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.
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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.
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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.
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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
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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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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
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EXHIBIT A
LEGAL DESCRIPTION OF
LAS VEGAS, NEVADA AND DENVER, COLORADO PROPERTIES