given to Borrower or Lender when given in any manner
designated herein.
17. Governing Law; Severability. The Note and this Deed of Trust shall be
governed by the law of Colorado. In the event that any provision or clause of
this Deed of Trust or the Note conflicts with the law, such conflicts shall not
affect other provisions of this Deed of Trust or the Note which can be given
effect without the conflicting provision, and to this end the provisions of the
Deed of Trust and Note are declared to be severable.
-5-
<PAGE>
18. Acceleration; Foreclosure; Other Remedies. Except as provided in
paragraph 24 (Transfer of the Property; Assumption), upon Borrower's breach of
any covenant or agreement of Borrower in this Deed of Trust, or upon any default
in a prior lien upon the Property, (unless Borrower has exercised Borrower's
rights under paragraph 6 above), at Lender's option, after 20 days written
notice from Lender stating the nature of such breach, all of the sums secured by
this Deed of Trust shall be immediately due and payable (Acceleration). To
exercise this option, Lender may invoke the power of sale and any other remedies
permitted by law. Lender shall be entitled to collect all reasonable costs and
expenses incurred in pursuing the remedies provided in this Deed of Trust,
including, but not limited to, reasonable attorney's fees.
If Lender invokes the power of sale, Lender shall give written notice to
Trustee of such election. Trustee shall give such notice to Borrower of
Borrower's rights as is provided by law, Trustee shall record a copy of such
notice as required by law. Trustee shall advertise the time and place of the
sale of the Property, for not less than four weeks in a newspaper of general
circulation in each county in which the Property is situated, and shall mail
copies of such notice of sale to Borrower and other persons as prescribed by
law. After the lapse of such time as may be required by Law, Trustee, without
demand on Borrower, shall sell the Property at public auction to the highest
bidder for cash at the time and place (which may be on the Property or any part
thereof as permitted by law). In one or more parcels as Trustee may think best
and in such order as Trustee may determine. Lender or Lender's designate may
purchase the Property at any sale. It shall not be obligatory upon the
purchaser at any such sale to see to the application of the purchase money.
Trustee shall apply the proceeds of the sale in the following order: (a) to
all reasonable costs and expenses of the sale, including, but not limited to,
reasonable Trustee's and attorney's fees and costs of title evidence; (b) to all
sums secured by this Deed of Trust; and (c) the excess, if any, to the person or
persons legally entitled thereto.
19. Borrower's Right to Cure Default. Whenever foreclosure is commenced
for nonpayment of any sums due hereunder, the owners of the Property or parties
liable hereon shall be entitled to cure said defaults by paying all delinquent
principal and interest payments due as of the date of cure, costs, expenses,
late charges, attorney's fees and other fees all in the manner provided by law.
Upon such payment, this Deed of Trust and the obligations secured hereby shall
remain in full force and effect as though no Acceleration had occurred, and the
foreclosure proceedings shall be discontinued.
20. Assignment of Rents; Appointment of Receiver; Lender in Possession.
As additional security hereunder, Borrower hereby assigns to Lender the rents of
the Property; however, Borrower shall, prior to Acceleration under paragraph 18
(Acceleration; Foreclosure; Other Remedies) or abandonment of the Property, have
the right to collect and retain such rents as they become due and payable.
Lender or the holder of the Trustee's certificate of purchase shall be
entitled to a receiver for the Property after Acceleration under paragraph 18
(Acceleration; Foreclosure; Other Remedies), and shall also be entitled during
the time covered by foreclosure proceedings and the period of redemption, if
any; and shall be entitled thereto as a matter of right without regard to the
solvency or insolvency of Borrower or of the then owner of the Property, and
without regard to the value thereof. Such receiver may be appointed by any
Court of competent jurisdiction upon ex parte application and without notice -
notice being hereby expressly waived.
-6-
<PAGE>
Upon Acceleration under paragraph 18 (Acceleration; Foreclosure; Other
Remedies) or abandonment of the Property, Lender, in person, by agent or by
judicially appointed receiver, shall be entitled to enter upon, take possession
of and manage the Property and to collect the rents of the Property including
those past due. All rents collected by Lender or the receiver shall be applied
first, to payment of the costs of preservation and management of the Property,
second, to payments due upon prior liens, and then to the sums secured by this
Deed of Trust. Lender and the receiver shall be liable to account only for
those rents actually received.
21. Release. Upon payment of all sums secured by this Deed of Trust,
Lender shall cause Trustee to release this Deed of Trust and shall produce for
Trustee the Note. Borrower shall pay all costs of recordation and shall pay the
statutory Trustee's fees. If Lender shall not produce the Note as aforesaid,
then Lender, upon notice in accordance with paragraph 16 (Notice) from Borrower
to Lender, shall obtain, at Lender's expense, and file only lost instrument bond
required by Trustee or pay the cost thereof to effect the release of this Deed
of Trust.
22. Waiver of Exemptions. Borrower hereby waives all right of homestead
and any other exemption in the Property under state or federal law presently
existing or hereafter enacted.
23. Escrow Funds for Taxes and Insurance. This paragraph 23 is not
applicable if Funds as defined below are being paid pursuant to a prior
encumbrance. Subject to applicable law, Borrower shall pay to Lender, on each
day installments of principal and interest are payable under the Note, until the
Note is paid in full, a sum (herein referred to as "Funds") equal to N/A of the
---
yearly taxes and assessments which may attain priority over this Deed of Trust,
plus N/A of yearly premium installments for Property Insurance, all as
---
reasonably estimated initially and from time to time by Lender on the basis of
assessments and bills and reasonable estimates, thereof, taking into account any
excess Funds not used or shortages.
The principal of the Funds shall be held in a separate account by the
Lender in trust for the benefit of the Borrower and deposited in an institution
the deposits or accounts of which are insured or guaranteed by a federal or
state agency. Lender shall apply the Funds to pay said taxes, assessments and
insurance premiums. Lender may not charge for so holding and applying the Funds,
analyzing said account or verifying and compiling said assessments and bills.
Lender shall not be required to pay Borrower any interest or earnings on the
Funds. Lender shall give to Borrower, without charge, an annual accounting of
the funds showing credits and debits to the Funds and the purpose for which each
debit to the Funds was made. The Funds are pledged as additional security for
the sums se cured by this Deed of Trust.
If the amount of the Funds held by Lender shall not be sufficient to pay
taxes, assessments and insurance premiums as they fall due, Borrower shall pay
to Lender any amount necessary to make up the deficiency within 30 days from the
date notice is given in accordance with paragraph 16 (Notice) by Lender to
Borrower requesting payment thereof. Provided however, if the loan secured by
this Deed of Trust is subject to RESPA or other laws regulating Escrow Accounts,
such deficiency, surplus or an other required adjustment shall be paid, credited
or adjusted in compliance with such applicable laws.
Upon payment in full of all sums secured by this Deed of Trust, Lender
shall simultaneously refund to Borrower any Funds held by Lender. If under
paragraph 18 (Acceleration; Foreclosure; Other Remedies) the Property is sold or
the Property is otherwise acquired by Lender. Lender shall apply, no later than
immediately
-7-
<PAGE>
prior to the sale of the Property or its acquisition by Lender, whichever occurs
first, any Funds held by Lender at the time of application as a credit against
the sums secured by this Deed of Trust.
24. Transfer of the Property; Assumption. The following events shall be
referred to herein as a "Transfer": (i) a transfer or conveyance of title (or
any portion thereof, legal or equitable) of the Property (or any part thereof or
interest therein), (ii) the execution of a contract or agreement creating a
right to title (or any portion thereof, legal or equitable) in the Property (or
any part thereof or interest therein), (iii) or an agreement granting a
possessory right in the Property (or any portion thereof), in excess of three
(3) years, (iv) a sale or transfer of, or the execution of a contract or
agreement creating a right to acquire or receive, more than fifty percent (50%)
of the controlling interest or more than fifty percent (50%) of the beneficial
interest in the Borrower, (v) the reorganization, liquidation or dissolution of
the Borrower. Not to be included as a Transfer are (i) the creation of a lien or
encumbrance subordinate to this Deed of Trust, (ii) the creation of a purchase
money security interest for household appliances, or (iii) a transfer by devise,
descent or by operation of the law upon the death of a joint tenant. At the
election of Lender, in the event of each and every Transfer:
(a) All sums secured by this Deed of Trust shall become immediately due
and payable (Acceleration).
(b) If a Transfer occurs and should Lender not exercise Lender's option
pursuant to paragraph 24 to Accelerate, Transferee shall be deemed to have
assumed all of the obligations of Borrower under this Deed of Trust including
all sums secured hereby whether or not the instrument evidencing such
conveyance, contract, contract or grant expressly so provides. This covenant
shall run with the Property and remain in full force and effect until said sums
are paid in full. The Lender may without notice to Borrower deal with Transferee
in the same manner as with the Borrower with reference to said sums including
the payment or credit to Transferee of undisbursed reserve Funds on payment in
full of said sums, without in any way altering or discharging the Borrower's
liability hereunder for the obligations hereby secured.
(c) Should Lender not elect to Accelerate upon the occurrence of such
Transfer then, subject to (b) above, the mere fact of lapse of time or the
acceptance of payment subsequent to any of such events, whether or not Lender
had actual or constructive notice of such Transfer, shall not be deemed a waiver
of Lender's right to make such election nor shall Lender be estopped therefrom
by virtue thereof. The issuance on behalf of the Lender of a routine statement
showing the status of the loan, whether or not Lender had actual or constructive
notice of such Transfer, shall not be a waiver or estoppel of Lender's said
rights.
25. Borrower's Copy. Borrower acknowledges receipt of a copy of the Note
and this Deed of Trust.
-8-
<PAGE>
EXECUTED BY BORROWER
IF BORROWER IS A NATURAL PERSON(S):
- -----------------------------------
- -----------------------------------
doing business as
- ----------------------------------- -------------------------
IF BORROWER IS CORPORATION: CROSS-CONTINENT AUTO RETAILERS, INC.,
ATTEST: A DELAWARE CORPORATION
---------------------------------------
by
- ------------------------------ ------------------------------------
Secretary Bill Gilliand, Chairman President
IF BORROWER IS PARTNERSHIP: ------------------------------------
Name of Partnership
by__________________________________
A General Partner
STATE OF COLORADO )
)ss.
COUNTY OF ARAPAHOE )
---------
The foregoing instrument was acknowledged before me on this day of April
-----
10, 1997 by * BILL GILLILAND, CHAIRMAN OF CROSS-CONTINENT AUTO RETAILERS, INC.,
- -------------------------------------------------------------------------------
A DELAWARE CORPORATION
- ----------------------
Witness my hand and official seal,
My commission expires: July 20, 1998
-------------
-------------------------------------------
Notary Public
LAND TITLE GUARANTEE COMPANY
3033 E. 1ST AVE. #600
DENVER, CO 80206
* If a natural person or persons, insert the name(s) of such persons(s).
If a corporation, insert, for example, "John Doe as President and Jane Doe
as Secretary of Doe & Co.. a Colorado Corporation." If a partnership,
insert for example, "Sam Smith as general partner for Smith & Smith, A
General Partnership."
-9-
<PAGE>
EXHIBIT 10.6.1
Promissory Note
$5,500,000 Denver, Colorado
April 10, 1997
FOR VALUE RECEIVED, Cross-Continent Auto Retailers, Inc., a Delaware
corporation ("Maker"), promises to pay to the order of R. Douglas Spedding
("Holder"), c/o RDS, Inc., 4380 E. Alameda Avenue, Glendale, Colorado 80222 (or,
at the option of the legal holder of this Note, at such other place as said
holder shall designate in writing), in coin or currency which, at the time or
times of payment, is legal tender for public or private debts in the United
States, the principal sum of FIVE MILLION FIVE HUNDRED THOUSAND DOLLARS
($5,500,000) with interest thereon from the date hereof at the prime or
reference rate announced by the Bank of America and published in the Western
addition of the Wall Street Journal. The interest rate of this Note will adjust
as the Bank of America prime or reference rate adjusts.
Monthly payments of interest shall be payable in arrears on the first day of
each month commencing May 1, 1997 ("Interest Payment Date"). Any payment not
received by the tenth day of any month shall, at the option of Holder,
constitute a default hereunder. All principal and accrued interest shall become
due and payable without notice on October 1, 1997.
The payment of this Note and all interest hereon is secured by a deed of
trust ("Deed of Trust"), security agreement, assignment of rents and lien
instruments (the "Security Instruments") executed by Maker. This Note is to be
construed according to the laws of the State of Nevada.
This loan may be prepaid in whole or in part at any time without penalty.
If there shall be any default in the making of any payment as herein
provided, or any part thereof, or in the performance of any of the terms,
agreements, covenants, or conditions contained in said Deed of Trust or the
Security Instruments after the expiration of any applicable cure period, then
the entire principal amount hereof, together with all accrued interest and any
additional sums to be paid under the Deed of Trust, or advanced by the holder
hereof, at the election of the holder hereof, shall at once become due and
payable and shall bear interest at the rate of 18% per annum. The failure to
exercise this election upon a default shall not constitute a waiver of the right
to exercise this option in the event of any subsequent or continuing default.
By acceptance of this Note, Maker for itself, its successors and assigns,
agrees that a deficiency judgment hereon or on any of the Security Instruments
may be sought or taken against Maker for the purpose of obtaining satisfaction
in payment hereof, or for breach of any warranty, representation or covenant
contained in any of the Security Instruments or the Deed of Trust.
The provisions of this Note and of all agreements between Maker and the
Holder hereof are hereby expressly limited so that in no contingency or event
whatsoever shall the amount of interest
<PAGE>
paid or agreed to be paid to the Holder for the use, forebearance, or detention
of the money to be loaned under this Note or secured by the Deed of Trust exceed
the maximum amount permissible under applicable law. If from any circumstance
whatsoever the performance or fulfillment of any provision hereof or of any
other agreement between Maker and the Holder hereof shall, at the time
performance or fulfillment of such provision shall be due, involve transcending
the limit or validity prescribed by law, then, the obligation to be performed or
fulfilled shall be reduced to the limit of such validity, and if from any
circumstance whatsoever the Holder hereof should ever receive as interest an
amount which would exceed the highest lawful rate, the amount which would be
excessive interest shall be applied to the reduction of the principal balance
owing hereunder (or, at the Holder's option, be paid over to Maker) and not to
the payment of interest.
In the event that any monthly installment of interest shall not be received
within 10 days of the Interest Payment Date, the Maker shall pay an amount equal
to 10% of the amount of such past due installment as a late charge for the loss
of the use of the funds and for the expense of handling the delinquent payment.
The rights and remedies of the Holder as provided in this Note, the Security
Instruments, including without limitation, the Deed of Trust shall be cumulative
and concurrent and may be pursued singly, successively, or together against
Maker, the property described in said Deed of Trust, and any other funds,
property, or security held by the Holder for the payment hereof at the sole
discretion of the Holder. The failure to exercise any such right or remedy
shall in no event be construed as a waiver or release of said rights or remedies
or of the rights to exercise them at any later time.
The Maker and all endorsers, guarantors, sureties, accommodation parties
hereof, and all other persons liable or to become liable for all or any part of
this indebtedness, jointly and severally waive diligence, presentment, protest,
and demand, and also notice of protest, of demand, of dishonor, and of maturity;
and they also jointly and severally hereby consent to any and all renewals,
extensions, or modifications of the terms hereof, including time for payment,
and further agree that any such renewal, extension, or modification of the terms
hereof or the release or substitution of any security for the indebtedness
evidenced hereby shall not affect the liability of any of said parties for the
indebtedness evidenced by this Note. Any such renewals, extensions, or
modifications may be made without notice to any of said parties.
The Maker, endorsers, guarantors, sureties, accommodation parties hereof,
and all other persons liable or to become liable on this Note agree jointly and
severally to pay all costs of collection, including reasonable attorneys' fees
and all costs of suit, in case the unpaid principal sum of this Note or any
payment of interest or principal and interest thereon or premium is not paid
when due, or in case it becomes necessary to protect the security for the
indebtedness evidenced hereby, or for the foreclosure by the Holder of the Deed
of Trust, or in the event the Holder is made a party to any litigation because
of the existence of the indebtedness evidenced by this Note, or because of the
existence of the Deed of Trust, whether suit be brought or not, and whether
through courts of original jurisdiction, as well as in courts of appellate
jurisdiction, or through a bankruptcy court
2
<PAGE>
or other legal proceedings.
This Note may not be amended, modified, or changed, nor shall any waiver of
any provision hereby be effective, except only by an instrument in writing and
signed by the party against whom enforcement of any waiver, amendment, change,
modification, or discharge is sought.
Whenever used herein, the words "Maker" and "Holder" shall be deemed to
include their respective heirs, personal representatives, successors, and
assigns.
MAKER:
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Bill Gilliland
---------------------------------------------
Bill Gilliland, Chairman of the Board and
Chief Executive Officer
3
<PAGE>
EXHIBIT 10.6.2
SECURITY AGREEMENT
AGREEMENT made this 10th day of April, 1997, between Cross-Continent
Auto Retailers, Inc., a Delaware corporation, as debtor (hereinafter
collectively referred to as "Debtor") and R. Douglas Spedding ("Lender"), as
secured party.
RECITALS
This Security Agreement and pledge of collateral is given in
conjunction with that certain sale of real property from Lender to Debtor.
Now therefore, in recognition of the exchange of good and valuable
consideration, Debtor hereby agrees for the benefit of Lender as follows:
1. Debtor hereby grants the Lender a security interest (collectively
referred to as the "Security Interests") in the property described below, as
security for the payment and performance of the terms and conditions of that
certain Promissory Note of even date herewith in the principal amount of
$5,500,000 (the "Obligation"). The Security Interests shall attach to the
following property of Debtor (the "Collateral"), and all proceeds thereof:
PERSONAL PROPERTY: All equipment, furniture and fixtures, owned by
Debtor and located on or used exclusively in conjunction with the
property described in Exhibit A attached hereto (the "Property"), and
all licenses and permits related thereto;
together with all substitutions and replacements for and products of any of the
foregoing property and together with proceeds of any and all of the foregoing
property and, in the case of all tangible Collateral, together with all
accessions and together with all accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed to or used in connection with any
such goods.
2. Debtor represents, warrants and agrees that:
a. Debtor has (or will have at the time it acquires rights in
Collateral hereafter arising) and will maintain so long as the Security
Interests may remain outstanding, absolute title to each item of Collateral and
all proceeds thereof, free and clear of all interests, liens, attachments,
encumbrances and security interests except the Security Interests and except as
provided herein or in the Deed of Trust of even date herewith between the Debtor
and the Lender or as the Lender may otherwise agree in writing. Debtor will
defend the Collateral against all claims or demands of all persons (other than
the Lender or the holder of any security interest permitted by this subsection)
claiming the Collateral or any interest therein. Debtor will not sell or
otherwise dispose of the Collateral or any interest therein, except the sale of
inventory in the ordinary course of Debtor's business, without the Lender's
prior written consent.
b. Each right to payment and each instrument, document, chattel
paper and other agreement constituting or evidencing Collateral is (or, in the
case of all future Collateral, will be when arising or issued) the valid,
genuine and legally enforceable obligation, subject to no defense, set-off or
counterclaim, of the account debtor or other obligor named therein or in
Debtor's records pertaining thereto as being obligated to pay such obligation.
Debtor will not modify, amend, subordinate, cancel or terminate the obligation
of any such account debtor or other obligor without the Lender's prior written
consent.
<PAGE>
c. Debtor will keep all tangible Collateral in good repair, working
order and condition, normal wear and tear excepted, and will, from time to time,
replace any worn, broken or defective parts.
d. Debtor will promptly pay all taxes and other governmental
charges levied or assessed upon or against any Collateral or upon or against the
creation, perfection or continuance of the Security Interests.
e. Debtor will keep all Collateral free and clear of all security
interests, liens and encumbrances except the Security Interests and other
security interests permitted hereby or otherwise approved in writing by the
Lender.
f. Debtor will at all reasonable times permit the Lender or its
representatives to examine or inspect any Collateral, or any evidence of
Collateral, wherever located, and Debtor will at any time and from time to time
send requests for verification of accounts or notices of assignment to account
debtors and other obligors.
g. Debtor will keep accurate and complete records pertaining to the
Collateral and pertaining to Debtor's business and financial condition, prepared
on the basis of generally accepted accounting principles consistently
maintained; will submit to the lender such monthly and other periodic reports
concerning the Collateral and Debtor's business and financial condition as the
Lender may from time to time reasonably request; and will permit the Lender, or
its employees, accountants, attorneys or agents, to examine and copy any or all
of its records at any time during Debtor's business hours. Lender agrees to use
reasonable efforts to maintain the confidentiality of information concerning the
Debtor or its business indicated by the Debtor to be confidential but nothing
contained herein shall prevent the use by Lender of any such information
(including the disclosure of such information by Lender if deemed necessary by
Lender in the exercise of its reasonable judgment) in the administration or
collection by Lender of the Obligation or shall constitute a defense by Debtor
to repayment of such Obligation in full.
h. Debtor will promptly notify the Lender of any loss of or
material damage to any Collateral or of any substantial adverse change, known to
Debtor, in any Collateral or the prospect of payment thereof.
i. Upon request by the Lender, whether such request is made before
or after the occurrence of an Event of Default, Debtor will promptly deliver to
the Lender in pledge all instruments, documents and chattel papers constituting
Collateral, duly endorsed or assigned by Debtor.
j. Debtor will at all times keep all tangible Collateral insured
against risks of fire (including so-called extended coverage), theft and such
other risks and in such amounts as the Lender may reasonably request, with any
loss payable to the lender to the extent of its interest.
k. Debtor will pay or reimburse the Lender on demand for all costs
of collection of any of the Obligation and all other out-of-pocket expenses
(including in each case all reasonable attorneys' fees and legal expenses)
incurred by the Lender in connection with the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interests or the
creation, continuance or enforcement of this Agreement or any or all of the
Obligation.
2
<PAGE>
l. Debtor will use and keep the Collateral, and will require that
others use and keep the Collateral, only for lawful purposes, without violation
of any federal, state or local law, statute or ordinance.
m. Debtor from time to time will execute and deliver or endorse any
and all instruments, documents, conveyances, assignments, security agreements,
financing statements and other agreements and writings which the Lender may
reasonably request in order to secure, protect, perfect or enforce the Security
Interests or the rights of the Lender under this Agreement (but any failure to
request or assure that Debtor executes, delivers or endorses any such item shall
not affect or impair the validity, sufficiency or enforceability of this
Agreement and the Security Interests, regardless of whether any such item was or
was not executed, delivered or endorsed in a similar context or on a prior
occasion).
If Debtor at any time fails to perform or observe any of the foregoing
agreements, and if such failure shall continue for a period of ten calendar days
after the Lender gives Debtor written notice thereof (or in the case of the
agreements contained in clauses (e) and (j) above, immediately upon the
occurrence of such failure, without notice or lapse of time), the Lender may,
but need not, perform or observe such agreement on behalf and in the name, place
and stead of Debtor (or, at the Lender's option, in the lender's name) and may,
but need not, take any and all other actions which the Lender may reasonably
deem necessary to cure or correct such failure (including, without limitation,
the payment of taxes, the satisfaction of security interests, liens or
encumbrances, the performance of Obligation owed to account debtors or other
obligors, the procurement and maintenance of insurance, the execution of
assignments, security agreements and financing statements, and the endorsement
of instruments); and Debtor shall thereupon pay to the Lender on demand the
amount of all monies expended and all costs and expenses (including reasonable
attorneys' fees and legal expenses) incurred by the Lender in connection with or
as a result of the performance or observance of such agreements or the taking of
such action by the Lender, together with interest thereon from the date expended
or incurred at the rate of 18%.
3. Debtor agrees to deliver to the Lender, or, at the Lender's option,
to deposit in one or more special collateral accounts maintained for the Lender
by any bank reasonably satisfactory to the lender, all cash proceeds of
Collateral, immediately upon receipt thereof, in the form received, except for
Debtor's endorsement when deemed necessary. Amounts deposited in a collateral
account shall bear interest but shall not be subject to withdrawal by Debtor,
except after full payment and discharge of all Obligation. Until delivered to
the Lender or deposited in a collateral account, all proceeds or collections of
Collateral shall be held in trust by Debtor for and as the property of the
Lender and shall not be commingled with any funds or property of Debtor. The
Lender may deposit out of any collateral account in the lender's general account
and may commingle such collections with other property of the Lender. All items
shall be delivered to the Lender or deposited in any collateral account subject
to final payment. If any such item is returned uncollected, Debtor will
immediately pay the Lender, or, for items deposited in a collateral account, the
bank maintaining such account, the amount of the items, or such bank at its
discretion may charge any uncollected item to Debtor's commercial account or
other account. The Lender from time to time at its discretion may apply funds on
deposit in any collateral account to the payment of any or all Obligation, in
any order or manner of application satisfactory to the Lender.
4. In addition to the rights of the Lender under paragraph 3 with
respect to any and all rights to payment constituting Collateral the Lender may
at any time (either before or after the occurrence of an Event of Default under
paragraph 6) notify any account debtor or other person obligated to pay the
amount due that such right to payment has been assigned or transferred to the
Lender for security and shall be paid directly to the Lender. Debtor will join
in giving such notice, if the Lender so requests. At any time after Debtor or
the Lender gives such notice to an account debtor or other obligor, the Lender
may, but need not, in the Lender's
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name or in Debtor's name, demand, sue for, collect or receive any money or
property at any time payable or receivable on account of, or securing, any such
right to payment, or grant any extension to, make any compromise or settlement
with or otherwise agree to waive, modify, amend or change the Obligation
(including collateral obligations) of any such account debtor or other obligor;
and (ii) as agent and attorney in fact of Debtor, notify the United States
Postal Service to change the address for delivery of Debtor's mail to any
address designated by the Lender, otherwise intercept Debtor's mail, and
receive, open and dispose of Debtor's mail, applying all Collateral as permitted
under this Agreement and holding all other mail for Debtor's account or
forwarding such mail to Debtor's last known address.
5. As additional security for the payment and performance of the
Obligation, Debtor hereby assigns to the Lender any and all monies (including,
without limitation, proceeds of insurance and refunds of unearned premiums) due
or to become due under, and all other rights of Debtor with respect to, any and
all policies of insurance now or at any time hereafter covering the Collateral
or any evidence thereof or any business records or valuable papers pertaining
thereto, and Debtor hereby directs the issuer of any such policy to pay all such
monies directly to the lender. If Debtor has not settled any insurance claim
within 60 days of the occurrence resulting in such claim, or at any time after
the occurrence of any Event of Default, the Lender may (but need not), in the
Lender's name or in Debtor's name, execute and deliver proof of claim, receive
all such monies, endorse checks and other instruments representing payment of
such monies, and adjust, litigate, compromise or release any claim against the
issuer of any such policy.
6. Each of the following occurrences shall constitute an Event of
Default under this Agreement (herein called an "Event of Default"): (i) Debtor
shall fail to pay any or all of the Obligation within 10 days of the date
payment is due; or (ii) Debtor shall fail to observe or perform any covenant or
agreement binding on Debtor under this Agreement or under any other assignment,
conveyance, instrument or agreement now in effect or hereafter made between
Debtor and the Lender within 20 days of written notice from Lender of such non-
performance or default; or (iii) any representation or warranty made by Debtor
in this Agreement or in any such other assignment, conveyance, instrument or
agreement, or in any financial statements, or reports or certificates heretofore
or at any time hereafter submitted by or on behalf of Debtor to the Lender,
shall prove to have been false or materially misleading when made; or (iv)
payment of any substantial indebtedness of Debtor, other than the Obligation,
shall be demanded or the maturity of any such indebtedness shall be accelerated,
or any precondition or circumstance permitting any creditor of Debtor, acting
individually or with the consent of other creditors, to accelerate the maturity
of any such indebtedness shall have occurred (for this purpose indebtedness
shall be deemed substantial if it exceeds $5,000,000); or (v) Debtor shall
become insolvent or shall file or have filed against it, voluntarily or
involuntarily, a petition in bankruptcy or for reorganization or for the
adoption of an arrangement or plan under the United States Bankruptcy Code or
shall procure or suffer the appointment of a receiver for any substantial
portion of its properties, or shall initiate or have initiated against it,
voluntarily or involuntarily, any act, process or proceeding under any
insolvency law or other statute or law providing for the modification or
adjustment of the rights of creditors; (vi) there shall be any default under the
Note or Deed of Trust given by Debtor of even date herewith to Lender.
7. Upon the occurrence of an Event of Default under paragraph 6 and at
any time thereafter, the lender may exercise one or more of the following rights
and remedies; (i) declare all unmatured Obligation to be immediately due and
payable, and the same shall thereupon be immediately due and payable, without
presentment or other notice or demand; (ii) exercise and enforce any and all
rights and remedies available upon default to a secured party under the Uniform
Commercial Code, including, without limitation, the right to take possession of
Collateral, or any evidence thereof, proceeding without judicial process or by
judicial process (without a prior hearing or notice thereof, which Debtor hereby
expressly waives) and the right to sell, lease
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or otherwise dispose of any or all of the Collateral, and in connection
therewith Debtor will on demand assemble the Collateral and make it available to
the Lender as a place to be designated by the lender which is reasonably
convenient to both parties. If notice to Debtor of any intended disposition of
Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given (in the
manner specified in paragraph 9) at least ten calendar days prior to the date of
intended disposition or other action; (iii) without notice or demand offset any
indebtedness the Lender or any of its participants, successors or assigns then
owes to Debtor, whether or not then due, against any Obligation then owed to the
Lender or any of its participants, successors or assigns by Debtor, whether or
not then due; and (iv) exercise or enforce any and all other rights or remedies
available by law or agreement against the Collateral, against Debtor, or against
any other person or property.
8. This Agreement does not contemplate a sale of accounts, contract
rights or chattel paper, and, as provided by law, Debtor is entitled to any
surplus and shall remain liable for any deficiency. The lender's duty of care
with respect to Collateral in its possession (as imposed by law) shall be deemed
fulfilled if it exercises reasonable care in physically keeping such Collateral,
or in the case of Collateral in the custody or possession of a bailee or other
third person, exercises reasonable care in the selection of the bailee or other
third person, and the Lender need not otherwise preserve, protect, insure or
care for any Collateral. The Lender shall not be obligated to preserve any
rights Debtor may have against prior parties, to realize on the Collateral at
all or in any particular manner or order or to apply any cash proceeds of the
Collateral in any particular order of application.
9. This Agreement can be waived, modified, amended, terminated or
discharged, and the Security Interests can be released, only explicitly in
writing signed by the Lender. A waiver so signed shall be effective only in the
specific instance and for the specific purpose given. Mere delay or failure to
act shall not preclude the exercise or enforcement of any rights or remedies
available to the Lender. All rights and remedies of the Lender shall be
cumulative and may be exercised singularly in any order or sequence, or
concurrently, at the Lender's option, and the exercise or enforcement of any
such right or remedy shall neither be a condition to nor bar the exercise or
enforcement of any other. All notices to be given to Debtor shall be deemed
sufficiently given if delivered or mailed by registered, certified or ordinary
mail, postage prepaid, to Debtor at its address set forth below or at its most
recent address shown on the Lender's records.
10. The Lender and its participants, if any, are not partners or joint
venturers, and the Lender shall not have any liability or responsibility for any
obligation, act or omission of any of its participants.
11. This Agreement, and the Security Interests granted hereby, shall
be binding upon Debtor, its successors and assigns, and shall inure to the
benefit of and be enforceable by the Lender and each and all of its
participants, successors and assigns, and shall be effective when executed by
Debtor and delivered to the lender whether or not this Agreement is executed by
the Lender. All rights and powers specifically conferred upon the Lender may be
transferred or delegated to any of the participants, successors or assigns of
the Lender. Except to the extent otherwise required by law, this Agreement and
the transaction evidenced hereby shall be governed by the substantive laws of
the State of Nevada. If any provision or application of this Agreement is held
unlawful or unenforceable in any respect, such illegality or unenforceability
shall not affect other provisions or applications which can be given effect, and
this Agreement shall be construed as if the unlawful or unenforceable provision
or application had never been contained herein or prescribed hereby. All
representations and warranties contained in this Agreement or in any other
agreement between Debtor and the Lender shall survive the execution, delivery
and performance of this Agreement and the creation and payment of the
Obligation. Debtor waives notice of the acceptance of this Agreement by the
Lender.
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12. A carbon, photographic or other reproduction of this Security
Agreement or of any financing statements signed by the Debtor is sufficient as a
financing statement and may be filed as a financing statement in any state to
perfect the security interests granted hereby.
IN WITNESS WHEREOF, this Security Agreement has been duly executed and
delivered by the proper officers thereunto duly authorized on the day and year
first above written.
DEBTOR:
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Bill Gilliland
-------------------------------------------
Bill Gilliland, Chairman of the Board
and Chief Executive Officer
Address: 1201 S. Taylor
Amarillo, Texas 79101
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<PAGE>
EXHIBIT 10.6.3
DEED OF TRUST AND ASSIGNMENT OF RENTS
THIS DEED OF TRUST, made this 10th day of April, 1997, between CROSS-CONTINENT
AUTO RETAILERS, INC., a Delaware Corporation, herein called GRANTOR or TRUSTOR,
whose address is 1201 S. Taylor, Amarillo, TX 79101, OLD REPUBLIC TITLE COMPANY
OF NEVADA, a Nevada corporation, herein called TRUSTEE, and R. DOUGLAS SPEDDING,
a married man, herein called BENEFICIARY, whose address is 4380 E. Alameda
Avenue, Glendale, CO 80222,
Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE
IN TRUST, WITH POWER OF SALE, that property in CLARK County, Nevada, described
as:
That portion of the Southwest Quarter (SW 1/4) of the Southeast Quarter (SE
1/4) of Section 2, Township 21 South, Range 60 East M.D.B. & M., described as
Lots 1 and 2 of Parcel Map located in File 18, Page 15, recorded March 23, 1978
in Book 863 of Official Records, as Document No. 822241, in the Office of the
County Recorder of Clark County, Nevada.
In the event the herein described property or any part thereof, or any interest
therein is sold, agreed to be sold, conveyed or allocated by the Trustor, or by
the operation of law or otherwise, all obligations secured by this instrument,
irrespective of the maturity dates expressed therein, at the option of the
holder hereof and without demand or notice shall immediately become due and
payable.
Together With the rents, issues and profits thereof, SUBJECT, HOWEVER, to the
right, power and authority given to and conferred upon Beneficiary by paragraph
(10) of the provisions incorporated herein by reference to collect and apply
such rents, issues and profits.
For the Purpose of Securing: 1. Performance of each agreement of Trustor
incorporated by reference or contained herein. 2. Payment of the indebtedness
evidenced by one promissory note of even date herewith, and any extension or
renewal thereof, in the principal sum of $5,500,000.00 executed by Trustor in
favor of Beneficiary or order, 3.
To Protect the Security of This Deed of Trust, Trustor Agrees: By the execution
and delivery of this Deed of Trust and the note secured hereby, that he will
observe and perform the provisions printed hereinafter; and that the references
to property, obligations, and parties in said provisions shall be construed to
refer to the property, obligations, and parties set forth in this Deed of Trust.
<PAGE>
1. To properly care for and keep said property in good condition and repair;
not to remove or demolish any building thereon; to complete in a good and
workmanlike manner any building which may be constructed thereon, and to
pay when due all claims for labor performed and materials furnished
therefor; to comply with all laws, ordinances and regulations requiring any
alterations or improvements to be made thereon; not to commit or permit any
waste thereof; not to commit, suffer or permit any act to be done in or
upon said property in violation of law; to cultivate, irrigate, fertilize,
fumigate, prune and/or do any other act or acts, all in a timely and proper
manner, which, from the character or use of said property, may be
reasonably necessary, the specific enumerations herein not excluding the
general.
2. The Grantor agrees to pay and discharge all costs, fees and expenses of
these Trusts, including cost of evidence of title and Trustee's fees in
connection with sale, whether completed or not, which amounts shall become
due upon delivery of Trustee of Declaration of Default and Demand for sale,
as hereinafter provided.
3. The amount collected under any fire insurance policy shall be credited:
first, to accrued interest, next to expenditures hereunder; and any
remainder upon the principal, and interest shall thereupon cease upon the
amount so credited upon principal; provided, however, that at the option of
the Beneficiary, the entire amount collected under the policies or any part
thereof may be released to the Grantor, without liability upon the Trustee
for such release.
4. The Grantor promises and agrees that if, during the existence of the Trust
there be commenced or pending any suit or action affecting said conveyed
premises, or any part thereof, or the title thereto, or if any adverse
claim for or against said premises, or any part thereof, be made or
asserted, he will appear in and defend any such matter purporting to affect
the security and will pay all costs and damages arising because of such
action.
5. Any award of damages in connection with any condemnation for public use of,
or injury to, any property or any part thereof is hereby assigned and shall
be paid to Beneficiary, who may apply or release such moneys received by
him in the same manner and with the same effect as herein provided for
disposition of proceeds of insurance.
6. Trustee shall be under no obligation to notify any party hereto of any
pending sale hereunder or of action or proceeding of any kind in which
Grantor, Beneficiary and/or Trustee shall be named as defendant, unless
brought by Trustee.
7. Acceptance by Beneficiary of any sum in payment of any indebtedness secured
hereby, after the date when the same is due, shall not constitute a waiver
of the right either to require prompt payment, when due, of all other sums
so secured or to declare default as herein provided for failure so to pay.
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8. Trustee may, at any time, or from time to time, without liability therefor
and without notice, upon written request of Beneficiary and presentation of
this Deed of Trust and the notes secured hereby for endorsement, and
without affecting the personal liability of any person for payment of the
indebtedness secured hereby or the effect of this Deed of Trust upon the
remainder of said property: reconvey any part of said property; consent in
writing to the making of any map or plat thereof; join in granting any
easement thereon; or join in any extension agreement or subordination
agreement in connection herewith.
9. Upon receipt of written request from Beneficiary reciting that all sums
secured hereby have been paid and upon surrender of this Deed of Trust and
said note to Trustee for cancellation and retention and upon payment of its
fees, the Trustee shall reconvey without warranty the property then held
hereunder. The recitals in such reconveyance of any matters of fact shall
be conclusive proof of the truth thereof. The Grantee in such reconveyance
may be described in general terms as "the person or persons legally
entitled thereto": and Trustee is authorized to retain this Deed of Trust
and the cancelled note.
(a) Should default be made by Grantor in payment of any indebtedness
secured hereby and/or in performance of any agreement herein, then
Beneficiary may declare all sums secured hereby immediately due by delivery
to Trustee of a written declaration of default and demand for sale, and of
written notice of default and election to cause said property to be sold
(which notice Trustee shall cause to be filed for record) and shall
surrender to Trustee this Deed, the notes and all documents evidencing any
expenditure secured hereby after 20 days written notice from Beneficiary
stating the nature of the default.
10. After three months shall have elapsed following recordation of any such
notice of default, Trustee shall sell said property at such time and at
such place in the State of Nevada as the Trustee, in its sole discretion,
shall deem best to accomplish the objects of these Trusts, having first
given notice of such sale as then required by law. Place of sale may be
either in the county in which the property to be sold, or any part thereof,
is situated, or at an office of the Trustee located in the State of Nevada.
(a) The Grantor, Pledgor and Mortgagor of the personal property herein
pledged and/or mortgaged waives any and all other demands or notices as
conditions precedent to sale of such personalty.
(b) Trustee may postpone sale of all, or any portion, of said property by
public announcement at the time fixed by said notice of sale, and may
thereafter postpone said sale from time to time by public announcement at
the time previously appointed.
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(c) At the time of sale so fixed, Trustee may sell the property so
advertised or any party thereof, either as a whole or in separate parcels
at its sole discretion at public auction, to the highest bidder for cash in
lawful money of the United States, payable at time of sale, and shall
deliver to such purchaser a deed conveying the property so sold, but
without covenant or warranty, express or implied. Grantor hereby agrees to
surrender, immediately and without demand, possession of said property to
such purchaser.
11. Trustee shall apply the proceeds of any such sale to payment of: expenses
of sale and all charges and expenses of Trustee and of these Trusts,
including cost of evidence of title and Trustee's fee in connection with
sale; all sums expended under the terms hereof, not then repaid, with
accrued interest at the rate of ten percent (10%) per annum; all other sums
then secured hereby, and the remainder, if any, to the person or persons
legally entitled thereto.
12. The Beneficiary or assigns may, at any time, by instrument in writing,
appoint a successor or successors to the Trustee named herein or acting
hereunder, which instrument, executed and acknowledged by beneficiary, and
recorded in the Office of the County Recorder of the County or Counties
wherein said property is situated, shall be conclusive proof of the proper
substitution of such successor or trustee, who shall have all the estate,
powers, duties and trusts in the premises vested in or conferred on the
original Trustee. If there be more than one Trustee, either may act alone
and execute the Trusts upon the request of the Beneficiary and his acts
shall be deemed to be the acts of all Trustees, and the recital in any
conveyance executed by such sole trustee of such requests shall be
conclusive evidence thereof, and of the authority of such sole Trustee to
act.
13. This Deed of Trust applies to, inures to the benefit of, and binds all
parties hereto, their heirs, legatees, devisees, administrators, executors,
successors and assigns.
14. Trustee accepts these trusts when this Deed of Trust, duly executed and
acknowledged, is made a public record as provided by law.
15. In this Deed of Trust, whenever the context so requires, the masculine
gender includes the feminine and/or neuter, and the singular number
includes the plural, and the term Beneficiary shall include any future
holder, including pledgees, of the note secured hereby.
16. Where not inconsistent with the above, Covenant Nos. 1, 2, 3, 4, 5, 6, 7, 8
or NRS 107.030 are hereby adopted and made a part of this Deed of Trust.
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<PAGE>
The undersigned Trustor requests that a copy of any Notice of Default and
of any Notice of Sale hereunder be mailed to him at his address
hereinbefore set forth.
Signature of Trustor
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Bill Gilliland
- ---------------------------------------
BILL GILLILAND, CHAIRMAN
STATE OF COLORADO
COUNTY OF ARAPAHOE
On April 10, 1997 before me, the undersigned, a Notary Public in and for said
State, personally appeared Bill Gilliland personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person(s) whose name(s)
in/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature /s/ Heidi Aemmer
----------------
Name Heidi Aemmer
------------
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Title Order No. 97-51-700
Escrow No. 97-51-700-DS
WHEN RECORDED MAIL TO
Name
R. DOUGLAS SPEDDING
4380 E. Alameda Avenue
Street Glendale, CO 80222
Address
City &
State
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<PAGE>
EXHIBIT 10.7
RELEASE AND INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of April 10, 1997, between Cross-Continent Auto
Retailers, Inc., a Delaware corporation ("C-CAR"), and R. Douglas Spedding
("RDS") (collectively, the "Parties").
RECITALS
WHEREAS, by that certain Stock Purchase Agreement dated January 23, 1997,
RDS has agreed to sell all of the issued and outstanding shares of capital stock
of Toyota West Sales and Service, Inc., a Nevada corporation, and Douglas
Toyota, Inc., a Colorado corporation (the "Purchased Corporations"), to C-CAR;
and
WHEREAS, in consummating such transaction, the Purchased Corporations will
continue to occupy, pursuant to commercial leases, three parcels of property,
one located in Las Vegas, Nevada and two located in Thornton, Colorado; and
WHEREAS, in conjunction with the stock purchase transaction, C-CAR has
agreed to purchase two parcels of real property, one of which is located in
unincorporated Adams County, Colorado and owned by RDS, Inc., a Delaware
corporation, and the other parcel located in Las Vegas, Nevada, and owned by RDS
individually; and
WHEREAS, all real property parcels referred to herein are legally described
and set forth on Exhibit A attached hereto and made a part hereof; and
WHEREAS, the Parties have agreed that RDS shall indemnify C-CAR, Douglas
Toyota, Inc., and Toyota West Sales and Service, Inc. (the "Indemnified
Parties") for any and all liabilities associated with hazardous substances (as
defined below) emanating from, or existing at, on or beneath the Properties as
of the date of this Agreement; and
WHEREAS, the Parties have agreed that RDS shall undertake full
responsibility for remediation of all hazardous substances emanating from, or
existing at, on or beneath the Properties to the extent necessary to receive
approval for such remediation from appropriate Local, State and Federal
agencies.
NOW THEREFORE, in consideration of the foregoing promises and mutual
representations, warranties, covenants and agreements contained herein, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
I. DEFINITIONS
As used in this Agreement, the following terms have the following meanings:
(A) "Property" or "Properties" means the parcels of real property described
in Exhibit A hereto.
<PAGE>
(B) "Environmental Regulation" means any federal, state or local law,
ordinance, rule, regulation or requirement (including provisions of common law)
relating to the environment or human health, or governing, regulating or
pertaining to the generation, treatment, storage, handling, transportation, use
or disposal of any Hazardous Substance whether now or hereafter enacted. The
term "Environmental Regulation" includes, but is not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), 42 U.S.C. (S)(S) 9601-9675, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C. (S)(S) 6901-6991, the Clean Water Act,
33 U.S.C. (S) 1251, et seq, the Clean Air Act, 42 U.S.C. (S)(S) 7401 et seq, the
Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. (S) 136
et seq, the Toxic Substances Control Act ("TSCA"), 15 U.S.C. (S)(S) 2601-2671,
and any similar state or local law or regulation.
(C) "Hazardous Substance" means (i) any substance or material defined in or
governed by any Environmental Regulation as a dangerous, toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance; (ii) any
substance, the presence of which requires investigation, notification, reporting
or remediation under any Environmental Regulation or under common law; (iii) any
toxic, explosive, corrosive, flammable, radioactive, or other hazardous
substance which is regulated by any Environmental Regulation; and (iv) urea-
formaldehyde, polychlorinated biphenyls, asbestos or asbestos-containing
materials, petroleum and petroleum products.
(D) "Losses" means any and all liabilities, claims, damages, judgments,
penalties, attorneys' and expert fees, damages or expenses incurred by an
Indemnified Party arising from the presence of any Hazardous Substance or under
any Environmental Regulation, including without limitation (i) any and all costs
associated with investigation or identification of Hazardous Substances on any
Property; (ii) all costs of defending and settling such Indemnified Party's
liability or potential liability with governmental agencies and third Parties;
(iii) all costs of remedial or corrective measures; and (iv) all other direct
and consequential losses incurred by such Indemnified Party in connection
therewith.
(E) "Environmental Remediation" means all actions necessary to investigate
and, if necessary, effectively remediate (including removal and proper disposal)
all Hazardous Substances emanating from, or existing at, on or beneath any
Property to such extent necessary to obtain a "no further action" letter from
the Oil Inspection Section, Colorado Department of Labor ("OIS"), that is
substantially similar to the model "no further action" letter attached as
Exhibit B, or a similar letter from the appropriate officials in the State of
Nevada.
II. INDEMNIFICATION AND REMEDIATION OBLIGATIONS
(A) The indemnification as provided for and limited herein shall be deemed
continuing for the benefit of the Indemnified Parties and their respective
officers, directors, stockholders, affiliates and assignees, and shall survive
any transfer of title to any Property (pursuant to sale, foreclosure or
otherwise) or any transfer of ownership of the capital stock.
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<PAGE>
(B) RDS hereby agrees to indemnify, release and hold harmless the
Indemnified Parties from Losses arising from the presence of any Hazardous
Substances, emanating from, or existing at, on or beneath any Property, and from
Losses resulting from the performance of the Environmental Remediation.
Notwithstanding the foregoing, RDS has no obligation to provide indemnification
for any Losses arising from the presence of Hazardous Substances on the Property
which are demonstrated by RDS to have been caused by any of the Indemnified
Parties subsequent to the date hereof.
(C) On or before December 31, 1998, RDS shall (a) remove all underground
storage tanks located on any of the Properties, and (b) undertake, at its sole
cost and expense, an investigation of all Hazardous Substances in soil or
groundwater located on, at, beneath or emanating from the Properties. If such
investigation reveals the presence of Hazardous Substances on any Property, RDS
at its sole cost and expense shall remediate such Hazardous Substances to such
extent necessary to obtain a "no further action" letter from the Oil Inspection
Section, Colorado Department of Labor, substantially similar to Exhibit B
hereto, or a similar letter from the analogous agency in Nevada.
(D) Notwithstanding anything in this Agreement or any other agreement
between the Parties hereto to the contrary, the aggregate environmental
liabilities for both indemnification of Losses and remediation arising from the
Properties will not exceed one million dollars ($1,000,000).
III. ESCROWED FUNDS
Within thirty (30) days of execution of this Agreement, RDS shall deposit
$1,000,000 into an escrow account, as set forth in Paragraph 4(C) of the Stock
Purchase Agreement, established with Land Title Guarantee Company, 3033 East
First Avenue, Denver, Colorado 80217. The Indemnified Parties shall be entitled
to withdraw from the escrow account, upon submitting a joint request with RDS,
any amount for payment of Losses arising from the presence of any Hazardous
Substances, emanating from, or existing at, on or beneath any Property, and from
Losses resulting from the performance of any Environmental Remediation.
RDS may not withdraw any remaining funds in the escrow account until such
time as RDS conducts a site investigation of each Property and determines there
are no Hazardous Substances emanating from or existing at, on or beneath the
Property or, if Hazardous Substances are located at a particular Property, upon
obtaining a "no further action letter," as described in Section II.C. above,
from the appropriate governmental agency. After one year from the date of this
Agreement, RDS may withdraw the remaining funds from the escrow account upon
reaching such a resolution with regard to all of the Properties.
VI. MISCELLANEOUS
(A) This Agreement shall supersede the environmental indemnifications
contained in the Stock Purchase Agreement dated January 23, 1997, and the
respective real estate purchase agreements for the parcels of real property in
Colorado and Nevada of even date therewith.
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(B) All matters relating to the interpretation, construction, validity and
enforcement of this Agreement shall be governed by the laws of the State of
Colorado without giving effect to any choice or conflict of law provision or
rule (whether of the State of Colorado or any other jurisdiction) that would
cause the application of laws of any jurisdiction other than the State of
Colorado.
(C) This Agreement contains the entire agreement of the Parties relating to
the subject matter hereof and supersedes all prior agreements and understandings
with respect to such subject matter, and the Parties hereto have made no
agreements, representations or warranties relating to the subject matter of this
Agreement which are not set forth herein or in such other agreements.
(D) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel to enforce any provisions of this
Agreement, except by a statement in writing signed by the party against whom
enforcement of the waiver or estoppel is sought.
(E) To the extent any provision of this Agreement shall be invalid or
unenforceable, it shall be considered deleted herefrom and the remainder of such
provision and of this Agreement shall be unaffected and shall continue in full
force and effect.
(F) This Agreement shall be continuing, irrevocable and binding on the
Parties and their respective heirs, successors and permitted assigns and shall
inure to the benefit of the Indemnified Parties and their respective heirs,
successors and permitted assigns.
(G) Each Indemnified Party agrees to provide RDS and its contractors with
access to those Properties leased by the Indemnified Party, upon reasonable
notice, as may be reasonably necessary for RDS and its agents to investigate and
remediate contamination on the Property.
(H) All notices under this Agreement shall be given in writing and sent by
certified mail, return receipt requested, postage prepaid, or by overnight
courier. Delivery of such notices shall be deemed given three days after being
sent by certified mail, return receipt requested, post prepaid, or one business
day after being sent overnight courier. Notices will be sent to the Parties at
the addresses set forth below:
C-CAR: 1201 S. Taylor
Amarillo, Texas 79101
RDS: 4380 E. Alameda Avenue
Glendale, Colorado 80222
Douglas Toyota: 1650 W. 104th Avenue
Thornton, Colorado 80234
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Toyota West Sales
& Service: 2025 S. Decatur
Las Vegas, Nevada 89102
(I) The signatories to this Agreement represent and warrant that they are
duly authorized to sign this Agreement.
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Bill Gilliland
----------------------------------------
Bill Gilliland, Chairman of the Board
and Chief Executive Officer
/s/ R. Douglas Spedding
- --------------------------------------------
R. Douglas Spedding
DOUGLAS TOYOTA, INC.
By: /s/ R. Douglas Spedding
----------------------------------------
R. Douglas Spedding, President
TOYOTA WEST SALES AND SERVICE, INC.
By: /s/ R. Douglas Spedding
----------------------------------------
R. Douglas Spedding, President
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EXHIBIT 99.1
[Cross-Continent Auto Retailers, Inc. Letterhead]
FOR IMMEDIATE RELEASE
CROSS-CONTINENT AUTO RETAILERS COMPLETES ACQUISITION OF TWO TOYOTA DEALERSHIPS
AMARILLO, TEXAS, APRIL 10, 1997 - CROSS-CONTINENT AUTO RETAILERS, INC. (NYSE:XC)
completed its previously announced acquisition of Douglas Toyota, Inc., in
Thornton, Colo., a suburb of Denver, and Toyota West Sales and Service, Inc., in
Las Vegas, Nev. The announcement was made by Bill Gilliland, chairman and chief
executive officer of Cross-Continent, and R. Douglas Spedding, President of
Toyota West and Douglas Toyota.
The aggregate purchase approximated $40 million, including $28 million in cash,
$7 million in promissory notes and $5 million in Cross-Continent common stock.
The acquisition will be accounted for as a purchase.
"We received approval from Toyota Motor Sales U.S.A. to complete the
acquisitions last week," Gilliland said. "The acquisitions reflect our strategy
of acquiring high-quality, well-managed, profitable dealerships in our targeted
markets.
"Douglas Toyota sales for 1996 were $98.3 million and Toyota West sales for 1996
were $106.8 million. We believe that each of these dealerships is the highest
volume Toyota dealership in its respective market," Gilliland noted. "The
Toyota dealerships' combined gross margin of 17.5 percent and pretax margin of
3.6 percent exceed the industry average and exceed our consolidated company's
margins of 15.5 percent gross and 3 percent pretax. The acquisition should be
accretive to our earnings."
This purchase represents the company's second major acquisition following its
initial public offering on September 23, 1996. On October 1, 1996, the company
completed the acquisition of Lynn Hickey Dodge, in Oklahoma City, which,
according to recent industry publications, ranks as one of largest Dodge
dealerships in the nation. On March 3, 1997, the company also announced the
pending acquisition of Sahara Nissan, Inc. (Sierra Datsun, Inc.), which operates
a Nissan dealership in Las Vegas under the trade name Jack Biegger Nissan.
Cross-Continent estimates that it will be ranked among the nation's top 15
franchised automobile dealership groups, based on retail volume, following the
completion of the acquisition of Beigger Nissan.
Including the pending Biegger Nissan acquisition, Cross-Continent Auto
Retailers, Inc. will own and operate a group of 10 franchised automobile
dealerships in Texas,
<PAGE>
Oklahoma, Nevada and Colorado. Through these dealerships, the company sells new
and used cars and light trucks, arranges related financing and insurance, sells
replacement parts and provides vehicle maintenance and repair services.
Cross-Continent Auto Retailers, Inc. is listed on the New York Stock Exchange
under the symbol XC.
Cross-Continent Auto Retailers, Inc. believes its shareholders benefit from the
views of management about the future of the company's business. Included herein
are forward-looking statements, including statements with respect to anticipated
revenue growth, acquisitions and profitability. These statements involve risks
and uncertainties that could cause actual results to differ materially,
including without limitation economic conditions, risks associated with
acquisitions and the risk factors set forth from time to time in the company's
filings with the Securities and Exchange Commission.
TO RECEIVE ADDITIONAL INFORMATION ON CROSS-CONTINENT AUTO RETAILERS, INC. FREE
OF CHARGE VIA FAX, DIAL 1-800-PRO-INFO AND ENTER "XC."
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