<PAGE>
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) August 15, 1997
----------------------------
Cross-Continent Auto Retailers, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
333-06585 75-2653095
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(Commission file number) (IRS Employer Identification Number)
1201 South Taylor Street, Amarillo, TX 79101
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(806) 374-8653
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
not applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On August 15, 1997, Cross-Continent Auto Retailers, Inc., a Delaware
corporation (the "Company"), completed its disposition of all of the outstanding
capital stock of two of its subsidiaries, Performance Dodge, Inc., an Oklahoma
corporation, and Performance Nissan, Inc., an Oklahoma corporation (the
"Dealership Shares"), to Benji Investments, Ltd. ("Benji"). The Dealership
Shares were sold to Benji in exchange for consideration consisting of 760,000
shares of common stock, par value $.01 per share, of the Company (the "Company
Shares"), which Common Stock became treasury stock of the Company. The sale
price for the Dealership Shares was determined by a limited auction conducted by
a third party at which Benji was the highest bidder. The Company Shares were
valued at $8,740,000, subject to certain adjustments. Performance Dodge, Inc.
is a franchised Dodge automobile dealership, and Performance Nissan, Inc. is a
franchised Nissan automobile dealership, both of which operate in the Oklahoma
City area.
Immediately prior to the transaction, the property upon which Performance
Dodge, Inc. is located and the related debt secured by such property was
transferred from Performance Dodge, Inc. to the parent company. Immediately
after the sale of Performance Dodge, Inc., the Company entered into a lease
agreement with Performance Dodge, Inc. for a term of 15 years with rent of
$253,000 per year.
Benji Investments, Ltd., a Texas limited partnership, is controlled by
Emmett M. Rice, Jr., a former senior vice president, chief operating officer,
and director of the Company.
Item 7. Financial Statements, PRO FORMA Financial Information and Exhibits.
(a) Not applicable.
(b) PRO FORMA Financial Information.
Pro Forma Condensed Consolidated Statements of Operations for (i) the
twelve months ended December 31, 1996, and (ii) the six months ended
June 30, 1997, with footnotes thereto and Pro Forma Condensed
Consolidated Balance Sheet as of June 30, 1997
(c) Exhibits.
2.1 Stock Purchase Agreement, dated as of June 20, 1997, between Cross-
Continent Auto Retailers, Inc. and Benji Investments, Ltd. (previously
filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
the Quarterly Period ended June 30, 1997, incorporated herein by
reference).
10.1 Separation Agreement dated as of June 20, 1997 between Cross-Continent
Auto Retailers, Inc. and Emmett M. Rice, Jr. (previously filed as an
exhibit to the Company's Quarterly Report on Form 10-Q for the
Quarterly Period ended June 30, 1997, incorporated herein by
reference).
2
<PAGE>
10.2 Management Agreement dated as of June 1, 1997 among Cross-Continent
Auto Retailers, Inc., Performance Nissan, Inc., Performance Dodge,
Inc., and Emmett M. Rice, Jr. (previously filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the Quarterly Period ended
June 30, 1997, incorporated herein by reference).
10.3 Lease Agreement dated August 15, 1997 between Cross-Continent Auto
Retailers, Inc. and Performance Dodge, Inc.
99.1 Copy of press release issued by Cross-Continent Auto Retailers, Inc.
on June 18, 1997.
3
<PAGE>
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: September 2, 1997
By: /s/ James F. Purser
---------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
4
<PAGE>
CROSS-CONTINENT AUTO RETAILERS, INC.
PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma statement of operations for the year ended
December 31, 1996, and the six months ended June 30, 1997, reflect the
historical accounts of the Company for those periods, adjusted to give pro forma
effect to the sale of Performance Dodge, Inc. and Performance Nissan, Inc. (the
"Performance Stores") as if the transaction had occurred at the beginning of
each period presented.
The following unaudited pro forma balance sheet as of June 30, 1997 reflects the
historical accounts of the Company as of that date, adjusted to give pro forma
effect to the sale of the Performance Stores as if the transaction had occurred
as of June 30, 1997.
The pro forma financial data and the accompanying notes should be read in
conjunction with the description of the sale of the Performance Stores contained
in this Form 8-K, the Consolidated Financial Statements and the related notes
included in the Company's 1996 Annual Report on Form 10-K previously filed with
the Securities and Exchange Commission. The Company believes that the
assumptions used in the following information provide a reasonable basis on
which to present the pro forma financial data. The pro forma financial data is
provided for informational purposes only and should not be construed to be
indicative of the Company's financial condition or results of operations had the
sale of the Performance Stores been consummated on the dates assumed and are not
intended to project the Company's financial condition on any future date or
results of operations for any future period.
5
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(unaudited)
<TABLE>
Pro Forma Adjustments
---------------------
Actual
Actual Performance Pro Forma
Company (1) Stores (2) Adjustments Company
-------------------------------------------------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues
Vehicle Sales $283,977 $ 67,283 $ 0 $216,694
Other operating revenue 37,606 11,586 0 26,020
-------- -------- ------- --------
Total Revenues 321,583 78,869 0 242,714 (4)
Cost of goods sold 271,650 66,534 0 205,116
-------- -------- ------- --------
Gross profit 49,933 12,335 0 37,598
Expenses
Selling, general and administration 36,490 10,992 0 25,498
Depreciation and amortization 1,207 253 0 954
Loss from sale of dealerships 1,099 0 0 1,099
-------- -------- ------- --------
38,796 11,245 0 27,551
-------- -------- ------- --------
Income before interest and taxes 11,137 1,090 0 10,047
Other income (expenses)
Interest Income 1,585 12 0 1,573
Interest Expense (4,778) (1,094) 0 (3,684)
-------- -------- ------- --------
Income (loss) before taxes 7,944 8 0 7,936
Income tax provision (benefit) 3,362 3 0 3,359
-------- -------- ------- --------
Net income (loss) $ 4,582 $ 5 $ 0 $ 4,577 (4)
-------- -------- ------- --------
-------- -------- ------- --------
Net income per share (3) $ NA (4)
--------
Weighted average shares outstanding (3) NA (4)
--------
</TABLE>
6
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(unaudited)
<TABLE>
Pro Forma Adjustments
---------------------
Actual
Actual Performance Pro Forma
Company (1) Stores (2) Adjustments Company
-------------------------------------------------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues
Vehicle Sales $196,965 $31,655 $ 0 $165,310
Other operating revenue 27,444 5,656 0 21,788
-------- ------- ------- --------
Total Revenues 224,409 37,311 0 187,098 (7)
Cost of goods sold 185,695 31,805 0 153,890
-------- ------- ------- --------
Gross profit 38,714 5,506 0 33,208
Expenses
Selling, general and administration 28,643 5,601 0 23,042
Depreciation and amortization 998 121 0 877
Loss from sale of dealerships 347 0 (347)(5) 0
-------- ------- ------- --------
29,988 5,722 (347) 23,919
-------- ------- ------- --------
Income before interest and taxes 8,726 (216) 347 9,289
Other income (expenses)
Interest Income 832 0 0 832
Interest Expense (2,946) (481) 0 (2,465)
-------- ------- ------- --------
Income (loss) before taxes 6,612 (697) 347 7,656
Income tax provision (benefit) 2,600 (260) 0 2,860
-------- ------- ------- --------
Net income (loss) $ 4,012 $ (437) $ 347 $ 4,796 (7)
-------- ------- ------- --------
-------- ------- ------- --------
Net income per share $ 0.29 $ 0.36 (7)
-------- --------
Weighted average shares outstanding 13,925 (760)(6) 13,165 (7)
-------- ------- --------
</TABLE>
7
<PAGE>
(1) Actual Company information reflects the actual consolidated results of
operations of the Company for the year ended December 31, 1996 as reported
in the Company's 1996 Annual Report on Form 10-K and for the six months
ended June 30, 1997 as reported in the Company's June 30, 1997 Quarterly
Report on Form 10-Q.
(2) Actual Performance Stores information reflects the actual combined results
of operations of Performance Dodge, Inc. and Performance Nissan, Inc. for
the year ended December 31, 1996 and for the six month period ended June
30, 1997. Such results of operations are included in the Company's actual
consolidated information for each respective period.
(3) Net income per share data was not presented in the actual statement of
operations for the year ended December 31, 1996 as the historical capital
structure prior to the Company's reorganization and initial public offering
during 1996 is not comparable to the capital structure after these events.
See note (4) below for pro forma net income per share data.
(4) The pro forma statement of operations for the year ended December 31, 1996
does not reflect the pro forma effect of the following significant
transactions which occurred during the period from January 1, 1996 to June
30, 1997; the Company's initial public offering in September 1996, the
acquisition of Lynn Hickey Dodge in October 1996, and the acquisition of
Toyota West Sales and Service, Inc. and Douglas Toyota, Inc. in April 1997.
Giving effect to these transactions as if each had occurred at the
beginning of fiscal 1996, in addition to the effect of the sale of the
Performance Stores, pro forma total revenue, net income and net income per
share for the year ended December 31, 1996 would have been $548,925,000,
10,332,000, and $0.79 respectively. (This pro forma information should be
read in conjunction with the Company's Form 8-K/A filed in June 1997 in
connection with the acquisition of Toyota West Sales and Service, Inc. and
Douglas Toyota, Inc. ("Spedding Toyota")) The pro forma net income per
share of $0.79 was calculated assuming that 13,040,000 shares were
outstanding since the beginning of the period, representing the 13,800,000
shares as of December 31, 1996 less the 760,000 shares received into
treasury in the sale of the Performance Stores.
(5) Reflects the reversal of the loss recognized upon the sale of the
Performance Stores.
(6) Reflects the 760,000 shares received into treasury as proceeds in the sale
of the Performance Stores.
(7) The pro forma statement of operations for the six months ended June 30,
1997 does not reflect the pro forma effect of the acquisition of Spedding
Toyota in April 1997. Giving effect to this transaction as if it had
occurred at the beginning of fiscal 1997, in addition to the effect of the
sale of the Performance Stores, pro forma total revenue, net income and net
income per share for the six months ended June 30, 1997 would have been
$237,298,000, 5,227,000, and $0.39, respectively. (This pro forma
information should be read in conjunction with the Company's Form 8-K/A
filed in June 1997 in connection with the acquisition of Spedding Toyota.)
The pro forma net income per share of $0.39 was calculated assuming that
13,319,720 shares were outstanding since the beginning of the period,
representing the 13,800,000 outstanding as of December 31, 1996, plus the
279,720 shares issued in the acquisition of Spedding Toyota, less the
760,000 shares received into treasury in the sale of the Performance
Stores.
8
<PAGE>
PRO FORMA BALANCE SHEET
AS OF JUNE 30, 1997
(unaudited)
<TABLE>
Pro Forma Adjustments
---------------------
Actual
Actual Performance Pro Forma
Company Stores Adjustments Company
-------------------------------------------------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 6,671 $ 219 $ $ 6,452
Accounts receivable 20,962 3,278 17,684
Inventories 72,708 13,197 59,511
-------- ------- --------- --------
Total current assets 100,341 16,694 83,647
-------- ------- --------- --------
Property and equipment, net 23,654 616 23,038
Goodwill and other intangibles, net 58,410 4,232 54,178
Other assets 5,666 819 4,847
-------- ------- --------- --------
Total Assets $188,071 $22,361 $ $165,710
-------- ------- --------- --------
-------- ------- --------- --------
Current liabilities:
Floorplan notes payable $ 69,311 $12,146 $ $ 57,165
Current maturities of long-term debt 8,063 0 8,063
Accounts payable 7,016 1,199 435(1) 6,252
Due to affiliates 1,016 0 1,016
Accrued expenses and other liabilities 11,170 552 10,618
Deferred income taxes 1,211 (244) 1,455
-------- ------- --------- --------
Total current liabilities 97,787 13,653 435 84,569
Long-term debt 21,816 35 21,781
Deferred warranty revenue - long term portion 1,222 21 1,201
-------- ------- --------- --------
Total long-term liabilities 23,038 56 0 22,982
-------- ------- --------- --------
Stockholders' equity:
Preferred stock 0 0
Common Stock 141 141
Paid-in capital 52,474 52,474
Treasury Stock 0 (8,740)(1) (8,740)
Retained earnings 14,631 (347)(1) 14,284
-------- --------- --------
Total stockholders' equity 67,246 (9,087) 58,159
-------- --------- --------
Total liabilities and stockholders'
equity $188,071 $165,710
-------- --------
-------- --------
(1) Reflects loss on sale of Performance Nissan and Performance Dodge as follows:
Treasury stock received $ 8,740,000
Less net book value of Performance dealerships (8,652,000)
Less estimated transaction costs (435,000)
-----------
$ (347,000)
-----------
-----------
</TABLE>
9
<PAGE>
EXHIBIT INDEX
2.1 Stock Purchase Agreement, dated as of June 20, 1997, between Cross-
Continent Auto Retailers, Inc. and Benji Investments, Ltd. (previously
filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
Quarterly Period ended June 30, 1997, incorporated herein by reference).
10.1 Separation Agreement dated as of June 20, 1997 between Cross-Continent Auto
Retailers, Inc. and Emmett M. Rice, Jr. (previously filed as an exhibit to
the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended
June 30, 1997, incorporated herein by reference).
10.2 Management Agreement dated as of June 1, 1997 among Cross-Continent Auto
Retailers, Inc., Performance Nissan, Inc., Performance Dodge, Inc., and
Emmett M. Rice, Jr. (previously filed as an exhibit to the Company's
Quarterly Report on Form 10-Q for the Quarterly Period ended June 30, 1997,
incorporated herein by reference).
10.3 Lease Agreement dated August 15, 1997 between Cross-Continent Auto
Retailers, Inc. and Performance Dodge, Inc.
99.1 Copy of press release issued by Cross-Continent Auto Retailers, Inc. on
June 18, 1997.
10
<PAGE>
Exhibit 10.3
LEASE AGREEMENT
BY AND BETWEEN
CROSS-CONTINENT AUTO RETAILERS, INC.
A DELAWARE CORPORATION
AND
PERFORMANCE DODGE, INC.
AN OKLAHOMA CORPORATION
DATED: AUGUST 15, 1997
<PAGE>
TABLE OF CONTENTS
1. LEASE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 USE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 LIMITATION ON USES . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 COMPLIANCE WITH PERMITS. . . . . . . . . . . . . . . . . . . . . . . 1
3. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3.1 COMMENCEMENT DATE. . . . . . . . . . . . . . . . . . . . . . . . . . 1
3.2 ACCEPTANCE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . 2
4. BASE RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.1 BASE RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.2 PARTIAL MONTHS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.3 NO OFFSET. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
6. MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . . . . . . . 3
7. ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
7.1 RESTRICTION ON ALTERATIONS . . . . . . . . . . . . . . . . . . . . . 3
7.2 REMOVAL AND SURRENDER OF FIXTURES AND TENANT ALTERATIONS . . . . . . 3
8. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8.1 PERSONAL PROPERTY TAXES. . . . . . . . . . . . . . . . . . . . . . . 4
8.2 REAL PROPERTY TAXES. . . . . . . . . . . . . . . . . . . . . . . . . 4
8.3 RIGHT TO PROTEST . . . . . . . . . . . . . . . . . . . . . . . . . . 4
9. INSURANCE; WAIVER OF SUBROGATION. . . . . . . . . . . . . . . . . . . . . 5
9.1 LIABILITY INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . 5
9.2 PROPERTY INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . 5
9.3 POLICY REQUIREMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 5
9.4 WAIVER OF SUBROGATION. . . . . . . . . . . . . . . . . . . . . . . . 6
10. FIRE OR CASUALTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
11. EMINENT DOMAIN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
11.1 TAKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
11.2 TEMPORARY TAKING . . . . . . . . . . . . . . . . . . . . . . . . . . 7
12. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . . . 7
i
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12.1 PROHIBITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
12.2 NO NOVATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
12.3 JOINT AND SEVERAL OBLIGATIONS. . . . . . . . . . . . . . . . . . . . 8
13. LANDLORD'S RIGHT OF ENTRY . . . . . . . . . . . . . . . . . . . . . . . . 8
14. INDEMNIFICATION AND LIMITATION ON LIABILITY . . . . . . . . . . . . . . . 8
14.1 INDEMNITY BY TENANT. . . . . . . . . . . . . . . . . . . . . . . . . 8
14.2 LIMITATION ON LANDLORD'S LIABILITY . . . . . . . . . . . . . . . . . 9
14.3 INDEMNITY BY LANDLORD. . . . . . . . . . . . . . . . . . . . . . . . 9
15. TRANSFER BY LANDLORD. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
16. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
16.1 SUBORDINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
16.2 ATTORNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
16.3 NOTICE FROM TENANT . . . . . . . . . . . . . . . . . . . . . . . . .10
17. ESTOPPEL CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . .10
18. SURRENDER OF PREMISES AND REMOVAL OF PROPERTY . . . . . . . . . . . . . .10
18.1 NO MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
18.2 SURRENDER OF PREMISES. . . . . . . . . . . . . . . . . . . . . . . .10
18.3 DISPOSAL OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . .11
19. HOLDING OVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
20. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . .11
20.1 DEFAULTS BY TENANT . . . . . . . . . . . . . . . . . . . . . . . . .11
20.2 LANDLORD'S REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . .12
20.3 RE-ENTRY NOT TERMINATION . . . . . . . . . . . . . . . . . . . . . .14
20.4 DEFINITION OF TENANT . . . . . . . . . . . . . . . . . . . . . . . .14
21. INTEREST ON TENANT'S OBLIGATIONS; LATE CHARGES. . . . . . . . . . . . . .14
21.1 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
21.2 LATE CHARGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
22. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
23. SIGNAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
24. TENANT'S RECOURSE . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
25. RIGHT OF FIRST REFUSAL. . . . . . . . . . . . . . . . . . . . . . . . . .15
ii
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26. OPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
27. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .17
27.1 NO WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . ..17
27.2 LANDLORD'S RIGHT TO PERFORM. . . . . . . . . . . . . . . . . . . ..17
27.3 TERMS; HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . ..18
27.4 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . ..18
27.5 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . ..18
27.6 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..18
27.7 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . ..19
27.8 CUMULATIVE REMEDIES. . . . . . . . . . . . . . . . . . . . . . . ..19
27.9 TIME OF ESSENCE. . . . . . . . . . . . . . . . . . . . . . . . . ..19
27.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . .19
27.11 ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . . . . .19
iii
<PAGE>
LEASE SUMMARY
This lease summary is attached to the within lease for convenience of
reference only and shall in no way be considered a part of said lease or used
in the interpretation of any of the provisions contained therein.
DATE: August 15, 1997
LANDLORD: CROSS-CONTINENT AUTO RETAILERS, INC.
TENANT: PERFORMANCE DODGE, INC.
PREMISES: 7609 S.E. 29th Street, Midwest City, Oklahoma 73110
TERM: Beginning on the Commencement Date and continuing for an
initial Lease Term of fifteen (15) years.
COMMENCEMENT DATE: The date first set forth above.
BASE RENT (NET): Two Hundred Fifty-Three Thousand Three Hundred Seventy-
Eight and 68/100 Dollars ($253,378.68) per annum.
LANDLORD'S ADDRESS: Cross-Continent Auto Retailers, Inc.
1201 S. Taylor
Amarillo, Texas 79101
TENANT'S ADDRESS: 7609 S.E. 29th Street
Midwest City, Oklahoma 73110
iv
<PAGE>
LEASE AGREEMENT
This Lease is made and entered into as of this 15th day of August, 1997,
by and between CROSS-CONTINENT AUTO RETAILERS, INC., a Delaware corporation
(the "LANDLORD") and PERFORMANCE DODGE, INC., an Oklahoma corporation (the
"TENANT").
1. LEASE OF PREMISES.
Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, that certain parcel of real property located at 7609 S.E. 29th
Street, Midwest City, Oklahoma 73110 and specifically described in Exhibit
"A" attached hereto and incorporated herein by this reference, together with
all improvements and appurtenances (the "PREMISES").
2. PURPOSE.
2.1 USE. The use of the Premises shall be limited to the
operation of one or more motor vehicle dealerships with related amenities.
The Premises shall be used for no other purpose without the prior written
consent of Landlord, which consent shall not be unreasonably withheld.
2.2 LIMITATION ON USES. Tenant shall not use or occupy the
Premises, or permit the use or occupancy of the Premises, in any manner or
for any purpose which: (a) would violate any law or regulation of any
governmental authority, or the provisions of any applicable governmental
permit; or (b) would constitute waste or otherwise materially and adversely
affect the value of the Premises.
2.3 COMPLIANCE WITH PERMITS. Tenant shall procure and maintain
any license or permit required for the lawful conduct of its business or
other activity on the Premises, submit such license or permit for inspection
by Landlord, if so requested, and comply at all times with all terms and
conditions thereof. The lease of the Premises shall be subject to all
statutes, laws, ordinances and regulations applicable from time to time to
the use, occupancy or possession of the Premises.
3. TERM.
3.1 COMMENCEMENT DATE. The term of this Lease shall commence on
the date first set forth above (the "COMMENCEMENT DATE") and shall end on the
last day of the calendar month preceding the month in which the fifteenth
annual anniversary of the Commencement Date occurs, unless sooner terminated
pursuant hereto (the "LEASE TERM").
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3.2 ACCEPTANCE OF PREMISES. By entering into possession of the
Premises or any part thereof, Tenant shall be deemed to have accepted the
Premises and to have agreed that the Premises are in satisfactory condition
and in full compliance with the requirements of this Lease as of the date of
such possession. Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty with respect to the
Premises, including without limitation, any representation or warranty with
respect to the suitability or fitness of the Premises for the conduct of
Tenant's business.
4. BASE RENT.
4.1 BASE RENT. Tenant shall pay Landlord base rent ("Base Rent")
for the Premises in the amount of Two Hundred Fifty-Three Thousand Three
Hundred Seventy-Eight and 68/100 Dollars ($253,378.68) per annum. Such Base
Rent shall be payable in twelve (12) equal monthly installments of Twenty-One
Thousand One Hundred Fourteen and 89/100 Dollars ($21,114.89), each
installment being payable in advance on the first day of each calendar month
beginning on the Commencement Date and continuing throughout the term of this
Lease.
4.2 PARTIAL MONTHS. If the Term begins on a day other than the
first day of a calendar month, or ends on a day other than the last day of a
calendar month, Base Rent for such beginning or ending month shall be
prorated based upon the number of days in such month occurring during, or
before or after, the Lease Term.
4.3 NO OFFSET. Base Rent, together with all other sums due
hereunder (herein called "ADDITIONAL RENT"), shall be paid to the Landlord
without deduction or offset of any kind, and in advance and without demand
(except as otherwise herein expressly provided) in lawful money of the United
States at 1201 S. Taylor, Amarillo, Texas 79101 or such other location or to
such other person as Landlord may from time to time designate in writing.
The Base Rent and Additional Rent may sometimes be referred to herein
collectively as the "RENT." The rent shall be absolutely net to Landlord and
under no circumstances or conditions, whether now existing or hereafter
arising, shall Landlord be expected or required to make any payment of any
kind whatsoever or be under any other obligation or liability hereunder,
except as expressly set forth in this Lease.
5. UTILITIES.
Tenant shall be solely responsible for and promptly pay all charges
for telephone, electric, gas, sewer, water and all other services and
utilities used or consumed on the Premises. If any such charges are billed
to the Landlord, then Tenant shall make payment in the full amount billed to
Landlord within ten (10) days after written demand from Landlord.
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6. MAINTENANCE AND REPAIRS.
Tenant shall, at Tenant's sole expense, keep the Premises and every
part thereof (including, without limitation, the roof and structural elements
of the Premises, plate glass, all electrical, plumbing, water, sewer and life
safety systems of the Premises, and the parking areas, driveways and
landscaping areas of the Premises) clean and in good condition and repair and
in compliance with all applicable laws and regulations, at all times during
the Lease Term. Landlord shall have no obligation to modify, alter, remodel,
improve or repair the Premises or any part thereof.
7. ALTERATIONS.
7.1 RESTRICTION ON ALTERATIONS. Tenant may make no alterations,
repairs, additions or improvements in, to or about the Premises
(collectively, "TENANT ALTERATIONS") without the prior written consent of
Landlord, and Landlord may impose as a condition to such consent such
reasonable requirements as Landlord may deem necessary or desirable (provided
that Landlord's consent shall not be required with respect to minor,
nonstructural Tenant Alterations costing less than Ten Thousand Dollars
($10,000.00)). Landlord does not expressly or implicitly covenant or warrant
that any plans or specifications submitted by Tenant are safe or that the
same comply with any applicable laws, ordinances, codes, rules or
regulations. Further, Tenant shall indemnify, protect, defend and hold
Landlord harmless from any loss, cost or expense, including attorneys' fees
and costs, incurred by Landlord as a result of any defects in design,
materials or workmanship resulting from Tenant Alterations. Tenant shall
promptly pay all costs incurred in connection with all Tenant Alterations and
shall not permit the filing of any mechanic's lien or other lien in
connection with any Tenant Alterations. If a mechanic's lien or other lien
is filed against the Premises, Tenant shall discharge or cause to be
discharged (by bond or otherwise) such lien within thirty (30) days after
Tenant receives notice of the filing thereof and shall not allow any such
lien to be foreclosed upon. If a mechanic's lien or other lien is filed
against the Premises and Tenant fails to timely discharge such lien, Landlord
may, without waiving its rights and remedies based on such breach of Tenant
and without releasing Tenant from any of its obligations, cause such lien to
be released by any means it shall deem proper, including payment in
satisfaction of the claim giving rise to such lien. Tenant shall pay to
Landlord within thirty (30) days following notice by Landlord, any sum paid
by Landlord to remove such liens, together with interest at the Reference
Rate, as defined in Section 20.2 below, plus two percent (2%) per annum, from
the date of such payment by Landlord. Any increase in any tax, assessment or
charge levied or assessed as a result of any Tenant Alterations shall be
payable by Tenant.
7.2 REMOVAL AND SURRENDER OF FIXTURES AND TENANT ALTERATIONS. All
Tenant Alterations and other work or improvements installed in the Premises
which are attached to, or built into the Premises, including, without
limitation, floor coverings, wall coverings, paneling, molding, doors
(including garage doors), vaults, plumbing
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systems, electrical systems, mechanical systems, lighting systems, built-in
communication systems and cabling, and outlets for the systems mentioned
above and for all telephone, radio, computer and television purposes, and any
special flooring or ceiling installations, shall become the property of
Landlord and shall be surrendered with the Premises, as a part thereof, at
the end of the Lease Term; provided, however, Landlord may, as a condition to
approving any proposed Tenant Alteration, require that such alteration be
removed by Tenant upon the expiration or termination of the Lease Term.
Tenant shall repair any damage to the Premises caused by such removal, all at
Tenant's sole expense. Any articles of personal property including business
and trade fixtures not attached to, or built into, the Premises, machinery
and equipment, free-standing cabinet work, and movable partitions, which were
installed by Tenant in the Premises at Tenant's sole expense and which were
not installed in connection with a credit or allowance granted by Landlord or
in replacement for an item which Tenant would not have been entitled to
remove, shall be and remain the property of Tenant and may be removed by
Tenant at any time during the Lease Term as long as Tenant is not in default
hereunder and provided that Tenant repairs any damage to the Premises caused
by such removal. For purposes of the insurance requirements of Section 9.2,
Tenant shall be deemed to have an insurable interest in all Tenant
Alterations in the Premises, as between Landlord and Tenant, but the same
shall be surrendered with the Premises on termination of this Lease, as set
forth above.
8. TAXES.
8.1 PERSONAL PROPERTY TAXES. At least ten (10) days prior to
delinquency, Tenant shall pay all taxes levied or assessed upon Tenant's
equipment, furniture, fixtures and other personal property located in or
about the Premises. If the assessed value of Landlord's property is
increased by the inclusion therein of a value placed upon Tenant's equipment,
furniture, fixtures or other personal property, Tenant shall pay Landlord,
upon written demand, the taxes so levied against Landlord, or the proportion
thereof resulting from said increase in assessment.
8.2 REAL PROPERTY TAXES. Tenant shall pay all real estate taxes,
assessments (special or otherwise) and charges levied upon or with respect to
the Premises. Landlord, at Landlord's option, may pay such taxes to the
taxing authority, in which event Tenant shall reimburse Landlord for all such
payments within ten (10) days after written demand therefor from Landlord, or
Landlord may provide Tenant with the billing from the taxing authority, in
which event Tenant shall pay the taxes directly and provided proof of such
payment to Landlord not later than ten (10) days prior to delinquency.
8.3 RIGHT TO PROTEST. Tenant shall have the right to protest any
valuations, taxes or assessments upon or with respect to the Premises that
Tenant believes are unreasonable. Tenant shall be liable for all costs and
expenses related to any protest made by Tenant. Landlord agrees to cooperate
with Tenant in the event
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Tenant protests any valuations, taxes or assessments upon or with respect to
the premises, but shall not be liable for any costs or expenses related to
Tenant's protest.
9. INSURANCE; WAIVER OF SUBROGATION.
9.1 LIABILITY INSURANCE. Tenant shall at all times during the
Lease Term and at its own cost and expense procure and continue workers'
compensation insurance and bodily injury liability and property damage
liability insurance adequate to protect Landlord against liability for injury
to or death of any person or damage to property in connection with the use,
operation or condition of the Premises. The limits of liability under the
workers' compensation insurance policy shall be at least equal to the
statutory requirements therefor and the limits of liability under the
Employer's Liability Insurance policy carried by Tenant shall be at least One
Million Dollars ($1,000,000). The general liability insurance for
non-employees and for damage to property at all times shall be in an amount
of not less than Five Million Dollars ($5,000,000), Combined Single Limit,
for injuries to persons and property damage. Not more frequently than once
each two (2) years, if, in the opinion of Landlord or Landlord's lender, the
amount of public liability and property damage insurance coverage at that
time is not adequate, Tenant shall increase the insurance coverage as
reasonably required by either Landlord or Landlord's lender.
9.2 PROPERTY INSURANCE. Tenant, at its sole cost and expense,
shall at all times during the Lease Term maintain in effect policies of
insurance covering (a) the Premises and all improvements and fixtures thereto
(including plate glass), (b) all leasehold improvements (including any Tenant
Alterations), and (c) all trade fixtures, merchandise and other personal
property from time to time in, on or upon the Premises, all in an amount not
less than one hundred percent (100%) of their actual replacement cost from
time to time during the term of this Lease, providing protection against any
peril included within the classification "Fire and Extended Coverage,"
together with insurance against sprinkler damage (if applicable), vandalism
and malicious mischief and water damage caused by plumbing leakage or
failure. Subject to the requirements of Landlord's lender, the proceeds of
such insurance, so long as this Lease remains in effect, shall be used for
the repair or replacement of the property so insured. The full replacement
cost of the items to be insured under this Section 9.2 shall be determined by
the company issuing the insurance policy at the time the policy is initially
obtained, and shall be increased as reasonably requested by Landlord or
Landlord's lender from time to time.
9.3 POLICY REQUIREMENTS. All insurance required to be carried by
Tenant hereunder shall be issued by responsible insurance companies,
qualified to do business in the State of Oklahoma and reasonably acceptable
to Landlord. Insurance companies rated A-9 or better by Best's Insurance
Reports shall be deemed acceptable. Each policy shall have a deductible or
deductibles, if any, which are no greater than those maintained by similarly
situated tenants. Each liability policy shall name Landlord as
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additional insured and each property insurance policy shall name Landlord and
Landlord's lender as loss payee with respect to the Premises and all Tenant
Alterations and copies of all policies, together with certificates evidencing
the existence and amounts of such insurance, shall be delivered to Landlord
by Tenant at least five (5) days prior to Tenant's occupancy of any portion
of the Premises. No such policy shall be cancelable except after thirty (30)
days written notice to Landlord. Tenant shall, at least thirty (30) days
prior to the expiration of any such policy, furnish Landlord with renewals or
"binders" thereof, or Landlord may order such insurance and charge the cost
thereof to Tenant, which amount shall be paid by Tenant upon demand. Any
policy may be carried under so-called "blanket coverage" form of insurance
policies, provided any such blanket policy specifically provides that the
amount of insurance coverage required hereunder shall in no way be prejudiced
by other losses covered by the policy. Neither the issuance of any such
insurance policy nor the minimum limits specified in this Article 9 shall be
deemed to limit or restrict in any way Tenant's liability arising under or
out of this Lease.
9.4 WAIVER OF SUBROGATION. To the extent such waivers are
obtainable from insurance carriers, Landlord and Tenant waive their
respective right of recovery against the other for any direct or
consequential damage to the property of the other, including, without
limitation, its interest in the Premises, by fire or other casualty to the
extent such damage is insured against under a policy or policies of
insurance. Each such insurance policy carried by either Landlord or Tenant
shall include such a waiver of the insurer's rights of subrogation. Such
waiver shall in no way be construed or interpreted to limit or restrict any
indemnity or other waiver made by Tenant under the terms of this Lease with
respect to any uninsured loss.
10. FIRE OR CASUALTY.
In the event the Premises are damaged by fire or other casualty, Tenant
shall repair such damage with reasonable diligence and in a manner consistent
with the provisions of any Underlying Mortgage, as hereinafter defined,
provided that the insurance proceeds paid with respect to such fire or
casualty are made available to Tenant to fund the cost of the restoration.
All insurance proceeds shall be held in a construction control account which
is acceptable to Landlord and to the holder of any Underlying Mortgage and
shall be disbursed to pay the costs of such repair. Rent shall continue
unabated notwithstanding any casualty, repair or reconstruction hereunder.
11. EMINENT DOMAIN.
11.1 TAKING. In case the whole of the Premises, or such part thereof
as shall substantially interfere with Tenant's use and occupancy thereof, shall
be taken by any lawful power or authority by exercise of the right of eminent
domain, or sold to prevent such taking, within sixty (60) days of receipt of
notice of such taking, either Tenant or Landlord may terminate this Lease
effective as of the date possession is
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required to be surrendered to said authority. Tenant shall not because of
such taking assert any claim against Landlord for any compensation because of
such taking, and Landlord shall be entitled to receive the entire amount of
any award without deduction for any estate or interest of Tenant.
11.2 TEMPORARY TAKING. If all or any portion of the Premises are
condemned or otherwise taken for public or quasi-public use for a limited
period of time, this Lease shall remain in full force and effect and Tenant
shall continue to perform all of the terms, conditions and covenants of this
Lease, including, without limitation, the payment of Base Rent and all other
amounts required hereunder. Tenant shall be entitled to receive the entire
award made in connection with any temporary condemnation or other taking
attributable to any period within the Lease Term. Landlord shall be entitled
to the entire award for any such temporary condemnation or other taking which
relates to a period after the expiration of the Lease Term. If any such
temporary condemnation or other taking terminates prior to the expiration of
the Lease Term, Tenant shall restore the Premises as nearly as possible to
the condition prior to the condemnation or other taking, at Tenant's sole
cost and expense; provided that Tenant shall receive the portion of the award
attributable to such restoration.
12. ASSIGNMENT AND SUBLETTING.
12.1 PROHIBITION. Tenant acknowledges that the economic
concessions and rental rates set forth in this Lease were negotiated by
Landlord and Tenant in consideration of, and would not have been granted by
Landlord but for, the specific nature of the leasehold interest granted to
Tenant hereunder, as such interest is limited and defined by various
provisions throughout this Lease, including, but not limited to, the
provisions of this Article 12 which define and limit the transferability of
such leasehold interest. Tenant further acknowledges and agrees that the
leasehold estate granted to Tenant hereunder is not a transferable interest
in property, and Landlord hereby reserves the right to receive any increased
rental value of the Premises during the Lease Term as the same may be
realized by any transfer of said estate. Tenant shall not directly or
indirectly, voluntarily or involuntarily assign, mortgage or otherwise
encumber all or any portion of its interest in this Lease or in the Premises
(collectively, "ASSIGNMENT") or permit the Premises to be occupied by anyone
other than Tenant or Tenant's employees or sublet the Premises (collectively,
"SUBLEASE") or any portion thereof without obtaining the prior written
consent of Landlord, which consent shall not be unreasonably withheld, and
any such attempted assignment, subletting, mortgage or other encumbrance
without such consent shall be null and void and of no effect. The acceptance
of rent by Landlord from any other person shall not be deemed to be a waiver
by Landlord of any provision of this Lease or to be a consent to any
Assignment or Sublease. If Tenant is a corporation, an unincorporated
association, a limited liability company or a partnership, any transfer,
assignment or hypothecation or any stock or interest in such corporation,
association, limited liability company or partnership in the aggregate in
excess of forty percent (40%), or any other transfer
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which results in a change in the effective control of such entity (such as a
change of the general partner or a change in the ownership of the general
partner of a limited partnership), shall be deemed an Assignment of this
Lease.
12.2 NO NOVATION. No Assignment or Sublease shall relieve Tenant
of its obligation to pay the rent and to perform all of the other obligations
to be performed by Tenant hereunder.
12.3. JOINT AND SEVERAL OBLIGATIONS. Each assignee shall assume all
obligations of Tenant under this Lease and shall be and remain liable jointly
and severally with Tenant for the payment of the rent, and for the
performance of all of the terms, covenants, conditions and agreements herein
contained on Tenant's part to be performed for the Lease Term. No Assignment
shall be binding on Landlord unless the assignee or Tenant shall deliver to
Landlord a counterpart of the Assignment which contains a covenant of
assumption by the assignee satisfactory in substance and form to Landlord
consistent with the requirements of this Article 12, but the failure of
refusal of the assignee to execute such instrument of assumption shall not
release or discharge the assignee from its liability as set forth above.
13. LANDLORD'S RIGHT OF ENTRY.
Landlord and its agents and representatives shall have the right,
at all reasonable times, but in such manner as to cause as little disturbance
to Tenant as reasonably practicable, to enter the Premises for purposes of
inspection, to post notices of non-responsibility and to otherwise protect
the interests of Landlord in the Premises.
14. INDEMNIFICATION AND LIMITATION ON LIABILITY.
14.1 INDEMNITY BY TENANT. Tenant shall indemnify, protect, defend
and hold harmless Landlord, its officers, directors, shareholders, agents and
employees from and against any and all claims, suits, demands, liability,
damages and expenses, including attorneys' fees and costs, arising from or
related to (a) Tenant's use or alteration of the Premises, (b) the conduct of
Tenant's business, (c) any activity performed or permitted by Tenant in or
about the Premises during the Lease Term, (d) any breach or default in the
performance of any obligation on Tenant's part to be performed under the
terms of this Lease, or (e) any other act, neglect, fault or omission of
Tenant or any of its officers, agents, directors, contractors, employees,
licensees or invitees. As a material part of the consideration to the
Landlord for entering into this Lease, Tenant hereby assumes all risk of and
releases, discharges and holds harmless Landlord from and against any and all
liability to Tenant for damage to property or injury to persons in, upon or
about the Premises from any cause whatsoever except to the extent caused by
the gross negligence or willful misconduct of Landlord.
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14.2 LIMITATION ON LANDLORD'S LIABILITY. In no event shall
Landlord be liable to Tenant for any injury to any person in or about the
Premises or damage to the Premises or for any loss, damage or injury to any
property of Tenant therein caused by any malfunction of any utility or other
equipment, installation or system, or by the rupture, leakage or overflow of
any plumbing or other pipes.
14.3 INDEMNITY BY LANDLORD. Landlord shall indemnify, protect,
defend and hold harmless Tenant and its officers, directors, shareholders,
agents and employees from and against any and all claims, suits, demands,
liabilities, damages and expenses, including reasonable attorneys' fees and
costs, arising from (a) Landlord's breach of its obligations under this
Lease, or (b) the negligent or wrongful acts of Landlord or its agents or
employees.
15. TRANSFER BY LANDLORD.
Landlord has the absolute right to transfer all or a part of its
interest in this Lease to any successor. In the event of any sale or other
transfer of Landlord's interest in the Premises, other than a transfer for
security purposes only, Landlord shall be automatically relieved of any and
all obligations and liabilities on the part of Landlord accruing from and
after the date of such transfer.
16. SUBORDINATION.
16.1 SUBORDINATION. This Lease is subject and subordinate to all
mortgages and deeds of trust (the "UNDERLYING MORTGAGES") which may now or
hereafter be executed affecting the Premises and to all renewals,
modifications, consolidations, replacements and extensions of any such
Underlying Mortgages. This clause shall be self-operative and no further
instrument of subordination need be required by any mortgagee or beneficiary
in order to make such subordination effective. Tenant, however, shall
execute promptly any certificate or document that Landlord may reasonably
request to effectuate, evidence or confirm such subordination.
16.2 ATTORNMENT. If Landlord's interest in the Premises is sold or
conveyed upon the exercise of any remedy provided for in any Underlying
Mortgage, or otherwise by operation of law: (a) this Lease will not be
affected in any way, and Tenant will attorn to and recognize the new owner as
Tenant's Landlord under this Lease, and Tenant will confirm such attornment
in writing within ten (10) days after request (Tenant's failure to do so will
constitute a material breach of this Lease); and (b) the new owner shall not
be (i) liable for any act or omission of Landlord under this Lease occurring
prior to such sale or conveyance, or (ii) subject to any offset, abatement or
reduction of rent because of any default of Landlord under this Lease
occurring prior to such sale or conveyance.
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16.3 NOTICE FROM TENANT. Tenant shall give written notice to the
holder of any Underlying Mortgage whose name and address have been previously
furnished to Tenant of any act or omission by Landlord which Tenant asserts
as giving Tenant the right to terminate this Lease or to claim a partial or
total eviction or any other right or remedy under this Lease or provided by
law. Tenant further agrees that if Landlord shall have failed to cure any
default for which Tenant intends to seek a remedy which could include a
termination of this Lease, the holder of any Underlying Mortgage shall have
an additional thirty (30) days within which to cure such default or if such
default cannot be cured within that time, then such additional time as may be
necessary if within such thirty (30) days such holder has commenced and is
diligently pursuing the remedies necessary to cure such default (including,
but not limited to, commencement of foreclosure proceedings, if necessary to
effect such cure), in which event this Lease shall not be terminated while
such remedies are being so diligently pursued.
17. ESTOPPEL CERTIFICATES.
Landlord and Tenant shall at any time and from time to time upon
not less than ten (10) days prior notice by the other party, execute,
acknowledge and deliver to the requesting party a statement in writing
certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications), the dates to which the Base Rent and
other charges have been paid in advance, if any, stating whether or not to
the best knowledge of the certifying party, the requesting party is in
default in the performance of any covenant, agreement or condition contained
in this Lease and, if so, specifying each such default of which the
certifying party may have knowledge and containing any other information and
certifications which reasonably may be requested by the requesting party or
the holder of any Underlying Mortgage. Any such statement delivered by
Tenant pursuant to this Article 17 may be relied upon by any prospective
purchaser of the fee of the Premises or any mortgagee.
18. SURRENDER OF PREMISES AND REMOVAL OF PROPERTY.
18.1 NO MERGER. The voluntary or other surrender of this Lease by
Tenant, a mutual cancellation or a termination hereof, shall not constitute a
merger, and shall, at the option of Landlord, terminate all or any existing
subleases or shall operate as an assignment to Landlord of any or all
subleases affecting the Premises.
18.2 SURRENDER OF PREMISES. Upon the expiration of the Lease Term,
or upon any earlier termination hereof, Tenant shall quit and surrender
possession of the Premises to Landlord in as good order and condition as the
Premises are now or hereafter may be improved by Landlord or Tenant,
reasonable wear and tear and casualty which is not to be restored by Tenant
pursuant to this Lease excepted, and shall, without expense to Landlord,
remove or cause to be removed from the Premises, all debris and rubbish, all
furniture, equipment, business and trade fixtures,
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free-standing cabinet work, movable partitioning and other articles of
personal property owned by Tenant or installed or placed by Tenant at its
expense in the Premises, and all similar articles of any other persons
claiming under Tenant unless Landlord exercises its option to have any
subleases or subtenancies assigned to Landlord, and Tenant shall repair all
damage to the Premises resulting from such removal.
18.3 DISPOSAL OF PROPERTY. In the event of the expiration of this
Lease or other re-entry of the Premises by Landlord as provided in this
Lease, any property of Tenant not removed by Tenant upon the expiration of
the term of this Lease, or within fifteen (15) days after a termination by
reason of Tenant's default, shall be considered abandoned and Landlord may
remove any or all of such property and dispose of the same in any
commercially reasonable manner or store the same in a public warehouse or
elsewhere for the account of, and at the expense and risk of, Tenant. If
Tenant shall fail to pay the costs of storing any such property after it has
been stored for a period of sixty (60) days or more, Landlord may sell any or
all of such property at public or private sale, in such manner and at such
places as Landlord, in its reasonable discretion, may deem proper, with
reasonable notice to Tenant. In the event of such sale, Landlord shall apply
the proceeds thereof, first, to the cost and expense of sale, including
reasonable attorneys' fees; second, to the repayment of the cost of removal
and storage; third, to the repayment of any other sums which may then or
thereafter be due to Landlord from Tenant under any of the terms of this
Lease; and fourth, the balance, if any, to Tenant.
19. HOLDING OVER.
In the event Tenant holds over after the expiration of the Lease
Term, with or without the express or implied consent of Landlord, such
tenancy shall be from month-to-month only, and not a renewal hereof or an
extension for any further term, and such month-to-month tenancy shall be
subject to each and every term, covenant and agreement contained herein;
provided, however, that Tenant shall pay as Base Rent during any holding over
period, an amount equal to one hundred fifty percent (150%) of the Base Rent
payable immediately preceding the expiration of the Lease Term. Nothing in
this Article 19 shall be construed as a consent by Landlord to any holding
over by Tenant and Landlord expressly reserves the right to require Tenant to
surrender possession of the Premises upon the expiration of the Lease Term or
upon the earlier termination hereof and to assert any remedy in law or equity
to evict Tenant and/or collect damages in connection with such holding over.
20. DEFAULTS AND REMEDIES.
20.1 DEFAULTS BY TENANT. The occurrence of any of the following
shall constitute a material default and breach of this Lease by Tenant:
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(a) The failure by Tenant to pay any rent within ten (10)
days after such payment is due.
(b) The abandonment or vacation of the Premises by Tenant.
(c) The failure by Tenant to provide estoppel certificates as
herein provided.
(d) The failure by Tenant to observe or perform any other
provision of this Lease where such failure continues for thirty (30) days
after notice thereof by Landlord to Tenant; provided, however, that if the
nature of such default is such that the same cannot reasonably be cured
within such thirty (30) day period, Tenant shall not be deemed to be in
default if Tenant shall within such period commence such cure and thereafter
diligently prosecute the same to completion.
(e) Any action taken by or against Tenant pursuant to any
statute pertaining to bankruptcy or insolvency or the reorganization of
Tenant (unless, in the case of a petition filed against Tenant, the same is
dismissed within ninety (90) days); the making by Tenant of any general
assignment for the benefit of creditors; the appointment of a trustee or
receiver to take possession of all or any portion of Tenant's assets located
at the Premises or of Tenant's interest in this Lease, where possession is
not restored to Tenant within ninety (90) days; or the attachment, execution,
or other judicial seizure of all or any portion of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where such seizure is not
discharged within ninety (90) days.
(f) Tenant's failure to vacate and surrender the Premises as
required by this Lease upon the expiration of the Lease Term or termination
of this Lease.
20.2 LANDLORD'S REMEDIES.
(a) In the event of any such default by Tenant, then, in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving Tenant thirty (30) days written notice
of such election to terminate. In the event Landlord shall elect to so
terminate this Lease, Landlord may recover from Tenant:
(i) the worth at the time of award of any unpaid rent
which has be earned at the time of such termination; plus
(ii) the worth at the time of award of any amount by
which the unpaid rent which would have been earned after termination until
the time
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of award exceeds the amount of such rental loss that Tenant proves could have
been reasonably avoided; plus
(iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of the award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided; plus
(iv) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would
be likely to result therefrom; and
(v) at Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time
by applicable law.
(b) All rent (as defined in Section 4.3) shall be computed on
the basis of the monthly amount thereof payable on the date of Tenant's
default, as the same are to be adjusted thereafter as contemplated by this
Lease. As used in subparagraphs (a) (i) and (ii) above, the "worth at the
time of award" is computed by allowing interest in the per annum amount equal
to the prime rate of interest or other equivalent reference rate from time to
time announced by the Bank of America National Trust and Savings Association
(the "REFERENCE RATE") plus two percent (2%), but in no event in excess of
the maximum interest rate permitted by law. As used in subparagraph (a)
(iii) above, the "worth at the time of award" is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of Dallas at the time
of award plus one percent (1%).
(c) In the event of any such default by Tenant, Landlord
shall also have the right, with or without terminating this Lease, to
re-enter the Premises and remove all persons and property therefrom by
summary proceedings or otherwise; such property may be removed and stored in
a public warehouse or elsewhere at the cost of and for the account of Tenant.
(d) In the event of the vacation or abandonment of the
Premises by Tenant, or in the event that Landlord elects to re-enter as
provided in Paragraph (c) above or takes possession of the Premises pursuant
to legal proceeding or pursuant to any notice provided by law, and if
Landlord does not elect to terminate this Lease, then Landlord may from time
to time, without terminating this Lease, either recover all rent as it
becomes due or relet the Premises or any part thereof for such term or terms
and at such rent and upon such other terms and conditions as Landlord, in its
sole discretion, may deem advisable, with the right to make reasonable
alterations and repairs to the Premises.
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(e) In the event that Landlord shall elect to so relet as
provided in Paragraph (d) above, then rentals received by Landlord from such
reletting shall be applied: First, to the payment of any indebtedness other
than rent due hereunder from Tenant to Landlord; second, to the payment of
any reasonable cost of such reletting; third, to the payment of the cost of
any alterations and repairs to the Premises; fourth, to the payment of rent
due and unpaid hereunder; and the remainder, if any, shall be held by
Landlord and applied in payment of future rent as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied to the payment of rent
hereunder, be less than the rent payable during that month by Tenant
hereunder, then Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any reasonable costs and expenses incurred
by Landlord in such reletting or in making such alterations and repairs not
covered by the rentals received from such reletting.
(f) In the event of any such default by Tenant, Landlord
shall have the right to exercise any remedy available to Landlord under this
Lease, at law, or in equity.
20.3 RE-ENTRY NOT TERMINATION. No re-entry or taking possession of
the Premises by Landlord pursuant to this Article 20 shall be construed as an
election to terminate this Lease unless a written notice of such intention be
given to Tenant or unless the termination thereof be decreed by a court of
competent jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any default of Tenant, Landlord may at any time after
such reletting elect to terminate this Lease for any such default.
20.4 DEFINITION OF TENANT. As used in this Article 20, the term
"TENANT" shall be deemed to include all persons or entities named as Tenant
under this Lease, or each and every one of them. If any of the obligations
of Tenant hereunder is guaranteed by another person or entity, the term
"TENANT" shall be deemed to include all of such guarantors and any one or
more of such guarantors. If this Lease has been assigned, the term "TENANT,"
as used in this Article 20, shall be deemed to include both the assignee and
the assignor.
21. INTEREST ON TENANT'S OBLIGATIONS; LATE CHARGES.
21.1 INTEREST. Any amount due from Tenant to Landlord which is not
paid when due shall bear interest at the lesser of two percent (2%) per annum
in excess of the Reference Rate (as defined in Paragraph 20.2(b) above) or
the maximum rate per annum which Landlord is permitted by law to charge, from
the date such payment is due until paid, but the payment of such interest
shall not excuse or cure any default by Tenant under this Lease.
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21.2 LATE CHARGE. In the event Tenant is more than ten (10) days
late in paying any installment of rent due under this Lease, Tenant shall pay
Landlord a late charge equal to three percent (3%) of the delinquent
installment of rent. The parties agree that the amount of such late charge
represents a reasonable estimate of the cost and expense that would be
incurred by Landlord in processing each delinquent payment of rent by Tenant
and that such late charge shall be paid to Landlord as liquidated damages for
each delinquent payment, but the payment of such late charge shall not excuse
or cure any default by Tenant under this Lease. The parties further agree
that the payment of late charges and the payment of interest provided for in
Section 21.1 above are distinct and separate from one another in that the
payment of interest is to compensate Landlord for the use of Landlord's money
by Tenant, while the payment of a late charge is to compensate Landlord for
the additional administrative expense incurred by Landlord in handling and
processing delinquent payments.
22. QUIET ENJOYMENT.
Tenant, upon the paying of all rent hereunder and performing each
of the covenants, agreements and conditions of this Lease required to be
performed by Tenant, shall lawfully and quietly hold, occupy and enjoy the
Premises during the Lease Term without hindrance or molestation of anyone
lawfully claiming by, through or under Landlord, subject, however, to the
provisions set forth in this Lease.
23. SIGNAGE.
Subject to Article 7 above, Tenant, at Tenant's sole cost and
expense, shall have the right to place signage upon the Premises, provided
the signage does not violate any law, ordinance, rule or regulation of any
governmental authority.
24. TENANT'S RECOURSE.
Anything in this Lease to the contrary notwithstanding, Tenant
agrees that it shall look solely to the estate and property of Landlord in
the land and buildings comprising the Premises (including any insurance
proceeds and/or condemnation awards paid to Landlord with respect to the
Premises), subject to prior rights of any mortgagee under an Underlying
Mortgage, and no other procedures for the satisfaction of Tenant's remedies.
25. RIGHT OF FIRST REFUSAL.
If Landlord receives a bona fide offer from a non-affiliated third
party to purchase the Premises, or any portion thereof, and desires to accept
the offer, Landlord shall give written notice (the "NOTICE") to Tenant. The
Notice shall include the exact and complete terms of the proposed sale.
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For a period of fifteen (15) days after receipt by Tenant of the
Notice, Tenant shall have the right to give written notice to Landlord of
Tenant's exercise of Tenant's right to purchase the Premises or the interest
proposed to be sold, on the same terms, price and conditions as set forth in
the Notice. Tenant shall not have the right to exercise the option described
in paragraph 26 after Tenant has received the Notice.
In the event Tenant fails to timely give Landlord written notice of
Tenant's exercise of Tenant's right of first refusal, Tenant shall have
waived Tenant's right of first refusal and the option set forth in paragraph
26, and Landlord may sell the Premises, or the interest proposed to be sold,
on the same terms set forth in the Notice. Any sale of the Premises or any
interest therein shall be expressly subject to the terms of this Lease. If
Tenant timely gives Landlord written notice of Tenant's exercise of Tenant's
right of first refusal, Tenant shall close the purchase on the same terms,
price and conditions as set forth in the Notice within sixty (60) days after
Tenant's receipt of the Notice. Notwithstanding anything contained in this
paragraph to the contrary, if Tenant does not exercise its right of first
refusal and Landlord fails to close on the sale of the Premises or the
interest proposed to be sold to the non-affiliated third party described in
the Notice within one hundred eighty (180) days from the date of the Notice,
Tenant's right of first refusal and the option described in paragraph 26
shall be reinstated.
Tenant's right of first refusal shall not apply to the sale of the
Premises or any interest therein by Landlord to any subsidiary or other
affiliate of Landlord, but shall apply to the sale of the Premises or any
interest therein by any subsidiary or other affiliate of Landlord to a
non-affiliated third party.
26. OPTION.
Landlord grants to Tenant an option to purchase the Premises at its
fair market value. The option must be exercised no later than six (6) months
prior to the fifteenth anniversary date of this Lease. The option shall be
exercised by Tenant giving written notice to Landlord. The closing of the
purchase of the Premises shall take place on or before sixty (60) days after
Landlord's receipt of Tenant's written election to exercise the option. At
closing, Landlord shall deliver a special warranty deed to Tenant, subject to
easements, rights-of-way and prescriptive rights, whether of record or not;
all then recorded instruments, other than liens and conveyances, that affect
the Premises; any discrepancies, conflicts, or shortages in area or boundary
lines; any encroachments or overlapping of improvements; taxes for the year
of conveyance, the payment of which Tenant will assume and subsequent
assessments for that and prior years due to a change in land usage,
ownership, or both, the payment of which Tenant will assume.
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In the event Tenant timely elects to exercise the option to
purchase the Premises, Landlord and Tenant shall attempt to agree on the fair
market value. If Landlord and Tenant fail to reach an agreement within
thirty (30) days following Tenant's exercise of the option, then Landlord and
Tenant shall agree upon and jointly appoint a single arbitrator who shall be
a MIA real estate appraiser who shall have been active over the five (5) year
period ending on the date of such appointment in the appraisal of commercial
projects in the Oklahoma City metropolitan area. Neither Landlord nor Tenant
shall consult with such appraiser as to his or her opinion as to the fair
market value prior to the appointment. The arbitrator may hold such hearings
and require such information as the arbitrator, in his or her sole
discretion, determines to be necessary. The arbitrator shall, within thirty
(30) days after his or her appointment, reach a decision on the fair market
value of the Premises and shall notify Landlord and Tenant thereof; provided,
however, the fair market value of the Premises shall not be less than the
lesser of: (a) the unpaid balance of any mortgage that is secured by the
Premises, or (b) 80% of the appraised value of the Premises at the time the
mortgage that is secured by the Premises is placed on the Premises. The
decision of the arbitrator shall be binding upon Landlord and Tenant.
If Landlord and Tenant fail to agree upon and appoint an
arbitrator, then the appointment of the arbitrator shall be made by the
presiding judge of the District Court of Oklahoma County, Oklahoma, or, if he
or she refuses to act, by any judge having jurisdiction over the parties.
The cost of arbitration shall be paid by Landlord and Tenant equally.
27. GENERAL PROVISIONS.
27.1 NO WAIVER. The waiver by Landlord of any breach of any term,
provision, covenant or condition contained in this Lease, or the failure of
Landlord to insist on the strict performance by Tenant, shall not be deemed
to be a waiver of such term, provision, covenant or condition as to any
subsequent breach thereof or of any other term, covenant or condition
contained in this Lease. The acceptance of rents hereunder by Landlord shall
not be deemed to be a waiver of any breach or default by Tenant of any term,
provision, covenant or condition herein, regardless of Landlord's knowledge
of such breach or default at the time of acceptance of rent.
27.2 LANDLORD'S RIGHT TO PERFORM. All covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed
by Tenant at Tenant's sole expense and without abatement of rent. If Tenant
shall fail to observe and perform any covenant, condition, provision or
agreement contained in this Lease or shall fail to perform any other act
required to be performed by Tenant, Landlord may, upon notice to Tenant,
without obligation, and without waiving or releasing Tenant from any default
or obligations of Tenant, make any such payment or perform any such
obligation on Tenant's part to be performed. All sums so paid by Landlord
and all costs incurred by Landlord, including attorneys' fees, together with
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interest thereon in a per annum amount equal to two percent (2%) per annum in
excess of the Reference Rate, but not in excess of the maximum rate permitted
by law, shall be payable to Landlord on demand and Tenant covenants to pay
any such sums, and Landlord shall have (in addition to any other right or
remedy hereunder) the same rights and remedies in the event of the
non-payment thereof by Tenant as in the case of default by Tenant in the
payment of rent.
27.3 TERMS; HEADINGS. The words "Landlord" and "Tenant" as used
herein shall include the plural, as well as the singular. The words used in
neuter gender include the masculine and feminine and words in the masculine
or feminine gender include the neuter. If there is more than one tenant, the
obligations hereunder imposed upon Tenant shall be joint and several. The
headings or titles of this Lease shall have no effect upon the construction
or interpretation of any part hereof.
27.4 ENTIRE AGREEMENT. This instrument along with any exhibits and
attachments or other documents affixed hereto, or referred to herein,
constitutes the entire and exclusive agreement between Landlord and Tenant
with respect to the Premises and the estate and interest leased to Tenant
hereunder. This instrument and said exhibits and attachments and other
documents may be altered, amended, modified or revoked only by an instrument
in writing signed by both Landlord and Tenant. Landlord and Tenant hereby
agree that all prior or contemporaneous oral understandings, agreements or
negotiations relative to the leasing of the Premises are merged into and
revoked by this instrument.
27.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of Article
12 relating to Assignment and Sublease, this Lease is intended to and does
bind the heirs, executors, administrators and assigns of any and all of the
parties hereto.
27.6 NOTICES. All notices, consents, approvals, requests, demands
and other communications (collectively "NOTICES") which Landlord or Tenant
are required or desire to serve upon, or deliver to, the other shall be in
writing and mailed postage prepaid by certified or registered mail, return
receipt requested, or by personal delivery, or given by a nationally
recognized overnight delivery service (such as Federal Express) with all fees
prepaid, to the applicable address set forth in the Lease Summary, or at such
other place or places as either Landlord or Tenant may, from time to time,
designate in a written notice given to the other. Notices shall be deemed
sufficiently served or given at the time of delivery; provided that refusal
to accept delivery of a notice shall constitute successful and effective
delivery thereof. Any notice, request, communication or demand by Tenant to
Landlord shall, if requested in writing by the Landlord, be given or served
simultaneously to the Landlord's mortgagee at the address specified in such
request. Rejection or other refusal to accept a notice, request,
communication or demand or the inability to deliver the same because of a
changed address of which no notice was given shall be deemed to be receipt of
the notice, request, communication or demand sent.
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27.7 SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material
benefit by either party hereunder, shall be held invalid or unenforceable to
any extent, the remaining terms, conditions and covenants of this Lease shall
not be affected thereby and each of said terms, covenants and conditions
shall be valid and enforceable to the fullest extent permitted by law.
27.8 CUMULATIVE REMEDIES. All remedies in this Lease, at law,
or in equity, are cumulative. No failure or delay on the part of either
party in exercising any right or remedy under this Lease, at law, or in
equity, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right or remedy preclude any other or further exercise
thereof, or the exercise of any other right or remedy.
27.9 TIME OF ESSENCE. Time is of the essence of this Lease and
each provision hereof in which time of performance is established.
27.10 GOVERNING LAW. This Lease shall be governed by, interpreted
and construed in accordance with the laws of the State of Oklahoma.
27.11 ATTORNEYS' FEES. If any action or proceeding is brought by
Landlord or Tenant to enforce its respective rights under this Lease, the
unsuccessful party therein shall pay all costs incurred by the prevailing
party therein, including reasonable attorneys' fees to be fixed by the court.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the date set forth in the first paragraph above.
LANDLORD: CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
By: /s/ Bill Gilliland
------------------------------------
Bill Gilliland,
Chairman & Chief Executive Officer
TENANT: PERFORMANCE DODGE, INC.,
an Oklahoma corporation
By: /s/ Emmett M. Rice, Jr.
------------------------------------
Emmett M. Rice, Jr., President
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Exhibit 99.1
FOR FURTHER INFORMATION CONTACT:
AT THE COMPANY
John Gaines
Vice President-Finance
806-374-8653
FOR IMMEDIATE RELEASE
CROSS-CONTINENT ANTICIPATES LOWER THAN EXPECTED SECOND
QUARTER RESULTS ON WEAK OKLAHOMA CITY SALES
AMARILLO, TEXAS, JUNE 18, 1997--CROSS-CONTINENT AUTO RETAILERS, INC. (NYSE:
XC) today announced that its second quarter results will be below analyst
expectations primarily due to approximately $717,000 in operating losses, or
$0.05 per share, recorded in April and May at its Performance Nissan and
Performance Dodge dealerships, and lower than expected new vehicle sales at
Lynn Hickey Dodge resulting from a disruption of new vehicle availability
attributed to the Chrysler engine plant strike. The company also anticipates
that full year results will be negatively impacted by these events.
The company also announced that it has reached an agreement in principle to
divest its Performance Nissan and Performance Dodge dealerships for total
consideration of approximately $9.0 million, subject to certain adjustments
prior to closing, to an affiliate of Emmett M. Rice, Jr., senior vice
president, chief operating officer and a director of the company. The
consideration for the purchase will be common stock of the company owned by
Emmett Rice. The transaction is subject to the execution of a definitive
agreement and required third party approvals.
Cross-Continent announced its intention to explore a possible sale of the
dealerships last month. Total revenue at the Performance Nissan dealership
approximated $32 million in 1996, and total revenue at the Performance Dodge
dealership approximated $46 million in 1996.
Under the terms of the agreement, Rice will resign as an officer and director
of Cross-Continent. "While we will miss the contribution of Mr. Rice to our
organization, we wish him well in his new endeavors," Bill Gilliland,
chairman and chief executive officer of Cross-Continent said.
The company's operating managers at its Amarillo and Oklahoma City
dealerships will report directly to Gilliland while the operating managers at
the Denver and Las Vegas dealerships will report to Mr. Douglas Spedding.
Robert W. Hall, the company's senior vice chairman, will assume Mr. Rice's
other duties.
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CROSS-CONTINENT AUTO RETAILERS, INC.
ADD -1-
Cross-Continent Auto Retailers, Inc. owns and operates a group of franchised
automobile retail dealerships in Texas, 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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