EXHIBIT 10.7
RELEASE AND INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of April 10, 1997, between Cross-Continent Auto
Retailers, Inc., a Delaware corporation ("C-CAR"), and R. Xxxxxxx Xxxxxxxx
("RDS") (collectively, the "Parties").
RECITALS
WHEREAS, by that certain Stock Purchase Agreement dated January 23, 1997,
RDS has agreed to sell all of the issued and outstanding shares of capital stock
of Toyota West Sales and Service, Inc., a Nevada corporation, and Xxxxxxx
Toyota, Inc., a Colorado corporation (the "Purchased Corporations"), to C-CAR;
and
WHEREAS, in consummating such transaction, the Purchased Corporations will
continue to occupy, pursuant to commercial leases, three parcels of property,
one located in Las Vegas, Nevada and two located in Thornton, Colorado; and
WHEREAS, in conjunction with the stock purchase transaction, C-CAR has
agreed to purchase two parcels of real property, one of which is located in
unincorporated Xxxxx County, Colorado and owned by RDS, Inc., a Delaware
corporation, and the other parcel located in Las Vegas, Nevada, and owned by RDS
individually; and
WHEREAS, all real property parcels referred to herein are legally described
and set forth on Exhibit A attached hereto and made a part hereof; and
WHEREAS, the Parties have agreed that RDS shall indemnify C-CAR, Xxxxxxx
Toyota, Inc., and Toyota West Sales and Service, Inc. (the "Indemnified
Parties") for any and all liabilities associated with hazardous substances (as
defined below) emanating from, or existing at, on or beneath the Properties as
of the date of this Agreement; and
WHEREAS, the Parties have agreed that RDS shall undertake full
responsibility for remediation of all hazardous substances emanating from, or
existing at, on or beneath the Properties to the extent necessary to receive
approval for such remediation from appropriate Local, State and Federal
agencies.
NOW THEREFORE, in consideration of the foregoing promises and mutual
representations, warranties, covenants and agreements contained herein, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
I. DEFINITIONS
As used in this Agreement, the following terms have the following meanings:
(A) "Property" or "Properties" means the parcels of real property described
in Exhibit A hereto.
(B) "Environmental Regulation" means any federal, state or local law,
ordinance, rule, regulation or requirement (including provisions of common law)
relating to the environment or human health, or governing, regulating or
pertaining to the generation, treatment, storage, handling, transportation, use
or disposal of any Hazardous Substance whether now or hereafter enacted. The
term "Environmental Regulation" includes, but is not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of
1986 ("XXXX"), 42 U.S.C. (S)(S) 9601-9675, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C. (S)(S) 6901-6991, the Clean Water Act,
33 U.S.C. (S) 1251, et seq, the Clean Air Act, 42 U.S.C. (S)(S) 7401 et seq, the
Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. (S) 136
et seq, the Toxic Substances Control Act ("TSCA"), 15 U.S.C. (S)(S) 2601-2671,
and any similar state or local law or regulation.
(C) "Hazardous Substance" means (i) any substance or material defined in or
governed by any Environmental Regulation as a dangerous, toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance; (ii) any
substance, the presence of which requires investigation, notification, reporting
or remediation under any Environmental Regulation or under common law; (iii) any
toxic, explosive, corrosive, flammable, radioactive, or other hazardous
substance which is regulated by any Environmental Regulation; and (iv) urea-
formaldehyde, polychlorinated biphenyls, asbestos or asbestos-containing
materials, petroleum and petroleum products.
(D) "Losses" means any and all liabilities, claims, damages, judgments,
penalties, attorneys' and expert fees, damages or expenses incurred by an
Indemnified Party arising from the presence of any Hazardous Substance or under
any Environmental Regulation, including without limitation (i) any and all costs
associated with investigation or identification of Hazardous Substances on any
Property; (ii) all costs of defending and settling such Indemnified Party's
liability or potential liability with governmental agencies and third Parties;
(iii) all costs of remedial or corrective measures; and (iv) all other direct
and consequential losses incurred by such Indemnified Party in connection
therewith.
(E) "Environmental Remediation" means all actions necessary to investigate
and, if necessary, effectively remediate (including removal and proper disposal)
all Hazardous Substances emanating from, or existing at, on or beneath any
Property to such extent necessary to obtain a "no further action" letter from
the Oil Inspection Section, Colorado Department of Labor ("OIS"), that is
substantially similar to the model "no further action" letter attached as
Exhibit B, or a similar letter from the appropriate officials in the State of
Nevada.
II. INDEMNIFICATION AND REMEDIATION OBLIGATIONS
(A) The indemnification as provided for and limited herein shall be deemed
continuing for the benefit of the Indemnified Parties and their respective
officers, directors, stockholders, affiliates and assignees, and shall survive
any transfer of title to any Property (pursuant to sale, foreclosure or
otherwise) or any transfer of ownership of the capital stock.
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(B) RDS hereby agrees to indemnify, release and hold harmless the
Indemnified Parties from Losses arising from the presence of any Hazardous
Substances, emanating from, or existing at, on or beneath any Property, and from
Losses resulting from the performance of the Environmental Remediation.
Notwithstanding the foregoing, RDS has no obligation to provide indemnification
for any Losses arising from the presence of Hazardous Substances on the Property
which are demonstrated by RDS to have been caused by any of the Indemnified
Parties subsequent to the date hereof.
(C) On or before December 31, 1998, RDS shall (a) remove all underground
storage tanks located on any of the Properties, and (b) undertake, at its sole
cost and expense, an investigation of all Hazardous Substances in soil or
groundwater located on, at, beneath or emanating from the Properties. If such
investigation reveals the presence of Hazardous Substances on any Property, RDS
at its sole cost and expense shall remediate such Hazardous Substances to such
extent necessary to obtain a "no further action" letter from the Oil Inspection
Section, Colorado Department of Labor, substantially similar to Exhibit B
hereto, or a similar letter from the analogous agency in Nevada.
(D) Notwithstanding anything in this Agreement or any other agreement
between the Parties hereto to the contrary, the aggregate environmental
liabilities for both indemnification of Losses and remediation arising from the
Properties will not exceed one million dollars ($1,000,000).
III. ESCROWED FUNDS
Within thirty (30) days of execution of this Agreement, RDS shall deposit
$1,000,000 into an escrow account, as set forth in Paragraph 4(C) of the Stock
Purchase Agreement, established with Land Title Guarantee Company, 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000. The Indemnified Parties shall be entitled
to withdraw from the escrow account, upon submitting a joint request with RDS,
any amount for payment of Losses arising from the presence of any Hazardous
Substances, emanating from, or existing at, on or beneath any Property, and from
Losses resulting from the performance of any Environmental Remediation.
RDS may not withdraw any remaining funds in the escrow account until such
time as RDS conducts a site investigation of each Property and determines there
are no Hazardous Substances emanating from or existing at, on or beneath the
Property or, if Hazardous Substances are located at a particular Property, upon
obtaining a "no further action letter," as described in Section II.C. above,
from the appropriate governmental agency. After one year from the date of this
Agreement, RDS may withdraw the remaining funds from the escrow account upon
reaching such a resolution with regard to all of the Properties.
VI. MISCELLANEOUS
(A) This Agreement shall supersede the environmental indemnifications
contained in the Stock Purchase Agreement dated January 23, 1997, and the
respective real estate purchase agreements for the parcels of real property in
Colorado and Nevada of even date therewith.
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(B) All matters relating to the interpretation, construction, validity and
enforcement of this Agreement shall be governed by the laws of the State of
Colorado without giving effect to any choice or conflict of law provision or
rule (whether of the State of Colorado or any other jurisdiction) that would
cause the application of laws of any jurisdiction other than the State of
Colorado.
(C) This Agreement contains the entire agreement of the Parties relating to
the subject matter hereof and supersedes all prior agreements and understandings
with respect to such subject matter, and the Parties hereto have made no
agreements, representations or warranties relating to the subject matter of this
Agreement which are not set forth herein or in such other agreements.
(D) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel to enforce any provisions of this
Agreement, except by a statement in writing signed by the party against whom
enforcement of the waiver or estoppel is sought.
(E) To the extent any provision of this Agreement shall be invalid or
unenforceable, it shall be considered deleted herefrom and the remainder of such
provision and of this Agreement shall be unaffected and shall continue in full
force and effect.
(F) This Agreement shall be continuing, irrevocable and binding on the
Parties and their respective heirs, successors and permitted assigns and shall
inure to the benefit of the Indemnified Parties and their respective heirs,
successors and permitted assigns.
(G) Each Indemnified Party agrees to provide RDS and its contractors with
access to those Properties leased by the Indemnified Party, upon reasonable
notice, as may be reasonably necessary for RDS and its agents to investigate and
remediate contamination on the Property.
(H) All notices under this Agreement shall be given in writing and sent by
certified mail, return receipt requested, postage prepaid, or by overnight
courier. Delivery of such notices shall be deemed given three days after being
sent by certified mail, return receipt requested, post prepaid, or one business
day after being sent overnight courier. Notices will be sent to the Parties at
the addresses set forth below:
C-CAR: 0000 X. Xxxxxx
Xxxxxxxx, Xxxxx 00000
RDS: 0000 X. Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Xxxxxxx Toyota: 0000 X. 000xx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
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Toyota West Sales
& Service: 0000 X. Xxxxxxx
Xxx Xxxxx, Xxxxxx 00000
(I) The signatories to this Agreement represent and warrant that they are
duly authorized to sign this Agreement.
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Xxxx Xxxxxxxxx
----------------------------------------
Xxxx Xxxxxxxxx, Chairman of the Board
and Chief Executive Officer
/s/ R. Xxxxxxx Xxxxxxxx
--------------------------------------------
X. Xxxxxxx Xxxxxxxx
XXXXXXX TOYOTA, INC.
By: /s/ R. Xxxxxxx Xxxxxxxx
----------------------------------------
R. Xxxxxxx Xxxxxxxx, President
TOYOTA WEST SALES AND SERVICE, INC.
By: /s/ R. Xxxxxxx Xxxxxxxx
----------------------------------------
R. Xxxxxxx Xxxxxxxx, President
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