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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to ___________________
Commission File Number 333-06585
CROSS-CONTINENT AUTO RETAILERS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2653095
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1201 S. TAYLOR
AMARILLO, TEXAS 79101
(Address of principal executive offices) (Zip Code)
(806) 374-8653
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
Number of shares outstanding of each of the issuer's classes of common stock, as
of November 12, 1997.
Class Shares Outstanding
- -------------------------- -------------------------
$.01 Par Value 13,445,703
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CROSS-CONTINENT AUTO RETAILERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS - EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
-------- ------- -------- --------
Revenues
Vehicle sales $118,078 $66,987 $315,043 $192,888
Other operating revenue 16,706 9,595 44,150 24,936
-------- ------- -------- --------
Total Revenues 134,784 76,582 359,193 217,824
Cost of sales 111,061 64,528 296,756 184,449
-------- ------- -------- --------
Gross Profit 23,723 12,054 62,437 33,375
-------- ------- -------- --------
Operating Expenses
Selling, general and administrative 16,786 8,315 45,429 24,010
Depreciation and amortization 815 272 1,814 821
Employee stock compensation - - - 1,099
Loss from sale of dealerships - - 347 -
-------- ------- -------- --------
17,601 8,587 47,590 25,930
-------- ------- -------- --------
Operating income 6,122 3,467 14,847 7,445
Other income (expense)
Interest income 159 197 992 724
Interest expense (2,112) (1,068) (5,058) (3,318)
-------- ------- -------- --------
Income before income taxes 4,169 2,596 10,781 4,851
Income tax provision 1,557 961 4,157 2,186
-------- ------- -------- --------
Net Income $ 2,612 $ 1,635 $ 6,624 $ 2,665
-------- ------- -------- --------
-------- ------- -------- --------
Net income per average common share $ .19 $ .48
-------- --------
-------- --------
Weighted average common shares
outstanding 13,446 13,764
-------- --------
-------- --------
The accompanying notes are an integral part of these financial statements.
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CROSS-CONTINENT AUTO RETAILERS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
SEPTEMBER 30, 1997 DECEMBER 31,1996
------------------ ----------------
(UNAUDITED)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 2,152 $ 36,946
Accounts receivable 19,626 18,629
Inventories 56,718 48,168
-------- --------
Total current assets 78,496 103,743
Property and equipment, at cost, less
accumulated depreciation 27,390 13,391
Goodwill, net 68,676 22,094
Other assets and deferred charges 5,626 3,218
-------- --------
Total assets $180,188 $142,446
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Floor plan notes payable $ 53,135 $ 46,282
Current maturities of long-term debt 724 1,345
Accounts payable 7,087 8,623
Due to affiliates - 5,478
Accrued expenses and other liabilities 13,189 7,408
Deferred income taxes 2,397 1,914
-------- --------
Total current liabilities 76,532 71,050
Long-term debt 38,945 10,568
Deferred warranty revenue and other liabilities 1,595 2,310
-------- --------
Total long-term liabilities 40,540 12,878
Stockholders' equity
Preferred stock, $.01 par value, 10,000,000
shares authorized, none issued - -
Common stock, $.01 par value, 100,000,000 shares
authorized, 13,445,703 and 13,800,000
respectively, outstanding 142 138
Paid-in capital 54,471 47,761
Treasury stock (8,740) -
Retained earnings 17,243 10,619
-------- --------
Total stockholders' equity 63,116 58,518
-------- --------
Commitments and contingencies
Total liabilities and stockholders'
equity $180,188 $142,446
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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CROSS-CONTINENT AUTO RETAILERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1997 1996
-------- -------
Cash flows from operating activities
Net income $ 6,624 $ 2,665
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 1,814 821
Employee stock compensation - 1,099
Deferred taxes and other (748) -
(Increase)decrease in
Accounts receivable 4,178 (1,375)
Inventory 3,812 3,906
Other assets (2,135) (394)
Increase (decrease) in
Accounts payable - trade (4,067) (864)
Accrued expenses and other liabilities (524) 343
-------- -------
Net cash provided by operating activities 8,954 6,201
-------- -------
Cash flows from investing activities
Acquisition of property and equipment (1,504) (254)
Construction in progress (4,935) (570)
Acquisition of dealerships (41,620) -
-------- -------
Net cash used in investing activities (48,059) (824)
-------- -------
Cash flows from financing activities
Change in floor plan notes payable (903) (3,558)
Due to affiliates (7,121) (1,208)
Proceeds from borrowing on long-term debt 30,037 -
Long-term debt repayments (17,702) (1,309)
Proceeds from common stock issuance - 45,818
-------- -------
Net cash provided by financing activities 4,311 39,743
-------- -------
Increase (decrease) in cash and cash equivalents (34,794) 45,120
Cash and cash equivalents at beginning of period 36,946 8,362
-------- -------
Cash and cash equivalents at end of period $ 2,152 $53,482
-------- -------
-------- -------
The accompanying notes are an integral part of these financial statements.
4
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CROSS-CONTINENT AUTO RETAILERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1997
NOTE 1. UNAUDITED INTERIM FINANCIAL INFORMATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended September 30, 1997 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1997. This interim report should be read in conjunction
with the consolidated financial statements and notes related thereto, and
management's discussion and analysis of results of operations and financial
condition included in Cross-Continent Auto Retailers, Inc.'s ("C-CAR" or the
"Company") Annual Report on Form 10-K for the year ended December 31, 1996.
The accompanying, unaudited, condensed consolidated financial statements have
been subject to review by the Company's independent accountants, whose report
is included herein.
NOTE 2. INITIAL PUBLIC OFFERING
In September 1996, the Company sold 3,675,000 shares of its common stock
(the "Common Stock") in an initial public offering for $14.00 per share (the
"Offering"). Net proceeds from the Offering, after considering underwriting
commissions, printing costs, professional fees, and other direct expenses,
were $45.5 million.
NOTE 3. NET INCOME PER COMMON SHARE
Earnings per share data are not presented for the three or nine month
periods ended September 30, 1996 because the historical capital structure
prior to the Company's Offering is not comparable to the capital structure
existing after the Offering.
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Financial Accounting Standard No. 128, Earnings Per Share ("FAS 128"),
which is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods. Effective December 31, 1997,
the Company will adopt FAS 128, which establishes standards for computing and
presenting earnings per share ("EPS"). The statement requires dual
presentation of basic and diluted EPS on the face of the income statement for
entities with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation, to the numerator and
denominator of the diluted EPS computation. Basic EPS excludes the effect of
potentially dilutive securities while diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised, converted, or resulted in the issuance of common stock
that would then share in the earnings of the entity.
Pro-forma basic and diluted EPS as computed pursuant to FAS 128 would
not have differed from the reported $0.19 and $0.48 per common share as
5
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presented on the face of the consolidated statement of operations, for the
three and nine month periods ended September 30, 1997, respectively.
NOTE 4. RELATED PARTY TRANSACTIONS
In connection with its business travel, the Company from time to time
makes use of an airplane that is owned and operated by Plains Air, Inc.
Plains Air, Inc. is owned by Bill A. Gilliland and Robert W. Hall, Chairman
and Senior Vice Chairman, respectively. Currently, the Company pays Plains
Air, Inc. $13,050 per month plus a fee of approximately $488 per hour for use
of the airplane. During the three and nine month periods ended September 30,
1997 the Company paid Plains Air, Inc. an aggregate of $130,000 and $399,000,
respectively, for the use of the airplane, compared to $48,000 and $112,000
for the three and nine month periods ended September 30, 1996.
In general, the Company is required to pay for all vehicles purchased
from the automakers upon delivery of the vehicles to the Company. General
Motors Acceptance Corporation ("GMAC"), Chrysler Financial Credit ("CFC") and
Toyota Motor Credit Corporation ("TMCC") provide financing for all new
vehicles and certain qualified used vehicles. This type of financing is
known as "floor plan financing" or "flooring." Under this arrangement with
GMAC, CFC and TMCC, the Company may deposit funds with the financial
institutions in an amount up to 75% of the amount of the floor plan
financing. Such funds earn interest at the same rate charged by GMAC, CFC
and TMCC to the Company for its flooring. From time to time, the control
group and other affiliates have advanced funds to the Company primarily for
the purpose of investing with GMAC, CFC and TMCC. The Company acts only as
an intermediary in this process. As of July 1, 1997, the Company had
withdrawn and repaid all control group and affiliate funds and interest
earned. The amount of interest accrued pursuant to these arrangements during
the nine month period ended September 30, 1997 approximated $193,000,
compared to $85,000 and $276,000 for the three and nine month periods ended
September 30, 1996.
Gilliland Group Family Partnership ("GGFP") was the contracting agent
for the construction of certain facilities for the Company during the nine
month period ending September 30, 1997. Bill Gilliland and Robert W. Hall,
Chairman and Senior Vice Chairman, respectively, are General Partners of
GGFP. The total cost of the facilities through September 30, 1997
approximated $585,000 including approximately $75,000 as payment to GGFP for
architectural and construction management fees. No construction costs or
related management fees were incurred during the three month period ending
September 30, 1997.
GGFP was also the lessor of certain properties to the Company during the
nine month period ending September 30, 1997. The total lease payments
approximated $21,000 and $53,000 for the three and nine month periods ending
September 30, 1997, compared to $16,000 and $40,000 for the comparable
periods ending September 30, 1996.
Subsequent to the acquisition of Toyota West Sales & Service, Inc. and
Douglas Toyota, Inc. (see Note 5), the seller, R. Douglas Spedding became
Vice President-Regional Manager of the Company. In connection with the
acquisition of Toyota West Sales & Service, Inc. and Douglas Toyota, Inc.,
the Company purchased two plots of land from R. Douglas Spedding in exchange
for a total of $7.5 million in seller-financed notes. The plots of land
6
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will be used to relocate the Las Vegas, Nevada and Denver, Colorado
dealerships to newly constructed facilities. In connection with interim
financing on construction projects at the two new locations (see Note 8), the
Company entered into an Interim Construction and Master Loan Agreement ("Loan
Agreement") with R. Douglas Spedding. The Loan Agreement provides interim
financing up to $7.4 million for use on construction of new automobile
dealership facilities in Las Vegas, Nevada and Denver, Colorado.
NOTE 5. ACQUISITIONS
Effective July 1, 1997, the Company acquired Sahara Nissan, Inc.
("Nissan West"). Nissan West is engaged in the retail sales of new and used
vehicles and in the retail and wholesale sales of replacement parts and
vehicle servicing. The total purchase price of approximately $13.7 million
was funded with $11.1 million in cash, $9 million of which was financed with
borrowings on the Company's Credit Facility (hereinafter defined), 125,983
shares of the Company's common stock valued at $15.875 per share, and
$600,000 in seller financed notes, bearing a 6.45% rate of interest and
payable on July 1, 2002. The Nissan West acquisition has been accounted for
as a purchase and the operating results of Nissan West have been included in
the accompanying consolidated statements of operations since July 1, 1997.
The cost of the Nissan West acquisition, including acquisition costs, has
been allocated on the basis of the estimated fair market value of the assets
acquired and the liabilities assumed.
A summary of the preliminary purchase price allocation for Nissan West
is presented below (in thousands):
Net working capital $ 364
Property and equipment 476
Goodwill and other intangibles 12,900
-------
Total $13,740
-------
-------
Effective April 1, 1997, the Company acquired Toyota West Sales and
Service, Inc. and Douglas Toyota, Inc. (collectively "Spedding Toyota").
Spedding Toyota is engaged in the retail sales of new and used vehicles and
in the retail and wholesale sales of replacement parts and vehicle servicing.
The total purchase price of approximately $40.5 million was funded with
$28.5 million in cash, $6 million of which was financed with bank debt
maturing in 2000, 279,720 shares of the Company's common stock valued at
$17.875 per share, and a prime rate based, seller financed note in the amount
of $7 million which matures in 2002. These debt balances have subsequently
been refinanced (See Note 7). In conjunction with the acquisition of
Spedding Toyota, the Company purchased two plots of land from R. Douglas
Spedding (see Note 4) in exchange for a total of $7.5 million in
seller-financed notes. The principal amount, together with interest at the
prime rate, matures October, 1998. The plots of land will be used to
relocate both the Spedding dealerships to newly constructed facilities. The
Spedding Toyota acquisition has been accounted for as a purchase and the
operating results of Spedding Toyota have been included in the accompanying
consolidated statements of operations since April 1, 1997. The cost of the
Spedding Toyota acquisition, including acquisition costs, has been allocated
on the basis of the estimated fair market value of the assets acquired and
the liabilities assumed.
A summary of the purchase price allocation for Spedding Toyota is
presented below (in thousands):
7
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Net working capital $ 2,183
Property and equipment 1,264
Goodwill and other intangibles 37,100
-------
Total $40,547
-------
-------
8
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Effective October 1, 1996, the Company acquired Lynn Hickey Dodge
("Hickey"). Hickey is engaged in the retail sales of new and used
automobiles and in the retail and wholesale sales of replacement parts and
vehicle servicing. The total purchase price of approximately $20 million was
financed with proceeds from the Company's initial public offering. The
acquisition has been accounted for as a purchase, and the operating results
of Hickey have been included in the accompanying consolidated statements of
operations since the date of the acquisition. The cost of the acquisition
was allocated on the basis of the estimated fair market value of the assets
acquired and the liabilities assumed.
A summary of the purchase price allocation for Hickey is presented below
(in thousands):
Net working capital $ 4,760
Property and equipment 430
Goodwill and other intangible assets 14,862
-------
Total $20,052
-------
-------
The unaudited consolidated statement of operations data is presented
below on a pro forma basis as though the Company's 1996 reorganization and
Offering, and the Hickey, Spedding Toyota and Nissan West acquisitions had
all occurred as of the beginning of each period presented (in thousands,
except per share data).
NINE MONTHS ENDED SEPTEMBER 30,
1997 1996
---- ----
Pro forma revenue $436,272 $520,345
Pro forma net income 7,140 8,384
Pro forma net income per share $ 0.51 $ 0.59
Pro forma weighted average shares 13,910 14,206
The adjustments to arrive at pro forma revenue include the historic
revenue of Hickey, Spedding Toyota, and Nissan West prior to the acquisition
of each. Adjustments to net income to arrive at pro forma net income include
estimated additional administrative expenses as a publicly owned company,
additional amortization expense related to purchased goodwill and other
intangibles, increased interest expense associated with the debt incurred in
the purchase of Spedding Toyota and Nissan West, and the tax effects of these
adjustments.
The pro forma results of operations information is not necessarily
indicative of the operating results that would have occurred had the
reorganization, acquisitions and the Offering been consummated as of the
beginning of each period, nor is it necessarily indicative of future
operating results.
NOTE 6. DISPOSITION
Effective July 1, 1997, the Company sold 100% of the stock in
Performance Dodge, Inc. and Performance Nissan, Inc. ("Performance"), both in
the Oklahoma City area, to Benji Investments, Ltd., a Texas limited
partnership controlled by Emmett M. Rice, Jr., the Company's former Chief
Operating Officer (also a shareholder and former Director of the Company), in
exchange for 760,000 shares of the Company's stock valued at a total of $8.7
million based on the average closing share price on the four (4) days
following June 16, 1997 (the date of execution of the definitive agreement).
9
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During the quarter ended June 30, 1997, the Company recorded an estimated
loss on the disposition of $347,000, which included estimated selling
expenses. In conjunction with the sale, the Company repaid $4.3 million in
long-term debt associated with the acquisition of these dealerships. The
Company also retained ownership of the Performance Dodge facilities and the
related mortgage, and is leasing such facilities to Benji Investments, Ltd.
The combined revenue and operating income (loss) from these dealerships for
the three and nine month periods ended September 30, 1997 and 1996 are
presented (in thousands) below:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1997 1996 1997 1996
------------------ -----------------
Revenue $ - $17,727 $37,312 $54,924
Operating income (loss) - (11) (215) 959
NOTE 7. REVOLVING CREDIT FACILITY
Effective June 26, 1997, the Company entered into a three year $40
million revolving credit facility ("Credit Facility") with a certain bank,
bearing variable interest rates based generally on the prime rate or the
LIBOR rate plus certain premiums on each depending on the Company's average
leverage ratio. The premium on the prime based rates ranges from 0.5% to
.75% and the premium on the LIBOR based rates ranges from 1.25% to 2%. On
August 7, 1997, the Company elected the LIBOR based rate which on September
30, 1997 was equal to 7.71875%. A commitment fee ranging from .25% to .50%
(0.5% at September 30, 1997), depending on the Company's average leverage
ratio is charged on the unused portion of the facility. As of September 30,
1997, the Company had drawn down $24 million, of which $13 million was used
to refinance borrowings used in the acquisition of Toyota West, Inc. and
Douglas Toyota, Inc., $9 million was used in the acquisition of Nissan West,
and $2 million was used to reduce other debt. The principal balances may be
repaid any time, but are due in full on June 26, 2000. The Credit Facility
requires the Company to maintain certain financial ratios and limits the
Company's capital expenditures for maintenance (excludes acquisitions and
certain store relocations) to $3 million annually. The Company was in
compliance with these requirements at September 30, 1997.
NOTE 8. REAL ESTATE CONSTRUCTION AND RELATED FINANCING
In connection with the new facilities for the Spedding Toyota stores as
discussed in Note 4, the Company has entered into construction contracts with
commitments for approximately $12.9 million. Construction costs to date have
totaled approximately $4.9 million and the projects are expected to be
completed in the second quarter of 1998. In order to finance a portion of
the construction costs, the Company entered into a Loan Agreement with R.
Douglas Spedding on September 30, 1997 (See Note 4). The Loan Agreement
provides interim financing up to $7.4 million for use in the construction of
the new automobile dealership facilities in Las Vegas, Nevada and Denver,
Colorado. Interest accrues at the prime rate plus 1% payable monthly, and any
outstanding balance is payable on October 31, 1998. As of September 30,
1997, no advances had been made under the Loan Agreement.
10
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During the three and nine months ended September 30, 1997, the Company
capitalized approximately $178,000 and $398,000, respectively, in interest
costs relating to the construction of such facilities, including interest
associated with the related land costs.
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NOTE 9. CHAISSON ACQUISITION
On October 20, 1997, the Company announced it had reached a definitive
agreement to acquire 100% of the common stock of JRJ Investments, Inc. which
owns Chaisson Motor Cars and Chaisson BMW, a multiple-franchise dealership
group operating in Las Vegas and Henderson, Nevada, for cash, promissory
notes and stock approximating $18.0 million. The transaction will be
accounted for as a purchase, is subject to customary closing conditions,
including appropriate approvals, and is expected to be completed by the end
of the fourth quarter.
NOTE 10. STOCK OPTIONS
The Company modified the pay plans of certain officers and key employees
for the three months ended September 30, 1997 resulting in a reduction in
compensation expense of approximately $1.3 million. As part of the modified
pay plans for the quarter, the Company granted to these officers and
employees options to purchase 492,000 shares of the Company's common stock at
an exercise price of $8.06 per share representing the market price of the
shares on the date of grant. The options are fully vested and were granted
under the Company's 1996 Stock Option Plan. The Company advanced to these
officers and employees an aggregate of approximately $1.1 million which is to
be repaid to the Company by no later than February 1999.
Also during the three months ended September 30, 1997, the Company
granted to certain directors, employees, and officers 339,000 options to
purchase the Company's common shares at an exercise price of $8.06 per share.
Approximately 200,000 of these options vest immediately and the remaining
balance vests over 4 years.
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INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors
Cross-Continent Auto Retailers, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Cross-Continent Auto Retailers, Inc. and its subsidiaries (the "Company") as
of September 30, 1997, and the condensed consolidated statements of income
for the three and nine month periods ended September 30, 1997 and 1996, and
cash flows for the nine month periods ended September 30, 1997 and 1996.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet information of the Company as of
December 31, 1996, and the related consolidated statements of income,
shareholders' equity, and cash flows for the year then ended (not presented
herein) and in our report dated February 13, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the accompanying consolidated balance sheet information as of
December 31, 1996 is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
PRICE WATERHOUSE, LLP
Fort Worth, Texas
October 20, 1997
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Cross-Continent Auto Retailers, Inc. ("C-CAR" or the "Company")
currently owns and operates a group of franchised automobile dealerships in
the Amarillo, Texas, Oklahoma City, Oklahoma, Denver, Colorado and Las Vegas,
Nevada markets. The financial condition and results of operations reported
herein are based solely upon the results of the eight dealerships owned by
C-CAR at September 30, 1997; however, year-to-date and the comparable periods
last year also include Performance Dodge, Inc. and Performance Nissan, Inc.
which were sold effective July 1, 1997. The Company generates its revenues
from sales of new and used vehicles, fees for repair and maintenance
services, sales of replacement parts, and fees and commissions from arranging
financing, extended warranties, and credit insurance in connection with
vehicle sales.
In October 1996, the Company acquired Lynn Hickey Dodge in Oklahoma
City, Oklahoma (See Note 5). In April 1997, the Company completed the
acquisition of Toyota West Sales & Service, Inc., located in Las Vegas,
Nevada, and Douglas Toyota, Inc. located just outside Denver, Colorado, from
owner R. Douglas Spedding (See Note 5). In July 1997, the Company acquired
Nissan West in Las Vegas, Nevada (See Note 5). Hickey, Spedding Toyota and
Nissan West are herein collectively referred to as the "Acquisitions". All
of the aforementioned Acquisitions were accounted for as purchases and,
accordingly, the operating results of the acquired dealerships have been
included in the operating results of the Company since their respective dates
of acquisition. Because of the significant growth of the Company since its
formation, as a result of the aforementioned Acquisitions, the Company's
historical results of operations, its period-to-period comparisons of such
results and certain financial data may not be comparable, meaningful or
indicative of future results.
The Company completed the divestiture of Performance Nissan, Inc. and
Performance Dodge, Inc. in Oklahoma City to Benji Investments, Ltd., a Texas
limited partnership controlled by Emmett M. Rice, Jr., a former officer and
director of the Company (See Note 6). The divestiture was effective July 1,
1997.
In October, 1997, the Company announced the proposed acquisition of 100%
of the stock of JRJ Investments, Inc., which owns Chaisson Motor Cars and
Chaisson BMW located in Las Vegas and Henderson, Nevada, for $18.0 million,
payable in cash, promissory notes and stock. The transaction will be
accounted for as a purchase, is subject to customary closing conditions,
including appropriate manufacturer approvals, and is expected to be completed
by the end of the fourth quarter (See Note 9).
FACTORS THAT MAY AFFECT FUTURE RESULTS
Certain matters discussed herein are forward-looking statements about the
business, financial condition and prospects of the Company. The actual results
could differ materially from those indicated by such forward-looking statements
because of various risks and uncertainties. Such risks and uncertainties may
include, but are not limited to, local, regional and national economic
conditions, changes in consumer demand for products offered by the Company, auto
manufacturer employee strikes and other matters that may adversely affect the
availability of products and pricing, state and federal regulatory environment,
availability of additional funding for acquisitions in the future, and other
risks indicated in the Company's previous filings with the Commission. The
14
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Company cannot control these risks and uncertainties and, in many cases,
cannot predict the risks and uncertainties that could cause its actual
results to differ materially from those indicated by the forward-looking
statements.
15
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CROSS-CONTINENT AUTO RETAILERS, INC.
CONSOLIDATED MARGIN STATISTICS
SEPTEMBER 30, 1997
<TABLE>
QTR ENDED QTR ENDED YTD YTD
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------ ------------------ ------------------
(IN THOUSANDS, EXCEPT UNITS AND PERCENTAGES)
<S> <C> <C> <C> <C>
New Vehicle Sales
Units 2,891 1,514 7,393 4,644
Revenue $ 65,260 $32,610 $163,550 $ 98,752
Average Selling Price $ 22.6 $ 21.5 $ 22.1 $ 21.3
Used Vehicle Sales
Units 3,552 1,781 10,128 5,022
Revenue $ 42,257 $24,433 $120,702 $ 66,497
Average Selling Price $ 11.9 $ 13.7 $ 11.9 $ 13.2
Wholesale Used Vehicle Sales
Units 2,139 1,739 6,503 5,229
Revenue $ 10,561 $ 9,944 $ 30,791 $ 27,639
Average Selling Price $ 4.9 $ 5.7 $ 4.7 $ 5.3
Total Vehicle Sales
Units 8,582 5,034 24,024 14,895
Revenue $118,078 $66,987 $315,043 $192,888
Other Operating Revenue
Finance and Insurance $ 5,231 $ 3,334 $ 13,975 $ 7,675
Parts and Service 10,242 6,121 26,879 16,577
Other Revenue 1,233 140 3,296 684
-------- ------- -------- --------
Total Other
Operating Revenue 16,706 9,595 44,150 24,936
-------- ------- -------- --------
Total Revenue $134,784 $76,582 $359,193 $217,824
-------- ------- -------- --------
-------- ------- -------- --------
Gross Profit
New Vehicles $ 6,523 $ 3,143 $ 17,288 $ 10,638
Used Vehicles 6,309 2,790 16,669 8,461
Wholesale Used Vehicles (427) 124 (1,294) (415)
Finance and Insurance 4,772 2,918 12,592 5,779
Parts and Service 5,313 2,939 13,886 8,228
Other Revenue 1,233 140 3,296 684
-------- ------- -------- --------
Total Gross Profit $ 23,723 $12,054 $ 62,437 $ 33,375
-------- ------- -------- --------
-------- ------- -------- --------
Gross Profit Percentages
New Vehicles 10.0% 9.6% 10.6% 10.8%
Used Vehicles 14.9% 11.4% 13.8% 12.7%
Wholesale Used Vehicles (4.0%) 1.2% (4.2%) (1.5%)
Finance and Insurance 91.2% 87.5% 90.1% 75.3%
Parts and Service 51.9% 48.0% 51.7% 49.6%
Other Revenue 100.0% 100.0% 100.0% 100.0%
-------- ------- -------- --------
Total Gross Profit Margin 17.6% 15.7% 17.4% 15.3%
-------- ------- -------- --------
-------- ------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
CROSS-CONTINENT AUTO RETAILERS, INC.
(1) SAME STORE MARGIN STATISTICS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Qtr Ended Qtr Ended YTD YTD
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
(IN THOUSANDS, EXCEPT UNITS AND PERCENTAGES)
<S> <C> <C> <C> <C>
New Vehicle Sales
Units 1,172 1,130 3,154 3,278
Revenue $ 27,287 $ 25,196 $ 72,445 $ 73,305
Average Selling Price $ 23.3 $ 22.3 $ 23.0 $ 22.4
Used Vehicle Sales
Units 1,205 1,302 3,527 3,656
Revenue $ 16,256 $ 18,822 $ 47,232 $ 50,475
Average Selling Price $ 13.5 $ 14.5 $ 13.4 $ 13.8
Wholesale Used Vehicle Sales
Units 1,219 1,347 3,550 3,970
Revenue $ 7,392 $ 8,062 $ 20,343 $ 22,308
Average Selling Price $ 6.1 $ 6.0 $ 5.7 $ 5.6
Total Vehicle Sales
Units 3,596 3,779 10,231 10,904
Revenue $ 50,935 $ 52,080 $140,020 $146,088
Other Operating Revenue
Finance and Insurance $ 2,227 $ 2,532 $ 6,361 $ 5,508
Parts and Service 4,479 4,126 11,654 10,924
Other Revenue 242 118 918 380
-------- -------- --------- --------
Total Other
Operating Revenue 6,948 6,776 18,933 16,812
-------- -------- --------- --------
Total Revenue $ 57,883 $ 58,856 $158,953 $162,900
-------- -------- --------- --------
-------- -------- --------- --------
Gross Profit
New Vehicles $ 2,538 $ 2,611 $ 7,790 $ 7,834
Used Vehicles 1,981 2,251 5,982 6,476
Wholesale Used Vehicles (188) 80 (428) (328)
Finance and Insurance 1,892 2,195 5,448 4,161
Parts and Service 2,202 2,084 5,951 5,721
Other Revenue 242 118 918 380
-------- -------- --------- --------
Total Gross Profit $ 8,667 $ 9,339 $ 25,661 $ 24,244
-------- -------- --------- --------
-------- -------- --------- --------
Gross Profit Percentages
New Vehicles 9.3% 10.4% 10.8% 10.7%
Used Vehicles 12.2% 12.0% 12.7% 12.8%
Wholesale Used Vehicles (2.5%) 1.0% (2.1%) (1.5%)
Finance and Insurance 85.0% 86.7% 85.6% 75.5%
Parts and Service 49.2% 50.5% 51.1% 52.4%
Other Revenue 100.0% 100.0% 100.0% 100.0%
-------- -------- --------- --------
Total Gross Profit Margin 15.0% 15.9% 16.1% 14.9%
-------- -------- --------- --------
-------- -------- --------- --------
</TABLE>
(1) "SAME STORE" INFORMATION RELATES TO THE DEALERSHIPS FOR WHICH THEIR RESULTS
OF OPERATIONS ARE INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE
SAME PERIODS OF 1997 AND 1996.
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
RESULTS OF OPERATIONS FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1997
Total revenue increased 76.0% to $134.8 million for the quarter ended
September 30, 1997 compared to $76.6 million for the quarter ended September 30,
1996.
New vehicle sales revenue increased approximately 100.1% to $65.3 million
for the third quarter of 1997, compared to $32.6 million in the third quarter of
1996. Acquisitions accounted for $38.0 million of the increase, which was
partially off-set by the absence of revenue from the two Performance dealerships
which were sold in July, 1997 but included in the comparable period last year.
Same store sales increased 8.3% or $2.1 million. New unit sales increased 1,377
units in the quarter to 2,891 units, compared to 1,514 in the third quarter of
1996. The Acquisitions accounted for 1,719 units of the increase, which was
partially off-set by the absence of unit sales from the Performance dealerships.
Comparable store new vehicle sales increased 42 units. The average selling price
of a new vehicle was $22,574, a 4.8% increase.
Gross margins on new vehicle sales were 10.0%, an increase of .4 percentage
point over last year. Acquisitions added approximately $4.0 million in gross
profit and the Acquisitions have historically had higher margins on new vehicle
sales.
Used vehicle retail sales revenue increased approximately 73.0% in the
third quarter of 1997 to $42.3 million, compared to $24.4 million in the third
quarter of 1996. Acquisitions added approximately $26.0 million, which was
partially off-set by the exclusion of the Performance dealerships. Same store
sales decreased approximately 13.6% or $2.6 million. The same store decrease in
used retail sales was attributable to lower used retail unit sales largely
because of manufacturer incentives at the end of the model year increased the
attraction of new vehicles relative to used vehicles, and to lower average
selling prices. Same store retail used unit sales decreased 7.5% to 1,205 for
the quarter and average selling prices decreased 6.7% per unit to $13,491.
Overall, the average used car selling prices decreased by 13.3% to $11,897.
Acquisitions have historically had a lower used car average selling price, when
combined with the Company's same store used vehicle sales, resulted in an
overall lower average selling price.
Used vehicle retail gross profit margin was 14.9%, compared to 11.4% in the
third quarter of 1996. The increase was primarily attributable to the higher
gross margins at the Acquisitions, which added approximately $4.3 million in
gross profit and the Acquisitions have historically had higher margins on used
vehicle sales. The increase from Acquisitions was partially off-set by the
exclusion of the Performance dealerships and a reduction of $270,000 in same
store gross profit.
The Company's other operating revenue increased 74.1% to $16.7 million for
the quarter compared to $9.6 million in the comparable period last year,
primarily because of increased finance and insurance revenue and parts and
service revenue.
18
<PAGE>
Finance and insurance revenue increased 56.9% to $5.2 million for the
quarter. Acquisitions added $3.0 million, which was partially off-set by the
exclusion of the Performance dealerships and a reduction in same store sales of
$305,000. The decrease in same store sales was attributable to the decrease in
used retail vehicles sold during the quarter.
Gross profit margin on finance and insurance was 91.2% which represents an
increase of 3.7 percentage points over last year. Acquisitions account for the
majority of the increase, which was partially off-set by the exclusion of the
Performance dealerships and a reduction of $304,000 in same store gross profit.
Parts and service revenue increased 67.3% to $10.2 million, largely because
of the inclusion of the Acquisitions which added approximately $5.8 million.
The Acquisitions increase was off-set by the exclusion of the Performance
dealerships. Same store sales increased by $353,000 or 8.5% over the same
period last year.
Gross profit margin on parts and service revenue was 51.9% which represents
an increase of 3.9 percentage points over last year. Acquisitions added
approximately $3.1 million in gross profit which was partially off-set by the
divestiture of the Performance dealerships.
The increase in other revenue is primarily attributable to miscellaneous
fee income recorded by the Acquisitions. Fees, which are collected on vehicle
sales, are usually governed by state regulatory agencies. The Acquisitions are
located in states which permit higher fees compared to the Company's same store
dealerships. The Company expects this component of other operating revenue to
increase as the Company acquires additional dealerships.
Total Company gross profit increased 96.8% for the quarter to $23.7
million, compared to $12.1 million for 1996. Acquisitions accounted for $15.1
million of the increase, which was off-set by the exclusion of the Performance
dealerships and a decrease in same store gross profit of $672,000, or 7.2%. The
decrease in same store gross profit was primarily attributable to a reduction in
used retail unit sales, increased losses on wholesale used unit sales and a
reduction in finance and insurance gross profit, which was partially off-set by
an increase in gross profit from parts and service and other operating revenue.
Total Company gross profit as a percentage of sales was 17.6% for the
quarter compared to 15.7% for the third quarter of 1996. The increase in gross
profit as a percentage of sales is primarily attributable to higher gross
margins on other operating revenue (including finance and insurance, and parts
and service) and higher used vehicle margins from the Acquisitions, partially
off-set by decreased gross margin on same store sales which was primarily
attributable to a decline in new vehicle margins, wholesale used vehicle margins
and finance and insurance margins.
The Company anticipates a reduction in overall gross profit as a percentage
of revenue for the remainder of 1997. The Company believes margins may decline
if the trend of lower demand for vehicles continues.
19
<PAGE>
Also, lower vehicle sales would directly affect finance and insurance
revenue, which is one of the Company's highest gross margin revenue item.
20
<PAGE>
Additionally, the amount of revenue recognized related to the in-house
warranties sold in prior periods, which was deferred and amortized over the
contractual service period of the warranty contracts, will decline each quarter
and will eventually cease at the expiration of the warranty periods. As a
result, gross margin will be negatively impacted during future periods.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company's selling, general and administrative expenses were $16.8
million, or 12.5% of the Company's revenues, for the quarter ended September 30,
1997, compared to $8.3 million, or 10.9% of total revenues, for the quarter
ended September 30, 1996. The increase was primarily attributable to the
Acquisitions which accounted for $11.1 million of the increase. The
Acquisitions have historically had a higher percentage of expense to revenue
ratio attributable to higher commission expenses in comparison to same store
dealerships.
The Company also incurred increased expenses related to higher corporate
expenses associated with public company administration and the assimilation of
Acquisitions. The increase was partially off-set by a decrease in staff at one
of the Company's recently acquired dealerships and the elimination of certain
non-essential contracts and leases. In addition, officers' pay plans were
modified for the quarter resulting in a reduction of compensation expense of
approximately $495,000. Employee pay plans were also modified resulting in an
additional reduction of expenses for the quarter of $828,000. Options to
purchase 492,000 shares of the Company's common stock were issued to these
officers and employees during the quarter at an exercise price of $8.06 per
share which approximated the market price at the date of grant. These options
are fully vested (See Note 10).
The Company expects that it may lose expense leverage during the next two
quarters because the fourth and first quarters are seasonally slower selling
quarters. Additionally, as the Company continues to acquire additional
dealerships, the Company's assimilation expenses are expected to continue to
rise.
INTEREST EXPENSE
The Company's interest expense, net of interest income, increased
approximately 124.3% to $2.0 million for the quarter ended September 30, 1997
compared to $871,000 for the quarter ended September 30, 1996.
Net interest expense is expected to increase throughout 1997 and into 1998
as the Company uses debt to acquire additional dealerships. Additionally,
interest expense on floorplan debt will increase as the Company acquires
additional dealerships.
INCOME TAXES
The Company's effective tax rate for the quarter ended September 30, 1997
approximated 37.4%. The tax rate for the same quarter of 1996 was 37.0%.
Management expects the effective tax rate in 1997 to approximate 37.4% to 38.0%.
21
<PAGE>
RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997
Total revenue increased approximately 64.9% to $359.2 million for the
period ended September 30, 1997, compared with total revenue of $217.8 million
last year.
New vehicle sales revenue increased approximately 65.6% to $163.6 million,
compared with $98.8 million in 1996. The increase in new vehicle sales for the
period was primarily attributable to Acquisitions which added $77.1 million.
This increase was partially off-set by the absence of revenue from the two
Performance dealerships which were sold in July, 1997. Same store sales
decreased by $860,000 over the comparable period a year ago, largely because of
weak market conditions in the Company's Amarillo trade area.
New unit sales increased 2,749 units for the nine month period to 7,393
units compared to 4,644 units for the same nine month period in 1996.
Acquisitions accounted for 3,483 units of the increase and was partially off-set
by the absence of units from the two Performance dealerships which were sold in
July, 1997, and a 124 unit decrease in same store new unit sales. The Company
attributes the lower demand for new vehicles to trends consistent within the
automotive retail industry. The average selling price of a new vehicle was
$22,122, a 4.0% increase.
New vehicle gross margins were 10.6%, a decrease of .20 percentage points,
largely attributable to lower margins at the Performance dealerships.
Acquisitions added approximately $8.0 million in gross profit and have
historically had higher margins.
Used vehicle retail sales revenue increased approximately 81.5% to $120.7
million, compared to $66.5 million in 1996. Acquisitions accounted for $59.2
million of the increase in used vehicle retail sales. Used vehicle retail sales
revenue from Acquisitions was partially off-set by the exclusion of the
Performance dealerships in the third quarter of 1997. Same store sales
decreased $3.2 million or 6.4%, largely because same store unit sales decreased
129 units. Consistent with trends in the quarter, lower average selling prices
at the Acquisitions reduced the retail used vehicle average selling price to
$11,918, compared to $13,241 last year. For the remainder of 1997 the Company
will continue to place an increased emphasis on used vehicle retail sales
because of customer buying patterns and the higher gross margins associated with
used vehicle sales.
Gross margins on used retail sales were 13.8%, an increase of 1.1
percentage points in comparison with last year. The increase was primarily
attributable to the higher gross margins at the Acquisitions. The Acquisitions
added approximately $9.5 million in gross profit and have historically had
higher margins. The increase from Acquisitions was partially off-set by the
exclusion of the Performance dealerships during the third quarter and a
reduction of $494,000 in same store gross profit.
For the nine months ended September 30, 1997 other operating revenue
increased 77.1% to $44.2 million, compared to $24.9 million during the
22
<PAGE>
comparable period last year, primarily because of increased finance and
insurance revenue and parts and service revenue.
23
<PAGE>
Finance and insurance revenue increased 82.1% to $14.0 million, largely
attributable to the Acquisitions. Acquisitions added $6.2 million and same
store sales increased approximately $853,000, which were partially off-set by
the exclusion of the Performance dealerships. The same store sales increase can
be largely attributed to third party extended warranty sales; the commissions
from the sale of third party warranties are recognized immediately into income
as opposed to in-house warranty revenue which is amortized ratably into income
over the life of the contracts. The Company commenced the sale of third party
warranties in 1996.
Gross profit margin on finance and insurance was 90.1% which represents an
increase of 14.8 percentage points over last year. The Acquisitions accounted
for a majority of the increase. Same store gross profit margin increased by
10.1 percentage points, largely attributable to third party extended warranty
sales.
Parts and service revenue increased 62.1% to $26.9 million, largely because
of the Acquisitions, which added approximately $11.3 million. The same store
parts and service sales increased by $730,000 over the same period last year.
Gross profit margin on parts and service revenue was 51.7% which represents
an increase of 2.1 percentage points over the comparable period last year.
Acquisitions added approximately $6.3 million in gross profit, which was
partially off-set by the divestiture of the Performance dealerships in July,
1997. The increase in margin was largely attributable to lower wholesale parts
sales, which typically generate lower gross profit margins.
The increase in other revenue was primarily attributable to miscellaneous
fee income recorded at the Acquisitions. Fees, which are collected on vehicle
sales, are usually governed by state regulatory agencies. The Acquisitions are
located in states which permit higher fees compared to the Company's same store
dealerships. The Company also experienced an increase in same store sales of
$538,000. The Company expects this component of other operating revenue to
increase as the Company acquires additional dealerships.
Total Company gross profit increased 87.1% to $62.4 million for the nine
month period of 1997, compared to $33.4 million for the 1996 period. The
Acquisitions accounted for $31.3 million of the increase, partially off-set by
the exclusion of the Performance dealerships in the third quarter of 1997. Same
store gross profit increased by $1.4 million, which was primarily attributable
to increased gross profit on finance and insurance revenue, parts and service
revenue, and other revenue.
Total Company gross profit as a percentage of sales was 17.4% for the
period, compared to 15.3% for the comparable period in 1996. The increase in
gross profit as a percentage of sales was primarily attributable to higher
margins on other operating revenue (including parts and service, and finance and
insurance) and stronger used vehicle margins from the Acquisitions. The
increase added by the Acquisitions was partially off-set by the effect of the
Performance dealerships which were sold in July of 1997.
24
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the nine months ended
September 30, 1997 were $45.4 million, or 12.6% of the Company's revenues,
compared to $24.0 million, or 11.0% of the Company's revenues, for the nine
months ended September 30, 1996. The Acquisitions accounted for $22.9 million
of the increase in expenses for the nine month period. The Acquisitions have
historically had a higher expense to revenue ratio attributable to higher
commission expense in comparison to same store dealerships. Expenses as a
percentage of revenue increased for the nine month period largely because of
higher dealership assimilation and corporate overhead costs. The Company
expects that it may lose expense leverage during the next two quarters because
the fourth and first quarters are seasonally slower quarters.
INTEREST EXPENSE
Net interest expense for the nine months ended September 30, 1997 increased
56.8% to $4.1 million compared to $2.6 million for the nine months ended
September 30, 1996. The Acquisitions accounted for approximately $1.5 million
of the increase in interest expense. The increase is primarily attributable to
an increase in borrowings to finance the Acquisitions and increased floorplan
financing. This increase is partially off-set by interest income earned on
proceeds from the Offering. For the nine months ended September 30, 1997 this
income approximated $595,000.
Net interest expense is expected to increase throughout 1997 and into 1998
as the Company uses debt to acquire additional dealerships. Additionally,
interest expense on floorplan debt will increase as the Company acquires
additional dealerships.
INCOME TAXES
The Company's effective income tax rate for the nine months ended September
30, 1997 approximated 38.6% as compared to 45.1% for the comparable period of
1996. The decrease in the effective rates relates to certain non-deductible
expenses incurred during the first nine months of 1996. The effective tax rate
for the period ended September 30, 1997 was 37.4%. Management expects the
effective tax rate in 1997 to approximate 37.4% to 38.0%.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires cash primarily for financing its inventory of new and
used vehicles and replacement parts, acquisitions of additional dealerships,
capital expenditures and transition expenses in connection with its
acquisitions. Historically, the Company has met these liquidity requirements
primarily through cash flow generated from operating activities, floor plan
financing and borrowings under the Credit Facility and other credit agreements.
Floor plan financing from GMAC currently represents the primary source of
financing for vehicle inventories.
During the first nine months of 1997, the Company generated net cash of
$9.0 million from operating activities, compared to $6.2 million
25
<PAGE>
generated for the nine months ended September 30, 1996. The increase in net
cash provided by operating activities was primarily attributable to a
decrease in accounts receivable and inventory and an increase in net income
which was partially off-set by a decrease in accounts payable and an increase
in other assets. The increase in other assets relates to debt financing
costs and advances made to certain officers and employees.
Cash used in investing activities totaled $48.1 million during the first
nine months of 1997. Expenditures relating to the purchase of Spedding Toyota
and Nissan West totaled approximately $41.6 million. The Company spent $4.9
million as of September 30, 1997, and expects to spend an additional $8.0
million (a total of $20.4 million, including $7.5 million in land financed by
seller and construction costs), to construct two new dealership facilities in
order to relocate Toyota West and Douglas Toyota. Funds will be provided by
cash on hand and interim financing provided by a $7.4 million note from a
certain officer of the Company dated September 30, 1997 (See Note 8). The
Company plans to convert interim financing to permanent financing when
construction is completed in the second quarter of 1998. The Company currently
anticipates that any future acquisitions will be financed with a combination of
debt, stock and cash.
Cash generated from financing activities totaled $4.3 million for the nine
months ended September 30, 1997. The increase was mainly attributable to a
$24.0 million advance under the Credit Facility for debt repayment and the
Nissan West acquisition which was partially off-set by the repayment of
long-term debt in conjunction with the sale of the Performance dealerships, a
decrease in floor plan debt related to decreased inventory levels and a
decrease in due to affiliates.
The Company currently finances its purchases of new vehicle inventory with
GMAC, CFC and TMCC. The Company also maintains lines of credit with GMAC, CFC
and TMCC for the financing of used vehicles. GMAC, CFC and TMCC receive a
security interest in all inventory they finance. The Company makes monthly
interest payments on the amounts financed by GMAC, CFC and TMCC. The Company
must repay the principal amount of indebtedness with respect to any vehicle
generally within two to three days of the sale of such vehicle by the Company.
The Company periodically renegotiates the terms of its financing with GMAC, CFC
and TMCC, including the interest rate. As of September 30, 1997, the Company
had outstanding floor plan debt of $53.1 million and paid an average annual
interest rate of 8.8%.
The Company plans to use the Credit Facility to finance the major portion
of any future acquisitions (See Note 7). The Company is negotiating to increase
the Credit Facility by an additional $35 million, which will bring the total
Credit Facility to $75 million and, is subject to syndication on a best-efforts
basis by the agent bank; however, no assurance can be given as to whether the
line will be increased or whether the agent bank will be able to syndicate
future loan requests. At September 30, 1997 the Company had $16 million
available under this credit agreement. The Company believes that its existing
capital resources will be sufficient to fund its current acquisition
commitments.
The Company believes that its existing capital resources, including cash on
hand, cash from operations, and funds available under the Credit
26
<PAGE>
Facility will be sufficient to run the Company's operations in the ordinary
course and fund its debt service requirements. To the extent the Company
pursues additional acquisitions, it may need to raise additional capital
either through the public or private issuance of equity or debt securities or
through additional bank borrowings.
The Company estimates that it will incur a tax liability of approximately
$4 million in connection with the change in its tax basis of accounting for
inventory from LIFO to FIFO. The Company is required to pay this liability in
six equal annual installments, which commenced in March 1997, and believes that
it will be able to pay such obligation with cash provided by operations.
SEASONALITY
The Company generally experiences a higher volume of new and used vehicle
sales in the second and third quarters of each year. If the Company acquires
dealerships in other markets, it may be affected by other seasonal or consumer
buying trends.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is named in claims involving the manufacture
of automobiles, contractual disputes and other matters arising in the ordinary
course of the Company's business. Currently, no legal proceedings are pending
against or involve the Company that, in the opinion of management, could be
expected to have a material adverse effect on the business, financial condition
or results of operations of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
A list of exhibits required by Item 601 of Regulation S-K and
filed as part of this report is set forth in the Exhibit Index,
which immediately precedes such exhibits.
(b) REPORTS ON FORM 8-K
(1) A Form 8-K was filed on April 25, 1997 reporting the
purchase of all the outstanding capital stock of each of
Douglas Toyota, Inc., a Colorado corporation, and Toyota
West Sales & Service, Inc., a Nevada corporation, together
with certain real estate to be used in connection with both
dealerships.
(2) A Form 8-K/A No. 1 was filed on June 24, 1997 completing
Item 7 Financial Statements and Pro Forma Financial
Information.
(3) A Form 8-K was filed on July 15, 1997 reporting the purchase
of all the outstanding stock of Sahara Nissan, Inc., a
Nevada corporation.
27
<PAGE>
(4) A Form 8-K/A No. 1 was filed on August 13, 1997 completing
Item 7 Financial Statements and Pro Forma Financial
Information.
(5) A Form 8-K was filed on September 2, 1997 reporting the sale
of all the outstanding capital stock of Performance Dodge,
Inc., an Oklahoma corporation, and Performance Nissan, Inc.,
an Oklahoma corporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CROSS-CONTINENT AUTO RETAILERS, INC.
DATE: November 12, 1997 By: /s/ JAMES F. PURSER
-----------------------------------
James F. Purser,
Chief Financial Officer
DATE: November 12, 1997 By: /s/ CHARLES D. WINTON
-----------------------------------
Charles D. Winton,
Vice President and
Chief Accounting Officer
28
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- ---------------------------------------------------
2.1 Asset Purchase Agreement dated as of June 17, 1996, among Lynn Hickey
Dodge, Inc., Lynn Hickey, and Cross Country Dodge, Inc. (1)
2.2 Stock Purchase Agreement, dated as of January 23, 1997, by and between
Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding (2)
2.3 Amendment to Stock Purchase Agreement dated as of April 1, 1997, by
and between Cross-Continent Auto Retailers, Inc. and R. Douglas
Spedding (3)
2.4 Stock Purchase Agreement dated as of February 28, 1997, among Cross-
Continent Auto Retailers, Inc., Jack Biegger, Dale Edwards, and Sahara
Datsun, Inc., d/b/a Jack Biegger Nissan, as amended by the Amendment
to Stock Purchase Agreement dated as of March 17, 1997, among Cross-
Continent Auto Retailers, Inc., Jack Biegger, Dale Edwards, and Sahara
Nissan, Inc., d/b/a Jack Biegger Nissan (10)
2.5 Second Amendment to Stock Purchase Agreement dated as of April 30,
1997, by and between Cross-Continent Auto Retailers, Inc., Jack
Biegger, Dale Edwards, and Sahara Datsun, Inc., d/b/a Jack Biegger
Nissan, as amended by the Amendment to Stock Purchase Agreement dated
as of March 17, 1997, among Cross-Continent Auto Retailers, Inc., Jack
Biegger, Dale Edwards, and Sahara Nissan, Inc., d/b/a Jack Biegger
Nissan (10)
2.7 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) (3)
2.8 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) (3)
2.9 Third Amendment to Stock Purchase Agreement, dated as of May 9, 1997,
among Cross-Continent Auto Retailers, Inc., The Jack Biegger Revocable
Living Trust, The Dale M. Edwards Revocable Family Trust, and Sahara
Nissan, Inc. d/b/a Jack Biegger Nissan. (9)
2.10 Stock Purchase Agreement dated as of June 20, 1997 between Cross-
Continent Auto Retailers, Inc. and Benji Investments, Ltd. (omitting
exhibits thereto, which will be furnished supplementally to the
Commission upon request). (11)
2.11 Stock Purchase Agreement dated as of October 8, 1997, by and among
Cross-Continent Auto Retailers, Inc., The Chaisson Family Trust R-501,
and JRJ Investments, Inc. (omitting exhibits thereto, which will be
furnished supplementally to the Commission upon request)
2.12 Amendment to Stock Purchase Agreement dated as of October 14, 1997, by
and among Cross-Continent Auto Retailers, Inc., The Chaisson Family
Trust R-501, and JRJ Investments, Inc.
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3.1 Amended and Restated Certificate of Incorporation of Cross-Continent
Auto Retailers, Inc. (4)
3.3 Amended and Restated Bylaws of Cross-Continent Auto Retailers, Inc.
(4)
4.1 Specimen Common Stock Certificate (4)
4.2 Rights Agreement between Cross-Continent Auto Retailers, Inc. and The
Bank of New York, as rights agent (4)
4.3 Amended and Restated 1996 Stock Option Plan of Cross-Continent Auto
Retailers, Inc. (5)
4.4 Registration Rights Agreement dated as of April 1, 1997, by and
between Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding
(3)
10.1 Dealer Sales and Service Agreement dated November 1, 1995, between the
Chevrolet Division of General Motors Corporation and Plains Chevrolet,
Inc., as amended by Supplemental Agreement dated as of July 29, 1996
(1)(6)
10.3 Dealer Sales and Service Agreement dated September 23, 1996, between
the Nissan Division of Nissan Motor Corporation, U.S.A., Quality
Nissan, Inc. and Cross-Continent Auto Retailers, Inc. (4)
10.4 Dollar Volume Contract dated April 1, 1997, between Plains Chevrolet,
Inc., Westgate Chevrolet, Inc., Midway Chevrolet, Inc., Quality
Nissan, Inc. and Amarillo Globe News (1)
10.6 Lease Agreement dated March 1, 1994, among John W. Adams, Eleanore A.
Braly as Trustee of the Eleanore A. Braly Trust, Romie G. Carpenter,
Melody Lynn Goff, and Selden Simpson and Quality Nissan, Inc. (1)
10.7 Office Lease dated June 1, 1996, between Gilliland Group Family
Partnership and Cross-Country Auto Retailers, Inc.(now named Cross-
Continent Auto Retailers, Inc.) (1)
10.9 Corporation and Shareholders' Agreement of Xaris Management Co. (1)
10.10 Documents dated December 4, 1995, relating to $5,550,000 loan by
General Motors Acceptance Corporation to Performance Dodge, Inc. (1)
10.10.1 Promissory Note by Performance Dodge, Inc. to General Motors
Acceptance Corporation, in the amount of $1,850,000 (2)
10.10.2 Promissory Note by Performance Dodge, Inc. to General Motors
Acceptance Corporation, in the amount of $3,700,000 (fully repaid)(2)
10.10.4 Security Agreement between General Motors Acceptance Corporation and
Performance Dodge, Inc. (2)
10.10.5 Mortgage, Assignment and Security Agreement between General Motors
Acceptance Corporation and Performance Dodge, Inc. (2)
10.11 Documents relating to loan by General Motors Acceptance Corporation to
Midway Chevrolet, Inc. (1)
10.11.1 Promissory Note dated December 15, 1989, by Midway Chevrolet, Inc. to
General Motors Acceptance Corporation, in the amount of $977,249.74
(2)
10.11.2 Renewal, Extension and Modification Agreement dated February 20, 1995,
between General Motors Acceptance Corporation and Midway Chevrolet,
Inc. (2)
10.11.3 Security Agreement dated February 20, 1995, between General Motors
Acceptance Corporation and Midway Chevrolet, Inc. (2)
10.13 Documents relating to used vehicle inventory financing agreements
between General Motors Acceptance Corporation and
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Cross-Continent Auto Retailers, Inc. dealership subsidiaries (1)
10.13.1 Used Vehicle Wholesale Borrowing Base Credit Line Loan Agreement dated
June 7, 1996, between General Motors Acceptance Corporation and Plains
Chevrolet, Inc. (2)(7)
10.13.2 Promissory Note dated June 7, 1996, by Plains Chevrolet, Inc. to
General Motors Acceptance Corporation, in the amount of $3,000,000
(2)(8)
10.13.3 Cross-Default and Cross-Collateralization Agreements between General
Motors Acceptance Corporation and Midway Chevrolet, Inc., Plains
Chevrolet, Inc., Quality Nissan, Inc., and Westgate Chevrolet, Inc.
(2)
10.14(*) Employment Contract dated February 21, 1997, by and between Cross-
Continent Auto Retailers, Inc. and James F. Purser (2)
10.15(*) Employment Contract dated February 18, 1997, by and between Cross-
Continent Auto Retailers, Inc. and R. Wayne Moore
10.16(*) Employment Agreement dated as of April 1, 1997, by and between R.
Douglas Spedding and Cross-Continent Auto Retailers, Inc. (3)
10.17(*) Employment Agreement dated as of April 1, 1997, by and between Douglas
J. Spedding and Cross-Continent Auto Retailers, Inc. (3)
10.18 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 (fully repaid)(3)
10.19 Promissory Note dated April 4, 1997, by Cross-Continent Auto
Retailers, Inc. to Amarillo National Bank in the principal amount of
$8,000,000 (fully repaid)(3)
10.20 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 (3)
10.20.1 Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
of RDS, Inc. (3)
10.20.2 Security Agreement between Cross-Continent Auto Retailers, Inc. and
RDS, Inc. (3)
10.20.3 Deed of Trust between Cross-Continent Auto Retailers, Inc. and RDS,
Inc. (3)
10.21 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 (3)
10.21.1 Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
of R. Douglas Spedding (3)
10.21.2 Security Agreement between Cross-Continent Auto Retailers, Inc. and R.
Douglas Spedding (3)
10.21.3 Deed of Trust between Cross-Continent Auto Retailers, Inc. and R.
Douglas Spedding (3)
10.22 Release and Indemnification Agreement dated as of April 10, 1997,
between Cross-Continent Auto Retailers, Inc. And R. Douglas Spedding
(3)
10.23 Unsecured Promissory Note, dated July 1, 1997, by Cross-Continent Auto
Retailers, Inc. to The Jack Biegger Revocable Living Trust, in the
principal amount of $360,000.00. (9)
10.24 Unsecured Promissory Note, dated July 1, 1997, by Cross-Continent Auto
Retailers, Inc. to The Dale M. Edwards Revocable Family Trust, in the
principal amount of $240,000.00. (9)
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10.25 Unsecured Promissory Note, dated July 1, 1997, by Sahara Nissan, Inc.
to The Jack Biegger Revocable Living Trust, in the principal amount of
$275,000.00.(9)
10.26 Unsecured Promissory Note, dated July 1, 1997, by Sahara Nissan, Inc.
to The Dale M. Edwards Revocable Family Trust, in the principal amount
of $125,000.00. (9)
10.27 Documents, dated as of June 26, 1997, relating to line of credit for
Cross-Continent Auto Retailers, Inc. with Texas Commerce Bank National
Association, individually and as agent. (9)
10.27.1 Revolving Credit Agreement between Cross-Continent Auto Retailers,
Inc., and Texas Commerce Bank National Association. (9)
10.27.2 Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
subsidiaries to the order of Texas Commerce Bank National Association.
(9)
10.27.3 Pledge and Security Agreement between Cross-Continent Auto Retailers,
Inc. and Texas Commerce Bank National Association. (9)
10.28 Dealer Sales and Service Agreement dated July 1, 1997, between the
Nissan Division of Nissan Motor Corporation, U.S.A., Sahara Nissan,
Inc., Cross-Continent Auto Retailers, Inc., and Bill A. Gilliland. (9)
10.29 Environmental Agreement dated July 1, 1997 between Cross-Continent
Auto Retailers, Inc. and The Jack Biegger Revocable Living Trust. (9)
10.30 Separation Agreement dated as of June 20, 1997 between Cross-Continent
Auto Retailers, Inc. and Emmett M. Rice, Jr.(11)
10.32 Documents, dated as of August 7, 1997, relating to the line of credit
for Cross-Continent Auto Retailers, Inc. with Texas Commerce Bank
National Association, individually and as agent.
10.32.1 First Amendment to Revolving Credit Agreement among Cross-Continent
Auto Retailers, Inc.; its subsidiaries; Texas Commerce Bank National
Association; Amarillo National Bank; The Bank of Tokyo-Mitsubishi,
Ltd., Houston Agency; and U. S. Bank.
10.32.2 Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
subsidiaries to the order of Texas Commerce Bank National Association
in the principal amount of $22,500,000
10.32.3 Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
subsidiaries to the order of Amarillo National Bank in the principal
amount of $7,500,000
10.32.4 Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
subsidiaries to the order of Bank of Tokyo-Mitsubishi, Ltd., Houston
Agency, in the principal amount of $5,000,000
10.32.5 Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
subsidiaries to the order of U. S. Bank in the principal amount of
$5,000,000
10.33 Lease Agreement dated August 15, 1997 between Cross-Continent Auto
Retailers, Inc. and Performance Dodge, Inc.(12)
10.34 Joinder Agreement dated July 1, 1997 between Sahara Nissan, Inc. and
Texas Commerce Bank National Association.
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10.35 Documents dated as of September 30, 1997 relating to the loan
agreement between Cross-Continent Auto Retailers, Inc. and R. Douglas
Spedding (omitting exhibits thereto, which will be furnished
supplementally to the Commission upon request).
10.35.1 Master Construction and Master Loan Agreement among Toyota West Sales
and Service, Inc., Douglas Toyota, Inc., Sahara Imports, Inc., and
Cross-Continent Auto Retailers, Inc. as Borrowers, and R. Douglas
Spedding as Lender.
10.35.2 Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
of R. Douglas Spedding in the principal amount of $7,400,000.
10.35.3 Deed of Trust among Cross-Continent Auto Retailers, Inc. as Borrower,
the Public Trustee of Adams County, Colorado, as Trustee, and R.
Douglas Spedding as Lender.
10.35.4 Deed of Trust and Assignment of Rents among Cross-Continent Auto
Retailers, Inc. as Grantor, Old Republic Title Company of Nevada as
Trustee, and R. Douglas Spedding as Beneficiary.
10.35.5 Security Agreement between Cross-Continent Auto Retailers, Inc.,
Douglas Toyota, Inc. and Toyota West Sales and Service, Inc. as
Debtors and R. Douglas Spedding as Lender.
10.35.6 Guaranty by Bill A. Gilliland in favor of R. Douglas Spedding.
10.36 Documents dated August 22, 1997 relating to loans by General Motors
Acceptance Corporation to Cross-Continent Auto Retailers, Inc. and
certain subsidiaries.
10.36.1 Cross Default and Cross Collateralization Agreement among General
Motors Acceptance Corporation and Midway Chevrolet, Inc., Plains
Chevrolet, Inc., Quality Nissan, Inc., Westgate Chevrolet, Inc.,
Sahara Nissan, Inc., and Cross-Continent Auto Retailers, Inc.
10.36.2 Guaranty Agreement between Cross-Continent Auto Retailers, Inc. and
General Motors Acceptance Corporation.
10.37 Assumption Agreement dated August 22, 1997 between General Motors
Acceptance Corporation and Cross-Continent Auto Retailers, Inc.
relating to Performance Dodge, Inc.(omitting exhibit thereto, which
will be furnished supplementally to the Commission upon request)
10.38 Amendment to Office Lease dated October 1, 1997, between Gilliland
Group Family Partnership and Cross-Country Auto Retailers, Inc. (now
named Cross-Continent Auto Retailers, Inc.)
10.39 Amendment No. 1 to Nissan Dealer Term Sales and Service Agreement
dated October 13, 1997, between the Nissan Division of Nissan Motor
Corporation U.S.A. and Sahara Nissan, Inc. d/b/a Jack Biegger Nissan
27.1 Financial Data Table
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(1) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 333-0685), incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, incorporated herein by
reference.
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(3) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated April 10, 1997, incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the Quarterly Period Ended September 30, 1996, incorporated herein
by reference.
(5) Previously filed as an exhibit to the Company's Registration Statement on
Form S-8, filed with the Securities and Exchange Commission on March 7,
1997, incorporated herein by reference.
(6) Substantially identical agreements exist between the Chevrolet Division and
each of Midway Chevrolet, Inc. and Westgate Chevrolet, Inc.
(7) Substantially identical Agreements exist between General Motors Acceptance
Corporation and each of Midway Chevrolet, Inc., Westgate Chevrolet, Inc.,
and Quality Nissan, Inc.
(8) Substantially identical Promissory Notes have been executed by Midway
Chevrolet, Inc., Westgate Chevrolet, Inc., and Quality Nissan, Inc., in the
amounts indicated for each dealership subsidiary in the Cross-Default and
Cross-Collateralization Agreement (Exhibit 10.13.3)
(9) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated July 15, 1997, incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1997, incorporated herein by
reference.
(11) 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.
(12) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated September 2, 1997, incorporated herein by reference.
(*) Exhibits followed by an (*) constitute management contracts or
compensatory plans or arrangements.
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Exhibit 2.11
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
this 8th day of October, 1997, by and among CROSS-CONTINENT AUTO RETAILERS, INC.
("Purchaser"), a Delaware corporation; THE CHAISSON FAMILY TRUST R-501 (the
"Seller"); and JRJ INVESTMENTS, INC. (the "Company"), a Nevada corporation.
RECITALS
A. The Company owns and operates a dealership known as "Chaisson Motor
Cars," located at 2333 S. Decatur, Las Vegas, Nevada (the "Las Vegas
Dealership"), and a dealership known as "Chaisson BMW," located at 261 Auto Mall
Drive, Henderson, Nevada (the "Henderson Dealership"); hereinafter referred to
individually as a "Dealership" and collectively as the "Dealerships."
B. The Company has been granted and operates the following new automobile
manufacturer's franchises at the Las Vegas Dealership:
1. Land Rover,
2. Jaguar,
3. Volkswagen,
4. Audi,
5. Bentley and Rolls Royce, and
6. BMW;
and has been granted a Satellite Location Addendum to its dealer agreement with
BMW to operate a BMW new automobile manufacturer's franchise at the Henderson
Dealership. Pursuant to the Satellite Location Addendum, the Henderson
Dealership will be the primary BMW location and the Las Vegas Dealership will be
the satellite location.
C. The Company leases the premises (the "Las Vegas Premises") on which
the Las Vegas Dealership is located pursuant to a lease agreement with JRJ
Properties, a Nevada general partnership (the "Las Vegas Lease").
D. The Company leases the premises (the "Henderson Premises") on which
the Henderson Dealership is located pursuant to a lease agreement with the
Seller (the "Henderson Lease").
E. Seller owns a tract of approximately 2.5 acres (the "2.5 Acre Tract")
adjacent to the Henderson Premises and having an address of 251 Auto Mall Drive.
F. The Seller is the owner of all of the issued and outstanding shares of
capital stock of the Company (the "Shares").
<PAGE>
G. Subject to the terms and conditions set forth in this Agreement,
Purchaser desires to purchase all of the Shares, and Seller desires to sell all
of the Shares to Purchaser.
AGREEMENT
In consideration of the mutual covenants, agreements, representations, and
warranties set forth in this Agreement, Purchaser, Seller, and the Company agree
as follows:
1. PURCHASE AND SALE OF THE SHARES. Subject to and upon the terms
and conditions of this Agreement, at the Closing (hereinafter defined) Seller
shall sell, transfer, convey, assign, and deliver to the Purchaser, and
Purchaser shall purchase, acquire and accept from Seller, all of the Shares,
free and clear of all security interests, liens, claims, agreements,
encumbrances, or restrictions of any kind, whether written or oral.
2. PURCHASE PRICE. The purchase price to be paid by Purchaser to
Sellers for the Shares shall be $17,760,000 (the "Purchase Price"), subject to
the adjustment set forth in Paragraph 3 of this Agreement.
3. ADJUSTMENT TO THE PURCHASE PRICE. In the event the Net Worth
(hereinafter defined) is more or less than $3,000,000, the Purchase Price shall
be increased or decreased by an amount equal to the difference between
$3,000,000 and the Net Worth. As used in this Agreement, the term "Net Worth"
shall mean the net worth of the Company as shown as total shareholders' equity
on the balance sheet of the Company, as adjusted by the Net Worth Adjustments
(hereinafter defined), as of the last business day prior to the Closing.
4. PAYMENT OF PURCHASE PRICE. At Closing Purchaser shall pay the
Purchase Price, as adjusted, as follows:
a. $13,000,000, plus or minus the amount of any increase or
reduction in the Purchase Price in accordance with paragraph
3 hereof, by cashier's check or other immediately available
funds (the "Cash");
b. Purchaser shall execute and deliver a promissory note to
Seller in the original principal amount of $2,760,000 (the
"Note"), bearing interest on the unpaid principal at eight
percent (8%) per annum, payable in sixty (60) equal monthly
installments of principal and interest in the amount of
$55,962 per month. The Note shall be in the form of Exhibit
"A" hereto.
c. Purchaser shall issue to Seller 128,205 shares of restricted
common stock (the "Restricted Stock"); provided, however,
that if the closing price for Purchaser's common stock on
the first anniversary of the Closing Date is less than
$15.60 per share, Purchaser shall either (i) issue to Seller
shares of its fully registered, unrestricted common stock
(the "Unrestricted Shares") so that the aggregate value of
the Restricted Shares and the Unrestricted Shares issued to
Seller
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<PAGE>
(based on the closing price for Purchaser's common stock on
the first anniversary of the Closing Date) shall equal
$2,000,000, or (ii) pay to Seller in the form of a cashier's
check or other immediately available funds an amount equal
to the difference between $2,000,000 and the product of the
number of Restricted Shares that are required to be issued
to Seller on the Closing Date times the closing price for
Purchaser's common stock on the first anniversary of the
Closing Date.
Purchaser shall not issue any fractional shares and shall
pay Seller cash in lieu of any fractional shares based on a
price of $15.60 per share or the closing price of
Purchaser's common stock as quoted in THE WALL STREET
JOURNAL on the first anniversary of the Closing Date,
whichever date is applicable.
The certificates representing any Restricted Shares that are
issued to Seller shall bear a restrictive legend that the
stock has not been registered under applicable federal and
state securities laws. It is understood and agreed that
Purchaser has not agreed to register the Restricted Shares
that is to be issued to Seller.
5. CLOSING. Subject to the terms and conditions set forth in this
Agreement, the closing ("Closing") of the purchase and sale of the Shares shall
take place at the offices of Jones, Jones, Close & Brown, Chartered, 3773 Howard
Hughes Parkway, Third Floor South, Las Vegas, Nevada 89109, or at such other
place as may be mutually agreed upon by Purchaser and Seller, on the earlier of
(i) as soon as practicable following the date on which all conditions to the
obligations of the parties hereunder (other than those requiring the taking of
action at the Closing) have been satisfied or waived, or (ii) November 3, 1997,
subject to the mutual agreement of the parties to select another date. The date
on which the Closing is to occur is hereinafter referred to as the "Closing
Date."
6. TRANSACTIONS AT CLOSING. The following transactions shall take
place at Closing:
a. DELIVERIES BY SELLER. The Seller shall deliver the
following to the Purchaser:
(i) Stock certificates representing the Shares in duly
transferrable form;
(ii) Such other documents and instruments as Purchaser
may reasonably request in order to vest in Purchaser
good and marketable title to the Shares and to any
and all right, title, interest or claim of any kind
that Seller may have in the properties, assets or
business of the Company;
(iii) The Las Vegas Lease, the Henderson Lease, and a
lease of the 2.5 acre tract (the "2.5 Acre Lease"),
in the forms of Exhibits "B," "C," and "D" hereto
(collectively, the "Leases");
3
<PAGE>
(iv) Copies of resolutions of the Board of Directors of
the Company, duly certified by its Secretary, in
form reasonably satisfactory to Purchaser's counsel,
authorizing the execution, delivery and performance
of this Agreement and all other documents to which
the Company is a party as contemplated hereby, and
all actions to be taken by the Company hereunder and
thereunder;
(v) A Seller's certificate in the form of Exhibit "E"
hereto, duly executed by the Seller and the Company;
(vi) An opinion of counsel to the Seller, in the form of
Exhibit "F" hereto;
(vii) An Investment Letter executed by Seller, in the form
of Exhibit "G" hereto;
(vii) A Registration Rights Agreement (the "Registration
Rights Agreement") executed by Seller, in the form
of Exhibit "H" hereto;
(ix) The Seller's Escrow Agreement;
(x) Any instruments and other documents specifically
required by this Agreement, to which Seller or the
Company is a party, that are not otherwise set forth
in this subparagraph 6(a); and
(xi) Any other instruments or documents deemed reasonably
necessary or desirable by the Purchaser in order to
consummate the transactions contemplated hereby.
b. DELIVERIES BY PURCHASER. The Purchaser shall deliver the
following to the Seller:
(i) The Cash, the Note, and a stock certificate
representing the Restricted Shares;
(ii) Copies of resolutions of the Board of Directors of
the Purchaser, duly certified by its Secretary, in
form reasonably satisfactory to Seller's counsel,
authorizing the execution, delivery and performance
of this Agreement and all other documents to which
the Purchaser is a party as contemplated hereby, and
all action to be taken by Purchaser hereunder and
thereunder;
(iii) The Registration Rights Agreement executed by
Purchaser;
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<PAGE>
(iv) A Purchaser's Certificate in the form of Exhibit I
hereto, duly executed by the Purchaser;
(v) An opinion of counsel to the Purchaser, in the form
of Exhibit J hereto;
(vi) The Employment Agreements referenced in subparagraph
7(o);
(vii) Any instruments and other documents specifically
required by this Agreement, to which Purchaser is a
party, that are not otherwise set forth in this
subparagraph 6(b); and
(viii) Any other instruments or documents deemed reasonably
necessary or desirable by the Seller in order to
consummate the transactions contemplated hereby.
7. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY.
The Seller and the Company jointly and severally represent and warrant to
Purchaser, effective as of the date of this Agreement and again at Closing, each
of the following:
a. AUTHORITY AND BINDING AGREEMENT. Seller has the legal power
and capacity to enter into this Agreement and to perform its
obligations hereunder. This Agreement has been duly and
validly executed and delivered by Seller and the Company and
is a valid and binding obligation of Seller and the Company
(relating to those certain agreements of the Company
contained in this Agreement), enforceable against Seller and
the Company in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to the enforcement of creditors' rights generally
and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity
or at law). Seller has (i) good and marketable title to the
Shares, free and clear of any security interests, liens,
claims, agreements, encumbrances, or restrictions of any
kind, and (ii) the complete and unrestricted right, power,
and authority to sell, transfer, and assign the Shares in
accordance with this Agreement.
b. ORGANIZATION AND STANDING. Seller is duly formed, validly
existing, and in good standing under the laws of the State
of Nevada and has all necessary power and authority to own
the Shares. The Company is duly incorporated, is validly
existing, and is in good standing under the laws of the
State of Nevada and has all necessary power and authority to
own, lease, and operate its properties and assets and to
conduct its business as its business is now being conducted.
Seller has delivered to Purchaser complete and accurate
copies of the Company's articles of incorporation and
bylaws, including all amendments thereto and have made
available to Purchaser its minute book and stock records.
At Closing,
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Schedule 7(b) will set forth a complete and accurate list
of all officers, directors and assumed or fictitious names
of the Company as of the date of this Agreement. The
Company is qualified to do business and is in good standing
in each state in which it transacts business. The Company
does not have any subsidiaries nor any direct or indirect
equity interest in any corporation, partnership, or other
entity. The Company is a "small business corporation" and
has maintained a valid election to be an "S" corporation
under Subchapter S of the Internal Revenue Code of 1986,
as amended.
c. CAPITALIZATION. The authorized capital stock of the Company
consists of 2,500 shares of common stock, having no par
value. On the date hereof, Seller owns beneficially and of
record 100 shares of common stock of the Company, which
comprises the Shares. The Shares (i) constitute all of the
issued and outstanding shares of capital stock of the
Company, (ii) have been validly authorized and issued, (iii)
are fully paid and nonassessable, (iv) have not been issued
in violation of any preemptive rights or of any federal or
state securities laws, and (v) are not subject to any
agreement that relates to the voting or control of any of
the Shares. There are and will be on the Closing Date no
outstanding subscriptions, options, rights, warrants,
convertible securities, or any other agreements or
commitments obligating the Company to issue, deliver, or
sell any additional shares of its capital stock of any class
or any other securities of any kind. There are no bonds,
debentures, notes, or other indebtedness or securities of
the Company having the right to vote on any matters on which
the shareholders of the Company may vote. There are no
outstanding rights, agreements, or arrangements of any kind
obligating the Company to repurchase, redeem, or otherwise
acquire any shares of capital stock or other voting
securities of the Company.
d. NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the fulfillment of or compliance with the
terms and provisions hereof will (i) violate, conflict with,
or result in a breach of the terms, conditions or provisions
of, or constitute a default or an event which, with notice
or lapse of time or both, would constitute a default under,
(y) the articles of incorporation or bylaws of the Company,
or (z) any contract, agreement, mortgage, deed of trust, or
other instrument or obligation to which the Seller or the
Company is a party or by which either of them is bound,
except for agreements between the Company and the respective
manufacturers (or the authorized sales/distributor entities
directly or indirectly owned by the respective
manufacturers) of Land Rover, Volkswagen, Audi, Bentley and
Rolls Royce or BMW (individually, a "Manufacturer" and
collectively, the "Manufacturers"), which require the
consent of the Manufacturer; (iii) other than with respect
to obtaining the consents referenced in subparagraph 7(e)(i)
and (iii), violate any provision of any applicable law or
regulation or of any order, decree, writ or injunction of
any court or governmental body, or (iv) result in the
creation or imposition of
6
<PAGE>
any lien, charge, restriction, security interest or
encumbrance of any kind whatsoever on any property or asset
of the Company or on the Shares.
e. CONSENTS. No consent or approval by, or any notification
of or filing with, any governmental entity or agency or any
other person or entity is required in connection with the
execution, delivery or performance of this Agreement by
Seller or the Company, other than consent from (i) the
Nevada Department of Motor Vehicles, (ii) the Manufacturers,
or (iii) the Federal Trade Commission (the "FTC") and the
United States Department of Justice (the "Justice
Department") under the Hart-Scott-Rodino Act.
f. REAL PROPERTY. At Closing, Schedule 7(f) will set forth a
complete and accurate (i) legal description of all real
property owned by the Company, and (ii) description of each
lease or sublease of real property under which the Company
holds a leasehold interest. Each of the leases and
subleases and subleases are in full force and effect and
constitutes a legal, valid and binding obligation of the
parties thereto. The Company has performed the covenants
required to be performed by it under each of the leases and
subleases to which it is a party and is not in default under
any of the leases or subleases to which it is a party. To
the best of Seller's and the Company's knowledge, the zoning
of each tract of real property owned, leased or otherwise
utilized by the Company permits the presently existing
improvements and the continuation of the business presently
being conducted on such real property. To the best of
Seller's and the Company's knowledge, there are no pending
or proposed changes to such zoning or of any pending or
proposed condemnation action, affecting any real property
owned, leased or otherwise utilized by the Company.
g. TANGIBLE PERSONAL PROPERTY. At Closing, Schedule 7(g) will
set forth a complete and accurate description of (i) all
equipment, furniture, fixtures, and other tangible personal
property (other than inventory) owned by the Company, and
(ii) each lease of personal property under which the Company
holds a leasehold interest. Each of the leases is in full
force and effect and constitutes a legal, valid, and binding
obligation of the parties thereto. The Company has
performed the covenants required to be performed by it under
each of the leases to which it is a party and is not in
default under any of the leases to which it is a party. To
the best of Seller's and the Company's knowledge, the
Tangible Personal Property (hereinafter defined) is in good
repair and operating condition, has been regularly and
properly maintained and fully serviced, and is suitable for
the purposes for which it is presently being used. All
Tangible Personal Property described on Schedule 7(g) shall
be at one or the other of the Dealerships, in good working
order and condition, and free and clear of all liens and
other encumbrances. As used in this Agreement, the term
"Tangible Personal Property" shall mean all tangible
personal property that is listed on the appraisal of
Marshall & Stevens, dated February 14, 1997, together with
that
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certain schedule of Additions/Deductions to Marshall &
Stevens Appraisal previously agreed to by and between the
Company and Purchaser (the "Appraisal"), adjusted to include
those items of tangible personal property acquired by the
Company and to exclude those items of tangible personal
property disposed of by the Company, in the ordinary course
of business subsequent to the Appraisal, owned by the
Company on the Closing Date.
h. INVENTORIES. At Closing, Schedule 7(h) will set forth a
complete and accurate description of the New Vehicle
Inventory (hereinafter defined), Used Vehicle Inventory
(hereinafter defined), and Parts and Accessories Inventory
(hereinafter defined). As used in this Agreement, the term
"New Vehicle Inventory" shall mean all new vehicles and
demonstrators having less than 6,000 miles on the odometer
owned by the Company on the Closing Date; and the term "Used
Vehicle Inventory" shall mean all used vehicles and
demonstrators having 6,000 miles or more on the odometer
owned by the Company on the Closing Date; and the term
"Parts and Accessories Inventory" shall mean all parts and
accessories purchased from the Manufacturers or other
reputable suppliers and owned by the Company on the Closing
Date. To the best of Seller's and the Company's knowledge,
each inventory of the Company consists of goods of a
quality and in quantities that are saleable in the ordinary
course of the Company's business with normal mark-up at
prevailing market prices. All parts and accessories in the
Parts and Accessories Inventory are in returnable condition,
are undamaged parts and accessories, are still in the
original, resalable merchandising package, are in unbroken
lots, are listed for sale in the current dealer parts and
accessories price schedule of each Manufacturer or other
supplier, and were purchased directly from the Manufacturers
or other reliable suppliers.
i. LICENSES AND PERMITS. At Closing, Schedule 7(i) will set
forth a complete and accurate description of all permits,
licenses, franchises, certificates, and similar items and
rights, owned or held by the Company (hereinafter
collectively referred to as the "Licenses and Permits").
The Licenses and Permits (i) are adequate for the operation
of the Company's business, and (ii) are valid and in full
force and effect, except as set forth on Schedule 7(i).
Other than with respect to obtaining the consents referenced
in subparagraph 7(e), no additional permit, license,
franchise, certificate, or similar item or right is required
by the Company for the operation of its business.
j. INTELLECTUAL PROPERTY. At Closing, Schedule 7(j) will set
forth a complete and accurate description of all
intellectual property presently in use by the Company, which
intellectual property includes (without limitation) software
patents, trademarks, tradenames, service marks, copyrights,
trade secrets, customer lists, inventions, formulas,
methods, processes, advertising materials, Internet sites,
and any other proprietary information or property
("Intellectual Property"). There are no outstanding
licenses or consents to third parties granting the right
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to use any Intellectual Property owned by the Company. To
the best of Seller's and the Company's knowledge, no
Intellectual Property used by the Company infringes on any
rights owned or held by any other person or entity, and no
person is infringing on the rights of the Company in any
Intellectual Property used by the Company. Any royalties or
fees payable by the Company to any third party by reason of
the use of any Intellectual Property by the Company is set
forth on Schedule 7(j). No additional Intellectual Property
is required by the Company for the continued operation of
its business, in the manner now conducted.
k. TITLE TO PROPERTIES AND ENCUMBRANCES. Other than with
respect to obtaining the consents referenced in subparagraph
7(e), the Company has good and marketable title to (or, (i)
in the case of leased property, valid and subsisting
leasehold interests in, and (ii) in the case of Intellectual
Property, a valid right to use) all of its properties and
assets, including (without limitation) the properties and
assets that will be listed on Schedules 7(f), 7(g), 7(h),
7(i) and 7(j). The properties and assets of the Company are
subject to no liens, deeds of trust, mortgages,
encumbrances, conditional sales agreements, security
interests, claims, or restrictions of any kind or character,
except for (i) the encumbrances that will be listed on
Schedule 7(k) to which Purchaser consents, and (ii) liens
for current taxes not yet due and payable or for taxes the
validity of which are being contested in good faith by
appropriate proceedings.
l. FINANCIAL STATEMENTS. The Company has delivered to the
Purchaser copies of balance sheets for the Company dated
August 31, 1997 (the "Balance Sheet Date"), and statements
of income and retained earnings for the periods ending
August 31, 1997 (hereinafter collectively referred to as the
"Financial Statements"). The Financial Statements are
unaudited. To the best of Seller's and the Company's
knowledge, (i) the Financial Statements fairly present the
financial condition of the Company at the dates mentioned
and the results of its operations for the periods specified
and were prepared in accordance with its normal and
customary accounting procedures; and (ii) the balance sheet
in the Financial Statements (y) discloses all of the debts,
liabilities, and obligations of any nature (whether
absolute, accrued, contingent, or otherwise, and whether due
or to become due) of the Company as of the Balance Sheet
Date and (z) includes appropriate reserves for all taxes and
other liabilities accrued or due at such dates but not yet
paid.
m. INDEBTEDNESS FOR BORROWED MONEY AND GUARANTIES. At
Closing, Schedule 7(m) will set forth a complete and
accurate description of the Company's indebtedness for
borrowed money. Seller has delivered to the Purchaser
complete and accurate copies of all instruments evidencing
or relating to the Company's indebtedness for borrowed
money. To the best of Seller's and the Company's knowledge,
the Company is not in default or violation of any
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provision of any agreement evidencing or relating to its
indebtedness for borrowed money. Schedule 7(m) will also set
forth a complete and accurate list of (i) all guaranties by
the Company of any obligation or liability of any person or
entity, including (without limitation) any guaranties of
installment sales contracts or leases, (ii) all warranties
on vehicles that have been sold by the Company for the last
three (3) years for which there is any contingency of
liability for the Company, and (iii) all loans from the
Company to any person or entity.
n. TAX MATTERS. To the best of Seller's and the Company's
knowledge, (i) the Company has filed or will file all
federal, state, local and foreign tax returns and tax
reports required to be filed by it for periods ending on or
prior to the Closing Date; (ii) all such returns and reports
are and will be correct and complete in all material
respects; and (iii) all federal, state, local, and foreign
income, profits, franchise, property, excise, sales, use,
occupation, payroll, employment, and other taxes and
assessments for periods ending on or prior to the Closing
Date that are or will be due and payable by the Company on
or before the Closing have been or will be properly
computed, duly reported, fully paid, and discharged. Seller
has no actual knowledge of any unpaid taxes that require
payment by the Company, except for current taxes not yet due
and payable. To the best of Seller's and the Company's
knowledge, (i) no issues have been raised in writing with
the Company by the Internal Revenue Service or any other
taxing authority in connection with any tax return or tax
report filed by the Company, and (ii) the Company has not
executed any waiver of the statute of limitations on the
assessment or collection of any tax. Seller agrees to
indemnify and hold harmless the Purchaser with respect to
any income or other tax (and any penalties and interest
payable with respect thereto) reportable and payable by
Seller or the Company which arise from the operation of the
Company prior to Closing or arise as a result of the
transactions contemplated by this Agreement.
o. TRANSACTIONS SINCE THE BALANCE SHEET DATE. Since the
Balance Sheet Date, except as set forth on Schedule 7(o):
(i) other than negotiating three (3) year written employment
agreements to be executed on or before the Closing Date (the
"Employment Agreements") with each of James J. Chaisson,
Jr., John P. Chaisson, and Ryan A. Cook (individually, a
"Key Employee" and collectively, the "Key Employees"), the
Company has not incurred any debts, liabilities, or
obligations, except current liabilities in the ordinary
course of business; discharged or satisfied any liens or
encumbrances, or paid any debts, liabilities, or
obligations, except in the ordinary course of business;
mortgaged, pledged, or otherwise subjected to any lien or
other encumbrance any of its properties or assets; canceled
any debt or claim; sold or transferred any properties or
assets, except the Jaguar Assets (hereinafter defined) and
sales from inventory in the ordinary course of business; nor
entered into any transaction other than in the
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<PAGE>
ordinary course of business; (ii) other than with respect to
the Jaguar Assets, there has not been any material adverse
change in the business, operations, properties, assets,
revenues, earnings, liabilities, or condition (financial or
otherwise) of the Company; (iii) there has not been any
declaration, setting aside or payment of any dividend or
other distribution in respect of, or any direct or indirect
redemption, purchase or other acquisition of, any of the
capital stock of the Company; (iv) the Company has not
issued or sold or contracted to issue or sell any stock,
securities or options, of any nature whatsoever; (v) the
Company has not increased the compensation, commissions,
bonuses, or other remuneration payable to any officer,
director, employee, or to any other person or entity,
whether now or hereafter payable, including any increase
pursuant to any pension, profit-sharing or other plan or
commitment, (vi) there has not been any damage, destruction
or loss (whether or not covered by insurance) affecting any
asset or property of the Company; (vii) the Company has not
made any capital expenditure or capital expenditure
commitment, individually or in the aggregate, in excess of
$25,000.00; (viii) the Company has not made any loan or
advance to any person or entity or guaranteed any obligation
or liability of any person or entity, including (without
limitation) any guaranties of any installment sales
contracts or leases, other than as will be set forth on
Schedule 7(m); (ix) the Company has not given any
indemnifications to any person or entity; (x) the Company
has not acquired any properties or assets other than in the
ordinary course of business; (xi) the Company has not made
any change in its method of accounting or accounting
practices, including (without limitation) any change in
depreciation or amortization policies or rates; (xii) the
Company has not granted any waiver or release of any claim
or right held by it; (xiii) the Company has not amended or
terminated any material contract, agreement, or license to
which it is a party; (xiv) the Company has not made any
material write-down of the value of any asset of the Company
or any material write-off as uncollectible of any account
receivable or note receivable; (xv) the Company has not
changed its past practices in the acquisition or sale of its
new vehicle, used vehicle, or parts and accessories
inventories; and (xvi) the Company has not agreed, in
writing or otherwise, to do or permit any of the foregoing;
p. LITIGATION. At Closing, Schedule 7(p) will set forth a
complete and accurate description of all actions, suits,
claims, investigations or legal, administrative or
arbitration proceedings, pending or threatened, whether at
law or in equity, involving the Company or any of its
properties, assets, or business, and all judgments, orders,
decrees, writs or injunctions of any court or governmental
department, commission, agency, instrumentality or
arbitrator applicable to Seller or to the Company. Neither
the Seller nor the Company has any actual knowledge of any
facts that might result in any other action, suit, claim,
investigation, or legal, administrative or arbitration
proceeding.
q. COMPLIANCE WITH LAWS.
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(i) To the best of Seller's and the Company's knowledge,
the Company has complied and is in compliance in all
material respects with all federal, state, local and
foreign laws, ordinances, rules, codes, regulations,
and orders (including those related to environmental
protection and occupational safety and health)
applicable to the Company.
(ii) To the best of Seller's and the Company's knowledge,
there are no past or present events, conditions,
circumstances, activities, practices, incidents,
plans or actions, based on or resulting from the
conduct of the business of the Company, including
the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or
handling, or the emission, discharge, release, or
threatened release into the environment, of any
pollutant, contaminant, chemical, or industrial
toxic or hazardous material, substance or waste,
which violates any laws or the regulations
promulgated thereunder currently in effect relating
to pollution or protection of the environment (the
"Environmental Laws"), including (without
limitation) the Comprehensive Environmental
Response, Compensation, and Liability Act
("CERCLA"), or any plan, order, decree, judgment,
injunction, notice or demand letter from a
governmental department, commission, agency or
instrumentality applicable to the Company, or which
could give rise to any common law or other legal
liability. To the best of Seller's and the
Company's knowledge, all real property currently or
formerly owned, leased or otherwise utilized by the
Company contains no spill, deposit, or discharge of
any hazardous substance (as that term is currently
defined under CERCLA or any applicable state law),
for which the Company could be liable.
(iii) At Closing, Schedule 7(q) will set forth a complete
and accurate description of each underground storage
tank of any kind or nature that is located on any
real property currently or formerly owned, leased or
otherwise utilized by the Company. Schedule 7(q)
will also set forth a complete history of each such
underground storage tank, including the dates and
types of all tests.
(iv) The Company will deliver to Purchaser copies of all
existing environmental site audits in the possession
of the Seller or the Company that cover any real
property currently or formerly owned, leased, or
otherwise utilized by the Company.
r. CONTRACTS AND AGREEMENTS. At Closing, Schedule 7(r) will
set forth a complete and accurate description of all
material written or oral contracts and agreements to which
the Company is a party or by which it or any of its
property is bound, unless any such contract or agreement is
set forth on either
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Schedule 7(f), 7(g), 7(s), 7(t), 7(u) or 7(v). All such
contracts and agreements are in full force and effect and
are binding upon the parties thereto, and, other than with
respect to obtaining the consents required from the
Manufacturers, none of the parties thereto are in breach of
any of the provisions thereof.
s. EMPLOYEE BENEFIT PLANS. At Closing, Schedule 7(s) will set
forth a complete and accurate description of all pension,
retirement, savings, deferred compensation, profit sharing,
stock option, bonus, incentive, severance, retirement,
health, insurance and other employee benefit plans that are
binding upon the Company. To the best of Seller's and the
Company's knowledge, there have been no material defaults,
breaches, or omissions by the Company or any fiduciary under
any of such plans.
t. INSURANCE. At Closing, Schedule 7(t) will set forth a
complete and accurate description of all insurance,
including (without limitation) property damage insurance,
general liability insurance, worker's compensation, and
group health insurance maintained by the Company and will
summarize the substantive terms of each of the insurance
policies, including (without limitation) whether the
insurance policies are "claims made" or "occurrence"
policies. The Company is carrying insurance that is
reasonable in light of the risks attendant to the business
and activities in which the Company is engaged. All of the
insurance is in full force and effect and will not be
affected by, or terminated or lapse by reason of, the
transactions contemplated by this Agreement.
u. PERSONNEL. At Closing, Schedule 7(u) will set forth a
complete and accurate list of (i) all current employees of
the Company and all independent contractors regularly
performing services on behalf of the Company, (ii) their
respective rates of compensation, including any salary,
bonus or other payment arrangement made with any of them,
and (iii) any accrued vacation of any employees of the
Company. Except as set forth on Schedule 7(u), the Company
does not have any employment agreements or contracts between
the Company and any person or entity. No employee of the
Company is represented by any union or collective bargaining
agent. The Company is not a party to or bound by any
collective bargaining agreement, nor has the Company
experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. The
Company has not, to the Seller's actual knowledge, committed
any unfair labor practice. Seller has no actual knowledge
of any organizational effort being made or threatened by or
on behalf of any labor union with respect to employees of
the Company within the past five (5) years. To the best of
Seller's and the Company's knowledge, the Company has (i)
paid or has made provision for the payment of all
compensation due any person or entity, (ii) complied in all
material respects with all applicable laws, rules, and
regulations relating to the employment of labor, including
those related to wages, hours, collective bargaining and the
payment and withholding of taxes,
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and (iii) withheld and paid to the appropriate governmental
authority, or is holding for payment not yet due to such
authority, all amounts required by law or agreement to be
withheld from the compensation of its employees.
v. ACCOUNTS RECEIVABLE. At Closing, Schedule 7(v) will set
forth a complete and accurate list of all accounts
receivable and notes receivable of the Company and an aging
analysis of the accounts receivable. To the best of
Seller's and the Company's knowledge, except as set forth on
Schedule 7(v), (i) all accounts receivable and notes
receivable of the Company are valid and enforceable claims,
arose in the ordinary course of business, require no further
performance by the Company, and are collectible without
resort to litigation; and (ii) no material objection, claim,
or offset has been made regarding any of the accounts
receivable or notes receivable. There are and at Closing
there will be no payables or receivables due or owing
between Seller and the Company.
w. BROKERS. Other than Elysium Enterprises, Inc. (the
"Broker"), neither Seller nor the Company has employed,
directly or indirectly, any broker or finder, or incurred
any liability for any brokerage fees, commissions, or
finder's fees, and other than the Broker, no broker or
finder has acted directly or indirectly for Seller or the
Company in connection with this Agreement or the
transactions contemplated by this Agreement.
x. DELIVERY OF DOCUMENTS. Complete and accurate copies of all
written instruments listed or described on the schedules
attached hereto or that will be attached hereto have been or
will be furnished to Purchaser. The Company will make
available to Purchaser, to the extent requested by
Purchaser, all books, records, and facilities of the
Company.
y. BANK ACCOUNTS AND POWERS OF ATTORNEY. At Closing, Schedule
7(y) will set forth a complete and accurate list of (i) the
names and addresses of all persons holding a power of
attorney on behalf of the Company, and (ii) the account
numbers and names of all banks or other financial
institutions in which the Company currently has an account,
deposit, or safe deposit box, with the names of all persons
authorized to draw on the accounts or deposits or to have
access to the boxes.
z. DISCLOSURE.
(i) To the best of Seller's and the Company's knowledge,
there have been no events, transactions or
information relating to the Company which, singly or
in the aggregate could reasonably be expected to
have a material adverse affect on the business,
operations, properties, assets, revenues, earnings,
liabilities, or condition (financial or otherwise)
of the Company. To the best of Seller's's and the
Company's knowledge, no representation
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or warranty by Seller or the Company in this Agreement
or in any of the exhibits attached hereto, or other
statement in any other writing furnished or to be
furnished to Purchaser by or on behalf of Seller or the
Company in connection with the transactions
contemplated by this Agreement, contains or will
contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary
to make the statements contained herein not misleading.
(ii) Except for the failure to obtain any consent set
forth in subparagraph 7(e), Seller has no actual
knowledge, (i) of any reason why the Company cannot
continue its business in the same manner following
the execution of this Agreement and the Closing as
it has been operated prior thereto, or (ii) at any
time in the foreseeable future the business of the
Company shall be materially adversely affected by
any event, except to the extent that the Purchaser
causes the business of the Company to change
following the Closing.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to Seller, effective as of the date of this Agreement
and again at Closing, each of the following:
a. INCORPORATION. Purchaser is duly incorporated, is validly
existing, and is in good standing under the laws of the
State of Delaware and has all necessary power and authority
to own, lease, and operate its properties and assets and to
conduct its business as its business is now being conducted.
Purchaser has delivered to Seller complete and accurate
copies of Purchaser's articles of incorporation and bylaws,
including all amendments thereto. The Purchaser is
qualified to do business and is in good standing in each
state in which it transacts business.
b. AUTHORITY AND BINDING AGREEMENT. Purchaser has the
corporate power and authority to enter into this Agreement
and to perform its obligations hereunder. This Agreement
has been duly and validly executed and delivered by
Purchaser and is a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with
its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to the enforcement
of creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
c. NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated by this Agreement will (i) violate, conflict
with, or result in a breach of the terms, conditions or
provisions of, or constitute a default or an event which,
with notice or lapse of time or
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both, would constitute a default under, (y) the articles
of incorporation or bylaws of the Purchaser, or (z) any
contract, agreement, mortgage, deed of trust, or other
instrument or obligation to which the Purchaser is a party
or by which it is bound, (iii) other than with respect to
obtaining the consents referenced in subparagraph 7(e)(i)
and (iii), violate any provision of any applicable law or
regulation or of any order, decree, writ or injunction of
any court or governmental body, or (iv) result in the
creation or imposition of any lien, charge, restriction,
security interest or encumbrance of any kind whatsoever on
any property or asset of the Purchaser or on the
Restricted Shares.
d. BROKERS. Other than the Broker, the Purchaser has not
employed, directly or indirectly, any broker or finder, or
incurred any liability for any brokerage fees, commissions
or finders' fees, and other than the Broker, no broker or
finder has acted directly or indirectly for the Purchaser in
connection with this Agreement or the transactions
contemplated by this Agreement.
e. LITIGATION. Purchaser is not a party to any pending or, to
its actual knowledge, any threatened claim, action, suit,
investigation or proceeding, or subject to any order,
judgment or decree, except for matters which in the
aggregate, will not have, or cannot reasonably be expected
to have, a materially adverse effect on the financial
condition of the Purchaser, and none that would affect the
Purchaser's ability to consummate the transactions and
perform its obligations contemplated hereby.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by the parties in this Agreement or in any
certificate, schedule, statement, document or instrument furnished hereunder or
in connection with the negotiation, execution and performance of this Agreement
shall survive the Closing for a period of three (3) years, and any claim or
cause of action for indemnification under subparagraph 15(a) or paragraph 16
for breaches of representations or warranties set forth in this Agreement or in
any exhibit or document furnished hereto may be made in respect of such matters
within three (3) years after the Closing Date. Notwithstanding any
investigation or audit conducted before or after the Closing or the decision of
any party to complete the Closing, each party shall be entitled to rely upon the
representations and warranties set forth herein for the time period set forth
above.
10. SELLER'S OBLIGATIONS PRIOR TO CLOSING. Seller agrees to do the
following prior to Closing:
a. CONDUCT OF BUSINESS BY THE COMPANY PRIOR TO THE CLOSING
DATE. Seller shall cause the Company to conduct its
operations according to the ordinary and usual course of
business reasonably consistent with past and current
practices, to maintain and preserve its business
organization, assets and properties, and vendor and supplier
relationships, and to retain the services of its officers,
employees, agents, and independent contractors, and shall
not, without the prior
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written consent of Purchaser, allow the Company to engage
in any practice, take any action, or enter into any
transaction outside of the ordinary course of business.
Without limiting the generality of the foregoing, Seller
shall prohibit the Company, without the prior written consent
of Purchaser, from directly or indirectly taking any of the
actions described in subparagraph 7(o).
b. FULL ACCESS. Seller shall cause the Company to permit
Purchaser and representatives of the Purchaser to have full
access to and to examine, at all reasonable times and
places, and in a manner so as not to interfere with the
normal business operations of the Company; the books,
records, properties, assets and operations of the Company.
Such examination shall include access to the officers,
directors, employees, agents and representatives of the
Company. Seller shall cause the Company to furnish to
Purchaser and representatives of Purchaser with such
financial, operating and other data and information, and
copies of documents with respect to the Company, as
Purchaser shall from time to time request. Such access and
information shall not in any way affect or diminish any of
the representations or warranties made in this Agreement.
c. AUDIT. Seller shall cause the Company to permit an audit
(the "Audit") to be conducted under generally accepted
auditing standards, of the books, records, and financial
statements of the Company for 1996, and through September
30, 1997, and any additional period requested by the
Purchaser or required by applicable law, and shall cause
Audited Financial Statements (hereinafter defined) to be
prepared in accordance with generally accepted accounting
principles, which shall include reserves for any extended
warranties, charge-backs, inventory write downs,
repossessions, contracts in transit, and any other
appropriate accruals and reserves. As used in this
Agreement, "Audited Financial Statements" shall mean an
audited (i) balance sheet, dated September 30, 1997, for the
Company, and (ii) income statement for the nine (9) month
period ending September 30, 1997, for the Company. The
Audit will be conducted by Purchaser's accountants, Price
Waterhouse, LLP. Seller agrees to cause the full
cooperation of the officers, directors, employees and
accountants of the Company in the Audit. The start date of
the Audit is anticipated to be October 13, 1997. In
addition, as near as possible to the Closing Date, Price
Waterhouse shall review the books and records of the Company
for the period after September 30, 1997, and prepare a
letter setting forth the unaudited adjustments that should
be made to the Net Worth (the "Net Worth Adjustments").
d. NOTICE OF ADVERSE CHANGES. Seller shall give prompt written
notice to Purchaser of any material adverse change in the
business, operations, properties, assets, revenues,
earnings, liabilities, or condition (financial or otherwise)
of the Company.
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e. STANDSTILL. From the date hereof to the earlier of the
Closing Date or the date this Agreement expires or
terminates, Seller shall not, directly or indirectly,
through any officer, director, employee, or otherwise, (i)
solicit or initiate the submission of any proposal or offer
from any person or entity (including any officers or
employees of the Company) relating to any liquidation,
dissolution, recapitalization, merger, consolidation,
acquisition, or purchase of all or a material portion of the
assets and properties of the Company, or the acquisition or
purchase of any equity interest in the Company, or (ii)
participate in any negotiations regarding, or furnish to any
other person or entity any information with respect to, or
otherwise cooperate in any manner with, or assist or
participate in, facilitate or encourage, any effort or
attempt by any other person or entity to do or seek any of
the foregoing.
f. FURTHER ASSURANCES. Seller shall from time to time, upon
the request of Purchaser, execute and deliver to Purchaser
such further instruments and take such other action as
Purchaser may reasonably request, in order to consummate the
transactions contemplated by this Agreement in accordance
with its terms.
g. INSURANCE AND RISK OF LOSS. Until the Closing, Seller shall
cause the Company to maintain the insurance the Company is
carrying in connection with the operation of the Dealership,
including (without limitation) property damage insurance,
general liability insurance, worker's compensation, and
group health insurance. The Seller and the Company shall
have the risk of loss for damage by fire or other casualty
to the assets and properties of the Company before Closing.
In the event of any material loss or damage to the assets
and properties of the Company prior to Closing, Purchaser
shall have the option to terminate this Agreement.
11. PURCHASER'S OBLIGATIONS PRIOR TO CLOSING. Purchaser agrees to
do the following prior to Closing:
a. DUE DILIGENCE. Until the transactions contemplated by this
Agreement close or this Agreement expires or terminates,
Purchaser may conduct such investigations, reviews and
inspections of the business, operations, properties, assets,
revenues, earnings, liabilities, and condition (financial or
otherwise) of the Company as Purchaser and Purchaser's
representatives deem necessary or desirable to determine
whether a material adverse change in the Company has
occurred.
b. FURTHER ASSURANCES. Purchaser shall from time to time, upon
the request of the Seller, execute and deliver to Seller
such further instruments and take such further action as the
Seller may reasonably request, in order to consummate the
transactions contemplated by this Agreement in accordance
with its terms.
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c. PURCHASER'S NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
REGARDING THE COMPANY. Purchaser acknowledges that it may
possibly have access to certain confidential information of
the Company, including (without limitation) lists of
accounts, operational policies, and pricing and costs
policies (the "Confidential Information"). The Purchaser
agrees that it will not disclose such Confidential
Information to any person or entity for any purpose or
reason whatsoever, except to employees and authorized
representatives of the Purchaser, or as required by law,
unless such Confidential Information becomes known to the
public generally through no fault of the Purchaser. In the
event of a breach or threatened breach by Purchaser of the
provisions of this subparagraph, the Seller and/or the
Company shall be entitled to temporary restraining order,
without bond, and an injunction restraining the Purchaser
from disclosing, in whole or in part, such Confidential
Information. Nothing herein shall be construed as
prohibiting the Seller and/or the Company from pursuing any
other available remedy for such breach or threatened breach,
including the recovery of damages.
12. SELLER'S AND PURCHASER'S OBLIGATIONS PRIOR TO CLOSING.
a. ASSISTANCE. Seller and Purchaser agree to use their best
efforts to create a workable, smooth and orderly transition
of Purchaser's acquisition of the Company.
b. HART-SCOTT-RODINO NOTIFICATION. The parties shall, if and
to the extent required by law, prepare, and Purchaser shall
file, all reports or other documents required or requested
by the FTC or the Justice Department under the
Hart-Scott-Rodino Act, and all regulations promulgated
thereunder, concerning the transactions contemplated by this
Agreement, and comply promptly with any request by the FTC
or the Justice Department for additional information
concerning such transactions, so that the waiting period
specified in the Hart-Scott-Rodino Act will expire as soon
as reasonably possible after the execution and delivery of
this Agreement. The parties agree to furnish to one another
such information concerning the Purchaser, the Seller, and
the Company as the parties need to perform their obligations
hereunder. The Purchaser agrees to pay all filing fees and
costs due governmental agencies with regard to the
notification under and compliance with the Hart-Scott-Rodino
Act and all regulations promulgated thereunder.
c. PHYSICAL INVENTORIES. On or before November 2, 1997,
Purchaser and Seller shall conduct a physical inventory of
the New Vehicle Inventory, the Used Vehicle Inventory, the
Parts and Accessories Inventory, and the Tangible Personal
Property. The physical inventories shall be collectively
referred to in this Agreement as the "Physical Inventories."
The value of the New Vehicle Inventory, the Used Vehicle
Inventory, the Parts and Accessories Inventory, and the
Tangible Personal Property shall be determined as follows:
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(i) Purchaser and Seller shall calculate the value of
the New Vehicle Inventory. The value of each new
vehicle shall be the cash sum equal to the factory
invoice price (excluding any Company internal
profit) to the Company, less any factory holdback
rebate and any other factory rebate or incentive,
advertising credits and interest credits, which the
Company may have received prior to the Closing, plus
performed PDI at the Company's cost (excluding any
internal profit), options added at the Company's
cost (excluding any internal profit), and any
freight and handling charges paid, prior to the
Closing. Any demonstrator and rental vehicle shall
be valued for a cash sum equal to an amount as
calculated above, except demonstrators and rental
vehicles having 6,000 miles or more on the odometer
shall be treated as a Used Vehicle. The value of
any new vehicle shall be decreased by an amount
equal to the Company's cost (excluding any internal
profit) of repair for any physically damaged
vehicle. Seller agrees that all factory rebates and
other credits on any new vehicles sold after the
Closing shall be retained by the Company.
(ii) Purchaser and Seller shall agree to the value of the
Used Vehicle Inventory. Any demonstrators and rental
vehicles having less than 6,000 miles on the
odometer shall be treated as a New Vehicle.
(iii) Purchaser and Seller shall calculate the value of
the Parts and Accessories Inventory. The value of
the parts and accessories shall be the cost of the
parts and accessories set forth in the dealer parts
and accessories price schedule in effect on the date
of the inventory for the applicable Manufacturer or
other reliable supplier. The Seller agrees that all
rebates and credits on any parts or accessories
shall be retained by the Company.
(iv) Purchaser and Seller shall calculate the value of
the Tangible Personal Property. The value of any
item of tangible personal property listed in the
Appraisal shall be the value of the property set
forth in the Appraisal, and the value of any item of
tangible personal property that is not listed in the
Appraisal shall be the Company's actual cost
(excluding any internal profit).
13. CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASER. The obligation
of Purchaser to consummate the transactions contemplated by this Agreement is
subject to the satisfaction on or prior to the Closing Date of the following
conditions, each of which may be waived by the Purchaser:
a. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations and warranties made by the Seller and the
Company in or pursuant to this Agreement shall be true and
correct in all material respects as of the Closing Date with
the same effect as though such representations and
warranties were
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made on the Closing Date, except to the extent that such
representations and warranties expressly relate to any
earlier date. Seller and the Company shall have performed
and complied with all the covenants and agreements and
satisfied all the conditions required by this Agreement to
be performed, complied with or satisfied by Seller and the
Company on or prior to the Closing Date. Seller must have
delivered to the Purchaser a certificate dated as of the
Closing Date certifying that this condition has been
fulfilled.
b. NO ADVERSE CHANGE. Purchaser shall have determined, to its
satisfaction, that as of the Closing Date, there has been no
material adverse change in the business, operations,
properties, assets, revenues, earnings, liabilities or
condition (financial or otherwise) of the Company.
c. EXHIBITS. Purchaser shall have timely received all exhibits
to this Agreement.
d. TRANSFER OF SHARES. The certificate(s) representing the
Shares shall have been transferred and conveyed by Seller to
Purchaser in a manner and by instruments acceptable to
Purchaser and its counsel, free and clear of all liens,
claims, encumbrances, or restrictions of any kind.
Contemporaneously with the consummation of the transfer of
the Shares, Seller shall put Purchaser in full possession
and enjoyment of all properties and assets of the Company.
In addition, Purchaser shall have received the complete
stock ledgers, minute books and other corporate records of
the Company.
e. THIRD PARTY APPROVALS. This Agreement and the transactions
contemplated by this Agreement shall have received all
required approvals and consents from all persons and
entities from which such approvals or consents are required,
including (without limitation) (i) the Manufacturers, (ii)
the FTC and the Justice Department under the
Hart-Scott-Rodino Act and the regulations promulgated
thereunder, and (iii) the Nevada Department of Motor
Vehicles. Without limiting the generality of the foregoing,
each Manufacturer other than BMW must approve Purchaser as
the dealer for that manufacturer in Las Vegas, Nevada prior
to Closing and BMW must approve Purchaser as the dealer in
Henderson and Las Vegas, Nevada prior to Closing.
f. COMPLIANCE WITH SECURITIES LAWS. Purchaser shall have (i)
received the Investment Letter, (ii) received the
Registration Rights Agreement, and (iii) determined that all
state and federal securities laws have been fully satisfied
relating to the purchase of the Shares by Purchaser.
g. LEASES. The Purchaser shall have received the Leases,
executed by the respective landlords.
h. PHYSICAL INVENTORIES. Purchaser shall have conducted the
Physical Inventories.
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i. APPROVAL OF DOCUMENTATION. The form and substance of all
opinions, certificates, instruments and other documents
delivered to Purchaser in connection with this Agreement
shall be satisfactory in all reasonable respects to
Purchaser and Purchaser's counsel.
j. CORPORATE DIRECTORS AND OFFICERS. The composition of the
directors and officers of the Company shall be as requested
by Purchaser, effective as of the Closing.
k. OPINION OF COUNSEL TO SELLER AND THE COMPANY. Seller and
the Company shall have delivered to Purchaser an opinion of
counsel reasonably satisfactory to Purchaser, dated as of
the Closing Date, that contains such opinions that are
reasonably requested by Purchaser, including (without
limitation with respect to the Seller) an opinion that the
Shares were issued and will be transferred to Purchaser, in
compliance with all state securities laws.
l. HART-SCOTT-RODINO WAITING PERIOD. The applicable waiting
period under the Hart-Scott-Rodino Act, and the regulations
promulgated thereunder, shall have expired.
m. AUDIT. Price Waterhouse shall have timely performed the
Audit, prepared the Audited Financial Statements, and
delivered a copy of the Audited Financial Statements to
Purchaser.
p. ADDITIONAL INFORMATION. Seller and the Company shall have
furnished to Purchaser and Purchaser's counsel such
additional information, certificates, and other documents as
Purchaser shall have reasonably requested.
14. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER. The obligation
of Seller to consummate the transactions contemplated by this Agreement is
subject to the satisfaction on or prior to the Closing Date of the following
conditions, each of which may be waived by the Seller:
a. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations and warranties made by the Purchaser in or
pursuant to this Agreement shall be true and correct in all
material respects as of the Closing Date with the same
effect as though such representations and warranties were
made on the Closing Date, except to the extent that such
representations and warranties expressly relate to an
earlier date, and Purchaser shall have performed and
complied with all of the covenants and agreements and
satisfied all the conditions required by this Agreement to
be performed, complied with or satisfied by Purchaser on or
prior to the Closing Date. The Purchaser must have
delivered to the Sellers a certificate dated as of the
Closing Date certifying that this condition has been
fulfilled.
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b. DELIVERY OF PURCHASE PRICE. The Purchaser shall have
delivered (i) the Cash, (ii) the Note and (iii) the
Restricted Shares.
c. LEASES. Seller shall have received the Leases, executed by
the Company.
d. APPROVAL OF DOCUMENTATION. The form and substance of all
certificates and other documents required to be delivered to
Seller in connection with this Agreement shall be
satisfactory in all reasonable respects to Seller and
Seller's counsel.
e. ADDITIONAL INFORMATION. Purchaser shall have furnished to
Seller and Seller's counsel such additional information,
certificates, and other documents as Seller shall have
reasonably requested.
15. SELLER'S OBLIGATIONS AFTER CLOSING.
a. GENERAL INDEMNITY. Seller shall indemnify, defend and hold
Purchaser and its successors and assigns (the "Purchaser
Indemnified Parties") harmless from and against any and all
liabilities, damages, losses, claims, costs and expenses,
including (without limitation) reasonable attorneys' fees,
arising from or related to (i) any breach of any
representation, warranty, covenant or agreement made by
Seller in this Agreement, or in any certificate or other
document delivered on behalf of Seller or the
nonperformance of any covenant or obligation of Seller
under this Agreement, (ii) any debts, liabilities, or
obligations of any nature (whether absolute, accrued,
contingent or otherwise and whether due or to become due) of
the Company at the Balance Sheet Date that are not reflected
in the Financial Statements, (iii) the conduct of the
business or other operations of the Company prior to the
Closing Date, (iv) the failure of Seller or the Company to
comply with any federal, state, or local tax laws for any
matter occurring prior to the Closing Date or applicable to
the transactions contemplated by this Agreement, and (v) any
and all actions, suits, proceedings, demands and judgments,
arising from or related to any of the matters set forth in
this subparagraph 15(a).
b. ENVIRONMENTAL INDEMNIFICATION. With respect to any existing
or future liability arising out of any condition, activity
or event existing or occurring prior to the Closing Date
with respect to the Las Vegas Premises, the Henderson
Premises or the 2.5 Acre Tract that violates or violated any
Environmental Laws or for which there may be any
environmental liability in tort, or otherwise, the Seller
agrees that it will indemnify, defend and hold harmless the
Purchaser Indemnified Parties from and against all claims,
damages, actions, suits, proceedings, demands, assessments,
adjustments, costs, and expenses, including reasonable
attorneys' fees and expenses of investigation, incurred by
any Purchaser Indemnified Party as a result of such
environmental condition and
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<PAGE>
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.
c. SELLER'S NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
REGARDING THE COMPANY. Seller acknowledges that the Seller
has in the past, currently has, and in the future may
possibly have access to Confidential Information. Seller
agrees that the Seller will not disclose such Confidential
Information to any person or entity for any purpose or
reason whatsoever except to employees and authorized
representatives of the Purchaser, or as required by law,
unless the Confidential Information becomes known to the
public generally through no fault of the Seller. In the
event of a breach or threatened breach by the Seller of this
subparagraph, the Purchaser shall be entitled to a temporary
restraining order, without bond, and an injunction
restraining the Seller from disclosing, in whole or in part,
such Confidential Information. Nothing herein shall be
construed as prohibiting the Purchaser from pursuing any
other available remedy for such breach or threatened breach,
including the recovery of damages.
d. SELLER'S AND CHAISSON'S COVENANT NOT TO COMPETE. Both
Seller and James J. Chaisson, Sr. ("Chaisson") agree that
they will not, either directly or indirectly, alone or with
others, either as an employee, owner, partner, agent,
stockholder, member, director, officer or otherwise:
(i) enter into or engage in the business of operating a
new vehicle dealership, warranty repair business, or
other related new vehicle business with respect to
any of Land Rover, Volkswagen, Audi, Bentley and
Rolls Royce or BMW automobiles within the Las Vegas
or Henderson, Nevada metropolitan areas (the
"Restricted Area") for a term of three (3) years
from the Closing Date (the "Restricted Period").
(ii) Further, neither the Seller nor Chaisson will
individually, collectively or in conjunction with
others, directly or indirectly, within the
Restricted Period and Restricted Area, directly or
indirectly, solicit or hire any employee of the
Company or encourage any such employee to leave such
employment unless such employee's employment with
the Company or the Purchaser has been terminated.
Seller and Chaisson also agree that in the event of
a breach of these covenants, the Purchaser may
protect its rights by injunction or otherwise.
16. PURCHASER'S OBLIGATIONS AFTER CLOSING.
a. GENERAL INDEMNITY. Purchaser shall indemnify, defend and
hold Seller and its successors and assigns (the "Seller
Indemnified Parties") harmless from and against any and all
liabilities, damages, losses, claims, costs and expenses,
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<PAGE>
including (without limitation) reasonable attorneys' fees,
arising from or related to (i) any breach of any
representation, warranty, covenant or agreement made by
Purchaser in this Agreement, or in any certificate or other
document delivered on behalf of Purchaser or the
nonperformance of any covenant or obligation of Purchaser
under this Agreement, (ii) any debts, liabilities, or
obligations of any nature (whether absolute, accrued,
contingent or otherwise and whether due or to become due) of
the Company accruing after the Closing, (iii) the conduct of
the business or other operations of the Company after the
Closing, (iv) the failure of Purchaser to comply with any
federal, state, or local tax laws for any matter occurring
after the Closing or applicable to the transactions
contemplated by this Agreement, and (v) any and all actions,
suits, proceedings, demands and judgments, arising from or
related to any of the matters set forth in this subparagraph
16(a).
b. ENVIRONMENTAL INDEMNIFICATION. With respect to any future
liability arising out of any condition, activity or event,
caused by, or under the control of, the Purchaser or the
Company occurring after the Closing with respect to the Las
Vegas Premises, the Henderson Premises or the 2.5 Acre
Tract, during the term of the respective Leases therefor,
that violates any Environmental Laws or for which there may
be any environmental liability in tort, or otherwise, the
Purchaser agrees that it will indemnify, defend and hold
harmless the Seller Indemnified Parties from and against all
claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs, and expenses, including
reasonable attorneys' fees and expenses of investigation,
incurred by any Seller Indemnified Party as a result of 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.
c. PRE-CLOSING PROFITS FROM OPERATIONS. In addition to payment
of the Purchaser Price, Purchaser agrees that it will, or
will cause the Company to, pay to Seller an amount equal to
the net profits from the operation of the Company from
September 30, 1997, through the last business day prior to
the Closing to the extent such net profits from operations
have not been included as a Net Worth Adjustment (the "Final
Distribution"). The Final Distribution shall be paid to
Seller no later than twenty days following the Closing.
17. INFORMATION REGARDING THE PURCHASER.
a. INSIDER LIABILITY. Seller acknowledges that trading in the
Purchaser's securities by persons possessing material
non-public information may result in private lawsuits for
damages or to civil or criminal proceedings by the
Securities and Exchange Commission. Seller also
acknowledges that liability may be imposed on insiders who
privately disclose otherwise non-public material information
where such disclosure coincide with trading Purchaser's
securities by such insiders or by the recipients of such
information.
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b. SELLER'S NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
REGARDING THE PURCHASER. Seller acknowledges that the
Seller may possibly have access to certain confidential
information of the Purchaser. Seller agrees that the
Seller will not disclose such confidential information to
any person or entity for any purpose or reason whatsoever
except as required by law, unless the confidential
information becomes known to the public generally through no
fault of the Seller. In the event of a breach or threatened
breach by the Seller of this subparagraph, the Purchaser
shall be entitled to a temporary restraining order, without
bond, and an injunction restraining the Seller from
disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as
prohibiting the Purchaser from pursuing any other available
remedy for such breach or threatened breach, including the
recovery damages.
18. TERMINATION.
a. MUTUAL CONSENT. This Agreement may be terminated by the
written consent of the parties.
b. BY THE PURCHASER. This Agreement may be terminated by
written notice of termination given by the Purchaser to
Seller if a material default should be made by Seller in the
observance of or in the due and timely performance by Seller
of any of the agreements and covenants of the Seller herein
contained, or if there shall have been a material breach by
Seller of any of the warranties and representations of the
Seller herein contained, or if the conditions of this
Agreement to be complied with or performed by Seller at or
before Closing shall not have been complied with or
performed at the time required for such compliance or
performance and such noncompliance or nonperformance shall
not have been waived by the Purchaser.
c. BY THE SELLER. This Agreement may be terminated by written
notice of termination given by the Seller to the Purchaser
if a material default should be made by the Purchaser in the
observance of or in the due and timely performance by the
Purchaser of any of the agreements and covenants of the
Purchaser herein contained, or if there shall have been a
material breach by the Purchaser of any of the warranties
and representations of the Purchaser, of if the conditions
of this Agreement to be complied with or performed by the
Purchaser at or before Closing shall not have been complied
with or performed at the time required for such compliance
or performance and such noncompliance or nonperformance
shall not have been waived by the Seller.
19. SECTION 338(h)(10) ELECTIONS.
a. Seller agrees to make an election under Section 338(h)(10)
of the Internal Revenue Code and all comparable elections
under state and local tax law with respect to the Company.
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b. Purchaser and Seller shall jointly file Form 8023-A with the
Internal Revenue Service in accordance with Section 338 of
the Internal Revenue Code and the regulations thereunder no
later than the 15th day of the ninth month beginning after
the month that includes the Closing Date in accordance with
Internal Revenue Code Section 338(g) and Treasury Regulation
Section 1.338(h)(10)-1(d)(2).
c. Purchaser and Seller shall allocate the Purchase Price to
the assets conveyed pursuant to this Agreement using a
reasonable asset valuation which will be agreed to by
Purchaser and Seller no later than ninety (90) days after
the Closing Date. In all events, however, Purchaser and
Seller agree to conformity of the treatment of all asset
allocations with respect to the Section 338(h)(10)
elections.
20. ADDITIONAL AGREEMENTS.
a. CHAISSON MOTORS CARS AND CHAISSON BMW NAMES. The Seller
consents for all purposes to the Purchaser's continued use
of the Chaisson Motor Cars, Chaisson BMW, and any other
names including the word "Chaisson" (collectively, the
"Chaisson Names") that are, or could be used, in connection
with the operation of the Dealerships within the Restricted
Area. Purchaser is not obligated to use any Chaisson Names.
Seller shall not be prohibited from using the name Chaisson
in any non-competing business venture, or from using any
Chaisson Name if Purchaser ceases using the name Chaisson in
connection with all of its automobile dealerships within the
Restricted Area. The parties acknowledge that the
Dealerships' television, radio and print advertisements
aimed at the Restricted Area may also be broadcast or
distributed outside the Restricted Area, and the Seller
agrees such advertisements shall not be a violation of this
Agreement, and
(i) No separate consideration, over and above the
Purchase Price, is owed by the Purchaser to the
Seller for this consent to use the Chaisson Names as
provided herein.
(ii) As soon as practicable after the Closing, the Seller
and Purchaser agree to file any required
certificates, terminations or consents necessary to
allow Purchaser to use the Chaisson Names. The
parties mutually agree to take other reasonable
steps as from time to time may be appropriate to
avoid confusion and mistake by third parties as to
their respective corporate identities.
(iii) The Purchaser's right to use the Chaisson Names in
the Restricted Area shall be binding on the Seller
and on all of its successors, assigns, transferees,
and licensees, and every sale, assignment, license
or transaction entered into by the Seller shall be
expressly subject to the Purchaser's continued right
to use the Chaisson Names in the Restricted Area as
provided in this Agreement.
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(iv) Other provisions hereof to the contrary
notwithstanding, Purchaser's right to continued use
of the Chaisson Names shall absolutely terminate on
the first to occur of the termination of this
Agreement, the mutual agreement of the Seller and
the Purchaser after Closing, or the Purchaser's
cessation of use thereof in the Restricted Area.
b. EMPLOYEE LIST. To the extent not set forth in Schedule
7(u), Seller agrees to provide, at least ten (10) days prior
to Closing, a list of all employees of the Company. Such
list shall contain the employee's name, employment
description, annual compensation or formula for computing
such annual compensation, accrued vacation pay, and
tentative vacation plans.
d. JAGUAR FRANCHISE. Purchaser and Seller agree that Purchaser
is not purchasing the Jaguar franchise or the Jaguar parts
and accessories (the "Jaguar Assets"). Prior to Closing,
the Company shall distribute the Jaguar Assets to the
Seller. Seller shall have until June 30, 1998, to relocate
the Jaguar Assets. Prior to the relocation of the Jaguar
Assets, the Company shall manage and operate the Jaguar
Assets under a Management Agreement with the Seller, or an
entity wholly owned by Seller, in the form of Exhibit "K"
hereto.
e. APPROVAL BY THE MANUFACTURERS. Notwithstanding anything
contained in this Agreement to the contrary, if by November
1, 1997 (i) BMW and Volkswagen have approved the
transactions contemplated by this Agreement, (ii) any other
Manufacturer has not approved the transactions contemplated
by this Agreement, and (iii) all other conditions to the
obligations of the parties hereunder (other than those
requiring the taking of action at the Closing) have been
satisfied or waived, Purchaser and Seller shall close the
transactions contemplated by this Agreement but shall place
that portion of the Purchase Price which equals the amounts
set forth on Schedule 20(e) for any Manufacturers that have
not given their approval into an interest bearing account
under an escrow agreement (the "Escrow Agreement") between
Purchaser and Seller. The Escrow Agreement shall be in the
form of Exhibit "L" hereto. The Company shall manage the
franchise for each Manufacturer that has not given its
approval by the Closing, under a Management Agreement in the
form of Exhibit "K" hereto.
21. GENERAL PROVISIONS.
a. ENTIRE AGREEMENT. This Agreement contains and constitutes
the entire agreement between the parties regarding the
subject matter hereof and supersedes all prior agreements
and understandings between the parties relating to the
subject matter of this Agreement. There are no agreements,
understandings, restrictions, warranties or representations
between the parties relating to the subject matter hereof
other than those set forth in this Agreement. This
Agreement is not intended to have any legal effect
whatsoever, or to be a
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legally binding agreement, or any evidence thereof, until it
has been signed by Seller, the Company, and the Purchaser.
b. EXHIBITS. Preliminary drafts of all Schedules and Exhibits
A through Fshall be prepared by the Seller on or before
October 24, 1997, and delivered to Purchaser for Purchaser's
review. Preliminary drafts of Exhibits G through L shall be
prepared by Purchaser on or before October 24, 1997, and
delivered to Seller for Seller's review. Final Schedules
and Exhibits shall be prepared by the party that prepared
the preliminary drafts, initialed by the parties, and
attached to this Agreement on or before the Closing Date.
When attached to this Agreement, the Schedules and Exhibits
shall be made a part of this Agreement by reference.
SCHEDULES:
Schedule 7(b) Officers, Directors, and Assumed Names
Schedule 7(f) Real Property
Schedule 7(g) Tangible Personal Property
Schedule 7(h) Inventories
Schedule 7(i) Licenses
Schedule 7(j) Intellectual Property
Schedule 7(k) Encumbrances
Schedule 7(m) Indebtedness and Guaranties
Schedule 7(p) Litigation
Schedule 7(o) Transactions Since the Balance Sheet Date
Schedule 7(q) Underground Storage Tanks
Schedule 7(r) Contracts and Agreements
Schedule 7(s) Employee Benefit Plans
Schedule 7(t) Insurance
Schedule 7(u) Personnel
Schedule 7(v) Accounts Receivable
Schedule 7(y) Bank Accounts and Powers of Attorney
Schedule 20(e) Manufacturer Allocation
EXHIBITS:
Exhibit "A" The Note
Exhibit "B" Las Vegas Lease
Exhibit "C" Henderson Lease
Exhibit "D" 2.5 Acre Lease
Exhibit "E" Seller's Certificate
Exhibit "F" Opinion of Sellers' Counsel
Exhibit "G" Investment Letter
Exhibit "H" Registration Rights Agreement
Exhibit "I" Purchaser's Certificate
Exhibit "J" Opinion of Purchaser's Counsel
Exhibit "K" Management Agreement
29
<PAGE>
Exhibit "L" Escrow Agreement
c. THIRD PARTY CONSENTS. The Seller and the Purchaser
mutually agree to cooperate and use their respective
reasonable, good faith efforts to prepare all documentation,
to effect all filings and to obtain all permits, consents,
approvals, and authorizations of all third parties and
governmental entities as may be necessary to consummate the
transactions contemplated by this Agreement.
d. FURTHER ACTIONS. From time to time, as and when requested
by any parties hereto, the other parties shall execute and
deliver, or cause to be executed and delivered, all such
documents and instruments and shall take, or cause to be
taken, all such further or other actions as such other
parties may reasonably deem necessary or desirable to
consummate the transactions contemplated by this Agreement.
e. PUBLICITY. The parties hereto agree that no public release
or announcement concerning the terms of the transactions
contemplated by this Agreement shall be issued by any party
without the prior written consent of the other parties
(which consent shall not be unreasonably withheld), except
as such release or announcement may be required by law, in
which case the party required to make the release or
announcement shall allow the other parties reasonable time
to comment on such release or announcement in advance of
such issuance.
f. AMENDMENT. This Agreement may not be amended, modified, or
terminated except by an instrument in writing signed by all
parties to this Agreement.
g. CONSTRUCTION. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine or
neuter gender thereof or to the plurals of each, as the
identity of the person or persons or the context may
require. The descriptive headings contained in this
Agreement are for reference purposes only and are not
intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision
contained in this Agreement.
h. INVALIDITY. If any provision contained in this Agreement
shall for any reason be held to be invalid, illegal, void or
unenforceable in any respect, such provision shall be deemed
modified so as to constitute a provision conforming as
nearly as possible to such invalid, illegal, void or
unenforceable provision while still remaining valid and
enforceable; and the remaining terms or provisions contained
herein shall not be affected thereby.
i. EXPENSES. Whether or not the transactions contemplated by
this Agreement are consummated, each of the parties to this
Agreement shall be responsible for its own costs and
expenses incurred in connection with the preparation and
negotiation of this Agreement and with the transactions
contemplated hereby.
30
<PAGE>
j. BINDING EFFECT AND ASSIGNMENT. This Agreement shall be
binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, administrators,
executors, successors and permitted assigns. Purchaser may
assign its rights under this Agreement to an affiliated
entity, and thereafter the Purchaser and its assignee shall
be fully obligated, responsible and liable for the
performance of the Purchaser's obligations hereunder. Seller
may not assign any of its rights or delegate any of its
obligations hereunder. Any assignment in violation of this
Agreement shall be void.
k. ATTORNEYS' FEES. In the event any party instigates
litigation to enforce or protect its rights under this
Agreement, the party prevailing in any such litigation shall
be entitled, in addition to all other relief, to reasonable
attorneys' fees, out-of-pocket costs and disbursements
relating to such litigation.
l. NOTICES. All notices and other communications hereunder
shall be (i) in writing, dated with the current date of such
notice, and signed by the party giving such notice, and (ii)
mailed, postpaid, registered or certified, return receipt
requested, addressed to the party to be notified, or
delivered by personal delivery or by overnight courier.
Notice shall be deemed given when received by the party to
be notified or when the party to be notified refuses to
accept delivery of the notice. The initial addresses of the
parties shall be as follows:
IF TO PURCHASER:
Cross-Continent Auto Retailers, Inc.
1201 S. Taylor
P.O. Box 750
Amarillo, Texas 79105-0750
ATTENTION: ROBERT W. HALL
(806) 374-8653
IF TO SELLER:
The Chaisson Family Trust
c/o James J. Chaisson, Sr.
40 Innisbrook
Las Vegas, Nevada 89113
with a copy to:
Jones, Jones, Close & Brown, Chartered
3773 Howard Hughes Parkway, 3rd Floor South
Las Vegas, Nevada 89109
Attention: Douglas G. Crosby, Esq.
31
<PAGE>
The parties hereto shall have the right from time to time to
change their respective addresses by not less than ten (10)
days prior written notice to the other parties.
m. DEFINITION OF KNOWLEDGE. As used in this Agreement, the
Seller's or the Company's "actual knowledge" or "knowledge"
shall include the knowledge of the Seller and the employees
and agents of the Company. Each representation and warranty
that is limited to the Seller's or the Company's "actual
knowledge" or "knowledge" is made with the understanding
that the Seller or the Company has made a good faith effort
to examine whatever sources of information as are in the
possession or control of the Seller or the Company in order
to verify the truth and accuracy of such representation and
warranty.
n. TIME IS OF THE ESSENCE. Time shall be of the essence with
respect to this Agreement and the consummation of the
transactions contemplated hereby.
o. REMEDIES. None of the remedies provided for in this
Agreement shall be the exclusive remedy of any party for a
breach of this Agreement. The parties hereto shall have the
right to seek any other remedy at law or in equity in lieu
of or in addition to any remedies provided for in this
Agreement.
p. SURVIVAL OF OBLIGATIONS. To the extent necessary to carry
out the terms and provisions of this Agreement, the
obligations and rights arising from or related to this
Agreement shall survive the Closing and shall not be merged
into the various documents executed and delivered at the
time of the Closing.
q. WAIVER. No waiver of any breach or default hereunder shall
be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed
a waiver of any subsequent breach or default of the same or
similar nature.
r. GOVERNING LAW. This Agreement shall be construed, enforced,
and governed in accordance with the laws of the State of
Nevada.
s. MEDIATION AND VENUE. If a dispute arises out of or relates
to this Agreement, or the breach thereof, and if the dispute
cannot be settled through negotiation, the parties agree
first to try in good faith to settle the dispute by
mediation administered by the American Arbitration
Association under its Commercial Mediation Rules before
resorting to arbitration, litigation, or some other dispute
resolution procedure. The jurisdiction and venue for any
proceeding, whether by mediation, arbitration, litigation or
other dispute resolution procedure, shall be Clark County,
Nevada.
t. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute
one and the same instrument.
32
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PURCHASER: CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
By: /s/ BILL GILLILAND
------------------------------------------------
Bill Gilliland, Chairman and Chief Executive Officer
SELLER: THE CHAISSON FAMILY TRUST R-501
By: /s/ JAMES J. CHAISSON, JR.
------------------------------------------------
James J. Chaisson, Sr., Trustee
COMPANY: JRJ INVESTMENTS, INC., a Nevada corporation
By: /s/ JAMES J. CHAISSON, SR.
------------------------------------------------
James J. Chaisson, Sr., President
33
<PAGE>
EXHIBIT 2.12
AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS AMENDMENT TO STOCK PURCHASE AGREEMENT (the "First Amendment") is
made and entered into this 14th day of October, 1997, by and among
CROSS-CONTINENT AUTO RETAILERS, INC. ("Purchaser"), a Delaware corporation;
THE CHAISSON FAMILY TRUST R-501 (the "Seller"); and JRJ INVESTMENTS, INC.
(the "Company"), a Nevada corporation.
RECITALS
A. Whereas, the above referenced parties entered into a certain Stock
Purchase Agreement, dated the 8th day of October, 1997, with reference to the
acquisition by Purchaser from Seller of all of the issued and outstanding
capital stock of the Company, and certain related transactions thereto (the
"Purchase Agreement").
B. Whereas, the above referenced parties have now determined that it is
in their respective best interest to amend certain provisions of the Purchase
Agreement to more clearly reflect their mutual understandings and agreements.
AGREED TO AMENDMENTS
In consideration of the mutual covenants, agreements, representations and
warranties set forth in the Purchase Agreement and this First Amendment,
Purchaser, Seller and the Company agree that the Purchase Agreement is
amended in the following respects:
1. Paragraph 3 of the Purchase Agreement is hereby amended to read
in its entirety as follows:
"ADJUSTMENT TO THE PURCHASE PRICE. In the event the Net Worth
(hereinafter defined) is more or less than $3,000,000, the Purchase Price
shall be increased or decreased by an amount equal to the difference between
$3,000,000 and the Net Worth. As used in this Agreement, the term "Net
Worth" shall mean the net worth of the Company as shown as total
shareholders' equity on the balance sheet of the Company in the Audited
Financial Statements (hereinafter defined), using the values for the New
Vehicle Inventory (hereinafter defined), the Used Vehicle Inventory
(hereinafter defined), the Parts and Accessories Inventory (hereinafter
defined), and the Tangible Personal Property (hereinafter defined), as
determined in accordance with subparagraph 12(c), as adjusted by the Net
Worth Adjustments (hereinafter defined), as of the last business day prior to
the Closing."
2. Paragraph 9 of the Purchase Agreement is hereby amended to read
in its entirety as follows:
"SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties
<PAGE>
made by the parties in this Agreement or in any certificate, schedule,
statement, document or instrument furnished hereunder or in connection with
the negotiation, execution and performance of this Agreement shall survive
the Closing for a period of three (3) years, and any claim or cause of
action for indemnification under subparagraph 15(a) or subparagraph 16(a) for
breaches of representations or warranties set forth in this Agreement or in
any exhibit or document furnished hereunder may be made in respect of such
matters within three (3) years after the Closing Date; provided, however, the
parties expressly agree that the indemnification provisions under
subparagraph 15(b) and subparagraph 16(b) shall not be subject to the three
(3) year limitation set forth herein. Notwithstanding any investigation or
audit conducted before or after the Closing or the decision of any party to
complete the Closing, each party shall be entitled to rely upon the
representations and warranties set forth herein for the time period set forth
above."
3. Subparagraph 15(b) of the Purchase Agreement is hereby amended
to read in its entirety as follows:
"ENVIRONMENTAL INDEMNIFICATION. With respect to any existing or
future liability arising out of any condition, activity or event existing or
occurring prior to the Closing Date with respect to the Las Vegas Premises,
the Henderson Premises or the 2.5 Acre Tract (individually, a "Property" and
collectively, the "Properties") that violates or violated any Environmental
Laws or for which there may be any environmental liability in tort, or
otherwise (an "Environmental Event"), the Seller agrees that it will
indemnify, defend and hold harmless the Purchaser Indemnified Parties from
and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs, and expenses, including reasonable
attorneys' fees and expenses of investigation, incurred by any Purchaser
Indemnified Party as a result of the Environmental Event, and further
including, if necessary, the costs and expenses of any remediation,
transportation, incineration, treatment, or other necessary and appropriate
disposition or mitigation of the Environmental Event. Notwithstanding the
preceding sentence, it is expressly agreed by the parties that the
indemnification provided for therein shall not apply to any Environmental
Event caused by contamination migrating into or onto a Property from or
through any other real property."
4. Subparagraph 16(b) of the Purchase Agreement is hereby amended
to read in its entirety as follows:
"ENVIRONMENTAL INDEMNIFICATION. With respect to any future
liability arising out of any condition, activity or event, caused by, or
under the control of, the Purchaser or the Company occurring after the
Closing with respect to any of the Properties that violates any Environmental
Laws or for which there may be any liability for an Environmental Event, the
Purchaser agrees that it will indemnify, defend and hold harmless the
Seller Indemnified Parties from and against all claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, costs, and expenses,
including reasonable attorneys' fees and expenses of investigation, incurred
by any Seller Indemnified Party as a result of the Environmental Event, and
further including, if necessary, the costs and expenses of any remediation,
transportation, incineration, treatment, or other necessary and appropriate
disposition or mitigation of the Environmental Event. Notwithstanding the
preceding sentence, it is expressly agreed by the parties that the
indemnification provided for therein shall not apply to any Environmental
Event caused by contamination migrating into or onto a Property from
<PAGE>
or through any other real property."
5. Subparagraph 16(c) of the Purchase Agreement is hereby amended
by changing the last word in the first sentence from "Purchaser" to
"Purchase."
6. As expressly amended hereby, all of the provisions of the
Purchase Agreement remain in full force and effect, and, as used in the
Purchase Agreement, the term "Agreement" means the Purchase Agreement as
amended by this First Amendment.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
PURCHASER: CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
By: /s/ BILL GILLILAND
----------------------------------------------------
Bill Gilliland, Chairman and Chief Executive Officer
SELLER: THE CHAISSON FAMILY TRUST R-501
By: /s/ JAMES J. CHAISSON, SR., TRUSTEE
----------------------------------------------------
James J. Chaisson, Sr., Trustee
COMPANY: JRJ INVESTMENTS, INC., a Nevada corporation
By: /s/ JAMES J. CHAISSON, SR.
----------------------------------------------------
James J. Chaisson, Sr., President
<PAGE>
EXHIBIT 10.32.1
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT dated as of
August 7, 1997 (this "AMENDMENT"), by and between Cross-Continent Auto
Retailers, Inc., a Delaware corporation (the "PARENT"), the other Borrowers
identified on the signature pages hereto (collectively, the "BORROWERS"), the
financial institutions listed on the signature pages hereto (the "BANKS"),
and Texas Commerce Bank National Association, a national banking association,
in its capacity as Agent (the "AGENT") and in its individual capacity as a
Bank hereunder ("TCB"). For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in that certain
Revolving Credit Agreement dated as of June 26, 1997 by and among the
Borrowers, the Banks and the Agent (as amended, the "CREDIT AGREEMENT").
SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT. Subject to
Section 5 hereof, the Credit Agreement is hereby amended as follows:
(a) Section 9.6 is hereby amended by inserting the following sentence
at the end thereof:
"Upon the occurrence and during the continuance of
a Default or Event of Default, any expenses incurred by
the Agent or any Bank pursuant to this Section 9.6
shall be for the account of the Borrowers."
(b) Section 13.3 is hereby amended by inserting the following
sentence after the first sentence thereof:
"Upon the occurrence and during the continuance of
a Default or Event of Default, the Borrowers shall also
reimburse the Banks for any such type of fees and
expenses incurred by any Bank."
(c) "Exhibit A" to the Credit Agreement is hereby amended by
including therein in proper alphabetical order the following
definition:
"FRANCHISE AGREEMENTS" shall mean the dealer sales
and service agreement(s) entered into by and between
the manufacturer(s) and the Borrower(s), as amended
from time to time.
<PAGE>
(d) "Exhibit E" to the Credit Agreement is hereby amended in its
entirety to provide as set forth on "Exhibit E" attached hereto.
(e) "Exhibit F" to the Credit Agreement is hereby amended in its
entirety to provide as set forth on "Exhibit F" attached hereto.
SECTION 4. COMMITMENTS.
(a) Subject to Section 5 hereof, from the date hereof the financial
institutions listed on the signature pages hereto are the "Banks"
with the respective Commitments listed opposite their signatures.
(b) All notices in connection with the Credit Agreement shall be
given in accordance with SECTION 13.4 of the Credit Agreement.
The address of the Banks for notices hereunder and thereunder,
together with payment instructions for amounts to be paid by the
Agent to each Bank under the Credit Agreement, shall be initially
as set forth on the signature pages hereof.
(c) Commitment Fees accrued to the date hereof are for the account of
TCB and such fees accruing from and including the date hereof are
for the account of the Banks, based upon their Pro Rata
Percentage of the aggregate Commitment.
(d) All payments of principal of and accrued interest on the Loans
and fees are to be made by the Borrowers to the Agent; the Agent
shall divide such payments among the Banks as their interests may
appear, with all interest accruing on the Loans and fees of the
Assignor prior to the date hereof to belong to TCB. Each Bank
hereby agrees that if it receives any amount from the Borrowers
under the Loan Documents which is for the account of the other
party hereto, it shall receive the same for the account of such
other party to the extent of such other party's interest therein
and shall promptly pay the same to such other party.
SECTION 5. CONDITIONS TO EFFECTIVENESS. This Amendment shall
become effective as of August 7, 1997 upon the satisfaction of the following
conditions precedent:
(a) the Agent shall receive original execution copies of this
Amendment, executed and delivered by the parties hereto;
(b) the Borrowers shall have executed and delivered to each Bank a
Note in the respective amount of such Bank's Commitment;
-2-
<PAGE>
(c) each Bank (other than TCB) shall deliver to TCB, in immediately
available funds, such Bank's Pro Rata Percentage of the
Commitment of the outstanding principal balance of the Loans; and
(d) to the extent set forth in SECTION 13.11(c) of the Credit
Agreement, this Amendment is conditioned upon the payment of the
assignment fees to the Agent.
SECTION 6. RATIFICATION OF LOAN DOCUMENTS. The Credit
Agreement, as amended hereby, and each other Loan Document is hereby ratified
and confirmed to be in full force and effect. Each reference in a Loan
Document to the "Credit Agreement" shall be deemed a reference to the Credit
Agreement as amended hereby.
SECTION 7. LIMITATIONS. The amendments set forth herein are
limited precisely as written and shall not be deemed to (a) be a consent to,
or waiver or modification of, any other term or condition of the Credit
Agreement or any of the Loan Documents, or (b) prejudice any right or rights
which the Agent and the Banks may now have or may have in the future under or
in connection with the Credit Agreement, the Loan Documents or any of the
other documents referred to therein. Except as expressly modified hereby,
the terms and provisions of the Credit Agreement, the Notes and any other
Loan Documents or any other documents or instruments executed in connection
with any of the foregoing are and shall remain in full force and effect. In
the event of a conflict between the Amendment and any of the foregoing
documents, the terms of this Amendment shall be controlling.
SECTION 8. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
Borrowers hereby represent and warrant that on and as of the date hereof, and
after giving effect hereto: (i) the representations and warranties of the
Borrowers made in Section 7 of the Credit Agreement (other than those
representations and warranties limited by their terms to a specific date)
shall be true and correct; and (ii) no Default or Event of Default shall have
occurred and be continuing.
SECTION 9. PAYMENT OF EXPENSES. The Borrowers jointly and
severally agree, whether or not the transactions hereby contemplated shall be
consummated, to reimburse and save the Agent and the Banks harmless from and
against liability for the payment of all reasonable out-of-pocket costs and
expenses arising in connection with the preparation, execution, delivery,
waiver and enforcement of, or the preservation of any rights under this
Amendment. The provisions of this Section 9 shall survive the termination of
the Credit Agreement and the repayment of the Loans.
SECTION 10. CHOICE OF LAW. The Amendment and the rights and
obligations of the parties hereunder and under the Credit Agreement shall be
construed in accordance with and be governed by the laws of the State of
Texas and the United States of America. This Amendment is a Loan Document.
-3-
<PAGE>
SECTION 11. DESCRIPTIVE HEADINGS. The descriptive headings of
the several Sections of this Amendment are inserted for convenience only and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
SECTION 12. ENTIRE AGREEMENT. The Amendment and the documents
referred to herein represent the entire understanding of the parties hereto
regarding the subject matter hereof and supersede all prior and
contemporaneous oral and written agreements of the parties hereto with
respect to the subject matter hereof.
SECTION 13. COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by parties hereto on separate counterparts, each
counterpart, when so executed and delivered, constitute an original
instrument, and all such counterparts shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and authorized by their respective officers as of August 7,
1997.
CROSS-CONTINENT AUTO
RETAILERS, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
QUALITY NISSAN, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
MIDWAY CHEVROLET, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
-4-
<PAGE>
PLAINS CHEVROLET, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
WESTGATE CHEVROLET, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
WORKING MAN'S CREDIT PLAN, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
ALLIED 2000 COLLISION CENTER, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
CROSS-COUNTRY DODGE, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
-5-
<PAGE>
C-CAR AUTO WHOLESALERS, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
DOUGLAS TOYOTA, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
TOYOTA WEST SALES & SERVICE, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
SAHARA IMPORTS, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
SAHARA NISSAN, INC.
By:
--------------------------------------------
Name: James F. Purser
Title: Chief Financial Officer
-6-
<PAGE>
COMMITMENT: TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as a
$22,500,000 Bank and as Agent
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
$7,500,000.00 AMARILLO NATIONAL BANK
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Address:
4th and Taylor
Amarillo, Texas 79101
Attention: Gregg Jordan
Telefax: (806) 378-8234
Send payments to:
Amarillo National Bank
ABA#: 111 300 958
For Credit To: Commercial Loan # 7000015181
Attention: Gregg Jordan
Reference: Cross-Continent Auto Retailers, Inc.
$5,000,000.00 THE BANK OF TOKYO-MITSUBISHI, LTD.,
HOUSTON AGENCY
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
-7-
<PAGE>
Address:
1100 Louisiana Street, Suite 2800
Houston, TX 77002
Attention: Mike Innes
Telefax: (713) 658-0116
Send payments to:
The Bank of Tokyo-Mitsubishi, Ltd.,
New York Branch
via CHIPS ABA# 0963
BTM Houston CHIPS UID# 251015
via FED ABA# 026009632
For Credit To: The Bank of Tokyo-Mitsubishi,
Ltd., Houston Agency A/C # 30001710.
$5,000,000.00 U.S. BANK
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Address:
10800 NE 8th, Suite 900
Bellevue, WA 98004
Attention: Linda Whitcomb
Telefax: (425) 450-5733
Send payments to:
U.S. Bank
ABA#: 5418-0010 Acct. # 4183 1111079
For Credit To: Cross-Continent Auto
Retailers, Inc.
Attention: Linda Whitcomb (425) 450-5814
-8-
<PAGE>
EXHIBIT "E"
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This Assignment and Acceptance Agreement (this "Agreement") dated as
of ___________, 199___, among _________________ (the "Assignor");
______________________ (the "Assignee"); and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Agent under the Revolving Credit Agreement (herein referred
to as the "Agent");
W I T N E S S E T H:
WHEREAS, the Agent, the financial institutions then or thereafter
party thereto (collectively, the "Banks") and the Borrowers have executed and
delivered that certain Revolving Credit Agreement (as amended, modified,
supplemented and restated, the "Credit Agreement") dated as of June 26, 1997;
WHEREAS, the Assignor has agreed to make Loans to the Borrowers and
participate in Letters of Credit issued for the account of the Borrowers in
accordance with the terms of the Credit Agreement, with the maximum aggregate
amount of such Loans and Letter of Credit participations made by Assignor
outstanding not to exceed the Assignor's Pro Rata Percentage of the
Commitment; and
WHEREAS, the Assignor proposes to sell and assign to the Assignee,
and the Assignee proposes to buy and accept from the Assignor, an interest
(the "Assigned Interest") in all rights and obligations of the Assignor under
the Loan Documents with the effect that, effective upon such sale and
assignment, the Assignee will have a Commitment of $________________, and a
Pro Rata Percentage of the Commitment of __________%;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Any term defined in the Credit Agreement
and used in this Agreement shall have the meaning ascribed to it in the
Credit Agreement.
SECTION 2. ASSIGNMENTS. The Assignor hereby assigns and sells,
without recourse or warranty except as specifically set forth herein, to the
Assignee the Assigned Interest in all rights and obligations of the Assignor
under the Loan Documents. The Assignee hereby purchases and accepts from the
Assignor all of such rights and obligations of the Assignor, including the
corresponding portion of the principal amount of the Loans and the principal
amount of Letter of Credit participations made by the Assignor outstanding on
the date hereof. As of the date hereof, and after giving effect to the sale
and assignment of the Assigned Interest to the Assignee, the Assignee's
outstanding principal balance of such Loans and Letter of Credit
participations is
-1-
<PAGE>
$__________. Subject to the execution and delivery hereof by the Assignor,
the Assignee, and the Agent, on the date hereof (a) the Assignee shall
succeed to the rights and be obligated to perform the obligations of a Bank
under the Loan Documents with a Pro Rata Percentage of the Commitment of
____________%, and shall be considered a Bank for all purposes; (b) the
Assignee shall deliver to the Assignor, in immediately available funds, the
Assignee's Pro Rata Percentage of the Commitment of the outstanding principal
balance of the Loans, and (c) the Pro Rata Percentage of the Commitment of
the Assignor as of the date hereof shall be reduced by the Pro Rata
Percentage of the Commitment acquired by the Assignee and the Assignor shall
be released from its obligations under the Loan Documents which have been so
assigned to and accepted by the Assignor.
SECTION 3. PAYMENTS. Commitment Fees and Letter of Credit Fees
accrued to the date hereof with respect to the Assignor's Pro Rata Percentage
of the Commitments pursuant to SECTIONS 5.1 AND 5.3 of the Credit Agreement
are for the account of the Assignor and such fees accruing from and including
the date hereof with respect to the Assigned Interest are for the account of
the Assignee. All payments of principal of and accrued interest on the Loans
are to be made by the Borrowers to the Agent; the Agent shall divide such
payments among the Banks as their interests may appear, with all interest
accruing on the Loans of the Assignor prior to the date hereof to belong to
the Assignor. Each of the Assignor and the Assignee hereby agrees that if it
receives any amount from the Borrowers under the Loan Documents which is for
the account of the other party hereto, it shall receive the same for the
account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party. The rights of
the Assignor and the Assignee under this Section 3 are in addition to other
rights and remedies which the Assignor, the Assignee or any other Bank may
have.
SECTION 4. CONSENT OF THE AGENT; PROCEDURE. To the extent set forth
in SECTION 13.11(c) of the Credit Agreement, this Agreement is conditioned
upon the consent of the Agent and the Parent and the payment of an assignment
fee to the Agent. The execution of this Agreement by the Agent and the
Parent is evidence of this consent and payment of the assignment fee.
Pursuant to SECTION 13.11(f) of the Credit Agreement, the Assignor agrees to
deliver its current Notes to the Parent, marked "Replaced" or its equivalent
for the purposes therein provided.
SECTION 5. THE ASSIGNOR. The Assignor (a) represents and warrants
to the Assignee that it is the legal and beneficial owner of the interest
being assigned by the Assignor to the Assignee hereunder and (b) makes no
representation or warranty and assumes no responsibility with respect to (1)
any statements, warranties or representations made in or in connection with
any Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Loan Document and (2) the financial
condition of the Borrowers or the performance or observance by any Borrower
of any of its obligations under any Loan Document.
SECTION 6. THE ASSIGNEE. The Assignee (a) confirms that it has
received a copy of the Credit Agreement, together with copies of the
financial statements referred to in the Credit Agreement and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Agreement; (b) agrees that it will,
independently and
-2-
<PAGE>
without reliance upon the Agent, the Assignor or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Loan Documents; (c) appoints and authorizes the Agent to take such
action as agent on behalf of the Assignee and to exercise such powers under
the Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; and (d)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Bank.
SECTION 7. NOTICES AND PAYMENT INSTRUCTIONS. All notices in
connection herewith shall be given in accordance with SECTION 13.4 of the
Credit Agreement. The address of the Assignee for notices hereunder and
thereunder, together with payment instructions for amounts to be paid to the
Assignee under the Credit Agreement, shall be initially as set forth on the
signature pages hereof.
SECTION 8. MISCELLANEOUS. This Agreement (a) shall be binding upon
and inure to the benefit of the Assignor, the Assignee, all of the Banks
(whether now or hereafter party to the Credit Agreement), and the Agent, and
their respective successors, assigns, receivers and trustees; (b) may be
modified or amended only by a writing signed by each of the parties hereto;
(c) shall be governed by and construed in accordance with the laws of the
State of Texas and the United States of America; (d) may be executed in
several counterparts, and by the parties hereto on separate counterparts, and
each counterpart, when so executed and delivered, shall constitute an
original agreement, and all such separate counterparts shall constitute but
one and the same agreement; (e) embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof
and supersedes all prior agreements, consents and understandings relating to
such subject matter, and (f) is a Loan Document. The headings herein shall
be accorded no significance in interpreting this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
ASSIGNOR:
[ ]
---------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-3-
<PAGE>
ASSIGNEE:
[ ]
---------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
Attention:
-----------------------------
Telefax:
-------------------------------
Send payments to:
----------------------------------------
----------------------------------------
ABA#
-----------------------------------
For Credit To:
-------------------------
Attention:
-----------------------------
Reference:
-----------------------------
-4-
<PAGE>
FOR PURPOSES OF SECTION 4 ONLY:
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CROSS-CONTINENT AUTO RETAILERS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-5-
<PAGE>
EXHIBIT "F"
LETTER OF CREDIT REQUEST
_______________, 19__
Texas Commerce Bank National Association, as Agent
712 Main
Houston, Texas 77002
Attention: _______________
Gentlemen:
Reference is made to that certain Revolving Credit Agreement dated
as of June 26, 1997 (as amended, the "Credit Agreement") executed by and
among Texas Commerce Bank National Association, individually and as Agent,
the other banks or financial institutions which are or may become a party
thereto in accordance with the terms thereof (collectively, the "Banks"), and
the Borrowers. Capitalized terms which are used but not defined herein shall
have the respective meanings assigned to such terms in the Credit Agreement.
The Parent (on behalf of the Borrowers) hereby requests the issuance
of a Letter of Credit under the Credit Agreement, and in that connection sets
forth below the information relating to such Letter of Credit ("Proposed
Letter of Credit") as required by Section 2.4 of the Credit Agreement. As
more fully set forth in the Application for Irrevocable Stand-by Letter of
Credit attached hereto as EXHIBIT I, the Proposed Letter of Credit must be
issued:
(a) on or before _______________, 19__(1);
(b) for the benefit of __________________;
(c) in the amount of $_____________(2);
(d) having an expiry date of __________, 19__(3); and which is
- -----------------
(1) Which must be not later than 30 days prior to the scheduled Maturity Date
and not less than five (5) Business Days after notice is given to the
Agent.;
(2) Which must not be less than $50,000.;
(3) Which shall not be a date later than 12 months from the issuance
date.
-1-
<PAGE>
(e) subject to the conditions set forth in the Application attached
hereto.
OR
The Parent hereby refers to Letter of Credit Number _____ (the
"Expiring Letter of Credit") which has an existing expiry date of __________.
The Parent (on behalf of the Borrowers) hereby requests that [the expiry date of
the Expiring Letter of Credit be extended to __________3]. [The Banks permit
the expiry date of the Expiring Letter of Credit to be extended to
_____________3].
The Parent hereby certifies that after giving effect to the
[issuance of the Proposed Letter of Credit] or
[the extension of the Expiring Letter of Credit]:
(a) the Stated Amount of such Letter of Credit shall not be greater
than an amount which when added to the Letter of Credit Outstandings at
such time and the aggregate principal amount of all Loans then outstanding
(after giving effect to the principal amount of all Loans repaid and all
Unpaid Drawings reimbursed prior to or concurrently with the issuance of
such Letter of Credit) would exceed the Commitments of all the Banks (after
giving effect to any reductions to the Commitments of all the Banks on such
date); and
(b) the Stated Amount of such Letter of Credit shall not be greater
than an amount which when added to the Letter of Credit Outstandings at
such time (after giving effect to all Unpaid Drawings reimbursed prior to
or concurrently with the issuance of such Letter of Credit), would exceed
the Letter of Credit Limit.
The Parent hereby further certifies that:
(a) on the date hereof all applicable conditions to the [issuance of
the Proposed Letter of Credit] [extension of the Expiring Letter of Credit]
set forth in the Credit Agreement have been satisfied and that the
[Proposed Letter of Credit] [the Expiring Letter of Credit as extended]
complies with the terms of the Credit Agreement;
(b) as of the date hereof and as a result of the [issuance of the
Proposed Letter of Credit] [the extension of the Expiring Letter of
Credit], there does not and will not exist any Default or Event of Default;
(c) the representations and warranties of the Borrowers contained in
the Loan Documents (other than those representations and warranties limited
by their terms to a specific date) are true and correct in all material
respects as of the date hereof and shall be true and correct upon the
[issuance of the Proposed Letter of Credit] [the extension of the Expiring
Letter of Credit], with the same force and effect as though made on and as
of the date hereof and thereof; and
-2-
<PAGE>
(d) no event has occurred since the date of the most recent financial
statements provided to the Agent dated as of __________, 199_ that has
caused a Material Adverse Effect.
Upon the [issuance of the Proposed Letter of Credit]
[extension of the Expiring Letter of Credit], the Parent will be deemed to
have recertified the foregoing on such issuance date or extension date, as
the case may be.
EXECUTED AND DELIVERED this _____ day of __________, 199_.
CROSS-CONTINENT AUTO RETAILERS, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-3-
<PAGE>
Exhibit 10.32.2
REVOLVING NOTE
$22,500,000.00 August 7, 1997
FOR VALUE RECEIVED, the undersigned, (collectively, the "Borrowers"),
HEREBY JOINTLY AND SEVERALLY PROMISE TO PAY to the order of Texas Commerce Bank
National Association (the "Bank"), on or before the Maturity Date, the lesser of
(i) principal sum of Twenty-Two Million Five Hundred Thousand and No/100 Dollars
($22,500,000.00) or (ii) the amount outstanding hereunder as of such date, in
accordance with the terms and provisions of that certain Revolving Credit
Agreement dated as of June 26, 1997 by and among the Borrowers, Texas Commerce
Bank National Association, as Agent, the Bank, and the other parties thereto (as
same may be amended, modified, increased, supplemented and/or restated from time
to time, the "Credit Agreement"; capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Credit
Agreement).
The outstanding principal balance of this Note shall be due and
payable on the Maturity Date and as otherwise provided in the Credit Agreement.
The Borrowers jointly and severally promise to pay interest on the unpaid
principal balance of this Note from the date of any Loan evidenced by this Note
until the principal balance thereof is paid in full. Interest shall accrue on
the outstanding principal balance of this Note from and including the date of
any Loan evidenced by this Note to but not including the Maturity Date at the
rate or rates, and shall be due and payable on the dates, set forth in the
Credit Agreement.
Payments of principal and interest, and all amounts due with respect
to costs and expenses, shall be made in lawful money of the United States of
America in immediately available funds, without deduction, set-off or
counterclaim to the Agent not later than 11:30 a.m. (Houston time) on the dates
on which such payments shall become due pursuant to the terms and provisions set
forth in the Credit Agreement.
If any payment of principal or interest on this Note shall become due
on a Saturday, Sunday, or public holiday on which the Agent is not open for
business, such payment shall be made on the next succeeding Business Day and
such extension of time shall in such case be included in computing interest in
connection with such payment.
In addition to all principal and accrued interest on this Note, the
Borrowers jointly and severally agree to pay (a) all costs and expenses incurred
by all owners and holders of this Note in collecting this Note through any
probate, reorganization, bankruptcy or any other proceeding and (b) reasonable
attorneys' fees when and if this Note is placed in the hands of an attorney for
collection after default.
-1-
<PAGE>
The Borrowers and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, protest, notice of protest, notice of intent to accelerate, notice of
acceleration and diligence in collecting and bringing of suit against any party
hereto, and agree to all renewals, extensions or partial payments hereon and to
any release or substitution of security hereof, in whole or in part, with or
without notice, before or after maturity.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.
This Note is in amendment and restatement of that certain Revolving
Note dated as of July 1, 1997.
IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
and delivered by their respective officers thereunto duly authorized effective
as of the date first above written.
CROSS-CONTINENT AUTO RETAILERS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
QUALITY NISSAN, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-2-
<PAGE>
MIDWAY CHEVROLET, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PLAINS CHEVROLET, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
WESTGATE CHEVROLET, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
WORKING MAN'S CREDIT PLAN, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-3-
<PAGE>
ALLIED 2000 COLLISION CENTER, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
CROSS-COUNTRY DODGE, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
C-CAR AUTO WHOLESALERS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
DOUGLAS TOYOTA, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
TOYOTA WEST SALES & SERVICE, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-4-
<PAGE>
SAHARA IMPORTS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SAHARA NISSAN, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-5-
<PAGE>
Exhibit 10.32.3
REVOLVING NOTE
$7,500,000.00 August 7, 1997
FOR VALUE RECEIVED, the undersigned, (collectively, the "Borrowers"),
HEREBY JOINTLY AND SEVERALLY PROMISE TO PAY to the order of Amarillo National
Bank (the "Bank"), on or before the Maturity Date, the lesser of (i) principal
sum of Seven Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00) or
(ii) the amount outstanding hereunder as of such date, in accordance with the
terms and provisions of that certain Revolving Credit Agreement dated as of June
26, 1997 by and among the Borrowers, Texas Commerce Bank National Association,
as Agent, the Bank, and the other parties thereto (as same may be amended,
modified, increased, supplemented and/or restated from time to time, the "Credit
Agreement"; capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to such terms in the Credit Agreement).
The outstanding principal balance of this Note shall be due and
payable on the Maturity Date and as otherwise provided in the Credit Agreement.
The Borrowers jointly and severally promise to pay interest on the unpaid
principal balance of this Note from the date of any Loan evidenced by this Note
until the principal balance thereof is paid in full. Interest shall accrue on
the outstanding principal balance of this Note from and including the date of
any Loan evidenced by this Note to but not including the Maturity Date at the
rate or rates, and shall be due and payable on the dates, set forth in the
Credit Agreement.
Payments of principal and interest, and all amounts due with respect
to costs and expenses, shall be made in lawful money of the United States of
America in immediately available funds, without deduction, set-off or
counterclaim to the Agent not later than 11:30 a.m. (Houston time) on the dates
on which such payments shall become due pursuant to the terms and provisions set
forth in the Credit Agreement.
If any payment of principal or interest on this Note shall become due
on a Saturday, Sunday, or public holiday on which the Agent is not open for
business, such payment shall be made on the next succeeding Business Day and
such extension of time shall in such case be included in computing interest in
connection with such payment.
In addition to all principal and accrued interest on this Note, the
Borrowers jointly and severally agree to pay (a) all costs and expenses incurred
by all owners and holders of this Note in collecting this Note through any
probate, reorganization, bankruptcy or any other proceeding and
-1-
<PAGE>
(b) reasonable attorneys' fees when and if this Note is placed in the hands
of an attorney for collection after default.
The Borrowers and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, protest, notice of protest, notice of intent to accelerate, notice of
acceleration and diligence in collecting and bringing of suit against any party
hereto, and agree to all renewals, extensions or partial payments hereon and to
any release or substitution of security hereof, in whole or in part, with or
without notice, before or after maturity.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.
This Note is in amendment and restatement of that certain Revolving
Note dated as of July 1, 1997.
IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
and delivered by their respective officers thereunto duly authorized effective
as of the date first above written.
CROSS-CONTINENT AUTO RETAILERS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
QUALITY NISSAN, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-2-
<PAGE>
MIDWAY CHEVROLET, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PLAINS CHEVROLET, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
WESTGATE CHEVROLET, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
WORKING MAN'S CREDIT PLAN, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-3-
<PAGE>
ALLIED 2000 COLLISION CENTER, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
CROSS-COUNTRY DODGE, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
C-CAR AUTO WHOLESALERS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
DOUGLAS TOYOTA, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
TOYOTA WEST SALES & SERVICE, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-4-
<PAGE>
SAHARA IMPORTS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SAHARA NISSAN, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-5-
<PAGE>
EXHIBIT 10.32.4
REVOLVING NOTE
$5,000,000.00 August 7, 1997
FOR VALUE RECEIVED, the undersigned, (collectively, the
"Borrowers"), HEREBY JOINTLY AND SEVERALLY PROMISE TO PAY to the order of
Bank of Tokyo-Mitsubishi, Ltd., Houston Agency (the "Bank"), on or before the
Maturity Date, the lesser of (i) principal sum of Five Million and No/100
Dollars ($5,000,000.00) or (ii) the amount outstanding hereunder as of such
date, in accordance with the terms and provisions of that certain Revolving
Credit Agreement dated as of June 26, 1997 by and among the Borrowers, Texas
Commerce Bank National Association, as Agent, the Bank, and the other parties
thereto (as same may be amended, modified, increased, supplemented and/or
restated from time to time, the "Credit Agreement"; capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to
such terms in the Credit Agreement).
The outstanding principal balance of this Note shall be due and
payable on the Maturity Date and as otherwise provided in the Credit
Agreement. The Borrowers jointly and severally promise to pay interest on the
unpaid principal balance of this Note from the date of any Loan evidenced by
this Note until the principal balance thereof is paid in full. Interest
shall accrue on the outstanding principal balance of this Note from and
including the date of any Loan evidenced by this Note to but not including
the Maturity Date at the rate or rates, and shall be due and payable on the
dates, set forth in the Credit Agreement.
Payments of principal and interest, and all amounts due with respect
to costs and expenses, shall be made in lawful money of the United States of
America in immediately available funds, without deduction, set-off or
counterclaim to the Agent not later than 11:30 a.m. (Houston time) on the
dates on which such payments shall become due pursuant to the terms and
provisions set forth in the Credit Agreement.
If any payment of principal or interest on this Note shall become
due on a Saturday, Sunday, or public holiday on which the Agent is not open
for business, such payment shall be made on the next succeeding Business Day
and such extension of time shall in such case be included in computing
interest in connection with such payment.
In addition to all principal and accrued interest on this Note, the
Borrowers jointly and severally agree to pay (a) all costs and expenses
incurred by all owners and holders of this Note in collecting this Note
through any probate, reorganization, bankruptcy or any other proceeding and
(b) reasonable attorneys' fees when and if this Note is placed in the hands
of an attorney for collection after default.
-1-
<PAGE>
The Borrowers and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, protest, notice of protest, notice of intent to accelerate, notice
of acceleration and diligence in collecting and bringing of suit against any
party hereto, and agree to all renewals, extensions or partial payments
hereon and to any release or substitution of security hereof, in whole or in
part, with or without notice, before or after maturity.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.
This Note is in amendment and restatement of that certain Revolving
Note dated as of July 1, 1997.
IN WITNESS WHEREOF, the Borrowers have caused this Note to be
executed and delivered by their respective officers thereunto duly authorized
effective as of the date first above written.
CROSS-CONTINENT AUTO RETAILERS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
QUALITY NISSAN, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
-2-
<PAGE>
MIDWAY CHEVROLET, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
PLAINS CHEVROLET, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
WESTGATE CHEVROLET, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
WORKING MAN'S CREDIT PLAN, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
-3-
<PAGE>
ALLIED 2000 COLLISION CENTER, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
CROSS-COUNTRY DODGE, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
C-CAR AUTO WHOLESALERS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
DOUGLAS TOYOTA, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
TOYOTA WEST SALES & SERVICE, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
-4-
<PAGE>
SAHARA IMPORTS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
SAHARA NISSAN, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
-5-
<PAGE>
Exhibit 10.32.5
REVOLVING NOTE
$5,000,000.00 August 7, 1997
FOR VALUE RECEIVED, the undersigned, (collectively, the
"Borrowers"), HEREBY JOINTLY AND SEVERALLY PROMISE TO PAY to the order of
U.S. Bank (the "Bank"), on or before the Maturity Date, the lesser of (i)
principal sum of Five Million and No/100 Dollars ($5,000,000.00) or (ii) the
amount outstanding hereunder as of such date, in accordance with the terms
and provisions of that certain Revolving Credit Agreement dated as of June
26, 1997 by and among the Borrowers, Texas Commerce Bank National
Association, as Agent, the Bank, and the other parties thereto (as same may
be amended, modified, increased, supplemented and/or restated from time to
time, the "Credit Agreement"; capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Credit
Agreement).
The outstanding principal balance of this Note shall be due and
payable on the Maturity Date and as otherwise provided in the Credit
Agreement. The Borrowers jointly and severally promise to pay interest on the
unpaid principal balance of this Note from the date of any Loan evidenced by
this Note until the principal balance thereof is paid in full. Interest
shall accrue on the outstanding principal balance of this Note from and
including the date of any Loan evidenced by this Note to but not including
the Maturity Date at the rate or rates, and shall be due and payable on the
dates, set forth in the Credit Agreement.
Payments of principal and interest, and all amounts due with respect
to costs and expenses, shall be made in lawful money of the United States of
America in immediately available funds, without deduction, set-off or
counterclaim to the Agent not later than 11:30 a.m. (Houston time) on the
dates on which such payments shall become due pursuant to the terms and
provisions set forth in the Credit Agreement.
If any payment of principal or interest on this Note shall become
due on a Saturday, Sunday, or public holiday on which the Agent is not open
for business, such payment shall be made on the next succeeding Business Day
and such extension of time shall in such case be included in computing
interest in connection with such payment.
In addition to all principal and accrued interest on this Note, the
Borrowers jointly and severally agree to pay (a) all costs and expenses
incurred by all owners and holders of this Note in collecting this Note
through any probate, reorganization, bankruptcy or any other proceeding and
(b) reasonable attorneys' fees when and if this Note is placed in the hands
of an attorney for collection after default.
-1-
<PAGE>
The Borrowers and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, protest, notice of protest, notice of intent to accelerate, notice
of acceleration and diligence in collecting and bringing of suit against any
party hereto, and agree to all renewals, extensions or partial payments
hereon and to any release or substitution of security hereof, in whole or in
part, with or without notice, before or after maturity.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.
This Note is in amendment and restatement of that certain Revolving
Note dated as of July 1, 1997.
IN WITNESS WHEREOF, the Borrowers have caused this Note to be
executed and delivered by their respective officers thereunto duly authorized
effective as of the date first above written.
CROSS-CONTINENT AUTO RETAILERS, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
QUALITY NISSAN, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
-2-
<PAGE>
MIDWAY CHEVROLET, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
PLAINS CHEVROLET, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
WESTGATE CHEVROLET, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
WORKING MAN'S CREDIT PLAN, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
-3-
<PAGE>
ALLIED 2000 COLLISION CENTER, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
CROSS-COUNTRY DODGE, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
C-CAR AUTO WHOLESALERS, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
DOUGLAS TOYOTA, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
TOYOTA WEST SALES & SERVICE, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
-4-
<PAGE>
SAHARA IMPORTS, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
SAHARA NISSAN, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
-5-
<PAGE>
Exhibit 10.34
JOINDER AGREEMENT
This JOINDER AGREEMENT (this "JOINDER AGREEMENT") is dated effective as of
July 1, 1997, and is executed and delivered by SAHARA NISSAN, INC. (the "JOINING
BORROWER"), a Nevada corporation, to TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a
national banking association, AS AGENT ON BEHALF OF BANKS (in such capacity,
together with its successors in such capacity, the "AGENT").
W I T N E S S E T H:
RECITALS:
1. Cross-Continent Auto Retailers, Inc., a Delaware corporation
("PARENT"), of which the Joining Borrower is a Subsidiary (together with the
other Borrowers thereto), has entered into that certain Revolving Credit
Agreement dated as of June 26, 1997 (as amended, modified, restated and
supplemented from time to time, the "CREDIT AGREEMENT") with Agent and certain
financial institutions which are signatories thereto or which may become a party
thereto from time to time.
2. Pursuant to the terms of the Credit Agreement, the Joining Borrower is
now required, among other things and subject to certain terms and conditions
thereof, to join in the execution and delivery to Agent on behalf of Banks and
the Issuing Bank of (a) a new Note, in amendment and restatement of the existing
Note and (b) the Credit Agreement and the other Loan Documents, by its execution
and delivery of this Joinder Agreement and otherwise by such action as Agent or
any Bank may reasonably require.
3. In order to comply with such requirement, the Joining Borrower
executes and delivers this Joinder Agreement.
AGREEMENTS:
Now, in consideration of the credit and financial accommodations extended
and to be extended to the Borrowers pursuant to the Credit Agreement and the
other Loan Documents or otherwise, which Joining Borrower hereby agrees have and
shall continue to benefit Joining Borrower and its shareholders, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Joining Borrower hereby agrees, assumes, ratifies, joins and
acknowledges as follows:
1. ASSUMPTION. Joining Borrower hereby unconditionally, jointly and
severally, assumes liability for all covenants, warranties,
representations, indemnifications, obligations and other Debt of the
Borrowers now existing or which may hereafter arise under the Loan
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Documents and shall be liable therefor as though Joining Borrower had
originally been a party to the Loan Documents. Without limitation of the
foregoing, Joining Borrower, as a primary obligor and not as a surety,
unconditionally, jointly and severally, shall be liable unto Agent for the
benefit of Banks and the Issuing Bank for the payment of the Debt of
Borrowers under the Loan Documents when due (whether at the stated
maturity, by acceleration or otherwise) in accordance with the terms of the
Loan Documents.
2. TERMS RATIFIED. Joining Borrower hereby expressly ratifies all
terms, covenants, representations, warranties, agreements, provisions,
indemnifications, WAIVERS, RELEASES, restrictions, duties and
responsibilities of Borrowers under the Loan Documents and agrees that they
shall apply to Joining Borrower as if Joining Borrower had executed the
Loan Documents, and that any reference to "Borrowers" or a "Borrower"
contained in the Credit Agreement or any other Loan Documents shall mean,
without limitations, the Joining Borrower.
3. REPRESENTATIONS. Joining Borrower (a) confirms that it has
received a copy of the Loan Documents, together with such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Joinder Agreement; (b) agrees that
it will, independently and without reliance upon Agent or any Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, and (c) represents that the value of the
consideration received and to be received by Joining Borrower is reasonably
worth at least as much as the liability and obligation of such Joining
Borrower hereunder, and that such liability and obligation may reasonably
be expected to benefit Joining Borrower directly or indirectly. The Board
of Directors of Joining Borrower has duly adopted resolutions certifying
that the execution, delivery and performance of this Joinder Agreement (and
the effect thereof) will benefit Joining Borrower and its shareholders.
4. NO IMPAIRMENT. Nothing herein shall in any manner impair or
extinguish any of the other Loan Documents or any lien or security interest
now or hereafter securing the payment of any of the Debt arising pursuant
to the Loan Documents.
5. CONDITIONS. This Joinder Agreement shall not become effective
until Agent has received each of the following:
(a) an Officer's Certificate of Joining Borrower, in form and
substance reasonably satisfactory to Agent, dated as of the date
hereof, as to (i) the resolutions of the Board of Directors (or
similar governing body) of the Joining Borrower authorizing the
execution, delivery and performance of this Joinder Agreement and of
all instruments contemplated herein to be executed and delivered by
Joining Borrower in connection herewith (a copy of such resolutions to
be incorporated into
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such certificate), such certificate to state that said copy is a
true and correct copy of such resolutions and that such resolutions
were duly adopted and have not been amended, superseded, revoked or
modified in any respect and remain in full force and effect as of
the date of such certificate; (ii) the election, incumbency and
signatures of the officer or officers (or other official) of Joining
Borrower executing and delivering this Joinder Agreement and each
other instrument or document furnished in connection herewith; (iii)
Joining Borrower's organizational documents in effect as of the date
hereof (a copy thereof to be attached to the certificate), and (iv)
such other documents and information as Agent or any Bank shall
reasonably request;
(b) a legal opinion from the legal counsel for Joining Borrower
acceptable to Agent, in form, substance and scope reasonably
satisfactory to Agent;
(c) a new Note dated as of the date hereof, in amendment and
restatement, but not novation, of the existing Note, to which all
existing Borrowers and Joining Borrower are parties, in form and
substance reasonably satisfactory to Agent;
(d) unless such action is prohibited by the applicable
Franchise Agreement, an amendment to the Pledge Agreement dated as of
the date hereof pledging all outstanding shares of Joining Borrower,
in form and substance reasonably satisfactory to Agent;
(e) a certificate from the appropriate public official of each
jurisdiction in which Joining Borrower is organized as to the
continued existence and good standing of Joining Borrower;
(f) a certificate from the appropriate public official of each
jurisdiction in which Joining Borrower is authorized and qualified to
do business as to the due qualification and good standing of Joining
Borrower unless failure is not reasonably likely to have a Material
Adverse Effect; and
(g) certified copies of Requests for Information of Copies
(Form UCC-11), or equivalent reports, listing all effective financing
statements which name Joining Borrower (under its present name, any
trade names and any previous names) as debtor and which are filed,
together with copies of all such financing statements.
6. GOVERNING LAW. UNLESS OTHERWISE SPECIFIED THEREIN, THIS JOINDER
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA.
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7. SURVIVAL; PARTIES BOUND. All representations, warranties,
covenants and agreements made by or on behalf of the Joining Borrower in
connection herewith shall survive the execution and delivery of this
Joinder Agreement and the other Loan Documents, shall not be affected by
any investigation made by any Person, and shall bind the Joining Borrower
and its successors, trustees, receivers and assigns and inure to the
benefit of the successors and assigns of Agent and Banks. The term of this
Joinder Agreement shall be until the termination of the Credit Agreement as
to all parties.
8. CAPTIONS. The headings and captions appearing in this Joinder
Agreement have been included solely for convenience and shall not be
considered in construing this Joinder Agreement.
9. DEFINITIONS. Terms used herein and not defined herein, but which
are defined in the Credit Agreement, shall have the meanings herein
assigned to them in the Credit Agreement.
10. PARTIES BOUND. This Joinder Agreement shall bind and benefit the
parties hereto and their respective successors and assigns, except that
Joining Borrower may not assign its rights or obligations hereunder without
the prior written consent of Agent and Banks.
11. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Joinder Agreement or by any other Loan Document, nor any consent to any
departure by the Joining Borrower therefrom, shall in any event be
effective unless the same shall be agreed or consented to by Agent, Banks
and Joining Borrower, and each such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
unless otherwise specifically provided in the Credit Agreement.
IN WITNESS WHEREOF, the Joining Borrower has executed this Agreement as of
the date set forth above.
SAHARA NISSAN, INC.
By:
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Name:
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Title:
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ATTEST:
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Name:
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Title:
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EXHIBIT 10.35.1
INTERIM CONSTRUCTION AND
MASTER LOAN AGREEMENT
THIS INTERIM CONSTRUCTION AND MASTER LOAN AGREEMENT (this "Agreement") is
entered into as of the 30th day of September, 1997 by and between Toyota West
Sales and Service, Inc., Douglas Toyota, Inc, and Cross-Continent Auto
Retailers, Inc. (collectively referred to herein as the "Borrower"), and R.
Douglas Spedding ("Lender").
WITNESSETH:
WHEREAS, Borrower is the owner of that certain tract or parcel of land
situated in Adams County, Colorado, commonly known as 7300 North Broadway,
Denver, Colorado, and more particularly described in Exhibit A attached hereto
and incorporated herein by reference for all purposes ("Parcel A"); and
WHEREAS, Borrower is the owner of that a certain tract or parcel of land
situated in Clark County, Nevada, and more particularly described by metes and
bounds on Exhibit B attached hereto and incorporated herein by reference for all
purposes ("Parcel B") (Parcels A and B are referred to collectively herein as
the "Parcels"); and
WHEREAS, in connection with financing Borrower's construction on each of
the Parcels of new automobile dealership facilities, including showrooms, office
and administrative space, service bays and other lot and facility improvements
(the "Improvements"), Borrower has applied to Lender for a loan (the "Loan"),
and Lender and Borrower desire to enter into this Agreement for the purposes of
establishing the terms, conditions and agreements under which Lender is willing
to make the Loan and pursuant to which Lender will advance funds thereunder to
Borrower;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and
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conditions contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Borrower and
Lender hereby agree as follows:
ARTICLE ONE
GENERAL LOAN TERMS
1.1 COMMITMENT TO LEND.
Subject to and upon the terms, covenants and conditions hereinafter set
forth, Lender will hereafter lend to Borrower the sum of $7,400,000 (Seven
Million Four Hundred Thousand Dollars), pursuant to the terms hereof and of the
Note (hereinafter defined), which indebtedness shall be evidenced by a
promissory note (said note and any and all modifications, amendments or
extensions thereof, and any promissory notes given in replacement or
substitution therefor or in renewal, extension or modification thereof, in whole
or in part, being referred to herein as the "Note"), in form and substance
reasonably satisfactory to Lender. Notwithstanding the foregoing, or anything
to the contrary contained herein, it is understood and agreed that in no event
will Lender advance to Borrower any amount in excess of $7,400,000 for the
purpose of enabling Borrower to pay costs incurred in constructing the
Improvements upon the Parcels.
1.2 LOAN COLLATERAL.
The Note and any renewals and extensions thereof shall be secured by, among
other collateral, the following:
(a) A lien upon the Parcels, together with the Improvements and any
and all other equipment, furniture, fixtures, improvements, and attachments of
any nature whatsoever, now owned or hereafter acquired by Debtor, and located on
or used in conjunction with either of the properties described in Exhibits A and
B attached hereto; now existing or hereafter constructed or placed upon the
Parcels (the Parcels and all such improvements and other property being
sometimes referred to herein collectively as the "Mortgaged Properties"; Parcel
A and all such improvements and other property being placed thereon and referred
to herein collectively as "Mortgaged Property A"; and Parcel B and all such
improvements and other property being placed thereon and referred to herein
collectively as "Mortgaged Property B";), second only to those first liens and
deeds of trust
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recorded (i) against Parcel A in the amount of $2,000,000 in favor and for
the benefit of RDS, Inc. and (ii) against Parcel B in the amount of
$5,500,000 in favor and for the benefit of R. Douglas Spedding, which liens
shall be created and evidenced by second deeds of trust (with a security
agreement, assignment of rents and financing statement) (the "Deed of Trust")
in the amount of $7,400,000 executed by Borrower, in form and substance
reasonably satisfactory to Lender;
(b) A Security Agreement (the "Security Agreement") in favor of
Lender covering any and all equipment, furniture, fixtures, improvements, and
attachments of any nature whatsoever, now owned or hereafter acquired by Debtor,
and located on or used in conjunction with either of the properties described in
Exhibits A and B attached hereto in form and substance acceptable to Lender;
(c) All other deeds of trust, security agreements, assignments,
financing statements and other documents and instruments executed in connection
with the Loan to create, evidence or assure Lender's security for the Loan
including, but not limited to, all plans, specifications, drawings, contracts,
licenses, and permits of every kind issued or created to enable Borrower to
construct and operate the Improvements.
Items (a) through (c) of this Section 1.2, together with any other
assignments or security agreements executed in connection with the Loan, and all
modifications, renewals and extensions thereof, are sometimes collectively
referred to herein as the "Security Instruments."
1.3 LOAN.
As used herein, the term "Loan" includes: (a) the indebtedness evidenced by
the Note; (b) any and all indebtedness, obligations and liabilities arising
under or pursuant to this Agreement or any and all of the Security Instruments;
(c) all loans and advances Lender may hereafter make to Borrower hereunder and
all amounts which Lender may deem, in its sole discretion, necessary to be made
to protect the Loan Collateral; and (d) any and all renewals, modifications
and/or extensions of all or any part of the indebtedness, obligations, debts,
loans, advances and liabilities described in (a) through (d) preceding.
1.4 PROCEEDS OF THE LOAN.
The proceeds of the Loan shall be disbursed in the form of Advances
(hereinafter defined) for Borrower's costs and expenses of the development of
the Land and the construction thereon of
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all buildings and improvements (the "Improvements"), in accordance with (i)
the original budget (the "Approved Budget") submitted by Borrower to Lender,
attached hereto as Exhibit C and incorporated herein by reference for all
purposes, which Approved Budget specifies the cost by item of (a) all labor,
materials and services necessary for the development and construction of the
Improvements, and (b) all other expenses anticipated by Borrower incident to
the Loan, the Mortgaged Properties and the construction of the Improvements,
and (ii) the Plans (hereinafter defined). In the event that the actual costs
incurred by Borrower with respect to any item in the Approved Budget are less
than the amount allocated therefor, then Borrower shall be entitled to
reallocate any amounts it has saved to any other item set forth in the
Approved Budget.
1.5 PAYMENTS OF INTEREST AND PRINCIPAL.
All interest due and payable upon the Note shall be paid monthly by
Borrower to Lender on the tenth (10th) day of each month during the period that
this loan is in effect, with the full balance of principal and any remaining
interest upon the Note due and payable by Borrower to Lender upon maturity. The
interest rate shall be adjustable, set at a rate of prime plus one percent
(prime + 1%), at the prime or reference rate periodically announced by the Bank
of America and published in the Western edition of the Wall Street Journal. The
Note will mature on October 31, 1998. All payments will be applied first to
interest accrued to the date of receipt of said installment, and the balance, if
any, to the principal. Holder should give written notice to the undersigned of
each increase or decrease in the rate within ten (10) days after the effective
date of each rate adjustment.
ARTICLE TWO
CONDITIONS PRECEDENT TO THE LOAN
2.1 CONDITIONS.
Borrower shall deliver, and Lender shall not be obligated to make the Loan
unless prior to the disbursement by Lender of any funds under the Loan, Borrower
has delivered, to Lender, the duly executed and, where appropriate,
acknowledged, documents, certificates, evidence and other instruments required
herein, including without limitation, the following:
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(a) The Note;
(b) The Second Deeds of Trust on both the Parcels;
(c) The Security Agreement and such assignments as Lender deems
necessary;
(d) Financing Statements to be filed in the U.C.C. and real estate
fixture filing records of Adams County, Colorado for Mortgaged Property A;
(e) Financing Statements to be filed with the Secretary of State of
Nevada, and in the U.C.C. and real estate fixture filing records of Clark
County, Nevada for Mortgaged Property B;
(f) ALTA (Co. 87) Mortgagee Policy of Title Insurance ("Title Policy
A") issued by Land Title Guarantee Company, agent for Old Republic National
Title Insurance Company (the "Title Company"), by which the Title Company
insures Lender's ownership of a second deed of trust and lien on Mortgaged
Property A in an amount not less than $3,000,000.00, subordinate and second only
to that first lien and deed of trust recorded against Parcel A in the amount of
$2,000,000 in favor and for the benefit of RDS, Inc.; provided, however, that
(i) the restrictive covenants exception, if any, shall be endorsed "None of
Record" or shall list any restrictive covenants by volume and page number; (ii)
the tax exception shall except only to standby fees and taxes for 1997 and
subsequent years and shall be endorsed "Not Yet Due and Payable", (iii) the
survey exception shall be deleted, (iv) there shall be no exception for rights
of parties in possession; and (v) any exception for visible and apparent
easements or roads and
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highways shall be limited to those shown on the surveys furnished pursuant to
Section 2.l(h) hereof. If required by Lender, such policy shall be extended to
cover each and every advance of the Loan proceeds at the time of making such
advance;
(g) ALTA (Co. 87) Mortgagee Policy of Title Insurance ("Title Policy
B") issued by Old Republic Title Company of Nevada, agent for the Title Company,
by which the Title Company insures Lender's ownership of a second deed of trust
and lien on Mortgaged Property B in an amount not less than $4,400,000.00,
subordinate and second only to that first lien and deed of trust recorded
against Parcel B in the amount of $5,500,000 in favor and for the benefit of R.
Douglas Spedding; provided, however, that (i) the restrictive covenants
exception, if any, shall be endorsed "None of Record" or shall list any
restrictive covenants by volume and page number; (ii) the tax exception shall
except only to standby fees and taxes for 1997 and subsequent years and shall be
endorsed "Not Yet Due and Payable", (iii) the survey exception shall be deleted,
(iv) there shall be no exception for rights of parties in possession; and (v)
any exception for visible and apparent easements or roads and highways shall be
limited to those shown on the surveys furnished pursuant to Section 2.l(h)
hereof. If required by Lender, such policy shall be extended to cover each and
every advance of the Loan proceeds at the time of making such advance;
(h) If so required by the applicable title insurer, a currently dated
ALTA survey or surveys, and recorded plat if in existence, of Parcels A and B,
with a metes and bounds description of the Parcels thereon, if applicable,
showing the location of any and all improvements and reflecting, among other
matters, all easements, encroachments, protrusions or other encumbrances or
matters affecting the Parcels (and the recording data therefor), and the number
of square feet contained in the Parcels prepared and certified by a duly
registered and licensed surveyor or engineer reasonably acceptable to Lender,
and containing a certification thereon in form and substance reasonably
acceptable to Lender;
(i) Copies of all contracts which may have been entered into with
contractors with respect to the construction of the Improvements, and any and
all other agreements or documents related or pertaining thereto;
(j) The final plans and specifications for the development and
construction of the Improvements (collectively the "Plans"), which plans shall
be in conformity with all governmental
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requirements and restrictive covenants applicable to the Land or the
Improvements and must be approved by Lender;
(k) Evidence of a policy or policies of hazard insurance (or
satisfactory certificates evidencing the existence thereof), in such amounts and
in form and content and issued by a company or companies reasonably acceptable
to Lender insuring the Mortgaged Properties and all materials and supplies
located thereon against loss or damage by fire and the risks and hazards insured
against by the standard form of extended coverage with builder's risk
endorsement in the full amount of the Loan, and against vandalism and malicious
mischief, and such other risks and hazards as Lender may reasonably request, and
containing a standard mortgage clause and a loss payable clause or endorsement
making loss payable to Lender as his interest shall appear;
(l) Evidence, in form acceptable to Lender, that Borrower, his
contractors, subcontractors and agents are carrying, in Lender's reasonable
judgment, satisfactory amounts of workmen's compensation and liability insurance
to cover any and all of Borrower's potential liabilities and losses as owner of
the Mortgaged Properties, showing Lender as an additional insured. Lender
understands and agrees to Borrower's insurance through a self-insurance group
for the Las Vegas, Nevada building project, as long as satisfactory amounts of
coverage, in Lender's reasonable judgment, are being carried by Borrower through
such group of worker's compensation and liability insurance as set forth in this
paragraph;
(m) Releases or waivers of mechanics' and materialmen's liens and, if
required by Lender, receipted bills showing payment to any and all parties who
have furnished materials or services or performed labor of any kind in
connection with the construction of the Improvements; and
(n) Such other deeds of trust, agreements, financing statements,
assignments, title insurance, surveys, certificates, instruments, and other
documents as Lender shall reasonably request to evidence, create or assure the
rights or benefits to be created in favor of Lender pursuant to this Agreement
or any of the Loan Papers.
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ARTICLE THREE
ADVANCES
3.1 DEFINED TERMS.
The term "Advance" shall mean a disbursement by Lender of the proceeds of
the Loan for financing construction of the Improvements, and "Advances" shall be
the plural thereof. The term "Application for Advance" shall mean a written
application submitted by Borrower to Lender, (and/or such other parties as
Lender may require), and in the form attached hereto as Exhibit D, requesting an
Advance and containing, if required by Lender, an Affidavit of Borrower
(hereinafter defined), accompanied by such schedules, affidavits, releases,
waivers, statements, invoices, bills and other documents provided herein or as
Lender may reasonably request. The term "Affidavit of Borrower" shall mean a
sworn affidavit executed by Borrower (and such other parties as Lender may
require), to the effect that all statements, invoices, bills and other expenses
incurred to a specified date in connection with the development or construction
of the Improvements which are the subject matter of such affidavit, whether or
not specified in the Approved Budgets, have been paid in full, except for (a)
amounts retained pursuant to any construction contract or as otherwise required
hereunder, and (b) items expressly approved in writing by Lender to be paid from
the proceeds of an Advance then being requested, if any.
3.2 TIMING OF ADVANCES.
Advances shall be made by Lender upon compliance by Borrower with the terms
and conditions contained in this Agreement after actual commencement of
construction of the Improvements only for work actually done by Borrower during
the preceding Period. From time to time, but not more frequently than twice a
month, Borrower may submit to Lender an Application for Advance requesting an
Advance under the Loan for the payment of the cost of labor, materials and
services supplied for the development or construction of the Improvements and
for the payment of other costs and expenses incident to the Loan, or the
construction of the Improvements, and specified in the Approved Budgets. Each
Application for Advance shall be submitted by Borrower to Lender a reasonable
time (but not less than five (5) business days) prior to the date upon which the
Advance requested is desired by Borrower.
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3.3 LIMITATION ON ADVANCES.
Advances for payment of the cost of development or construction of the
Improvements shall not exceed the aggregate of (a) the cost of labor, materials
and services incorporated into the Improvements in a manner reasonably
acceptable to Lender and as specified in the Approved Budget, PLUS (b) the
purchase price of all uninstalled materials to be utilized in the construction
and assembly of the Improvements and stored on the Land, or elsewhere with the
written consent of, and in a manner acceptable to, Lender, less (c) the sum of
all prior Advances. Lender may disburse any portion of any Advance hereunder at
any time, and from time to time, to persons other than Borrower for the purposes
specified herein irrespective of the other provisions of this Agreement, and the
amount of funds to which Borrower shall thereafter be entitled under this
Agreement shall be correspondingly reduced.
3.4 CONDITION PRECEDENT TO INITIAL ADVANCE.
Prior to being required to make any Advance hereunder, Lender shall require
proof in the form of such schedules, affidavits, releases, waivers, statements,
invoices, bills and other documents provided herein or as Lender may reasonably
request to document that Cross-Continent Auto Retailers, Inc. ("CCAR") has
invested at least FIVE MILLION DOLLARS ($5,000,000) of it's own funds in the
Improvements consistent with the Approved Budgets for the projects to be
completed upon Parcels A and B, and an affidavit of an officer or director of
CCAR attesting that, as of the date of the Initial Advance made hereunder (and
defined hereafter):
(a) CCAR has invested at least $5,000,000 of it's own funds towards
completion of the Improvements consistent with the Approved Budgets;
(b) All statements, invoices, bills and other expenses incurred to a
specified date in connection with the development or construction of the
Improvements which are the subject matter of such affidavit, whether or not
specified in the Approved Budgets, have been paid in full;
(c) There exists no default or event (a "Potential Default") which
with notice, lapse of time or, both, would constitute a default hereunder or
under any of the Loan Papers;
(d) Borrower has submitted to Lender an Application for the Initial
Advance;
(e) The representations and warranties made in this Agreement remain
in force
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and effect and are true and correct; and
(f) Borrower has procured and delivered to Lender releases or waivers
of mechanic's and materialmen's liens and receipted bills showing payment to all
parties who have furnished materials or services or performed labor of any kind
in connection with the construction of any part of the Improvements.
3.5 CONDITIONS PRECEDENT TO SUBSEQUENT ADVANCES.
As a condition precedent to each subsequent Advance after the first Advance
disbursed after the closing of the Loan (the "Initial Advance"), and in addition
to all other requirements herein, Borrower must satisfy the following
requirements:
(a) All conditions precedent to disbursing the Initial Advance
pursuant to Sections 2.1 and 3.4 hereof, and any other prior Advance, shall have
been and continue to be satisfied;
(b) There shall exist no default or event (a "Potential Default")
which with notice, lapse of time or, both, would constitute a default hereunder
or under any of the Loan Papers;
(c) The representations and warranties made in this Agreement shall
be true and correct on and as of the date of each such Advance, with the same
effect as if made on that date;
(d) Borrower shall have submitted to Lender an Application for
Advance with respect to the Advance being requested;
(e) Borrower shall have procured and delivered to Lender releases or
waivers of mechanic's and materialmen's liens and receipted bills showing
payment to all parties who have furnished materials or services or performed
labor of any kind in connection with the construction of any part of the
Improvements; and
(f) Borrower shall have submitted such other instruments and
documents as Lender shall reasonably request to evidence, create or assure the
rights or benefits to be created in favor of Lender pursuant to this Agreement.
3.6 FINAL ADVANCE.
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The final Advance will not be made until the date of final completion of
the Improvements, and in any event not until Lender has received such of the
following with respect to the Improvements and the Loan, as Lender may request
from Borrower: (a) a certificate from Lender's inspector and Borrower's
designated architects/engineers, certifying to Lender that the Improvements have
been completed substantially in accordance with the Plans, as approved by
Lender; (b) evidence that no mechanic's or materialmen's liens or other
encumbrances have been filed and remain in effect against the Mortgaged
Properties or any part thereof; (c) evidence that all governmental requirements
have been satisfied, including, without limitation, evidence that the
improvements are in conformity with any and all governmental requirements
applicable to the Land or the Improvements; and (d) a liens-paid affidavit
executed by Borrower to the effect that (and/or, at Lender's request, final lien
releases or waivers from) all subcontractors, materialmen and other parties who
have supplied labor, materials or services for the construction of the
Improvements, or who otherwise might be entitled to claim a contractual,
statutory or constitutional lien against the Mortgaged Properties, have been
paid in full with respect to the Improvements or that Borrower is contesting
payment of any amounts due upon such liens in a commercially appropriate manner
with adequate reserves being held with Borrower.
3.7 NO WAIVER.
No Advance shall constitute a waiver of any condition precedent to the
obligation of Lender to make any further Advance or preclude Lender from
thereafter declaring the failure of Borrower to satisfy such conditions
precedent to be a default hereunder or under any of the Loan Papers (as
hereafter defined).
3.8 CONDITIONS PRECEDENT FOR THE BENEFIT OF LENDER.
All conditions precedent to the obligation of Lender to make the Initial
Advance or any other Advance hereunder are imposed hereby solely for the benefit
of Lender, and no other party may require satisfaction of any such condition
precedent or be entitled to assume that Lender will refuse to make any Advance
in the absence of strict compliance with such conditions precedent. Any
requirement or condition of this Agreement may be waived by Lender at its
discretion, in whole or in part, at any time, but no such waiver shall imply or
be deemed a waiver of any subsequent or other
<PAGE>
requirement or condition of this Agreement or any of the Loan Papers.
ARTICLE FOUR
CERTAIN REPRESENTATIONS AND WARRANTIES OF BORROWER
4.1 BORROWER REPRESENTS AND WARRANTS THAT:
(a) Borrower possesses all necessary and lawful authority and power
to carry on his or its business and to comply with the terms, covenants and
conditions of this Agreement, any and all documents, instruments and agreements
mentioned herein or contemplated to be delivered hereunder, and any and all
documents, instruments and agreements evidencing, securing or pertaining to all
or any part of the Loan, including, without limitation, the Security Agreement,
the Note, the Deeds of Trust and all the Security Instruments (this Agreement
and all such documents, instruments and agreements, together with any and all
renewals, extensions and modifications thereof, herein sometimes being
collectively called the "Loan Papers").
(b) Borrower is duly authorized to execute and deliver the Loan
Papers, and will continue to be duly authorized to borrow monies hereunder and
to perform all obligations under the Loan Papers.
(c) Neither the execution and delivery of the Loan Papers, nor
consummation of any of the transactions herein contemplated, nor compliance with
the terms and provisions hereof, will contravene any provision of law, statute,
rule or regulation to which Borrower is subject or any judgment, decree,
license, order or permit applicable to Borrower, or will conflict or will be
inconsistent with, or will result in any breach of any of the terms of the
covenants, conditions or provisions of, or constitute a delay under, or result
in the creation or imposition of a lien (except liens in favor of Lender) upon
any of the property or assets of Borrower, pursuant to the terms of any
indenture, mortgage, deed of trust, agreement or other instrument to which
Borrower is a party or by which Borrower may be bound, or to which Borrower may
be subject.
(d) No consent, approval, authorization or order of any court or
governmental authority or third party (other than those which have been obtained
prior to the date hereof and of which Borrower has notified Lender in writing on
the date hereof) is required in connection with the execution and delivery by
Borrower of any of the Loan Papers.
<PAGE>
(e) The Loan Papers, when duly executed and delivered, will be the
legal and binding obligations of Borrower, enforceable in accordance with their
respective terms except as the same may be limited by applicable bankruptcy,
insolvency, rearrangement, moratorium, reorganization, liquidation,
conservatorship or similar debtor relief laws of general application and the
power of courts to award damages in lieu of granting equitable remedies.
(f) All federal, state, local, and other taxes, assessments, fees,
and other governmental charges imposed upon Borrower or upon the assets of
Borrower or on the Mortgaged Properties (all such taxes, assessments, fees, and
charges being herein called "Taxes") which are due and payable, have been paid
or will be paid before they are delinquent.
(g) Neither Borrower, nor any affiliate of Borrower, is in default of
any other obligation with respect to money that Borrower, or any affiliate of
Borrower, has borrowed from Lender or any other financial institution upon any
obligation that would have a material negative impact upon the financial
condition of Borrower.
(h) At the date hereof, no part of the Mortgaged Properties is the
subject of any contract of sale, conditional sales agreement, contract for deed
or any other like instrument or any other encumbrance whatsoever affecting the
Mortgaged Properties except matters expressly acknowledged and approved in
writing by Lender on or before the date hereof, except for any liens set forth
in Exhibit E attached hereto (the "Permitted Liens") which liens represent all
of the existing liens upon the Properties as of the date of this Agreement.
(i) The balance sheets, financial statements and income tax returns
of Borrower, which have heretofore been delivered to Lender are complete and
accurate and correct in all material respects.
ARTICLE FIVE
AFFIRMATIVE COVENANTS OF BORROWER
5.1 UNTIL PAYMENT AND PERFORMANCE IN FULL OF THE LOAN, BORROWER COVENANTS
AND AGREES TO:
(a) Promptly pay, or cause to be paid, when due any and all Taxes
before delinquency, unless otherwise contested by Borrower based upon some
reasonable claim or
<PAGE>
argument;
(b) Promptly pay all survey, appraisal, recording and title expenses
with respect to the Mortgaged Properties or the Loan (subject to Borrower's
right to contest such expenses based upon some reasonable claim or argument);
(c) Promptly pay and discharge when due all of his debts, claims,
liabilities and obligations with respect to the Mortgaged Properties, including,
without limitation, those under any construction contract and any and all other
contracts for construction or work on the Mortgaged Properties and for all other
labor and materials (subject to Borrower's right to contest such expenses based
upon some reasonable claim or argument);
(d) Promptly pay, or cause to be paid, when due any and all other
costs and expenses required by this Agreement or arising in connection with the
Loan or this Agreement, including, without limitation, all reasonable fees and
expenses of counsel to Lender, all fees for filing or recording the Security
Instruments and all survey and title insurance and examination charges,
including premiums for the Policy and any updates or increased coverage thereof;
(e) Keep, in the city to which notice is to be sent to Borrower
pursuant to this Agreement, proper and complete books of record and account
concerning the transactions and financial records and affairs of borrower as
relating to the Mortgaged Properties, and, at Lender's request, make such
records available for Lender's inspection and permit Lender to make and keep
copies thereof;
(f) Furnish, or cause to be furnished, to Lender such other
information, not otherwise required herein, respecting the business affairs,
assets and liabilities of Borrower as Lender shall from time to time reasonably
request;
(g) Except as already approved by Lender, Borrower will not become
party to any contract for the performance of any work with respect to the
Mortgaged Properties or for the supplying of any labor, materials, or services
for the construction of any part of the Improvements except upon such terms and
with such parties as shall be approved in advance in writing by Lender;
provided, however, that Lender shall not unreasonably delay approval of
contracts submitted to it by Borrower. Any construction contracts or agreements
with respect to the Improvements shall provide that all liens of the general
contractor and any subcontractors shall be subordinate to the lien
<PAGE>
of the Deed of Trust. No approval by Lender of any construction contract
executed hereafter or any change order shall impose upon Lender any
responsibility for the adequacy, form, or content of any such construction
contract or change order;
(h) Deliver to Lender, upon execution hereafter of any contract for
development or construction on or to any part of the Mortgaged Properties or
materials supplied in connection therewith, a subordination agreement in form
and substance satisfactory to Lender, subject to the provisions thereof;
(i) Ensure that the construction of the Improvements shall be
prosecuted with due diligence and continuity, in a good and workmanlike manner,
and in accordance with sound building and engineering practices, all applicable
governmental requirements, the Approved Budgets and the Plans. Borrower shall
not permit cessation of work for a period in excess of thirty (30) business days
without the prior written consent of Lender, except for delays due to bad
weather, strikes, riots, acts of God, war, governmental laws, regulations or
restrictions, and Borrower shall promptly notify Lender of any such delays;
provided, however, that in no event shall work cease for a period in excess of
forty-five (45) days regardless of the cause. Except for such delays as are
hereinabove allowed, the Improvements shall be completed by no later than the
31st day of October, 1998.
(j) Cause all materials supplied for, or intended to be utilized in,
the construction of any part of the Improvements, to be stored on the Land or at
such other location as may be approved by Lender in writing, with adequate
safeguards, as required by Lender, to prevent loss, theft, damage or commingling
with other materials or projects;
(k) Permit Lender, any governmental authority, and their respective
agents and representatives, to enter at all reasonable times upon the Mortgaged
Properties and any locations where materials intended to be utilized in the
construction of any part of the Improvements are stored for the purpose of
inspection of the Mortgaged Properties and such materials;
(l) Timely comply with and promptly furnish to Lender true and
complete copies of any official notice or claim by any governmental authority
pertaining to the Mortgaged Properties;
(m) Apply all Advances for payment or reimbursement of costs and
expenses specified in the Approved Budgets and the related Application for
Advance, and for no other purpose;
<PAGE>
(n) Protect the Mortgaged Properties, and the materials stored
therein, from removal, destruction or damage and maintain, with financially
sound and reputable insurance companies or associations, insurance of the kinds,
in such amounts and covering such risks as Lender shall reasonably require, and,
at Lender's request, deliver to Lender evidence, of the maintenance of such
insurance;
(o) Promptly notify Lender in writing of any change in any fact or
circumstance represented or warranted herein, in any of the Loan Papers, or in
any other document furnished to Lender in connection with this Agreement, or of
any fact or circumstance which might materially delay or impede the construction
of the Improvements or interfere with the lease, sale or operation thereof,
including, without limitation, any fire or other casualty, any notice of taking
or eminent domain action or proceeding affecting the Mortgaged Properties or the
Improvements or any litigation, or claim or controversy which might become the
subject of litigation, against Borrower or affecting the Mortgaged Properties,
if any unfavorable outcome of same might have a material adverse effect on
Borrower's financial condition or cause a default hereunder;
(p) Promptly pay or cause to be paid when due all costs and expenses
incurred in connection with the Mortgaged Properties and the construction of the
Improvements, and Borrower shall keep the Mortgaged Properties free and clear of
any liens, charges or claims other than the lien of the Deed of Trust and the
first liens against the Parcels in favor of RDS, Inc. and R. Douglas Spedding as
more particularly described in paragraph 1.2(a) of this Agreement.
Notwithstanding anything to the contrary contained in this Agreement or any of
the Security Instruments, Borrower may (i) contest the validity or amount of any
claim of any contractor, consultant, architect or other person providing labor,
materials or services with respect to the Mortgaged Properties, (ii) contest any
tax or special assessments levied by any governmental authority, or (iii)
contest the enforcement of or compliance with any governmental requirements, and
such contest on the part of Borrower shall not be a default hereunder; provided,
however, that during the pendency of any such contest, Borrower shall furnish to
Lender a bond or other security acceptable to Lender in a sum reasonably
acceptable to Lender and provided further that Borrower shall pay any contested
sum before a Judgment resulting from any such contest is subject to foreclosure
or execution upon the Mortgaged Properties or any part thereof;
(q) Comply with any and all governmental rules, regulations or
requirements of
<PAGE>
any kind which are applicable to the Mortgaged Properties, including, without
limitation, all such matters relating to zoning, utilities and construction;
and preserve and maintain all licenses, privileges, franchises, certificates
and the like necessary for the operation of Borrower's business and the
Improvements;
(r) Consider all sums, if any, paid or expended by Lender under the
terms of this Agreement in excess of the amount of the Loan to be an additional
loan to Borrower and the repayment thereof, together with interest thereon at
the rate provided for past due payments of principal and interest on the Note,
shall be secured by the Deed of Trust and any other Security Instruments and
shall be immediately due and payable without notice of any kind whatsoever; and
Borrower agrees to pay such sums upon demand (provided that nothing contained
herein shall obligate Lender to make such advances);
(s) Execute and deliver to Lender such documents, financing
statements, instruments, assignments, agreements, extensions, renewals and other
writings, and do such other acts as are necessary or desirable, to preserve and
protect any collateral at any time securing or intended to secure the Loan, as
Lender may from time to time require, and do and execute all and such further
lawful and reasonable acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of this Agreement and
Lender's rights and remedies under the Loan Papers as Lender shall reasonably
require from time to time; and
<PAGE>
(t) Within ninety (90) days of the Initial Advance made hereunder
this Loan Agreement, obtain a commitment for permanent financing for the new
automobile dealership facilities being constructed on the Parcels, the proceeds
of which will be used upon maturity hereof to pay off, extinguish and retire all
debt owed by Borrower to Lender pursuant to and under this Loan Agreement and
the underlying Note.
ARTICLE SIX
NEGATIVE COVENANTS OF BORROWER
6.1 LIMITATIONS.
Until payment and performance in full of the Loan and all other obligations
of Borrower secured by the Deed of Trust, Borrower covenants that he will not,
without the prior written consent of Lender, which consent will not be
unreasonably withheld:
(a) Create by mortgage, deed of trust, security agreement, title
retention document, first Liens, or other security instrument, or suffer to
exist, any lien or encumbrance upon the Mortgaged Properties, whether or not
subordinate to the lien of the Deed of Trust, except for the Permitted Liens and
any matters as may be specifically provided for in the Loan Papers and the first
liens more particularly described in paragraph 1.2(a) of this Agreement;
(b) Waive, assign or transfer, or attempt so to do, any of his
rights, powers, duties or obligations arising pursuant to, or make or permit to
be made any change in or amendment to any of the Loan Papers;
(c) Do or suffer to be done any act whereby the value of any part of
the Mortgaged Properties may be lessened;
(d) Purchase or install any materials, fixtures or any other part of
the Improvements under security agreements, conditional sale contracts or lease
agreements, or other arrangement wherein a security interest or title to said
property is retained or the right is reserved or accrues to anyone to remove or
repossess any such items or to consider them as personal property;
(e) Change or modify the Plans that have been approved by Lender or
enter into any change orders with contractors that are working on the
construction of the Improvements; provided, however, that change orders
resulting in an increase in cost of not more than $25,000 each
<PAGE>
will not require the prior written consent of Lender unless prior to the
completion of the Improvements, such change orders, when aggregated, exceed
$100,000 in total; Borrower will, however, submit all change orders to Lender
for its review; or
(f) Allow any change in control of a fifty percent (50%) or more
ownership stake or interest in the common stock of Borrower.
ARTICLE SEVEN
DEFAULT
7.1 THE TERM "EVENT OF DEFAULT," AS USED IN THIS AGREEMENT, SHALL MEAN ANY
ONE OR MORE OF THE FOLLOWING:
(a) The failure or refusal of Borrower in payment of principal or
interest on the Note or any other payment under any of the Loan Papers, or any
part thereof, as it becomes due in accordance with the terms of the Note, this
Agreement or any of the other Loan Papers, whether at stated maturity, by
acceleration, or otherwise, and the continuation of said failure for a period of
ten (10) days after Lender has provided Borrower with written notice of such
failure;
(b) The failure or refusal of Borrower punctually and properly to
perform any covenant, agreement, obligation or condition contained herein or in
any of the Loan Papers, including, without limitation, the Note, the Deed of
Trust, the Security Instruments, or any of the instruments executed in
connection therewith when such failure or refusal has continued for a period of
twenty (20) days after Lender has provided Borrower with written notice thereof;
(c) The occurrence of any other uncured default under the Note, the
Deed of Trust, the Security Instruments, or any other of the Loan Papers;
(d) The levy against any real or personal property, or the like, or
any part thereof, representing the security for the Note, of any execution,
attachment, sequestration or other writ;
(e) The insolvency of Borrower, or any other party liable for the
payment of the Note, whether as maker, endorser, guarantor, surety or otherwise
(f) The liquidation or dissolution of Borrower, or any other party
liable for the payment of the Note, whether as maker, endorser, guarantor,
surety or otherwise;
<PAGE>
(g) The appointment of a trustee or receiver, if not discharged
within thirty (30) days, for the assets, or any part thereof, of Borrower or for
the material portion of the property or assets of any other party liable for the
payment of the Note, whether as maker, endorser, guarantor, surety or otherwise,
or the appointment of a trustee or receiver for any real or personal property,
or the like, or any part thereof, representing the security for the Note;
(h) The making by Borrower, or any other party liable for the payment
of the Note, whether as maker, endorser, guarantor, surety or otherwise, of a
transfer in fraud of creditors or a general assignment for the benefit of
creditors;
(i) The entry in bankruptcy of an order for relief for or against
Borrower, or any other party liable for the payment of the Note, whether as
maker, endorser, guarantor, surety or otherwise;
(j) The filing, by way of petition or answer admitting the material
allegations of any petition, or other pleading seeking entry of an order for
relief for or against Borrower, or any other party liable for the payment of the
Note, whether as maker, endorser, guarantor, surety or otherwise), as a debtor
or an adjustment of said parties' debts, or any other relief under any state or
federal bankruptcy, reorganization, debtor's relief or insolvency laws now or
hereafter existing, including without limitation, a petition or answer seeking
reorganization or admitting the material allegations of a petition filed against
any of said parties in any bankruptcy or reorganization proceeding, or the act
of any of said parties in instituting or voluntarily being or becoming a party
to any other judicial proceedings intended to effect a discharge of the debts of
any of said parties, in whole or in part, or a postponement of the maturity or
the collection thereof, or a suspension of any of the rights or powers of a
trustee or of any of the rights or powers granted to Lender herein, or in any
other document executed in connection herewith;
(k) The receipt by Lender of information establishing that any
material representation or warranty made by Borrower, or any other party liable
for the payment of the Note, whether as maker, endorser, guarantor, surety or
otherwise, or in any other document or instrument evidencing the Note or any
other instrument or document modifying, renewing, extending, evidencing,
securing or pertaining to the Note is false or is erroneous in any material
manner;
(l) The failure of Borrower or any other party liable for the payment
of the Note,
<PAGE>
whether as maker, endorser, guarantor, surety or otherwise, to pay any money
judgment against any such party before the expiration of thirty (30) days
after such judgment becomes final and no longer appealable; or
(m) The admission of Borrower, or any other party liable for the
payment of the Note, whether as maker, endorser, guarantor, surety or otherwise,
in writing of any such party's inability to pay said Party's debts as they
become due.
It is understood and agreed by Borrower that the foregoing "Events of
Default" are cumulative and in addition to any "events of default" contained in
any other documents modifying, renewing, extending, securing, or pertaining to
the Note or the debt evidenced thereby; provided, that, in the event of any
discrepancy or inconsistency between any Event of Default hereunder and any
"events of default" contained in the Note or in any other document modifying,
renewing, extending, securing or pertaining to the Note or the debt evidenced
thereby, the Events of Default stated herein, at the option of Lender, shall
control.
ARTICLE EIGHT
RIGHTS AND REMEDIES
8.1 REMEDIES UPON DEFAULT.
Upon the occurrence of an Event of Default, Lender may, at its option and
election, do any one or more of the following:
(a) Without demand, presentment, protest or notice of any kind
whatsoever, including, without limitation, notice of dishonor, notice of
intention to accelerate or of acceleration, all of which are hereby waived,
declare the entire unpaid balance of the Loan immediately due and payable.
(b) Without notice to Borrower, which is hereby waived, take
possession of the Mortgaged Properties, and, at the option of Lender, exercise
any and all remedies allowed by the Note, the Deed of Trust, or any other of the
Loan Papers, including, but not by way of limitation, reduce any claim to
judgment, foreclose or otherwise enforce Lender's liens on all or any part of
the Mortgaged Properties by any available judicial or non-judicial procedure.
(c) Apply for and obtain, by appropriate judicial action, appointment
of a receiver
<PAGE>
or receivers for all or any part of the Mortgaged Properties, without regard
to the sufficiency of the security, without any showing of insolvency, fraud
or mismanagement on the part of Borrower, to protect or enforce the rights of
Lender.
(d) Lender shall have the right, but not the obligation, at its
option, to enter upon and take possession of the Mortgaged Properties, or any
part thereof, and, whether or not in possession of the Mortgaged Properties, to
disburse and directly apply the proceeds of any advance hereunder to the
satisfaction of any of Borrower's obligations hereunder, or for such other
purposes or in such other proportions as Lender may, in its reasonable
discretion, deem necessary or advisable. Any advance by Lender for such
purposes shall be part of the Loan and shall be secured by the Security
Instruments. Lender will notify Borrower in writing of any disbursements made
directly by Lender. Borrower hereby authorizes Lender to hold, use, disburse
and apply the proceeds of the Loan for payment of expenses incident to the Loan
or the Mortgaged Properties and the payment or performance of the obligations
incident thereto. Borrower hereby assigns and pledges the proceeds of the Loan
to Lender for such purposes.
8.2 APPLICATION OF PROCEEDS.
Lender shall be entitled to apply the proceeds of any sale of all or any
part of the Mortgaged Properties (or its rights thereto) toward payment of the
Loan in such order and manner as Lender, in its reasonable discretion, may deem
advisable. Lender shall account to Borrower for any surplus remaining after
payment in full of the Loan and reasonable costs and expenses, including,
without limitation, reasonable attorneys' fees, incurred in connection with any
such sale.
8.3 PERFORMANCE OF BORROWER'S OBLIGATIONS.
<PAGE>
Should any covenant, duty or agreement of Borrower fail to be performed
in accordance with the terms of this Agreement, Lender may, at its election,
perform, or attempt to perform, such covenant, duty or agreement on behalf of
Borrower. Borrower shall, at the request of Lender, promptly pay any amount
expended by Lender in such performance or attempted performance to Lender at
its address stated herein, together with interest thereon at the Default
Interest Rate (as such term is defined in the Note) from date of such
expenditure by Lender until paid; provided, that Lender does not assume and
shall never, except by express written consent of Lender, have any liability
for the performance of any duties or obligations of Borrower under or in
connection with all or any part of the Mortgaged Properties or any of the
Loan Papers.
8.4 NO LIABILITY OF LENDER.
Lender shall have no liability, obligation or responsibility whatsoever
with respect to the Mortgaged Properties except to make advances of the
proceeds of the Loan pursuant to this Agreement. Lender shall not be
obligated to inspect the Mortgaged Properties nor be liable for any action,
performance or default of Borrower, or for the payment of costs of
construction or development of the Mortgaged Properties or labor, materials
or services supplied in connection therewith, or for the performance of any
obligation or indebtedness of Borrower whatsoever, nor shall Lender have any
responsibility or obligation for the management, conduct or operation of the
business affairs of Borrower. Nothing, including without limitation, any
advance hereunder or acceptance of any document or instrument, shall be
construed as a representation or warranty, expressed or implied, to any party
by Lender, and no condition hereof, or of any of the Loan papers, shall be
construed so as to deem the relationship between borrower and Lender to be
other than that of borrower and lender, and Borrower shall at all times
represent that the relationship between Borrower and Lender is solely that of
borrower and lender, and not that of partners, joint venturers, fiduciaries,
guarantors or the like. BORROWER HEREBY INDEMNIFIES AND AGREES TO HOLD
LENDER SAFE AND HARMLESS FROM AND AGAINST ANY COST, EXPENSE, LIEN OR
LIABILITY INCURRED OR SUFFERED BY LENDER AS A RESULT OF ANY ASSERTION OR
CLAIM OF ANY OBLIGATION OR RESPONSIBILITY OF LENDER FOR THE MANAGEMENT,
OPERATION AND CONDUCT OF THE BUSINESS AND AFFAIRS OF BORROWER, OR AS A RESULT
OF ANY ASSERTION OR CLAIM OF ANY LIABILITY OR RESPONSIBILITY OF LENDER FOR
THE PAYMENT OR PERFORMANCE OF ANY INDEBTEDNESS OR OBLIGATION OF BORROWER.
<PAGE>
8.5 RIGHT OF OFFSET.
Borrower hereby grants to Lender a right of offset, to secure repayment
of the Loan, upon any and all monies, securities or other property of
Borrower, and the proceeds therefrom, now or hereafter held or received by or
in transit to Lender, from or for the account of Borrower (except for any
monies, securities, or other property, which come into the possession,
custody, or control of Lender in his capacity as Vice President of CCAR and
not in his capacity as Lender under this Agreement), whether for safekeeping,
custody, pledge, transmission, collection or otherwise, and also upon any and
all deposits (general or special) and credits of Borrower, and any and all
claims of Borrower against Lender at any time existing. Upon the occurrence
of any default, Lender is hereby authorized at any time and from time to
time, without notice to Borrower, to offset, appropriate, apply and enforce
said liens against any and all items herein above referred to against the
Loan.
8.6 WAIVERS.
The acceptance by Lender at any time and from time to time of partial
payment on the Loan shall not be deemed to be a waiver of any Event of
Default then existing. No waiver by Lender of any default shall be deemed to
be a waiver of any other then existing or subsequent default, nor shall any
such waiver by Lender be deemed to be a continuing waiver. No delay or
omission by Lender in exercising any right, power, privilege or remedy under
the Loan Papers (collectively, "Rights") shall impair any such Rights or be
construed as a waiver thereof or any acquiescence therein, nor shall any
single or partial exercise of any Rights preclude other or further exercise
thereof, or the exercise of any other Rights.
8.7 CUMULATIVE RIGHTS.
All Rights shall be cumulative and in addition to all other rights,
powers, privileges, and remedies granted to Lender at law or in equity, or
otherwise, and may be exercised from time to time, and as often as may be
deemed expedient by Lender, whether or not the Loan be due and payable and
whether or not Lender shall have taken other action in connection with this
Agreement or any other of the Loan Papers.
<PAGE>
8.8 TRANSFER OF THE MORTGAGED PROPERTIES.
If Borrower shall sell, convey, lease, assign, transfer, exchange or
dispose of all or any part of the Mortgaged Properties or any interest
therein (a "Transfer") without the prior written consent of Lender (which
consent may be withheld without cause), Lender may, at Lender's option,
declare the Loan immediately due and payable, which option may be exercised
at any time following any such Transfer. Lender may in its sole discretion
consent to a Transfer, or, upon any transfer made without Lender's prior
written consent, and at Borrower's request, decide not to exercise such
option, in which event Lender's consent or forbearance, as the case may be,
may be predicated on such terms and conditions as Lender may in its sole
discretion require, including but not limited to Lender's approval of the
transferee's credit-worthiness and management ability, and the execution and
delivery to Lender by such transferee, prior to the Transfer, of a written
assumption agreement containing such terms as Lender may require, including
but not limited to a payment of a part of the remaining principal amount of
the Loan, an increase in the rate of interest payable on the Note, the
payment of an assumption fee not to exceed the maximum limit fixed or allowed
by law, a modification of the term of the Note, and such other terms as
Lender may require. Should a Transfer of all or any part of the Mortgaged
Properties occur without the prior written consent of Lender and payment of
any portion of the Note is thereafter accepted by Lender, such acceptance
shall not be deemed a waiver of the requirement of Lender's consent in
writing thereto or with respect to any other Transfer.
8.9 LIABILITY OF BORROWER.
Notwithstanding any Transfers, it is understood and agreed that Borrower
shall at all times remain liable for payment of the Loan.
8.10 SATISFACTION AND RELEASE.
<PAGE>
Upon full and final payment of the Loan and any and all other debt
secured by the Security Instruments, Lender shall, at the sole cost and
expense of Borrower, release any collateral held by Lender as security for
the Loan.
ARTICLE NINE
MISCELLANEOUS
9.1 GOVERNING LAW.
This Agreement is executed and delivered and intended to be performed in
the State of Colorado and except where the laws of the United States shall
preempt or apply, the laws of the State of Colorado shall govern the
validity, construction, enforcement and interpretation of this Agreement and
all of the other Loan Papers; and the parties hereto agree that in the event
of any dispute involving this Agreement or any of the Loan Papers, venue for
such dispute shall lie in any court of competent jurisdiction in the District
Court in and for the County of Adams, State of Colorado.
9.2 NOTICE.
Whenever this Agreement requires or permits any notice, demand or request
by one party to another, it shall be in writing, enclosed in an envelope,
addressed to the party to be notified at the address set forth below (or at
such other address as may have been designated by a party by written notice
to the other party) and either delivered in person or properly stamped,
sealed and deposited with the United States postal service, certified mail,
return receipt requested. Notice shall be deemed to have been given or the
demand or request made on the date on which it shall have been personally
delivered or seven (7) days after it has been deposited in the mails as above
stated.
Lender: R. Douglas Spedding
RDS, Inc.
4380 East Alameda Avenue
<PAGE>
Denver, Colorado 80222
with copies to
Lender's Counsel: Michael S. Burg
Matthew S. McElhiney
Burg & Eldredge
4643 South Ulster, Suite 900
Denver, Colorado 80237
Borrower: Cross-Continent Auto Retailers, Inc.
Attn: Bill Gilliland/Wayne Moore, Esq.
1201 South Taylor Street
Amarillo, Texas 79101-4313
9.3 WAIVER OF PROVISIONS.
Either party hereto shall have the right to waive any provision of this
Agreement which is contained herein solely for the benefit of said waiving
party or to agree to changed terms or conditions of any such provision;
provided, however, that no such waiver or agreement shall be effective except
if in written form and no such waiver or agreement shall serve or be treated
as a waiver of any other term, covenant, condition or agreement contained
herein or as a future or continuous waiver of the term, covenant, condition
or agreement so waived.
9.4 ATTORNEYS' FEES.
<PAGE>
Borrower shall pay all reasonable attorneys' fees of Lender's counsel in
connection with the Loan and, including, without limitation, preparation of
all loan documentation and review of all items and data relating to Borrower
and the Mortgaged Properties. If an action shall be brought by Lender to
recover any fees under this Agreement, or for or on account of any breach of
or to enforce or interpret any of the terms, covenants or conditions of this
Agreement, Lender shall be entitled to receive from Borrower all of Lender's
costs and reasonable attorneys' fees incurred by Lender in prosecuting its
rights hereunder.
9.5 ENTIRE AGREEMENT.
This Agreement embodies the entire agreement between the parties
respecting the subject matter hereof, and except as otherwise specifically
provided herein, this Agreement may not be amended or varied except by
written agreement of the parties.
9.6 TIME OF ESSENCE.
Time is important to both parties hereto in the performance of this
Agreement and they have agreed that strict compliance is required as to any
date set forth herein.
9.7 CAPTIONS.
The captions used in connection with this Agreement are for convenience
only and shall not be deemed to expand, limit or interpret the meaning of the
language of this Agreement.
9.8 GENDER.
Words of any gender used in this Agreement shall be held and construed to
include any other gender as appropriate, and words in the singular shall be
held to include the plural, unless the context otherwise requires.
9.9 INVALID PROVISIONS.
<PAGE>
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term of this
Agreement, the legality, validity and enforceability of the remaining
provisions of this Agreement shall not be affected thereby, and in lieu of
each such illegal, invalid or unenforceable provision there shall be added
automatically as a part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
9.10 ASSIGNMENT BY LENDER.
Lender may without cost to Borrower assign all or any part of its
interest in the Loans and this Agreement, whether by participation with other
lenders or otherwise, and Borrower shall be bound to such assignee or
participant to the full extent of such assignment or participation, and
Lender shall notify Borrower of any such assignment except for participations
wherein Lender retains administration of the Loans.
9.11 SUCCESSORS AND ASSIGNS.
This Agreement is binding upon Borrower, his heirs, successors and
assigns, and inures to the benefit of Lender, its successors and assigns.
9.12 APPROVAL BY LENDER OR BORROWER.
Notwithstanding anything to the contrary contained herein, it is
understood and agreed that when under the terms and conditions of this
Agreement either Lender or Borrower has the right to approve an action of the
other, such approval will not be unreasonably withheld.
IN WITNESS WHEREOF, the parties execute this Agreement as of the day and
year first above written.
BORROWER:
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Robert W. Hall
---------------------------
<PAGE>
Title: Senior Vice Chairman
---------------------------
TOYOTA WEST SALES AND SERVICE, INC.
By: /s/ Robert W. Hall
---------------------------
Title: Vice President
---------------------------
DOUGLAS TOYOTA, INC.
By: /s/ Robert W. Hall
---------------------------
Title: Vice President
---------------------------
LENDER:
/s/ R. Douglas Spedding
-------------------------------
R. Douglas Spedding
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION OF COLORADO REAL PROPERTY
<PAGE>
EXHIBIT "B"
LEGAL DESCRIPTION OF NEVADA REAL PROPERTY
<PAGE>
EXHIBIT "C"
APPROVED BUDGET
<PAGE>
EXHIBIT "D"
FORM OF APPLICATION FOR ADVANCE
<PAGE>
EXHIBIT "E"
LIST OF ENCUMBRANCES AGAINST PARCELS AT CLOSING
PARCEL A:
PARCEL B:
<PAGE>
Exhibit 10.35.2
PROMISSORY NOTE
$7,400,000 Denver, Colorado
September 30, 1997
FOR VALUE RECEIVED the undersigned ("Maker") promises to pay to the order
of R. Douglas Spedding (the "Lender"), or order, on October 31, 1998 (the
"Maturity Date"), the principal sum of $7,400,000, or so much of that sum as
may be advanced under that certain Interim Construction Master Loan Agreement
(as it may be amended, modified, extended and renewed from time to time, the
"Loan Agreement") dated as of September 30, 1997 between Maker and Lender,
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, plus 1% additional interest (ie.
Bank of America prime rate + 1%) (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 tenth (10th) day of the following month and on
the Maturity Date 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 $7,400,000 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 in connection with that Interim Construction
and Master Loan Agreement (the "Loan Agreement") entered into by and between
Lender and Maker dated September 30, 1997, and any and all amendments,
supplements, and documents given in connection therewith, including a
security agreement, second deeds of trust and financing statements to secure
a perfected security interest in and to the real property located in Denver,
Colorado and Las Vegas, Nevada upon which the new automobile dealerships are
being constructed, and by all of the improvements being placed thereon
(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 the Maturity Date. Maker shall pay
interest monthly as set forth herein, with the full amount of all
<PAGE>
principal and interest remaining due hereunder to be paid by Maker to Lender
on or before the Maturity Date. 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. In the event that any monthly installment
of interest shall not be received by the tenth (10th) day after it is due,
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 amount evidenced by this Note shall include all amounts loaned by Lender
to Maker for the construction of new automobile dealership facilities in
Denver, Colorado and Las Vegas, Nevada as provided for in the Loan 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 secured by the real property and improvements being built by
Maker in Las Vegas, Nevada and Denver, Colorado as described herein and in
the Loan Agreement, and such security interests are evidenced
2
<PAGE>
by the Purchase Documents.
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, and such
failure is not cured within ten (10) days after written notice to Maker, or
(2) Maker 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
twenty (20) days after written notice to Maker, Maker hereby acknowledging
that all defaults under this Note are material; or (3) 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 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 attorneys' 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.
3
<PAGE>
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 a fifty percent (50%) or more 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 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.
4
<PAGE>
1201 S. Taylor
P.O. Box 750
Amarillo, Texas 79101-4313
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) seven (7) 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.
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.
5
<PAGE>
This Note is 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/ Robert W. Hall
-----------------------------------------
Title Senior Vice Chairman
--------------------------------------
RECEIPT
Lender hereby states that on or about September ____, 1997, Lender received
and agreed to the terms of the original Promissory Note, dated September
____, 1997, payable to Lender under that $7,400,000 loan made by R. Douglas
Spedding, Lender to Cross-Continent Auto Retailers, Inc., Maker.
By:
----------------------------
R. Douglas Spedding
6
<PAGE>
The printed portions of this form approved by
the Colorado Real Estate Commission (TD 72-11-83)
- -------------------------------------------------
Exhibit 10.35.3
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 this 30th day of September, 1997, between
Cross-Continent Auto Retailers, a Delaware corporation (Borrower), whose
address is 1201 S. Taylor, Amarillo, Texas 79101-4313; and the Public Trustee
of the County in which the Property (see paragraph 1) is situated (Trustee);
for the benefit of R. Douglas Spedding, individually, (Lender), whose address
is c/o RDS, Inc., 4380 E. Alameda Avenue, Glendale, Colorado 80222.
Borrower and Lender covenant and agree as follows:
1. Property in Trust. Borrower, in consideration of the indebtedness
herein recited and the trust herein created, hereby grants and conveys to
Trustee in trust, with power of sale, the 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, Colorado (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 September 30, 1997, in the principal sum of Seven Million Four
Hundred Thousand Dollars ($7,400,000.00) U.S. Dollars, with interest
on the unpaid principal balance from September 30, 1997, until paid,
at the rate of ______________* percent per annum, with principal and
interest payable at 4380 E. Alameda Ave., Glendale, Colorado 80222 or
such other place as the Lender may designate, in monthly interest
payments of __________* Dollars (U.S. $_____________) due on the 10th
day of each month beginning November 10, 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 31, 1998;
* Interest at the Prime or Reference Rate announced by the Bank of
America, as published in the Western Edition of THE WALL STREET
JOURNAL, plus 1% additional interest. 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 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%, see Promissory Note for 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 Deed of Trust; Charges; Liens. Borrower shall
perform all of Borrower's obligations under any prior deed of trust and any
other prior liens. Borrower shall pay all taxes, assessments and other
charges, fines and impositions attributable to the Property which may 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 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 sums 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
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
1
<PAGE>
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 authoirzed 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 paragraphs 4
(Payment of Principal and Interest) and 23 (Escrow Funds for Taxes and
Insurance) or change 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 sujbect 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, disbursements of
reasonably attorneys' fees and entry upon the Property to make repairs.
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 2B (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 entires
upon and inspection of the Property, provided that Lender shall give Borrower
notice prior to any such inspection specifying reasonable cause therefor
related to Lender's interest in the Property.
11. Condemnation. The proceeds of any award or claim for damages,
direct or consequential, in connection with any condemnation or other taking
of the Property, or part thereof, or for conveynace 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
immediatley 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
taking.
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 witihin 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 paragraphs 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 the 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 nor Borrower's successors in interest.
13. Forbearance by Lender Not a Waiver. Any forbearance by Lender in
exercising any right or remedy hereunder, or otherwise afforded by law, shall
not be a waiver or preclude 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 and 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. Successors 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 provided 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 been 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
conflict shall not affect other provisions of this Deed of Trust or the Note
which can be given effect without the conflicting provisions, and to this end
the provisions of the Deed of Trust and Note are declared to be severable.
18. Acceleration; Foreclosure; Other Remedies. Except as provided in
paragraph 24 (Transfer of the Property; Assumption),
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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, 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 attorneys' 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 perons 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 parcel as Trustee
may think best and in such order as Trustee may determine. Lender or
Lender's designee 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 attorneys' 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 so 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.
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 statutor Trustee's fees. If Lender shall not produce the Note as
aforesaid, the Lender, upon notice in accordance with paragraph 16 (Notice)
from Borrower to Lender, shall obtain, at Lender's expense, and file any 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 secured 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.
Upon payment in full of all sums secured by this Deed of Trust, Lender
shall simultaneouly 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 imemdiately 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 therin), (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 this 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 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 the 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
3
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hereunder for the obligations hereby secured.
(c) Should Lender not elect to Accelerate upon the occureence of such
Transfer then, subject to (b) above, the mere fact of a 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.
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EXECUTED BY BORROWER:
IF BORROWER IS NATURAL PERSON(s):
- -------------------------------------- --------------------------------------
doing business as
- -------------------------------------- --------------------
IF BORROWER IS CORPORATION:
ATTEST: CROSS-CONTINENT AUTO RETAILERS, INC.
A DELAWARE CORPORATION
--------------------------------------
Name of Corporation
/s/ R. Wayne Moore by: /s/ Bill Gilliland
- -------------------------------------- --------------------------------------
Secretary Bill Gilliland, Chairman
IF BORROWER IS PARTNERSHIP:
--------------------------------------
Name of Partnership
By:
--------------------------------
A General Partner
STATE OF TEXAS )
)
COUNTY OF POTTER )
The foregoing instrument was acknowledged before me this 10th day of
October, 1997, by * Bill Gilliland as Chairman of Cross-Continent Auto
Retailers, Inc., a Delaware Corporation.
Witness my hand and official seal.
My commission expires: 5-6-98
----------
/s/ Kathy Rieken
--------------------------------------
Notary Public
1201 S. TAYLOR, AMARILLO, TX 79101
--------------------------------------
Address
*If a natural person or persons, insert the name(s) of such person(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 in and for Smith & Smith, a
general partnership."
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Exhibit 10.35.4
DEED OF TRUST AND ASSIGNMENT OF RENTS
THIS DEED OF TRUST, made this 30th day of September, 1997, between
CROSS-CONTINENT AUTO RETAILERS, INC., herein called GRANTOR or TRUSTOR, whose
address is 1201 S. Taylor Street, Amarillo, Texas 79105-0750, OLD REPUBLIC
TITLE COMPANY OF NEVADA, a Nevada corporation, herein called TRUSTEE, and R.
DOUGLAS SPEDDING, a married man, whose address is 4380 East Alameda Avenue,
Glendale, Colorado 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.
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 of 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 $7,400,000 executed by
Trustor in favor of Beneficiary or order.
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.
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 to 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 by 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 hereof 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.
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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.
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 Canceled 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, after ten (10) days written notice from Beneficiary stating
nature of default, 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.
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 demands or notice 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.
(c) At the time of sale so fixed, Trustee may sell the property so
advertised or any part 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 is 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.
2
<PAGE>
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 of
NRS 107.030 are hereby adopted and made a part of this Deed of Trust.
The undersigned Trustor requests that a copy of any Notice of Default and of
any Notice of Sale hereunder be mailed to him at this address hereinbefore
set forth.
Signature of Trustor
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Bill Gilliland
---------------------------------- -------------------------------------
Bill Gilliland, Chairman and
Chief Executive Officer
---------------------------------- -------------------------------------
STATE OF TEXAS )
)
COUNTY OF POTTER )
On OCTOBER 10, 1997, before me, the undersigned, a Notary Public in and for
said State, personally appeared Bill Gilliland, Chairman and Chief Executive
Office of Cross-Continent Auto Retailers, Inc., personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/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/ Kathy Rieken
------------------------------------
Name: Kathy Rieken
-----------------------------------------
(typed or printed)
(This area for official notarial seal)
______________________ SPACE BELOW THIS LINE FOR RECORDER'S USE _______________
- --------------------------------------------
Title Order No. ____97-28-8268______
Escrow No. ______97-28-8268-JL____
- --------------------------------------------
WHEN RECORDED MAIL TO:
NAME R. DOUGLAS SPEDDING
4380 EAST ALAMEDA AVEMUE
STREET GLENDALE, CO 80222
ADDRESS
CITY &
STATE
3
<PAGE>
Exhibit 10.35.5
SECURITY AGREEMENT
AGREEMENT made this 30th day of September, 1997, between Cross Continent
Auto Retailers, Inc., Douglas Toyota, Inc., and Toyota West Sales and
Service, Inc. as debtors (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 loan from Lender to Debtor, of even date herewith, for the purpose
of funding the construction of new automobile dealerships upon certain
properties owned by Debtor and located in Denver, Colorado and Las Vegas,
Nevada (the "Projects").
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 each and every debt, liability
and obligation of every type and description which Debtor owes to Lender,
pursuant to that Interim Construction and Master Loan Agreement (the "Loan
Agreement") dated September 30, 1997, between Lender and Debtor, (whether
such debt, liability or obligation arising thereunder now exists or is
hereafter created or incurred, and whether it is direct or indirect, due or
to become due, absolute or contingent, primary or secondary, liquidated or
unliquidated, or sole, joint, several or joint and several) (all such debts,
liabilities and obligations are herein collectively referred to as the
"Obligations"). The Security Interests shall attach to the following
property of Debtor (the "Collateral"), and all products and proceeds thereof
(including without limitation any proceeds consisting of accounts receivable,
chattel paper, and insurance proceeds):
PERSONAL PROPERTY: All equipment, furniture, fixtures, improvements, and
attachments of any nature whatsoever, now owned or hereafter acquired by
Debtor, and located on or used in conjunction with either of the properties
described in Exhibit A attached hereto (the "Property"), wherever such
collateral may thereafter be located;
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 (i) all accessories, attachments, parts,
equipment and repairs now or hereafter attached or affixed to or used in
connection with any such goods, and (ii) all warehouse receipts, bills of
lading and other documents of title now or hereafter covering such goods.
This Security Agreement secures a purchase money security interest in any and
all improvements made to the Property, as the Property is described in the
Exhibits hereto, and in any financing statements filed in connection with or
related to this Security Agreement.
1
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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 (except the first
liens against the Property in favor of RDS, Inc. and R. Douglas Spedding as
more specifically described in the Loan Agreement), liens, attachments,
encumbrances and security interests except the Security Interests and except
as provided herein or in the Interim Construction and Master Loan Agreement
(the "Loan Agreement") 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, which consent will not be unreasonably
withheld.
2
<PAGE>
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.
c. Debtor will keep all tangible Collateral in good repair,
working order and condition, normal depreciation 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
Debtors' normal business hours as long as such activities do not unreasonably
result in a disturbance to Debtor's business. Lender agrees to use reasonable
efforts to maintain the confidentiality of information concerning the
Borrower or its business indicated by the Borrower 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 Obligations or shall constitute
a defense by Debtor to repayment of such Obligations 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 in Debtor's business that would result in a
negative impact upon the prospect of payment upon payment of the Obligations.
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 flood (if such properties are located within a 100-year or
less flood plain), fire (including so-called extended coverage), theft,
collision (for Collateral consisting of motor vehicles) 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.
3
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k. Debtor will pay or reimburse the Lender on demand for all
reasonable costs of collection of any of the Obligations 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 Obligations.
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 (10)
calendar days as to monetary defaults, and twenty (20) calendar days as to
non-monetary defaults, 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 of Debtor 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 obligations
owed to account debtors or other obligors, the procurement and maintenance of
insurance); 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 highest lawful rate then applicable to any
of the Obligations.
3. In addition to the other rights of the Lender set forth herein this
agreement, with respect to any and all rights to payment constituting
Collateral the Lender may, at any time after the occurrence of an Event of
Default as defined herein, notify any account debtor or other person
obligated to pay any amount due to Debtor 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, 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 obligations (including collateral
obligations) of any such account debtor or other obligor as long as such
waiver, modification, amendment or change is reasonable.
4. As additional security for the payment and performance of the
Obligations, 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 sixty (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), 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
4
<PAGE>
claim against the issuer of any such policy.
5. 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 Obligations when due or, if
payable on demand, on demand, and such failure shall not have been cured
within ten (10) calendar days after Lender gives Debtor written notice
thereof; 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, and any applicable grace period therefore
shall have expired and such failure shall not have been cured within twenty
(20) calendar days after Lender gives Debtor written notice thereof; 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 Obligations, 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 $100,000) and such
failure shall not have been cured within twenty (20) calendar days after
Lender gives Debtor written notice thereof; 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
portin 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 and such failure shall not have been
cured within twenty (20) calendar days after Lender gives Debtor written
notice thereof; or (vi) there shall be any default under the Note, Deed of
Trust or Loan Agreement given by Debtor to and in favor of Lender in
furtherance of the Projects and of even date herewith that has not been cured
within any applicable cure period set forth in such documents.
6. Upon the occurrence of an Event of Default under paragraph 5 and at
any time thereafter, the lender may exercise one or more of the following
rights and remedies; (i) declare all unmatured Obligations to be immediately
due and payable, and the same shall thereupon be immediately due and payable,
without presentment or other notice or demand (but the Lender expressly
reserves the right to demand payment of any Obligation payable on demand, at
any time, whether or not an Event of Default has occurred or is continuing);
(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
and the right to sell, lease 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 8) at
least ten (10) 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.
7. This Agreement does not contemplate a sale of accounts, contract
rights or chattel paper, and,
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<PAGE>
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.
8. 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.
9. 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.
10. 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 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 Obligations. Debtor waives
notice of the acceptance of this Agreement by the Lender.
11. 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/ Robert W. Hall
-----------------------------------------
Title: Senior Vice Chairman
--------------------------------------
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DOUGLAS TOYOTA, INC.
By: /s/ Robert W. Hall
-----------------------------------------
Title: Vice President
--------------------------------------
TOYOTA WEST SALES AND SERVICE, INC.
By: /s/ Robert W. Hall
-----------------------------------------
Title: Vice President
--------------------------------------
LENDER:
/s/ R. Douglas Spedding
---------------------------------------------
R. Douglas Spedding
7
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION OF
LAS VEGAS, NEVADA AND DENVER, COLORADO PROPERTIES
<PAGE>
EXHIBIT 10.35.6
GUARANTY
THIS GUARANTY is made and given this 30th day of September, 1997 by
Mr. Bill A. Gilliland ("Guarantor") to and in favor of Mr. R. Douglas
Spedding ("Lender").
RECITAL OF FACTS
WHEREFORE, Lender has agreed to make a loan (the "Loan") to, on behalf
and for the benefit of Cross-Continent Auto Retailers, Inc., Toyota West
Sales and Service, Inc., Douglas Toyota, Inc. and Sahara Imports, Inc.
(collectively referred to herein as the "Borrower") to finance the
construction of new automobile dealership facilities on certain real
properties owned by Borrower in Denver, Colorado and Las Vegas, Nevada (the
"Project"), with the metes and bounds or other legal descriptions of such
properties being more particularly set forth in Exhibit "A" attached hereto
and made a part hereof by reference (the "Parcels"); and
WHEREFORE, the Loan is for the amount of $7,400,000, bearing interest in
accordance with the provisions of that certain Promissory Note of even date
herewith (the "Note"), a copy which is attached as Exhibit "B" and
incorporated herein by this reference. Interest is payable monthly as
provided in the Note, which is secured by a Second Deed of Trust on the
Parcels and the Project, a Security Agreement and Financing Statements, this
Guaranty, and certain other loan documents (hereinafter collectively referred
to as the "Security Instruments"); and
WHEREFORE, to induce Lender to make the Loan and to provide Lender with
additional security for the performance of Borrower's obligations under the
Security Instruments, Guarantor has agreed to guarantee (1) repayment of the
principal amount of the Loan; (2) payment of interest and other monetary
obligations of Borrower under the Security Instruments; (3) the performance
of all covenants, obligations, and conditions provided in the Security
Instruments; and (4) the completion of the Project in conformance with the
plans and specifications. The purpose of this Guaranty is to specify the
terms and conditions of those guarantees.
NOW, THEREFORE, incorporating the recitals of facts above, and to induce
Lender to make the Loan to Borrower, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Guarantor agrees as follows:
1. GUARANTY OF PAYMENT. Guarantor hereby absolutely and
unconditionally guarantees to Lender the timely, complete, and full payment
of all principal, interest, and other sums presently due and owing or which
in the future become due and owing to Lender from Borrower in connection with
the Interim Construction and Master Loan Agreement of even date herewith, or
the Loan contemplated thereby or any promissory note, deed of trust, security
agreement, or any other Security Instrument now or hereafter made in
connection herewith. It is understood that this Guaranty is a guarantee of
immediate payment and that Lender may enforce this right to immediate payment
without proceeding against or joining the Borrower and without applying or
enforcing any security for the Loan.
2. GUARANTY OF PERFORMANCE. Guarantor hereby absolutely and
unconditionally
<PAGE>
guarantees to Lender the full observance and performance of all conditions,
agreements, covenants, and obligations of Borrower under the Security
Instruments, including without limitation the satisfactory completion of the
Project in accordance with the plans and specifications approved by Lender
from time to time, free and clear of any and all materialmens' and mechanics'
liens. In the event of any default by Borrower in its obligations under any
of the Security Instruments, Guarantor agrees upon notification by Lender, to
assume responsibility for the completion of the Project and, at Guarantor's
own cost and expense, to cause the Project to be fully and satisfactorily
completed.
3. ASSIGNMENT. Lender may assign or transfer this Guaranty and its
rights hereunder, in whole or in part, in connection with the assignment or
transfer of the Loan. The benefit of this Guaranty shall automatically pass
with a transfer or assignment of Lender or his successor or assign in the
Loan or any portion thereof to any subsequent party to the extent of such
party's interest in the Loan. In the event of any such transfer or
assignment, this Guaranty shall remain in full force and effect with respect
to any interest which is retained by Lender. All rights and privileges of
Lender herein shall inure to the benefit of each and every assign and
successor to the rights of Lender, regardless of whether such assign or
successor holds an interest in the Loan currently with Lender, and all
references to Lender herein shall be deemed to include every assignee or
successor of Lender or any subsequent holder of the Loan or any portion
thereof.
4. ACTIONS BY LENDER. No action Lender may take or omit to take
in connection with the Loan or any security given therefor, nor any course of
dealing with Borrower or any representative or employee of Borrower, shall
relieve Guarantor of its obligations hereunder, or affect this Guaranty in
any way. By way of example, but not in limitation of the foregoing,
Guarantor hereby expressly agrees that Lender may, from time to time and
without notice to Guarantor:
(a) Amend, change, or modify, in whole or in part, the Security
Instruments;
(b) Accelerate, change, extend, or renew the time for payment of
any promissory note given in connection with the Loan;
(c) Waive any terms, conditions, or covenants of any of the
Security Instruments, or grant any extension of time or forbearance for
performance of the same;
(d) Compromise or settle any amount due or owing or claimed to be
due or owing under any of the Security Instruments; or
(e) Surrender, release, or subordinate any or all of the security
for the Loan or accept additional or substituted security therefor.
The provisions of this Guaranty shall extend and be applicable to all
renewals, amendments, extensions, and modifications of the Security
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Instruments, and all references to any Security Instruments shall be deemed
to include any such renewal, extension, amendment, or modification thereof.
5. WAIVER. Guarantor expressly waives notice of acceptance of
this Guaranty, presentment of payment, or performance of Borrower's
obligations under the Security Instruments, protest and notice of protest,
demand, notice of dishonor, notice of any and all proceedings to collect
amounts due under the Security Instruments, and to enforce any security given
for the Loan, and diligence in collecting sums due under the Loan or to any
liability under this Guaranty.
Guarantor also waives any right to require Lender to proceed against
Borrower, to proceed against or exhaust any security held to guarantee
performance of Borrower's obligations to Lender, or to pursue any other
remedy whatsoever available to Lender. Guarantor expressly waives any
defense arising by reason of any disability or other defense of Borrower, by
reason of the cessation from any cause whatsoever of the liability of
Borrower, or by reason of Lender's election of any remedy against Borrower or
Guarantor, or both, including without limitation election of Lender to
exercise its rights under the power of sale contained in any deed of trust
securing the Loan and the potential loss by Guarantor of the right to recover
any deficiency from Borrower. Until all indebtedness of Borrower to Lender
shall have been paid in full, Guarantor shall have no right of subrogation
and Guarantor hereby expressly defers any right to enforce any remedy which
Lender now has or may hereafter have against Borrower and defers any benefit
of any right to participate in any security now or hereafter held by Lender.
In the event Borrower or Guarantor shall at any time become insolvent or make
a general assignment, or if a petition in bankruptcy or any insolvency or
reorganization proceeding shall be filed or commenced by, against, or in
respect of the Borrower or Guarantor, such action shall not in any manner
affect the continuing obligations of Guarantor hereunder. The validity of
this Guaranty and the obligations of the Guarantor shall not be terminated,
affected, or impaired by the relief, discharge, or release of any or all of
the indebtedness by operation of law or otherwise, including, without
limitation, a discharge in bankruptcy, receivership, or other proceedings, a
disaffirmation or rejection of the indebtedness by a trustee or other
representative in bankruptcy, a stay or other enforcement restriction, or any
other reduction, modification, impairment, or limitation of any of the
indebtedness.
In addition, Guarantor agrees that Lender shall have no duty to disclose
to Guarantor any information it receives regarding the financial status of
the Borrower, whether or not such information indicates that the risk that
Guarantor may be required to perform hereunder has been or may be increased.
Guarantor assumes full responsibility for being and keeping informed of all
such matters.
6. INDEPENDENT OBLIGATION. The obligations of Guarantor hereunder
are independent of the obligations of Borrower, and Lender may proceed
directly to enforce its rights under this Guaranty without proceeding against
or joining the Borrower and without applying or enforcing any security for
the Loan. Guarantor hereby waives any rights it may have to compel Lender to
proceed against the Borrower or any security or to participate in any
security for the sums guaranteed hereby.
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<PAGE>
7. DEFAULT. In case of any default in the performance of the
Security Instruments, Lender shall have the right (1) to enforce its rights
under this Guaranty or (2) to enforce its rights against Borrower, including
without limitation its rights under any instrument securing the payment or
performance of the Loan, in any order, and all remedies available to Lender
shall be nonexclusive. Guarantor hereby empowers Lender, its successors and
assigns, in their sole discretion, with notice to Guarantor, to exercise any
right or remedy which they may have, including but not limited to judicial
foreclosure, exercise of rights of power of sale, taking a deed or assignment
in lieu of foreclosure or sale, appointment of a receiver to protect the
security or to collect rents and profits, exercise of remedies against
personal property, or enforcement of an assignment of leases, as to any
security, whether real, personal, or intangible, and Guarantor shall be
liable to Lender for any failure of such securities to fully satisfy the
Loan, but in no event more than the full amount due and owing, even though
any rights which Guarantor may have against the Borrower or others may be
diminished or destroyed by the exercise or election to exercise any such
remedy. In the event Lender, in its sole discretion, elects to foreclose
against all or any portion of the security given for the loan, the amount bid
by Lender or the amount received by Lender at the sale of the security shall
be conclusive evidence of the value of the security for purposes of
determining any remaining deficiency judgment to be enforced against the
Guarantor.
8. PROCEEDS. Guarantor hereby authorizes Lender, with notice to
Guarantor, to apply all payments and credits received from Borrower or from
Guarantor to payment of the Loan or in satisfaction of any of the covenants
and conditions set forth in the Security Instruments, in such manner and in
such priority as Lender, in its sole judgment, shall see fit.
9. INDEMNITY. Guarantor agrees to indemnify Lender for, and hold
Lender harmless against, all loss, cost, and expense, including without
limitation all court costs and reasonable attorneys' fees (including
appellate fees, if any), reasonably incurred or paid by Lender in enforcing
or compromising any rights under this Guaranty.
10. DELEGATION. Guarantor's obligations hereunder shall not be
assigned or delegated.
11. AMENDMENT. This Guaranty may not be changed orally, and no
obligation of the Guarantor can be released or waived by Guarantor or
Borrower except in a written amendment hereto signed by Lender.
12. DEATH OR RELEASE OF GUARANTOR. Guarantor agrees that the death
of Guarantor shall not effect a termination of this Guaranty and that nothing
shall discharge or satisfy the liability of Guarantor hereunder except the
full payment and performance of all Borrower's debts and obligations to
Lender with interest.
13. GOVERNING LAW. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Colorado. Guarantor
hereby consents to jurisdiction within the State of Colorado for purposes of
any such litigation and agrees that service of process may be made, and
4
<PAGE>
personal jurisdiction over Guarantor obtained, by whatever methods are
provided by Colorado law. Nothing contained herein, however, shall prevent
Lender from bringing any action or exercising any rights against the security
for the Loan or against Guarantor, individually or personally, or any
property of Guarantor, within any other state. Initiating such proceedings
or taking such action in any other state shall not, however, constitute a
waiver of the agreement contained herein that the laws of the State of
Colorado shall govern the rights and obligations of Guarantor.
5
<PAGE>
14. SEVERANCE. If any term or provision of this Guaranty shall be
determined to be illegal or unenforceable, all other terms and provisions
hereof shall nevertheless remain effective and shall be enforced to the
fullest extent permitted by law.
15. TERM. This Guaranty shall be irrevocable by Guarantor until
the entire principal amount of the Loan has been repaid to Lender, together
with all accrued interest and other charges due and payable to Lender under
any Security Instrument.
16. NOTICE OF SPECIAL EVENTS. If Guarantor shall become bankrupt
or insolvent, or any application shall be made to have Guarantor declared
bankrupt or insolvent, or Guarantor shall make an assignment for the benefit
of creditors, notice of such occurrence or event shall be promptly furnished
to Lender by Guarantor.
17. RIGHTS CUMULATIVE. The rights of Lender granted and arising
hereunder shall be separate and distinct and cumulative of other powers and
rights which Lender may have at law or in equity, and none of them shall be
exclusive of the others and all of them are cumulative to the remedies for
collection of indebtedness, enforcement of rights under the deed of trust,
and preservation of security as provided by law. No act of Lender shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision or an election of remedies to the bar of any
other remedy allowed at law or in equity, anything herein or otherwise to the
contrary notwithstanding.
18. NO WAIVER BY LENDER. Failure by Lender to exercise any right
which it may have hereunder shall not be deemed a waiver thereof unless so
agreed in writing by Lender and, if any such waiver is given, it shall not be
deemed a continuing waiver or a waiver of any other default or of the same
default on another occasion.
19. NOTICES. All notices hereunder shall be in writing and shall
be deemed to have been sufficiently given or served for all purposes when
presented personally (which includes notices given by messengers or overnight
couriers) or, if sent by mail, shall be deemed given and delivered seven (7)
days after being deposited in any duly authorized United States mail
depository, postage prepaid, certified with return receipt requested, or, if
delivered by telegraph, shall be deemed given upon the sender's receipt of
confirmation of delivery by the telegraph company. Any notices delivered
hereunder shall be addressed to the following unless otherwise notified in
accordance herewith:
6
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been executed as of the day
and year first above written.
GUARANTOR
/s/ Bill A. Gilliland
-------------------------------------------
Mr. Bill A. Gilliland
STATE OF TEXAS )
)ss.
COUNTY OF POTTER )
The foregoing instrument was acknowledged before me this 10th day of
October, 1997 by Mr. Bill A. Gilliland.
Witness my hand and official seal.
My commission expires: 5-6-98
----------------
Notary Public: /s/ Kathy Rieken
------------------------
7
<PAGE>
EXHIBIT 10.36.1
CROSS DEFAULT AND CROSS COLLATERALIZATION AGREEMENT
THIS AGREEMENT dated this 22nd day of August, 1997, is entered into
by GENERAL MOTORS ACCEPTANCE CORPORATION, A NEW YORK CORPORATION,
(hereinafter referred to as "GMAC"), on the one hand, and MIDWAY CHEVROLET,
INC., A TEXAS CORPORATION; PLAINS CHEVROLET, INC., A TEXAS CORPORATION;
QUALITY NISSAN, INC., A TEXAS CORPORATION; WESTGATE CHEVROLET, INC., A TEXAS
CORPORATION, SAHARA NISSAN, INC., D/B/A NISSAN WEST, a Nevada Corporation,
and CROSS-CONTINENT AUTO RETAILERS, INC., on the other hand (collectively
referred to herein as "BORROWERS").
W I T N E S S E T H
WHEREAS, the BORROWERS are indebted to GMAC under various promissory
notes, security agreements, mortgages, guaranties and other agreements
(collectively referred to herein as "loan documents"), and
WHEREAS, GMAC may hereafter make additional loans, advances, and other
extensions of credit to BORROWERS; and
WHEREAS, GMAC is willing to extend credit evidenced by the loan documents
to BORROWERS if BORROWERS agree to provide additional security by cross
default and cross collateralizing all of said existing, proposed, and future
loans, advances, or extensions of credit to them individually and/or
collectively; and
WHEREAS, BORROWERS have requested that GMAC release certain parties from
their guaranty agreements by which they had previously guaranteed all of
certain BORROWERS' indebtedness to GMAC; and
WHEREAS, it is the intention of BORROWERS and GMAC that all collateral in
which GMAC now has or may hereafter obtain a lien on or security in from any
and/or all of Borrowers shall secure payment and performance of all loans,
advances, and other extensions of credit now or hereafter made by GMAC to any
and/or all of BORROWERS.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged, including the inducement of GMAC, in
its sole discretion, to extend credit to BORROWERS, IT IS AGREED as follows:
(1) DEFINITIONS: As used in this Agreement, the terms listed below shall
have the following meaning:
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(a) OBLIGATIONS shall mean any liability, indebtedness, or obligation of
BORROWERS, either individually and/or collectively, to GMAC
of every kind and nature, now existing or hereafter arising, whether
created directly or acquired by assignment, whether matured or
unmatured, and any costs or expense, including reasonable attorneys,
fees incurred in the collection or enforcement of any such obligation;
(b) SECURITY AGREEMENT shall mean any existing or future agreements
between BORROWERS, individually and/or collectively, and GMAC which
creates or provides for a security interest in or lien upon any of the
assets or property (tangible or intangible, real or personal) of
BORROWERS, including but not limited to security agreements, deeds of
trust, mortgages, and wholesale floorplan agreements.
(2) CROSS-COLLATERALIZATION: All collateral now or hereafter subject to
a security interest or lien of GMAC pursuant to any or all of the Security
Agreements between BORROWERS and GMAC shall secure any and all Obligations,
and any proceeds of any collateral may he applied to any of the Obligations
as GMAC may see fit, subject to applicable law.
(3) CROSS DEFAULT: In addition to and not in substitution for any
provisions in any of the Security Agreements evidencing obligations, it is
agreed that any default or breach by BORROWERS, individually and/or
collectively, in payment or default of a material nature under any agreement
evidencing an Obligation shall, at the option of GMAC, constitute a default
under each and all loan documents executed by any of the BORROWERS in favor
of GMAC.
(4) EFFECT ON OTHER AGREEMENTS: This Agreement shall constitute an
amendment and supplement of each Security Agreement now or hereafter executed
and shall augment and be in addition to and not in substitution for any
provision of any Security Agreement or Obligation and shall not otherwise
limit or affect the rights and remedies of GMAC under any such Security
Agreement or Obligation.
(5) FUTURE LOANS: GMAC may, in its sole and absolute discretion, make
additional loans and other financing accommodations to BORROWERS, all of
which will be subject to the terms of this Agreement. Notwithstanding
anything to the contrary, any future change in the terms of any of BORROWERS'
Obligations shall require the written consent of GMAC.
(6) NOTICES: Any notices or other communications required or permitted
to be given by this document or by any of the loan documents must be given in
writing and must be personally delivered or mailed by prepaid certified,
registered, or first class mail or delivered by a nationally recognized
overnight courier to the party to whom such notice
2
<PAGE>
or communication is directed at the address set forth in this document. Any
notice or other communication shall be deemed to have been given (whether
actually received or not) on the day it is personally delivered or, if
mailed, on the third day after it is mailed as aforesaid. Either party may
change its address for purposes of this document by giving ten (10) days
prior written notice of such change to the other party pursuant to the terms
of this clause.
(7) NO OTHER UNDERSTANDINGS: Other than as recited herein, BORROWERS
acknowledge that GMAC has made no promises to induce execution of this
Agreement and that there are no other agreements or understandings, either
oral or in writing, affecting this Agreement and nothing in this Agreement
shall be considered a waiver by GMAC of any existing or future default(s) by
any BORROWERS of any Security Agreement or Obligation. No further
modification or amendment of this Agreement shall be made except in writing
executed by all parties.
(8) GOVERNING LAW: This Agreement shall he deemed to be a contract
entered into and made pursuant to the laws of the State of Oklahoma and shall
in all respects be governed, construed, and enforced in accordance with the
laws of said State.
(9) SUCCESSORS AND ASSIGNS: The provisions of this Agreement shall be
binding upon and shall inure to the benefit of the successors and assigns of
BORROWERS and GMAC.
MIDWAY CHEVROLET, INC.,
A TEXAS CORPORATION
WITNESS:
By: /s/ Bill Gilliland
-----------------------------------
BILL GILLILAND
/s/ Kathy Rieken
- --------------------------- Title PRESIDENT
/s/ Diana Walling Address: Canyon Expressway & Rockwell
- --------------------------- -------------------------------
Amarillo, Texas 79106
-------------------------------
PLAINS CHEVROLET, INC.,
A TEXAS CORPORATION
WITNESS:
By: /s/ Bill Gilliland
-----------------------------------
BILL GILLILAND
/s/ Kathy Rieken
- --------------------------- Title PRESIDENT
---------------------------------
/s/ Diana Walling Address: 2200 I-40 East
- --------------------------- -------------------------------
Amarillo, Texas 79103
QUALITY NISSAN, INC.
3
<PAGE>
A TEXAS CORPORATION
WITNESS:
By: /s/ Bill Gilliland
-----------------------------------
BILL GILLILAND
/s/ Kathy Rieken
- --------------------------- Title PRESIDENT
---------------------------------
/s/ Diana Walling Address: 4121 South Georgia
- --------------------------- -------------------------------
Amarillo, Texas 79110
WESTGATE CHEVROLET, INC.,
A TEXAS CORPORATION
WITNESS:
By: /s/ Bill Gilliland
-----------------------------------
BILL GILLILAND
/s/ Kathy Rieken
- --------------------------- Title PRESIDENT
---------------------------------
/s/ Diana Walling Address: 7300 I-40 West
- --------------------------- -------------------------------
Amarillo, Texas 79016
SAHARA NISSAN, INC., D/B/A
NISSAN WEST, A NEVADA CORPORATION
WITNESS:
By: /s/ Bill Gilliland
-----------------------------------
BILL GILLILAND
/s/ Kathy Rieken
- --------------------------- Title PRESIDENT
---------------------------------
/s/ Diana Walling Address: 5050 West Sahara Avenue
- --------------------------- -------------------------------
Las Vegas, Nevada 89102
CROSS-CONTINENT AUTO RETAILERS, INC.
A DELAWARE CORPORATION
WITNESS:
By: /s/ Bill Gilliland
-----------------------------------
BILL GILLILAND
/s/ Kathy Rieken
- --------------------------- Title CHAIRMAN OF THE BOARD
---------------------------------
CHIEF EXECUTIVE OFFICER
---------------------------------
/s/ Diana Walling Address: 1201 South Taylor Street
- --------------------------- -------------------------------
Amarillo, Texas 79105
"BORROWERS"
4
<PAGE>
GENERAL MOTORS ACCEPTANCE CORPORATION
WITNESS:
By:
----------------------------------
- ---------------------------
Title Area Manager
-------------------------------
- --------------------------- Address: 6303 Waterford Blvd.
----------------------------
Suite 100
----------------------------
Oklahoma City, OK 73118
----------------------------
5
<PAGE>
EXHIBIT 10.36.2
GUARANTY AGREEMENT
THIS AGREEMENT is made effective as of the 22ND day of August, 1997, by
CROSS-CONTINENT AUTO RETAILERS, INC., A DELAWARE CORPORATION, (the "GUARANTOR"),
having a notice address of 1201 SOUTH TAYLOR STREET, P.O. BOX 750, AMARILLO,
TEXAS 79105-0750, in favor of GENERAL MOTORS ACCEPTANCE CORPORATION (the
"LENDER") having a notice address of 6303 WATERFORD BOULEVARD, SUITE 100,
OKLAHOMA CITY, OKLAHOMA 73118.
W I T N E S S E T H:
In consideration of the release by GMAC of the Guaranty Agreements of
various entities of which the undersigned is a shareholder or an affiliate and
the release of personal guaranties of various individuals of the obligations of
PERFORMANCE DODGE, INC., PERFORMANCE NISSAN, INC., MIDWAY CHEVROLET, INC.,
PLAINS CHEVROLET, INC., QUALITY NISSAN, INC., WESTGATE CHEVROLET, INC., AND
SAHARA NISSAN, INC., and in consideration of present and future financial
accommodations to MIDWAY CHEVROLET, INC., PLAINS CHEVROLET, INC., QUALITY
NISSAN, INC., WESTGATE CHEVROLET, INC., AND SAHARA NISSAN, INC., (HEREINAFTER
COLLECTIVELY REFERRED TO AS "BORROWERS") and the benefits to be derived by
Guarantor therefrom, IT IS AGREED as follows:
1. The Guarantor guarantees to Lender the absolute, complete and punctual
performance of any liability, indebtedness, or obligation of Borrowers, either
individually and/or collectively, to GMAC of every kind and nature, now existing
or hereafter arising, whether matured or unmatured, and any costs or expenses,
including reasonable attorneys, fees incurred in the collection or enforcement
of any such obligation. The obligation of the Guarantor hereunder is an
absolute, unconditional and continuing guaranty of payment and performance by
the Borrowers and will not terminate until the Borrowers have paid in full all
of the amounts owing to Lender and have performed all of the Borrowers,
obligations under any and all agreements with Lender.
2. The Guarantor agrees that the Guarantor's liability hereunder will not
be released, reduced, impaired or affected by the occurrence of any one or more
of the following events: (a) the Lender's obtaining collateral from the
Borrowers or any other person to secure payment or performance under any
agreement; (b) the assumption of liability by any other person (whether as
Guarantor or otherwise) for payment or performance under any agreement; (c) the
release, surrender, exchange, loss, termination, waiver or other discharge of
any collateral securing payment or performance under any agreement; (d) the
subordination, relinquishment or discharge of the Lender's rights relating to
any agreement or any collateral described therein; (e) the full or partial
release from liability by the Lender of any other person now or hereafter liable
for payment or performance under any agreement; (f) the death,
<PAGE>
insolvency, bankruptcy, reorganization, disability, discharge, waiver or other
exoneration by the Lender of any other person now or hereafter liable for
payment or performance under any agreement; (g) the renewal, consolidation,
extension, modification, rearrangement or amendment from time to time of the
loan or of the terms of any one or more of any agreement; (h) the failure,
delay, waiver or refusal by the Lender to exercise any right or remedy held by
the Lender under any agreement; (i) the invalidity, unenforceability or
insufficiency of any agreement or any collateral securing payment or
performance thereunder; or (j) the failure of the Guarantor to be given notice
of any one or more of the foregoing actions or events.
3. The Lender may, at the Lender's option, proceed to enforce this
Agreement directly against the Guarantor without first proceeding against the
Borrowers for payment or performance under any agreement if the Borrower is in
default and without first proceeding against or exhausting any collateral now or
hereafter held by the Lender to secure payment or performance under any
agreement.
4. The Guarantor waives diligence, presentment, protest, notice of
dishonor, demand for payment, notice of nonpayment or nonperformance, notice of
acceptance of this Agreement and all other notice of any nature in connection
with the exercise of the Lender's rights under any agreement or this Agreement.
Performance by the Guarantor hereunder will not entitle the Guarantor to any
payment by any Borrower under any claim for contribution, indemnification,
subrogation or otherwise, until such time as the Borrower shall have paid in
full all amounts owing to the Lender and performed all of the Borrower's
obligations under any agreement.
5. The Guarantor agrees that in any action brought to enforce this
Agreement in which the Lender prevails, the Guarantor will pay to the Lender
reasonable attorney's fees, court costs and other expenses incurred by the
Lender.
6. Nothing herein contained will limit the Lender in exercising any rights
held under any agreement. In the event ofany defaultunder any agreement or this
Agreement, the Lender will be entitled to enforce any one or more of the rights
held by the Lender and such action will not he deemed a waiver of any other
right held by the Lender. All of the remedies of the Lender under this
Agreement and any agreement are cumulative and not alternative.
7. If any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect or for any reason, such invalidity, illegality or
unenforceability will not affect any other provisions herein contained and such
other provisions will remain in full force and effect.
8. This agreement will be binding on the Guarantor(s) and all
representatives, successors and assigns of the Guarantor(s) and will
<PAGE>
inure to the benefit of the Lender and all successors and assigns of the
Lender.
9. This Agreement cannot be amended except by an agreement in writing.
CROSS-CONTINENT AUTO RETAILERS, INC.
A DELAWARE CORPORATION
BY: /s/ BILL GILLILAND
----------------------------------
BILL GILLILAND
ITS: CHAIRMAN OF THE BOARD AND
----------------------------------
CHIEF EXECUTIVE OFFICER
----------------------------------
STATE OF TEXAS )
) ss.
COUNTY OF POTTER )
Before me, a Notary Public, on this 22ND day of August, 1997,
personally appeared BILL GILLILAND, to me known to be the identical person who
subscribed the name of the maker thereof to the Guaranty Agreement as its
Chairman of the Board and Chief Executive Officer, and acknowledged to me that
he executed the same as the free and voluntary act and deed of such corporation,
for the uses and purposes therien set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year last above written.
/s/ Kathy Rieken
--------------------------------------
[SEAL] Notary Public
My Commission Expires:
5-6-98
- ----------------------
<PAGE>
EXHIBIT 10.37
ASSUMPTION AGREEMENT
THIS AGREEMENT entered into this 22ND day of August, 1997, between
GENERAL MOTORS ACCEPTANCE CORPORATION (HEREINAFTER REFERRED TO AS "GMAC") ,
having a notice address of 6303 Waterford Boulevard, Suite 100, Oklahoma City,
Oklahoma 73118, and CROSS-CONTINENT AUTO RETAILERS, INC. A DELAWARE CORPORATION
(HEREINAFTER REFERRED TO AS "C-CAR"), having a notice address of 1201 South
Taylor Street, P.O. Box 750, Amarillo, Texas 79105-0750.
R E C I T A L S
WHEREAS, C-CAR has entered into an agreement with PERFORMANCE DODGE, INC.
under which C-CAR is to purchase all of PERFORMANCE DODGE, INC.'S right, title
or interest in two (2) tracts of land lying and situated in the Southeast
Quarter (SE/4) of Section Ten (10), Township Eleven (11) North, Range Two (2)
West of the Indian Meridian, Oklahoma County, Oklahoma, more particularly
described upon Exhibit "A" attached and made a part hereof; and
WHEREAS, a portion of the consideration for C-CAR'S purchase of the above
referenced property from PERFORMANCE DODGE, INC., is C-CAR'S assumption and
agreement to pay according to the terms and provisions thereof all the unpaid
principal balance of and all interest thereon accruing upon that certain
Promissory Note, dated December 4, 1995, in the original principal amount of ONE
MILLION EIGHT HUNDRED FIFTY THOUSAND DOLLARS ($1,850,000.00) ("the Promissory
Note") executed by PERFORMANCE DODGE, INC., and payable to GMAC, a true and
correct copy of said Promissory Note is attached hereto marked Exhibit "B" and
made a part hereof; and
WHEREAS, the Promissory Note in favor of GMAC executed by PERFORMANCE
DODGE, INC., is secured by a certain Mortgage, Assignment and Security Agreement
dated December 4, 1995, and recorded on December 7, 1995, in Book 6826 at Page
1055, in the office of the County Clerk of Oklahoma County, Oklahoma, as well as
secured by a Uniform Commercial Code Financing Statement (Form UCC-1) filed in
the office of the County Clerk of Oklahoma County, Oklahoma; and
WHEREAS, C-CAR has requested, and GMAC has agreed, to release PERFORMANCE
DODGE, INC. of any liability to GMAC if GMAC would allow C-CAR to assume the
payment of the indebtedness evidenced by the Promissory Note and secured by the
Mortgage; and
WHEREAS, GMAC has consented to the request of C-CAR to release
1
<PAGE>
PERFORMANCE DODGE, INC. subject to the agreements and stipulations set forth
here.
NOW THEREFORE, in consideration of the foregoing, together with other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, it is hereby agreed as follows:
1. C-CAR does hereby assume and agree to pay the indebtedness
evidenced by the Promissory Note, and to assume, keep, observe and perform the
obligations, covenants and agreements under the Promissory Note and the
Mortgage, Assignment and Security Agreement, in the manner, at the times, and in
all other respects as therein provided.
2. C-CAR acknowledges and agrees that each and every term and provision of
the Promissory Note and the Mortgage, Assignment and Security Agreement is in
full force and effect, and agrees that all right, remedies, titles, liens,
security interests and equities evidenced and created by the Mortgage,
Assignment and Security Agreement are valid and subsisting, and are hereby
recognized, renewed, extended and continued in full force and effect to secure
the payment of the indebtedness evidenced by the Promissory Note and assumed by
C-CAR in accordance with the terms hereof. C-CAR covenants and agrees that to
the best of its knowledge there exists no event of default under the Promissory
Notes, the Mortgage, Assignment and Security Agreement or other document or
agreement executed in connection with the Promissory Note; and that to the best
of its knowledge there are no defenses, counter-claims or offsets to the
Promissory Note, the Mortgage, Assignment and Security Agreement or any document
or agreement executed in connection with the Promissory Note.
3. C-CAR and GMAC acknowledge and agree that the current unpaid principal
balance of the Promissory Note as of the date hereof is as follows:
ORIGINAL BALANCE CURRENT BALANCE
---------------- ---------------
$1,850,000.00 $
4. This written agreement represents the final agreement between the
parties and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties. Any modification of this Agreement
is required to be in writing and signed by bother GMAC and C-CAR.
IN WITNESS WHEREOF, this Agreement is executed on 22ND day of August,
1997.
CROSS CONTINENT AUTO RETAILERS, INC.
By: /s/ BILL GILLILAND
-----------------------------------
2
<PAGE>
BILL GILLILAND,
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
GENERAL MOTORS ACCEPTANCE CORPORATION
BY:
--------------------------------------
DON ROHR
AREA MANAGER
STATE OF TEXAS )
) ss.
COUNTY OF POTTER )
-------
The foregoing instrument was acknowledged before me this _______ day of
August, 1997 by BILL GILLILAND, as Chairman of the Board and Chief Executive
Officer of Cross-Continent Auto Retailers, Inc., a Delaware Corporation, on
behalf of the corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year last above written.
/s/ Kathy Rieken
-------------------------------------
[SEAL] Notary Public
My Commission Expires:
5-6-98
- ---------------
STATE OF TEXAS )
) ss.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this ___ day of August,
1997 by DON ROHR, as Area Manager, of General Motors Acceptance Corporation, a
corporation, on behalf of the corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year last above written.
3
<PAGE>
---------------------------------
[SEAL] Notary Public
My Commission Expires:
- ----------------------
4
<PAGE>
Exhibit 10.38
AMENDMENT TO OFFICE LEASE
This Amendment to Office Lease (the "Amendment") is dated
October 1, 1997, and amends the Office Lease dated June 1, 1996,
by and between Gilliland Group Family Partnership, a Texas
general partnership, as Landlord, and Cross-Country Auto
Retailers, Inc. (now known as Cross-Continent Auto Retailers,
Inc.)
For good and valuable consideration, the receipt of which is
hereby acknowledged, the parties to this Amendment agree as
follows:
1. PREMISES shall be amended to 9,691 square feet.
2. BASE RENT shall be amended to $10,242.00
3. TERMINATION DATE shall be amended to September 30, 2002.
4. Cross-Continent Auto Retailers, Inc. shall pay 56% of the water, gas,
electricity, taxes, insurance, and maintenance which is their share
of 1115 S. Taylor. Gilliland Group Family Partnership will bill
Cross-Continent Auto Retailers, Inc. monthly with terms of Net 10
days.
5. All capitalized terms used and not otherwise defined in this Agreement
shall have the same meaning given them in the Office Lease.
6. Except as expressly modified herein, the Office lease is and shall
remain in full force and effect, enforceable in accordance with
the terms and provisions thereof.
7. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
LANDLORD: GILLILAND GROUP FAMILY PARTNERSHIP
a Texas general partnership
By: /s/ Bill Gilliland
-----------------------------------
Bill Gilliland, General Partner
By: /s/ Robert W. Hall
-----------------------------------
Robert W. Hall, General Partner
TENANT CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ James F. Purser
-----------------------------------
James F. Purser, Chief Financial Officer
<PAGE>
EXHIBIT 10.39
AMENDMENT NO. 1
TO
NISSAN DEALER TERM
SALES AND SERVICE AGREEMENT
This Agreement of Amendment is entered into October 13, 1997 by and between
the Nissan Division of Nissan Motor Corporation U.S.A., a California corporation
(hereinafter "Seller"), and SAHARA NISSAN, INC., dba Jack Biegger Nissan, a
Nevada corporation (hereinafter "Dealer").
RECITALS
Effective July 1, 1997, Seller and Dealer entered into a Nissan
Dealer Term Sales and Service Agreement (hereinafter "the Agreement").
Seller and Dealer desire to amend the Agreement to reflect a change in
DBA Name.
THEREFORE, the parties hereby agree to amend the Agreement as follows:
1. The name of Dealer in the Final Article is hereby amended to read as
follows:
"Dealer Name: SAHARA NISSAN, INC. DBA NISSAN WEST"
The terms and conditions of the Agreement, to the extent not modified
herein, shall remain in full force and effect and shall continue to bind the
parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
as of the day and year first above written
DEALER SELLER
SAHARA NISSAN, INC. NISSAN DIVISION
DBA NISSAN WEST NISSAN MOTOR CORPORATION U.S.A.
By: /s/ Bill A. Gilliland By: /s/ Thomas H. Eastwood
--------------------------- ------------------------------------
Bill A. Gilliland Thomas H. Eastwood
Chairman and CEO Vice President
Nissan Division
By: /s/ William Kirrane
------------------------------------
William Kirrane
Regional Vice President, Southwest Region
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,152
<SECURITIES> 0
<RECEIVABLES> 19,626
<ALLOWANCES> 0
<INVENTORY> 56,718
<CURRENT-ASSETS> 78,496
<PP&E> 36,326
<DEPRECIATION> 8,936
<TOTAL-ASSETS> 180,188
<CURRENT-LIABILITIES> 76,532
<BONDS> 38,945
0
0
<COMMON> 142
<OTHER-SE> 62,974
<TOTAL-LIABILITY-AND-EQUITY> 180,188
<SALES> 359,193
<TOTAL-REVENUES> 359,193
<CGS> 296,756
<TOTAL-COSTS> 296,756
<OTHER-EXPENSES> 47,590
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,066
<INCOME-PRETAX> 10,781
<INCOME-TAX> 4,157
<INCOME-CONTINUING> 6,624
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,624
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
