<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 12, 1996
PACIFIC INTERNATIONAL SERVICES CORP.
(Exact Name of Registrant as Specified in Its Charter)
California
(State or Other Jurisdiction of Incorporation)
0-11404 95-2877371
(Commission File Number) (I.R.S. Employer Identification No.)
1600 Kapiolani Boulevard, Suite 825, Honolulu, Hawaii 96814
(Address of Principal Executive Offices)
(808) 926-4242
Not Applicable
(Former Name or Address, if Changed Since Last Report)
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ITEM 2. Acquisition or Disposition of Assets
------------------------------------
As previously reported in Registrant's Form 10-Q Quarterly Report for
the quarter ended June 30, 1996, Registrant has been experiencing cash flow
difficulties and its ability to continue to operate its automobile dealerships
would depend upon cooperation of Chrysler Financial Corporation ("CFC"),
Registrant's principal source of financing. Registrant has been engaged for
several months in negotiations with CFC regarding its existing secured lines of
credit with CFC, including arrangements for wholesale acquisition of new and
used vehicles by South Seas Motors, Inc. ("South Seas"), Registrant's
wholly-owned subsidiary. Registrant has sought to modify its arrangements with
CFC and to obtain additional financing from CFC. In addition, Registrant has
sought to obtain funds through a bank and new investors and through the sale of
assets, including its automobile dealerships. Registrant has been unsuccessful
in these endeavors.
As a result of containing cash flow difficulties, Registrant and South
Seas have experienced significant delinquencies in payments to their creditors,
including CFC. In CFC's case, some delinquencies involved sales of vehicles
without remitting the required amount of proceeds to CFC. CFC has responded by
taking possession of substantially all of South Seas' inventory of new and used
vehicles and the proceeds of vehicle sales: all of this inventory and proceeds
was collateral under existing secured lines of credit with CFC. As a result
South Seas suspended operations in late October. Further negotiations with CFC
have not resulted in financing arrangements that would permit South
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Seas to resume operations. Accordingly, on November 13, 1996, Registrant, South
Seas and Alan Robin entered into an agreement (the "CFC Agreement") pursuant to
which Registrant and South Seas were required to surrender to CFC all its
collateral under secured lines of credit in lieu of foreclosure. This collateral
constituted substantially all of the assets of South Seas. As a result, South
Seas has ceased doing business as a going concern. Since South Seas represented
Substantially all of the assets of Registrant, it too has ceased to do business
as a going concern.
As a result of the circumstances described herein, Registrant has
defaulted on its payment of
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interest in the amount of $14,050 under its $281,000 10% Debentures due
2007, and has no prospects for making further payment of principal or
interest on the Debentures. Likewise, neither Registrant or South Seas has
prospects of paying their other creditors.
Registrant expects to wind-up its affairs promptly. Registrant's
tangible assets amount to less than $1,000 and its liabilities are approximately
$13 million. Substantially all of Registrant's and South Seas' employees have
resigned or been terminated and, as described in Item 4 below, Price Waterhouse
LLP has resigned as Registrant's independent public accountants.
In light of these developments, Registrant lacks the resources to
prepare reliable interim financial statements for financial reporting purposes.
Accordingly, Registrant will not file its quarterly report on Form 10-Q for the
period ended September 30, 1996, and does not expect to make any further
periodic filings with the Securities and Exchange Commission.
ITEM 4. Changes in Registrant's Certifying Accountant
---------------------------------------------
(a) On November 12, 1996, Price Waterhouse LLP resigned as
Registrant's independent accountants. For the years ended December 31, 1994 and
1995, Price Waterhouse's report on Registrant's financial statements did not
contain an adverse opinion or a disclaimer of opinion and
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was not qualified or modified as to uncertainty, audit scope, or accounting
principles.
During the two most recent fiscal years and the interim period
preceding resignation there were no disagreements with Price Waterhouse on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure and no reportable event within the meaning of Item
304(a)(1) (iv) of Regulation S-K, 17 C.F.R. (S) 229.304.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits
1. Agreements dated November 15, 1996, among South Seas Motors,
Inc., Pacific International Services Corporation, Alan Robin
and Chrysler Financial Corporation.
2. Letter of Price Waterhouse LLP dated November 15, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PACIFIC INTERNATIONAL SERVICES CORP.
(Registrant)
Date: November 18, 1996 By: /s/ Alan M. Robin
---------------------------
Alan M. Robin
President
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Exhibit 1
AGREEMENT
---------
THIS AGREEMENT ("AGREEMENT") is made and entered into effective this 15th
day of November 1996, as follows:
1. THE PARTIES
-----------
The parties to this AGREEMENT are:
1.1 SOUTH SEAS MOTORS, INC., a Hawaii corporation ("SOUTH
SEAS");
1.2 PACIFIC INTERNATIONAL SERVICES CORPORATION, a
California corporation ("PACIFIC")
1.3 ALAN ROBIN, an individual ("ROBIN"), is the President
and Chairman of the Board of SOUTH SEAS and is the President and Chairman
of the Board of PACIFIC; and
1.4 CHRYSLER FINANCIAL CORPORATION. a Michigan corporation
successor by merger to CHRYSLER CREDIT CORPORATION, a Delaware
corporation ("CFC").
2. RECITALS
--------
2.1 SOUTH SEAS is a wholly owned subsidiary of PACIFIC.
ROBIN is the President and Chairman of the Board of SOUTH SEAS and is the
President and Chairman of the Board of PACIFIC. CFC has provided financing for
the wholesale acquisition of new and used motor vehicles by SOUTH SEAS pursuant
to a series of WHOLESALE LENDING AGREEMENTS and CFC holds a perfected first lien
on virtually all assets of SOUTH SEAS, including, but not limited to, the
following (hereinafter, "COLLATERAL"):
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2.1.1 New motor vehicles, whether now owned or hereafter acquired,
together with all additions and accessions thereto; and
2.1.2 All inventory, including but not limited to all new and
used motor vehicles, campers, travel trailers, mobile homes and all
automotive parts and accessories, whether now owned or hereafter acquired,
together with all additions and accessions thereto; and
2.1.3 All chattel paper, accounts whether or not earned by
performance, contract rights, documents, instruments, general intangibles,
consumer goods, equipment, fixtures and leasehold improvements, whether now
owned or hereafter acquired, together with all additions and accessions
thereto; and
2.1.4 All proceeds of the collateral described in this
paragraph, including but not limited to insurance proceeds on said
collateral, money, chattel paper, goods, including without limitation
motor vehicles received in trade, contract rights, accounts, whether or
not earned by performance, documents, instruments, general intangibles,
claims and tort recoveries relating to said collateral.
2.2 CFC holds second and third mortgages on leases held by SOUTH
SEAS and/or PACIFIC on real property located at 2841 North Nimitz Highway,
Honolulu, Hawaii, 96819 and 94-245 Farrington Highway, Waipahu, Hawaii 96797
(the "LEASE MORTGAGES").
2.3 SOUTH SEAS is in default pursuant to its WHOLESALE LENDING
AGREEMENTS with CFC, and SOUTH SEAS and PACIFIC acknowledge that the financial
affairs of SOUTH SEAS are such that it can no longer continue in its present
business operations.
2.4 As a result of SOUTH SEAS' defaults, CFC has repossessed its motor
vehicle collateral and threatened to foreclose upon the other assets which serve
as COLLATERAL to CFC's various loans. In lieu of foreclosure, SOUTH SEAS and
PACIFIC have agreed to consent to the repossession of the motor vehicles and to
voluntarily surrender the other COLLATERAL, and to grant mortgages and/or assign
leases, on the condition that CFC lend certain additional funds as specified
herein to allow SOUTH SEAS to satisfy certain obligations of SOUTH SEAS. In
order to resolve pending differences and disputes between ROBIN, SOUTH SEAS and
CFC, ROBIN will pay CFC certain personal funds to induce CFC to lend as provided
in paragraph 3.4, 3.5, 3.6 and 3.7 herein and to provide the releases and
covenants to SOUTH SEAS, PACIFIC and certain individuals
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as provided herein. CFC is under no obligation to provide the requested loan
but is willing to do so as a condition of obtaining the surrender of the balance
of its COLLATERAL, the payments from ROBIN recited herein, and the releases and
covenants contained herein.
3. PROMISES AND RELEASES
---------------------
In consideration of the promises and releases herein, the Parties
covenant, agree, represent and warrant as follows:
3.1 SOUTH SEAS AND PACIFIC hereby consent to the repossession of
the motor vehicles and agree to immediately surrender all of CFC's other
COLLATERAL to CFC pursuant to the terms and conditions of the letter dated
November 15, 1996, amended hereto as Exhibit "A".
3.2 ROBIN shall pay CFC the sum of $325,000.00, payable in
cashier's checks, in the amount of $200,000.00 delivered to CFC not later than
November 19, 1996, the sum of $50,000.00 delivered to CFC
not later than November 27, 1996, and $75,000.00 delivered to CFC upon the
first to occur of the sale of ROBIN's home or November 15, 1997, all on account
of SOUTH SEAS' and PACIFIC's debt to CFC. All of said monies shall be applied by
CFC to its various unpaid LOANS. The $75,000.00 installment will be secured by a
third mortgage on ROBIN's home at 164 Kaulana Way, Honolulu, Hawaii (the
"HOME") in a form reasonably satisfactory to CFC's counsel. ROBIN will place the
HOME on the market for sale by November 19, 1996. ROBIN has represented that the
HOME is subject to prior mortgages in the total amount of approximately
$682,000.00 and that the HOME has a current market value of approximately
$950,000.00. If the approximate value or mortgage amounts above are
substantially incorrect, ROBIN will provide additional security acceptable to
CFC.
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3.3 Conditioned upon and contingent upon CFC's receipt of the
$200,000.00 payment and the $50,000.00 payment specified in paragraph 3.2 of
this AGREEMENT, pursuant to certain mortgages, amended mortgages, additional
mortgages and related loan documents to be executed by the parties, CFC will
lend SOUTH SEAS and PACIFIC the sum of $145,000.00 in the form of a check or
other acceptable form of payment to Steven Guttman, attorney for SOUTH SEAS and
PACIFIC. Said loan shall be used exclusively for the payment of up to eighty
percent (80%) of SOUTH SEAS' payroll due for the period October 1, 1996 through
October 11, 1996, and one hundred (100%) of all withholding tax associated with
the portion of the payroll paid with the loan proceeds. No portion of said sum
shall be used to pay any salary to ROBIN, or may other monies due ROBIN. CFC
shall advances this loan upon the recording of mortgages or additional mortgages
suitable to CFC on the real property leases in the name of SOUTH SEAS and/or
PACIFIC on the parcels of real property commonly known as 2841 North Nimitz
Highway, Honolulu, Hawaii 96819 and 94-245 Farrington Highway, Waipahu, Hawaii
96797 (the "REAL PROPERTY").
3.4 Conditioned upon and contingent upon CFC's receipt of the
$200,000.00 payment and the $50,000.00 payment specified in paragraph 3.2 of
this agreement, pursuant to certain mortgages, amended mortgages, additional
mortgages and related loan documents to be executed by the parties, CFC will
lend SOUTH SEAS and PACIFIC the sum of $11,254.39, to be used exclusively for
payment of the insurance premium due Cananwill the Directors & Officers Policy
for the payment due on October 25, 1996. In the event ROBIN has advanced said
sum to Cananwill upon proof of payments by ROBIN, CFC shall reimburse ROBIN for
said payment with said loan proceeds in the form of a check made payable to
Robert Marks, attorney for ROBIN. CFC shall advance this loan upon the
recording of mortgages or additional mortgages available to CFC on the REAL
PROPERTY.
3.5 Conditioned upon and contingent upon CFC's receipt of the
$200,000.00 payment and the $50,000.00 payment specified in paragraph 3.2 of
this AGREEMENT, pursuant to certain mortgages, amended mortgages, additional
mortgages and related loan documents to be executed by the parties, CFC will
lend SOUTH SEAS and PACIFIC
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up to $18,745.51 in the form of a check or other acceptable form of payment to
Steven Guttman, attorney for SOUTH SEAS and PACIFIC. Said loan shall be used
first to secure employee medical benefits through the end of the employee's term
of employment, and second, if any funds remain, to address and resolve other
consumer or employee-related problems faced by SOUTH SEAS' retail customers or
employees as a result of or arising out of their involvement with SOUTH SEAS. No
portion of said sum shall be used to pay any salary due ROBIN. CFC shall advance
this loan upon the recording of mortgages or additional mortgages suitable to
CFC on the REAL PROPERTY, and upon written request from Steven Guttman.
3.6 Conditioned upon and contingent upon CFC's receipt of the
$200,000.00 payment and the $50,000.00 payment specified in paragraph 3.2 of
this AGREEMENT, pursuant to certain mortgages, amended mortgages, additional
mortgages and related loan documents to be executed by the parties, CFC will
lend SOUTH SEAS and PACIFIC up to $280,000.00; said monies to be used to pay
off, settle or resolve (1) unpaid RETAIL LIENS (as hereinbelow described): (2)
unpaid Department of Motor Vehicles fees on sold vehicles that have not yet been
registered to retail buyers; and (3) return deposits on vehicles ordered from
SOUTH SEAS and not delivered. CFC may, in its sole discretion, decide to
directly or indirectly administer the funding of this portion of the loan, and
may issue CFC checks directly to lienholders, the Department of Motor Vehicles,
or people making deposits to insure that lienholders are paid and titles are
obtained and delivered to customers or lenders, and deposits are returned, as
appropriate. CFC may, in its sole discretion, decide which RETAIL LIENS, fees
or deposits will be paid with its loan funds, and in what order. If CFC decides
to administer this loan, it shall begin doing so within two (2) days of the date
ROBIN delivers CFC the sum of $200,000.00 as provided in paragraph 3.2 above,
and CFC shall proceed expeditiously to satisfy the RETAIL LIENS and pay the
unpaid fees and return deposits up to the amount of the loan. The cost of
administration by CFC personnel of the loan proceeds will not be deducted from
the amount of the loan, however, if CFS decides, in its sole and absolute
discretion, to retain an outside service to assist with the titling of vehicles,
all costs of the outside service may be deducted from the loan, in CFR's sole
and absolute discretion. As used in this AGREEMENT, "RETAIL LIEN" means the lien
on a car taken in
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trade by SOUTH SEAS from a retail customer, and excludes, for example, liens
placed by wholesale lenders and consignment liens. The known cars with RETAIL
LIENS described in this paragraph are identified in Schedule 1 attached hereto.
In the event CFC elects to administer the loan proceeds as provided in this
paragraph, CFC shall have no further responsibility for payoff, settlement or
resolution of RETAIL LIENS, unpaid Department of Motor Vehicle fees, or deposit
returns, after the exhaustion of the $280,000.000 loan proceeds referred to
herein.
3.7 SOUTHSEAS or CFC is presently in possession of certain vehicles
which were traced in to SOUTH SEAS by retail customers and which were and are
subject to RETAIL LIENS which were not paid by SOUTH SEAS. It is estimated that
the aggregate value of these vehicles is approximately $50,000.00 less than the
aggregate of all liens against the vehicles. Pursuant to certain mortgages,
amended mortgages, additional mortgages and related loan documents to be
executed by the parties, CFC will lend up to $50,000.00 to SOUTH SEAS to allow
SOUTH SEAS to liquidate these vehicles and resolve as many RETAIL LIENS thereon
as possible. CFC may, in its sole and absolute discretion, decide to administer
the sale of these vehicles and the resolution of these RETAIL LIENS. If CFC
elects to administer such sale and the resolution of RETAIL LIENS, it shall
begin doing so within two (2) days of the date ROBIN delivers CFC the sum of
$200,000.00 as provided in paragraph 3.2 above, and shall do so expeditiously.
CFC may, in its sole discretion, decide to pay, settle, or otherwise resolve or
handle said RETAIL LIENS and may, in its sole and absolute discretion, take
possession of said vehicles and the proceeds thereof for the purpose of paying
such RETAIL LIENS. If there are surplus funds after the sale of all said
vehicles and the RETAIL LIENS are discharged, that surplus shall be part of
CFC's COLLATERAL under the WHOLESALE LENDING AGREEMENTS and may be applied to
reduce the balance due pursuant to CFC's various loans. CFC may, in its sole and
absolute discretion, decide which RETAIL LIENS will be paid with its loan funds,
and is what order. The cost of administration by CFC personnel of the loan
proceeds will not be decided from the amount of the loan, however, if CFC
decides, in its sole and absolute discretion, to retain an outside service to
assist with the titling of vehicles, all costs of the outside service may be
deducted from the loan, in CFC's sole and absolute discretion. The known cars
with RETAIL LIENS described in this paragraph are identified in Schedule 2
attached hereto. In the event CFC elects to administer a portion of the loan
referred to in this paragraph, after the $50,000.00 loan proceeds referred to
herein are used, CFC shall have no further responsibility for payment,
settlement, resolution or handling of RETAIL LIENS in connection with vehicles
referred to in this paragraph.
3.8 PACIFIC, SOUTH SEAS and ROBIN hereby release CFC, its parents
and subsidiaries, if any, and its officers, directors, shareholders, agents,
independent contractors, attorneys and employees
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(collectively, the "CFC RELEASED PARTIES") from any and all claims, causes of
action, proceedings, covenants, sums of money, accounts, controversies, debts,
demands and differences of any type whatsoever, known or unknown, which may at
time heretofore have existed in favor of SOUTH SEAS, PACIFIC or ROBIN and
against the CFC RELEASED PARTIES, that have been asserted or could have been
asserted.
3.9 With the exception of the promises, duties, representations and
obligations of the respective PARTIES to be performed under this AGREEMENT, CFC
hereby releases ROBIN, William Seidle and Paul Finazzo, individually, and in
their capacities as directors and/or officers of PACIFIC or SOUTH SEAS or both,
as appropriate, and their attorneys (collectively, the "PACIFIC RELEASED
PARTIES") from any and all claims, causes of action, proceedings, covenants,
sums of money, accounts, controversies, debts, demands and differences of any
type whatsoever, known or unknown which may at any time heretofore have existed
in favor of CFC and against the PACIFIC RELEASED PARTIES, that have been
asserted or could have been asserted. Nothing in this AGREEMENT shall be or be
construed to be, as a release of or be construed to constrain CFC's authority to
execute against its COLLATERAL and any insurance proceeds, including, but not
limited to, insurance proceeds under the officers and directors policy covering
the directors and officers, not heretofore released, of PACIFIC and/or SOUTH
SEAS and under the various liability policies for PACIFIC and/or SOUTH SEAS; and
nothing herein shall be construed to prevent CFC from executing against any
recovery by SOUTH SEAS or PACIFIC from PRICE-WATERHOUSE, L.L.P. or any selected
entity or individual. Nothing herein shall be construed to create a new right on
behalf of CFC to execute against proceeds of insurance under the officers and
directors policy or any claim, suit, settlement, judgment or recovery by SOUTH
SEAS or PACIFIC from PRICE WATERHOUSE, L.L.P. Nothing herein shall be, or be
construed to be, a release or waiver of any claim CFC may have directly against
PRICE WATERHOUSE, L.L.P.
3.10 CFC hereby covenants not to execute against the assets of
PACIFIC or SOUTH SEAS (which assets are not included in CFC's COLLATERAL), or
their respective officers and directors not released above, in connection with
claims arising out of the WHOLESALE LENDING AGREEMENTS, or otherwise, with
respect to the affairs of SOUTH SEAS or PACIFIC, provided, however, that CFC may
execute against its COLLATERAL, and any insurance proceeds, including, but not
limited to, insurance proceeds under the officers and
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directors policy covering the directors and officers of PACIFIC and/or SOUTH
SEAS and under the various liability policies for PACIFIC and/or SOUTH SEAS,
and CFC may execute against any recovery by SOUTH SEAS or PACIFIC from
PRICE-WATERHOUSE or any related entity or individual. Nothing herein shall be
construed to create a new right on behalf of CFC to execute against proceeds of
insurance under the officers and directors policy or any claim, suit,
settlement, judgment or recovery by SOUTH SEAS or PACIFIC from PRICE WATERHOUSE,
L.L.P. Nothing herein shall be, or be construed to be a release or waiver of
any claim CFC may have directly against PRICE WATERHOUSE, L.L.P.
3.11 Within fifteen (15) days after execution of this AGREEMENT,
ROBIN and SOUTH SEAS will either take possession of all vehicles as described on
Exhibit "B" attached hereto or file insurance claims and/or police reports with
respect thereto.
3.12 Upon execution of this AGREEMENT, SOUTH SEAS, PACIFIC and
ROBIN shall immediately surrender all of CFC's COLLATERAL in their possession to
CFC, including, but not limited to, all cash and checks.
3.13 CFC is authorized to redirect, receive and open SOUTH SEAS'
mail to an address or post office box of CFC's choosing in order to recover its
COLLATERAL under the WHOLESALE LENDING AGREEMENTS. Mail not related to the
collection of COLLATERAL shall be directed to the site designated by SOUTH SEAS.
3.14 SOUTH SEAS shall identify all its bank accounts to CFC and
immediately arrange to transfer all funds in such accounts to CFC.
3.15 SOUTH SEAS hereby authorizes CFC to make claims under SOUTH
SEAS' insurance policies for loss or damage to its COLLATERAL and to receive
all insurance proceeds payable thereunder.
3.16 If so requested by CFC, SOUTH SEAS and PACIFIC will assign
their respective leases on said REAL PROPERTY, and SOUTH SEAS and PACIFIC's
lease on the real property located at 2780 Waiwai Loop, Honolulu, Hawaii 96819
(if said lease is then in effect), to CFC or its nominee within five (5) days
of CFC's written request to SOUTH SEAS or PACIFIC.
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4. WAIVER OF NOTICE
----------------
PACIFIC and SOUTH SEAS hereby waive notice of sale of CFC's
COLLATERAL as provided in Haw. Rev. Stat. (S)490:9-504. PACIFIC and SOUTH SEAS
agree that CFC's liquidation process of its COLLATERAL is commercially
reasonable. CFC has estimated that the deficiency from the sale of the
COLLATERAL will be at lease $1,000,000.00 after the liquidation process is
completed in a commercially reasonable manner. SOUTH SEAS, PACIFIC and ROBIN do
not contest said estimate, and believe it to be correct based upon their
knowledge of the COLLATERAL liquidation process.
5. NO BANKRUPTCY
-------------
In consideration of the loans made hereunder and the agreements
contained herein, PACIFIC and SOUTH SEAS and their respective officers and
directors agree not to place PACIFIC and SOUTH SEAS, or vote to place PACIFIC
and SOUTH SEAS into any bankruptcy proceeding for a period of 120 days from the
date of this AGREEMENT.
6. NO ADMISSION OF LIABILITY OF THE PARTIES
----------------------------------------
The PARTIES hereby covenant, agree and represent that this
settlement is in complete compromise of disputed claims, and that the
consideration contained in this AGREEMENT is not to be construed as an admission
of liability on the part of any of the Parties, and that the Parties each deny
any liability and intend merely to avoid litigation. By paying or loaning
hereunder, ROBIN and CFC do not admit any liability to PACIFIC or SOUTH SEAS, or
to each other. By loaning and administering as herein provided, CFC assumes no
responsibility or liability for the obligations of PACIFIC, SOUTH SEAS, or
ROBIN. Nothing contained in this AGREEMENT shall be construed to relieve
PACIFIC, SOUTH SEAS or ROBIN from any responsibility or liability to any person
or entity other than CFC.
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7. NO DISPARAGING STATEMENTS
-------------------------
PACIFIC, SOUTH SEAS and ROBIN agree that, with respect to CFC,
its parents and subsidiaries, and its former or current officers, directors,
shareholders, employees and agents, they will not make any statements or express
any opinions that are (a) disparaging, derogatory, or negative of any of the
foregoing entities or individuals; or (b) malign or defame the foregoing
entities or individuals; provided that PACIFIC, and SOUTH SEAS and their former
and current officers, directors, shareholders, employees and agents, if any,
may respond truthfully to statements made about them personally or in connection
with their business relationship activities with CFC and/or its parents and
subsidiaries.
CFC agrees that, with respect to PACIFIC, SOUTH SEAS and ROBIN, or
any of their respective former or current officers, directors, shareholders,
employees and agents, CFC will not make any statements or express any opinions
that are (a) disparaging, derogatory, or negative of any of the foregoing
entities or individuals; or (b) malign or defame the foregoing entities or
individuals; provided that CFC its parents and subsidiaries, and its former or
current officers, directors, shareholders, employees and agents may respond
truthfully to statements made about CFC its parents and subsidiaries, and its
former or current officers, directors, shareholders, employees and agents
personally or in connection with its business relationship activities with
PACIFIC, SOUTH SEAS and ROBIN and/or their respective parents and subsidiaries.
The PARTIES will use their best efforts to comply with this
paragraph. If the PARTIES have any doubt about whether a matter comes within the
prohibitions of this section, they shall make no comment about the matter or
state to the effect that they have no comment due to the amicable resolution of
disputes between the PARTIES.
8. ENTIRE AGREEMENT AND SUPERCEDING EFFECT
---------------------------------------
The Parties hereby covenant, agree and represent that no promise,
inducement or agreement not herein expressed or made to the Parties exists or
has been made, and that this
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AGREEMENT together with CFC's WHOLESALE LENDING AGREEMENTS and the
CAPITALIZATION AGREEMENT contains the entire agreement between the Parties
hereto, and that the terms of this AGREEMENT are contractual and are not merely
a recital.
9. APPLICABLE LAW
--------------
This AGREEMENT shall be construed in acordance with the laws of the
State of Hawaii.
10. SUCCESSORS AND ASSIGNS
----------------------
This AGREEMENT shall inure to the benefit of the Parties herein,
their heirs, agents, assigns, successors in interest, personal representatives,
parents, subsidiaries, and each of their respective officers, directors,
shareholders, attorneys, and employees, and each of them, and shall be binding
upon each of the Parties executing this AGREEMENT, and upon their respective
heirs, agents, successors in interest, assigns and personal representatives.
11. ADVICE OF ATTORNEY
------------------
Each Party warrants and represents that, in executing this
AGREEMENT, it has relied upon legal advice from the attorney of its choice, that
the terms of this AGREEMENT have been read and its consequences (including
risks, complications and costs) have been completely explained to it by that
attorney, and that it fully understands the terms of this AGREEMENT.
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12. CONDITIONS of EXECUTION
-----------------------
Each Party acknowledges and warrants that its execution of this
AGREEMENT is free and voluntary.
13. CONSTRUCTION OF AGREEMENT
-------------------------
This AGREEMENT has been negotiated at arms length and between
persons sophisticated and knowledgeable in matters dealt with in this AGREEMENT.
In addition, each party has been represented by experienced, knowledgeable and
competent legal counsel. Accordingly, any rule of law, legal decision or common
law principle that would require interpretation of any ambiguities in this
AGREEMENT against the party that has drafted it is not applicable and is waived.
The provisions of this AGREEMENT shall be interpreted in a reasonable manner to
effect the purpose and intent of this AGREEMENT.
14. CONFIDENTIALITY
---------------
The PARTIES covenant, agree, warrant and represent that the terms
of this AGREEMENT are confidential, and will not be disclosed by the PARTIES
hereto except (1) as is necessary in any litigation between the PARTIES to
enforce the terms of this AGREEMENT, and (2) as may be required by law
(including without limitation, disclosure statements as may be required to be
filed by PACIFIC under applicable securities laws). No PARTY or PARTIES shall
make or cause to be made any "press release" or other public announcement with
regard to the terms of this AGREEMENT without the prior written consent of all
other PARTIES, except as to the extent required by securities law.
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15. COUNTERPARTS
------------
This AGREEMENT may be executed in counterparts and each such
executed counterpart shall be deemed an original document. The signatures of the
Parties hereto, exchanged via fax, shall constitute and be deemed an original
signature for all purposes.
16. ADDITIONAL DOCUMENTS
--------------------
Not later than November 20, 1996, the Parties will execute
additional documents, in agreed form, to fully effecuate the loans provided
for in this AGREEMENT.
17. AUTHORITY TO EXECUTE
--------------------
Each of the parties to this AGREEMENT warrants and represents
that the entity executing the AGREEMENT, and the person executing this AGREEMENT
for and on behalf of each entity, is competent to execute this AGREEMENT and has
the requisite power and authority to execute this AGREEMENT.
IN WITNESS WHEREOF, the undersigned have executed this AGREEMENT as of
the date first hereinabove written.
CHRYSLER FINANCIAL CORPORATION, a
Michigan corporation, successor by merger to
CHRYSLER CREDIT CORPORATION, a Delaware
corporation
By:
------------------------------------
D.R. McNeely, its Branch Manager
SOUTH SEAS MOTORS, INC., a Hawaiian
corporation
By:
------------------------------------
Alan Robin, its President
PACIFIC INTERNATIONAL SERVICES
CORPORATION, a California corporation
By:
------------------------------------
Alan Robin, its President
13
<PAGE>
---------------------------------------
ALAN ROBIN, an individual
APPROVED AS TO FORM:
---------------------------------------
STEVEN GUTTMAN
Attorney for
SOUTH SEAS MOTORS, INC.
---------------------------------------
KIERAN P. FALLON
Attorney for
PACIFIC INTERNATIONAL
SERVICES CORPORATION
---------------------------------------
ROBERT A. MARKS
Attorney for ALAN ROBIN
COOKSEY, HOWARD, MARTIN & TOOLEN
By:
------------------------------------
KIM GAGE
Attorney for
CHRYSLER FINANCIAL CORPORATION
14
<PAGE>
November 15, 1996
CHRYSLER FINANCIAL CORPORATION
1585 Kapiolani Boulevard, Suite 1620
Honolulu, HI 96814
Attn: D.E. McNeely
RE: Voluntary Surrender of Collateral by South Seas Motors, Inc. to Chrysler
Financial Corporation, assignee of Chrysler Credit Corporation
Dear Mr. McNeely:
The undersigned, President of South Seas Motors, Inc., dba South Seas
Jeep Eagle, dba Oahu Chrysler Jeep, and dba Car World, a wholly-owned subsidiary
of Pacific International Services Corp., a California corporation, herein
referred to as "Borrower", with the unanimous consent of the Board of Directors
of Pacific International Services Corp., conducting its business at 1600
Kapiolani Boulevard, Suite 825, Honolulu, Hawaii 96814, does hereby acknowledge
that the financial affairs of the Borrower are such that it can no longer
continue its present business operations.
In consequence, the undersigned requests that Chrysler Financial
Corporation take the following actions with reference to the various obligations
and business arrangements between Borrower and Chrysler Credit Corporation.
Chrysler Financial Corporation has repossessed and has in its
possession the new and used motor vehicles in which it holds security interests
under various security arrangements executed at various times by Borrower
pursuant to the laws of the State of Michigan. Borrower hereby consents to the
repossession of its inventory of new and used motor vehicles, and surrenders the
same for the purpose of lease, sale, or other disposition to be accomplished in
a commercially reasonable manner and in accordance with the statutes in such
case made and provided.
Chrysler Financial Corporation holds valid subsisting security
interests in machinery and equipment, fixtures and furniture, tools, supplies,
parts and accessories belonging to Borrower given to secure its various loans.
Borrower requests that Chrysler Financial Corporation take possession of all of
the above personal property and hereby surrenders the same for the purpose of
lease, sale or other disposition to be accomplished in a commercially reasonable
manner and in accordance with the statutes in such case made and provided.
<PAGE>
CHRYSLER FINANCIAL CORPORATION
RE: Voluntary Surrender of Collateral
November 15, 1996
Page 2
Chrysler Financial Corporation presently holds an assignment of all
notes, contract rights, accounts receivable and general intangibles of Borrower;
an assignment of all monies now due or coming due to Borrower from any bank,
finance company or other financial institution in connection with Borrower's
sales of retail installment contracts to such financial institutions; and
assignment of all credits now due or coming due to Borrower from Chrysler
Corporation.
You are hereby authorized to make demand upon the holders of all such
credits, monies, notes, contract rights, accounts receivable and general
intangibles for payment to you of the same, to receive all monies paid, and to
give a valid receipt therefor in the Borrower's name. Any payments so received
shall be applied first to expenses of liquidation and then to Borrower's
indebtedness to you.
You are holding certain reserves on retail installment sales contracts
purchased by you from Borrower which you shall continue to hold pursuant to the
terms of the Vehicle Financing and Repurchase Agreement. After all proper
charges against such reserves have been made, the balance remaining, if any,
shall be applied in reduction of other indebtedness due you by Borrower.
The Borrower has this day given to Chrysler Financial Corporation, and
does hereby evidence the transfer of, the exclusive possession of the Borrower's
premises located at South Seas Jeep Eagle, 2841 North Nimitz Highway, Honolulu,
Hawaii 96819, Oahu Chrysler Jeep, 94-245 Farrington Highway, Waipahu, Hawaii
96797, and Car Wold, 2780 Waiwai Loop, Honolulu, Hawaii 96819, for the purpose
of storing and preserving all the foregoing described vehicles, and other
personal property until the same may be foreclosed upon and disposed of.
Chrysler Financial Corporation may retain possession of the premises for such
reasonable period of time as may be necessary to foreclose, liquidate, and sell
and dispose of the foregoing collateral. It is agreed that such occupancy
(which is not expected to exceed 20 weeks) shall be free from any claim by or on
behalf of Borrower for rent or storage during such period. This transfer of
possession of the premises is given in consideration of benefits to accrue to
Borrower and to Chrysler Financial Corporation from the Agreement dated
November 15, 1996 between Chrysler Financial Corporation and Borrower.
<PAGE>
CHRYSLER FINANCIAL CORPORATION
RE: Voluntary Surrender of Collateral
November 15, 1996
Page 3
The undersigned appoints D.E. McNeely of Chrysler Financial
Corporation, or any employee designated by him, as the undersigned's attorney-
in-fact to execute, endorse and deliver in the Borrower's name any and all
manufacturers' certificates of origin, title certificates or other documents
required by the State of Hawaii or other State or governmental authority, for
the transfer of ownership of the vehicles subject to Chrysler Financial
Corporation's security interests to the purchasers thereof at foreclosure sale
or other disposition, and for the transfer of titles of repossessed retail
vehicles (including those repossessed subsequent to this date) to purchasers
upon resale where the undersigned has agreed to repurchase such repossessed
vehicles.
Borrower acknowledges that it does not own, hold or claim sufficient
assets to pay in full all the indebtedness owing Chrysler Financial Corporation
and realizes that there will be a deficiency, the exact amount of which is not
now ascertained. Nothing herein, however, shall be construed in any way or
manner as releasing or discharging guarantors of such indebtedness from their
obligations under various guaranties heretofore given by them.
DATE: SOUTH SEAS MOTORS, INC., dba
------------------- SOUTH SEAS JEEP EAGLE, dba
OAHU CHRYSLER JEEP, and dba
CAR WORLD
By:
---------------------------
Alan Robin,
President of SOUTH SEAS MOTORS,
INC., and Chairman of the Board
of Directors, with the consent
of the remaining Board of
Directors
WITNESS: --------------------------------
<PAGE>
Exhibit 2
[LETTERHEAD OF PRICE WATERHOUSE LLP APPEARS HERE]
November 15, 1996 Via Courier
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
Subject: Pacific International Services Corp.
Commission File Number 0-11404
We have read Item 4 of Pacific International Services Corp's Form 8-K dated
November 12, 1996 and are in agreement with the statements contained in
paragraph 4(a) therein.
Yours very truly,
/s/ Price Waterhouse LLP
Price Waterhouse LLP
