REAL ESTATE LOAN AND SECURITY AGREEMENT
Mortgaged Property: 6825 E. McDowell Road, Scottsdale, Arizona
[Acura Facilities]
THIS SECURITY AGREEMENT AND REAL ESTATE LOAN AGREEMENT (hereinafter
called the "Agreement") dated this ____ day of ___________, 1996 is made by SA
AUTOMOTIVE, Ltd., an Arizona corporation, whose address is 6725 E. McDowell,
Scottsdale, Arizona (hereinafter called "Borrower"), for the benefit of CHRYSLER
FINANCIAL CORPORATION, a Michigan corporation, having offices located at 27777
Franklin Road, Southfield, Michigan 48034 (hereinafter called "Lender").
WHEREAS, Borrower is engaged in the development of automobile
dealership properties and in connection therewith owns a piece of real property
(which business hereinafter shall be called "Borrower's Business") and desires
to borrow funds in the amount of $2,417,000 (hereinafter called the "Loan") from
Lender in order to provide permanent financing for certain real estate known as
6825 E. McDowell Road, Scottsdale, Arizona [Acura facilities] and as more
particularly described in Exhibit A attached to the Deed of Trust given to
Lender on even date herewith and incorporated herein by reference (hereinafter
the "Mortgaged Premises"); and
WHEREAS, Lender is willing to lend to Borrower said capital funds on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration mutually exchanged by Borrower and Lender, the receipt
and sufficiency of which is hereby acknowledged, and intending to be legally
bound hereby, Borrower hereby agrees as follows:
SECTION 1. DEFINITIONS. When used in this Agreement, the following terms shall
have the following meanings and shall be limited to only that Collateral as
defined below which is owned or leased by Borrower and located on or used in
connection with the Mortgaged Premises:
1.1. "Affiliate" with respect to Borrower shall mean any person, entity or
business organization which, directly or indirectly, controls, is controlled by
or is under common control with the Borrower;
1.2. "Books" shall mean all books, records and correspondence relating to
the Collateral, including, but not limited to, all ledgers, computer and
automatic machinery software and programs, printouts and computer runs and other
computer prepared information;
1.3. "Collateral" shall mean all property and interests in property or
rights in which a security interest is granted by
Borrower to Lender in this Agreement pursuant to Section 3 hereof;
1.4. "Commitment Letter" shall mean that certain letter, if any, between
Borrower and Lender, setting forth certain terms and conditions of the Loan;
1.5. "Event of Default" shall mean the occurrence of the event as contained
in Section 8 of this Agreement;
1.6. "Fixtures" shall mean all personal property which has become
permanently attached to the Mortgaged Premises;
1.7. "Obligations" shall mean any and all liability, obligation, or
indebtedness owed pursuant to the terms and conditions of this Agreement and any
and all other agreements, promissory notes, guaranties and contractual
arrangements of every kind and nature between Borrower and Lender with respect
to the Loan, whether now or hereafter in existence; and
1.8. "Proceeds" shall mean whatever is received upon the sale, exchange,
collection or other disposition of the Collateral or proceeds, whether cash
proceeds or non-cash proceeds.
SECTION 2. THE LOAN.
2.1. Lender hereby agrees to loan to Borrower, and Borrower hereby agrees
to borrow from Lender, an amount which shall be evidenced by a promissory note
(the "Note") to be executed by Borrower concurrently herewith, which Note shall
be in substance and form satisfactory to Lender. The amount borrowed may be
increased from time to time upon written request of Borrower approved by Lender.
The initial loan and any new advances evidencing increases to the initial loan
(hereinafter in the aggregate referred to as the "Loan") shall be subject to the
terms and conditions of this Agreement. The Loan may be prepaid at any time in
whole or in part without premium or penalty.
2.2. The Note shall evidence the terms of repayment of the Loan.
The Loan shall bear interest upon the unpaid balance thereof at that
rate of interest stated in the Note.
Principal and interest shall be due and payable on the date(s) and in
the amounts as specified in the Note.
2.3. Borrower and Lender agree that it is their respective intentions, and
they do specifically agree: (a) that this Agreement, the Note issued hereunder,
and any subsequent promissory notes issued hereunder evidencing new advances,
and any subsequent agreements between the parties, provide for cross rights to
declare a default; (b) upon the occurrence of an Event of Default, all
Obligations shall be matured, immediately due and
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payable, notwithstanding any maturity date thereof, or agreements thereto, to
the contrary; and (c) that the agreements contained in this Section 2.3 shall
be, and are hereby, made a part of all agreements between Borrower and Lender,
whether now or hereafter in existence.
SECTION 3. SECURITY.
3.1. As security for the prompt and complete payment and performance when
due of all Obligations due Lender, Borrower hereby grants to Lender a continuing
security interest in all of Borrower's right, title and interest in, to and
under the following Collateral located on or used in connection with the
Mortgaged Premises, whether now owned or hereafter acquired:
(a) all of Borrower's Fixtures;
(b) all Proceeds and products of any of the foregoing.
3.2. As further and additional security, Borrower has given Lender a Deed
of Trust dated on even date herewith, which covers the Mortgage Premises
(hereinafter called "Deed of Trust").
SECTION 4. BORROWER'S WARRANTIES. To induce Lender to enter into this
Agreement to make the loan contemplated hereby, Borrower represents and warrants
as follows:
4.1. Borrower operates Borrower's Business in the form of business
organization, if any, and from the principal place of business or address as set
forth in the introductory paragraph of this Agreement, and Borrower is in good
standing, duly authorized, licensed and franchised to operate Borrower's
Business;
4.2. All balance sheets, statements of profit and loss and other financial
data which have been furnished by Borrower to Lender fairly present the
financial condition of Borrower's Business as of the dates stated therein, and
the results of its operations for the periods for which the same are furnished;
all other information, reports, papers and data furnished to Lender are accurate
and correct in all material respects and complete insofar as completeness may be
necessary to give Lender a true and accurate knowledge of the subject matter;
and there has been no change in the business, earnings, prospects, assets,
liabilities or condition (financial or otherwise) of Borrower's Business from
that set forth in the most recent financial statements furnished by Borrower to
Lender other than changes in the ordinary course of Borrower's Business, none of
which changes have been materially adverse;
4.3. None of the Collateral is, as of the date hereof, subject to any
mortgage, pledge, lien or encumbrance in favor of anyone other than Lender
except liens of the kind permitted by
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Section 6.1 hereof, unless otherwise agreed to by Lender in writing;
4.4. There is not now pending against Borrower, or to the officers,
managers or principals of Borrower's Business, if any, any litigation or legal,
administrative or tax proceedings, investigations or other action or matter, the
outcome of which in the opinion of Borrower or such officers, managers or
principals could materially adversely affect the continued operation or
condition (financial or otherwise) of Borrower's Business;
4.5. Borrower warrants that there exists on the date of this Agreement no
Event of Default and no event which with the lapse of time would become an Event
of Default; and
4.6. Borrower warrants that it is and shall remain the lawful owner of the
Collateral, free of all liens and claims whatsoever, other than the security
interest created hereby or pursuant hereto, or specifically allowed by this
Agreement, and has the authority and right to subject the Collateral to the
security interest granted to Lender by this Agreement.
SECTION 5. BORROWER'S AFFIRMATIVE COVENANTS. Borrower hereby covenants and
agrees that, for so long as there shall remain any indebtedness hereunder;
5.1. Borrower will maintain the existence in good standing of Borrower's
Business to the extent necessary under applicable law, and will continue to keep
in full force and effect any and all licenses, franchises and other
authorizations necessary to conduct Borrower's Business, if any;
5.2. Borrower will (i) keep proper Books of the operations of Borrower's
Business if Borrower is a corporation or partnership or (ii) will keep proper
personal financial statements if Borrower is an individual, all such Books and
statements to be in forms satisfactory to Lender. Borrower will furnish to
Lender balance sheets and statements of profit and loss for each year with
respect to Borrower's Business (and, upon written request of Lender, Affiliates
of Borrower), within one hundred twenty (120) days after the close of each
Borrower's fiscal years hereafter, for so long as this Agreement shall remain in
effect, and will furnish to Lender at such time a completed, executed copy of a
report of an examination of the financial affairs of Borrower's Business (and,
upon written request of Lender, Affiliates of Borrower) made by Borrower or by
independent certified public accountants selected by Borrower and acceptable to
Lender, such report of Borrower's Business and Affiliates, where applicable, to
be in such detail and with such certification as Lender reasonably may require
from time to time; and Borrower will furnish such other financial statements as
Lender reasonably may require from time to time. Borrower will permit Lender to
inspect and make copies of the Books of Borrower's Business, if any, (and, upon
written request of
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Lender, Affiliates of Borrower) at all reasonable times and from time to time.
All such balance sheets, statements of profit and loss and other financial
statements as Borrower may furnish hereunder will fairly present the financial
condition of Borrower's Business and Affiliates, where applicable, as of the
dates and for the periods for which the same are furnished and shall be
certified as true and correct be an appropriate officer of Borrower or
Affiliate, as applicable;
5.3. At the time any asset of Borrower's Business is assigned, mortgaged,
pledged or otherwise hypothecated to Lender as security for any Obligation,
Borrower will be the lawful owner thereof; the same being free from all
encumbrances except as specifically stated in the instrument by which the same
shall be so assigned, mortgaged, pledged or otherwise hypothecated; and the
Borrower will warrant and defend the same against all claims and demands of any
kind or nature;
5.4. Borrower promptly will pay when due all contractual obligations
calling for the payment of money, taxes, assessments and charges imposed upon
Borrower and upon Borrower's Business and Borrower's properties, assets,
operations, products, income or securities and also promptly will pay all claims
which constitute, or, if unpaid, may become a lien, charge or encumbrance upon
Borrower's business or any of Borrower's properties, assets, operations,
products income or securities;
5.5. Borrower shall be responsible for all loss and damage to Borrower's
Business and agrees to keep Borrower's Business insured against loss or damage
by fire, theft, collision and vandalism and against such other losses as Lender
may require from time to time. Insurance policies for the said insurance shall
be with such companies and in such amounts and in such form as shall be
satisfactory to Lender. All such policies of insurance shall contain an
endorsement in form and substance satisfactory to Lender, showing loss payable
to Lender as its interest may appear, and a certificate of insurance evidencing
such coverage will be provided to Lender;
5.6. Borrower will, upon request of Lender, execute such financing
statements and other documents (and pay the cost of filing or recording the same
in all public offices deemed necessary by Lender) and do all such other acts and
things as Lender may from time to time request, to establish and maintain a
valid first perfected security interest in the Collateral (free of all other
liens and claims whatsoever except as otherwise expressly provided herein) to
secure the payment of the Obligations;
5.7. Borrower will keep, at the address designated above, all Books, if
any, concerning the Collateral, which Books will be of such character as will
enable Lender or its designees to determine at any time the status of the
Collateral;
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5.8. Borrower will, upon request of Lender, stamp on its Books concerning
the Collateral, a notation or other notice(s), in form satisfactory to Lender,
or take such other action to place third parties on notice of the security
interest of Lender in the Collateral;
5.9. Borrower will not sell, assign, create or permit to exist any lien on
or security interest in any Collateral in favor of anyone other than Lender;
5.10. Borrower will, at Borrower's sole cost and expense, keep the
Collateral in as good and substantial repair and condition as the same is now or
at the time the lien and security interest granted by this Agreement shall
attach thereto, reasonable wear and tear excepted, making repairs and
replacements when and where necessary. Borrower will further take all action
necessary to insure that the real estate upon which the Borrower's Business is
located shall be free of hazardous conditions, substances and pollutants of any
kind; and
5.11. Borrower shall apply the proceeds of the Loan for the purposes set
forth in this Agreement and shall furnish such evidence thereof as Lender may
request.
SECTION 6. BORROWER'S NEGATIVE COVENANTS. Borrower hereby covenants and agrees
that, for so long as there shall remain any Obligation owing to Lender, it will
not, without the prior written consent of Lender:
6.1. Create, permit or suffer to exist any mortgage, lien or other
encumbrance to be levied upon or become a charge against the Collateral located
on or used in connection with Mortgaged Premises other than mortgages, liens or
other encumbrances in favor of Lender, those liens identified as Permitted
Encumbrances in the Deed of Trust, and liens resulting from deposits or pledges
to secure payments of worker's compensation, unemployment insurance, old age
pensions or social security;
6.2. Endorse, guarantee or become surety for the payment of any debt or
liability, of any individual, partnership or corporation, directly or
contingently which would create a lien on the Collateral located on or used in
connection with Mortgaged Premises unless such lien is in favor of Lender; and
6.3. Sell, exchange, transfer or otherwise dispose of any of its
properties, assets, operations or products except in the normal course of
Borrower's Business; consolidate Borrower's Business with or merge Borrower's
Business into any other business concern or permit any other business concern to
consolidate with or merge into Borrower's Business; or sell, exchange, transfer,
lease or otherwise dispose of all or any substantial part of its capital assets,
or make or have outstanding any loan or advance to any individual, partnership
or
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corporation, purchase any security of any corporation or invest in the
obligations of any individual, partnership or corporation.
SECTION 7. OWNERSHIP AND MANAGEMENT OF BORROWER'S BUSINESS.
7.1. Lender has elected to enter into this Agreement and to make the Loan
contemplated hereby with reliance and confidence in the integrity and ability of
the Borrower, and if Borrower is a corporation or partnership, the persons
presently having an ownership interest in or being in the active management and
operation of Borrower's Business as disclosed to Lender concurrently herewith,
and in reliance that said persons are and shall continue to have the same
ownership interest in or be in the active management and operation of Borrower's
Business or both, as the case may be, and that such ownership and management
shall not change without Lender's prior consent so long as this Agreement
remains effective and the Obligations remain outstanding.
SECTION 8. EVENT OF DEFAULT AND REMEDIES.
8.1. The following shall constitute an Event of Default hereunder:
(a) the occurrence of any event of default under the Deed of
Trust given by Borrower to Lender on even date herewith; or
(b) if there is now or hereafter be any change in the ownership
interest in or active management of the operation of the
Borrower's Business.
8.2. Upon the existence of an Event of Default, all outstanding Obligations
of Borrower to Lender will (notwithstanding any provisions to the contrary)
after expiration of any applicable notice and cure period, thereupon immediately
become due and payable, and Lender may, provided Borrower is also given notice,
notify any parties obligated to Borrower on any of the Collateral to make
payment to Lender of any amounts due or to become due thereunder and enforce
collection of any of the Collateral by suit or otherwise, and surrender,
release or exchange all or any part thereof, or compromise, extend or renew for
any period (whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon request of Lender, Borrower will, at its
own expense, notify any parties obligated to Borrower on any of the Collateral
to make payment to Lender of any amounts due or to become due thereunder. In
addition, Lender may take possession of the Collateral and any Books concerning
same wherever they may be found, with or without process of law, and may dispose
of the Collateral or any portion thereof in any manner permitted by law. Unless
otherwise agreed to by the parties in writing, any notification of intended
disposition of any of the Collateral required by law shall be
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deemed reasonably and properly made if given at least seven (7) days before such
disposition.
SECTION 9. APPOINTMENT OF LENDER AS ATTORNEY.
9.1. When an Event of Default shall occur and be continuing, Borrower
hereby irrevocably appoints Lender as attorney-in-fact with power of
substitution to act for Borrower in Borrower's name or in the name of Lender, or
otherwise, for the use and benefit of Lender hereunder, at the expense of
Borrower; provided that in no event shall this appointment impose any duty on
Lender to act initially or thereafter, as this appointment is made solely to
allow Lender to protect its interests in the Collateral from time to time at its
option. This special power of attorney shall include, but not be limited to,
the hereinafter enumerated acts:
(a) Upon reasonable notice to Borrower, to execute and deliver,
or otherwise take any action deemed appropriate by Lender
regarding any deed, lease, assignment, security agreement,
certificate of title, chattel mortgage, vehicle
registration, bill of sale, release and such other
instruments as may be necessary to sell, assign, transfer,
pledge or otherwise deal with the property of Borrower which
is or shall hereafter become Collateral of Lender under this
Agreement and any amendments thereto;
(b) Upon reasonable notice to Borrower, to demand, collect,
receive payment on, release and otherwise take any action
deemed appropriate by Lender regarding all claims or money
due or to become due to the Borrower in connection with the
purchase, sale, damage or destruction of any of the
Collateral, to settle and compromise any such claim, to
receive and open any mail addressed to Borrower, and to
endorse checks for collection, deposit or payment, and
execute and deliver waivers, releases, covenants not to sue,
or other legal instruments deemed necessary to effect such
collection, settlement or compromise; and
(c) Upon reasonable notice to Borrower, to prosecute or
otherwise take any action deemed appropriate by Lender in
the name of Lender or in the name of Borrower, or otherwise,
any action or proceeding to collect any such claim or to
enforce the right of Borrower for the benefit of Lender.
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SECTION 10. GENERAL. Borrower and Lender further agree that:
10.1. Lender shall, at all times, have the right to setoff and apply any and
all credits, monies or properties of Borrower in Lender's possession or control
against any Obligations of Borrower to Lender. All payments by Borrower or
other funds of borrower held or received by Lender, other than regular monthly
installments of principal and interest due on the Note, shall be applied to the
first maturing installments under said Note in order of maturity.
10.2. The acceptance by Lender of any installment or payment after it
becomes due or the waiver by Lender of any other Event of Default shall not be
deemed to alter or affect Borrower's Obligations and/or Lender's rights with
respect to any subsequent payment or Event of Default.
10.3. All of the agreements, representations and warranties contained in
this agreement or in any other instrument or document delivered pursuant thereto
shall survive the delivery of the Note and any extensions, renewals or
substitutions thereof and shall continue in full force and effect as long as
there shall remain Obligations owing to Lender from Borrower.
10.4. All negotiations, correspondence and memoranda passed between the
parties hereto with regard to the transactions contemplated by this Agreement
(other than the Commitment Letter, if any), are merged hereby and this Agreement
cancels and supersedes all prior agreements between the parties with regard
thereto. This Agreement may be assigned, altered, modified or abridged only by
a written instrument duly executed by the authorized representatives of Lender
and Borrower.
10.5. It is intended that this Agreement shall not be in violation of any
valid law applicable hereto now or hereafter from time to time in effect in any
jurisdiction and in the event any provision hereof in any way contravenes any of
said laws, this Agreement shall be considered valid except as to such
provisions. This Agreement is executed in the State of Arizona and shall be
subject to and construed under the laws of the State of Arizona.
10.6. Any notice given hereunder shall be in writing and given by personal
delivery or shall be sent by U.S. registered or certified mail, postage prepaid,
addressed to the party to be charged with such notice, at the respective address
as set forth above, or such other address as may be provided in writing.
10.7. This Agreement shall be binding upon and shall inure to the benefit of
the executors, administrators, legal representatives, successors and assigns of
the parties.
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10.8. This Agreement shall be binding upon and shall inure to the benefit of
the executors, administrators, legal representatives, successors and assigns of
the parties.
SECTION 11. AUTHORITY. Borrower shall furnish to Lender upon execution of this
Agreement such proof of its authority to enter into this Agreement, to make the
Note and to deposit the said security with Lender as Lender from time to time
reasonably may request, including, without limiting the generality of the
foregoing, an opinion of Borrower's counsel and, if Borrower is a corporation,
certified copies of resolutions of Borrower's stockholders, board of directors,
or other managers.
SECTION 12. WAIVER OF JURY TRIAL. LENDER AND BORROWER ACKNOWLEDGE AND AGREE
THAT THERE MAY BE A CONSTITUTIONAL RIGHT OT A JURY TRIAL IN CONNECTION WITH ANY
CLAIM, DISPUTE OR LAWSUIT ARISING BETWEEN THEM, BUT THAT SUCH RIGHT MAY BE
WAIVED. ACCORDINGLY, THE PARTIES AGREE;
(A) NOTWITHSTANDING SUCH CONSTITUTIONAL RIGHT, IN THIS COMMERCIAL
MATTER THE PARTIES BELIEVE AND AGREE THAT IT SHALL BE IN THEIR
BEST INTEREST TO WAIVE SUCH RIGHT AND, ACCORDINGLY, HEREBY WAIVE
SUCH RIGHT TO A JURY TRIAL AND FURTHER AGREE THAT THE BEST FORUM
FOR HEARING ANY CLAIM, DISPUTE OR LAWSUIT, IF ANY, ARISING IN
CONNECTION WITH THIS AGREEMENT OR RELATIONSHIP BETWEEN LENDER AND
BORROWER, INCLUDING, BUT NOT LIMITED TO, IN CONNECTION WITH THE
COLLECTION OF THE LOAN OR OTHER OBLIGATIONS, SHALL BE A COURT OF
COMPETENT JURISDICTION SITTING WITHOUT A JURY;
(B) THIS WAIVER OF JURY TRIAL IS FREELY, KNOWINGLY AND VOLUNTARILY
GIVEN BY EACH PARTY, WITHOUT ANY DURESS OR COERCION, AFTER EACH
PARTY HAS CONSULTED WITH ITS COUNSEL AND HAS CAREFULLY AND
COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF THIS
AGREEMENT, SPECIFICALLY INCLUDING THIS WAIVER OF JURY TRIAL
PROVISION; AND
(C) NEITHER LENDER NOR BORROWER SHALL BE DEEMED TO HAVE RELINQUISHED
THIS PROVISION WAIVING JURY TRIAL EXCEPT BY A WRITING SIGNED BY
AN OFFICER OF LENDER AND BORROWER RELINQUISHING THIS WAIVER OF
JURY TRIAL PROVISION.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the date first above written.
WITNESSES: BORROWER:
SA AUTOMOTIVE, Ltd., an Arizona
corporation
By:
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Its: President
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