BMW FINANCIAL SERVICES
Inventory Financing and Security Agreement
--------------------------------------------------------------------------------
This Agreement is entered into between BMW Financial Services NA, Inc.
("Lender") and the undersigned borrower ("Borrower") and dated as of the date
listed above the signature provision. ("Agreement Date")
A. WHEREAS, Borrower wishes to purchase motor vehicles ("Vehicle(s)")
from BMW of North America, Inc. ("BMW NA") and other manufacturers, distributors
or motor vehicle dealers from time to time; and
B. WHEREAS, Borrower requests and Lender agrees to finance the
acquisition of such Vehicles for Borrower pursuant to the terms set forth in
this Agreement, and the Lender's Inventory Finance Program. ("Program")
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the parties agree as follows:
1. Definitions.
When used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"ADVANCE" shall mean any amount actually disbursed by Lender by cash,
check, draft, electronic funds transfer or otherwise.
"AVERAGE DAILY BALANCE" shall mean the total of the outstanding
balances of the Advances with respect to a Loan for all days in the applicable
billing period divided by the number of days in the billing period.
"BMW" shall mean Bayerische Motoren Werke, AG.
"BUSINESS DAY" shall mean a day other than Saturdays, Sundays,
holidays or other days on which the principal office of Lender is not open for
business.
"DEALER TRADE VEHICLE" shall mean any New Motor Vehicle which Borrower
has acquired through a like-kind exchange with or purchased from another
franchised dealer.
"DEMONSTRATOR" shall mean any New Motor Vehicle owned by Borrower
which has been designated in writing by Borrower as a Demonstrator.
"GUARANTORS" shall mean those parties who have executed and delivered
Guaranties.
"INDEX RATE" shall mean the base rate on corporate loans posted by at
least seventy-five percent (75%) of the nation's thirty (30) largest banks on
the last Business Day of each calendar month, which is quoted as the "Prime
Rate" in the column entitled "Money Rates" published in THE WALL STREET JOURNAL
(in the event no such rate is published in THE WALL STREET JOURNAL on such date,
the Index Rate shall be the "Prime Rate" shown in such column for the most
recent Business Day preceding the last Business Day of such month on which such
rate was published) or, in the event THE WALL STREET JOURNAL does not quote a
"Prime Rate," the rate quoted as the "Prime Rate" in a publication as Lender
may, from time to time, hereafter designate in writing.
"INTEREST RATE" shall mean the Index Rate plus an applicable
percentage.
"▇▇▇▇▇▇ BLUE BOOK VALUE" shall mean the average loan value of a Used
Motor Vehicle, excluding any equipment additions, as shown in the appropriate
regional edition of the ▇▇▇▇▇▇ BLUE BOOK.
"LOANER VEHICLE" shall mean a New Motor Vehicle owned by Borrower
which has been designated by Borrower in the Borrower's loaner program.
"N.A.D.A VALUE" shall mean the average loan value of a Used Motor
Vehicle, excluding any equipment additions, as shown in the appropriate regional
edition of the N.A.D.A. OFFICIAL USED CAR GUIDE.
"NEW MOTOR VEHICLE" shall mean (a) any previously unowned, unused and
untitled motor vehicle manufactured by BMW or any other manufacturer purchased
by Borrower, (b) any previously unowned, unused and untitled motor vehicle
purchased by Borrower, or (c) any Dealer Trade Vehicle or any Loaner Vehicle.
"USED MOTOR VEHICLE" shall mean that portion of the Borrower's
inventory which consists of a previously owned and titled motor vehicle which
has a N.A.D.A. Value (▇▇▇▇▇▇ Blue Book Value) of at least $5,000.00 and which
has been in Borrower's inventory for less than sixty (60) days.
All other terms contained in this Agreement shall, when the context so
indicates, have the meanings provided for by the Uniform Commercial Code.
2. Loan Terms.
Lender agrees to make the New Motor Vehicle Loan and Used Motor Vehicle
Loan as defined below (collectively referred to as
2
"Loans") to Borrower in the total principal aggregate amount set forth in the
New Motor Vehicle Note and Used Motor Note respectively, as defined below for
all such Loans. Borrower promises to repay such Loans on the following terms
and conditions:
(a) NEW MOTOR VEHICLE LOAN.
(1) An Advance, from time to time as necessary on or after the
Agreement Date, for the purchase of a New Motor Vehicle (the "New Motor
Vehicle Loan") in the aggregate principal amount of one hundred percent
(100%) of the manufacturer or distributor invoice price for such New Motor
Vehicle as evidenced by the master promissory note substantially in the
form of EXHIBIT A (the "New Motor Vehicle Note").
(2) Each Advance for a New Motor Vehicle Loan shall be payable in
full on the earliest of:
(i) forty-eight (48) hours from the time of sale or within
twenty-four (24) hours from the time Borrower receives
payment by or on behalf of the purchaser of such new Motor
Vehicle; or
(ii) one hundred eighty (180) days from the date of the new
model year introduction for any such New Motor Vehicle; or
(iii) the pay-off date as Lender may specify from time to time
under the terms of the Program; or
(iv) the termination of this Agreement.
(3) With respect to any Loaner Vehicle or Demonstrator, Borrower
shall pay Lender, at Lender's election, either;
(i) monthly installments of one percent (1%) of the original
amount of the Advance with respect to such Vehicle
beginning thirty (30) days from the date of the Advance
for such Vehicle until payment in full is due thereon; or
(ii) an amount equal to the total aggregate amounts received
from any manufacturer or distributor including holdback
reserves, manufacturer rebates or incentive payments
within thirty (30) days from the date of the Advance for
such Vehicle until payment in full is due thereon.
3
(b) USED MOTOR VEHICLE LOAN.
(1) An advance, from time to time as necessary on or after the
Agreement Date, to finance a Used Motor Vehicle which is manufactured by
BMW in the maximum principal amount of the lesser of:
(2) An Advance, from time to time as necessary on or after the
Agreement Date, to finance a Used Motor Vehicle which is not manufactured
by BMW in the maximum principal amount of the lesser of:
(i) eighty percent (80%) of the N.A.D.A. Value of the Used
Motor Vehicle or eighty percent (80%) of the ▇▇▇▇▇▇ Blue
Book Value of the Used Motor Vehicle; or
(ii) the Borrower's cost for the Used Motor Vehicle; or
(iii) the maximum principal amount as set forth in the program.
(3) The Advances described in the foregoing SECTIONS 2(b)(1) AND
2(b)(2) are referred to collectively in this Agreement as the "Used Motor
Vehicle Loan" and each such Advance shall be evidenced by the master
promissory note in substantially the form of EXHIBIT A-2 hereto (the "Used
Motor Vehicle Note).
(4) Each Advance for a Used Motor Vehicle Loan shall be payable in
full upon the earliest of:
(i) forty-eight (48) hours from the time of sale or within
twenty-four (24) hours from the time Borrower receives
payment by or on behalf of the purchaser of such Used
Motor Vehicle; or
(ii) one hundred eighty (180) days from the date of the Advance
for any Used Motor Vehicle which is manufactured by BMW;
or
(iii) one hundred twenty (120) days from the date of the Advance
for any Used Motor Vehicle which is not manufactured by
BMW, or
(iv) the pay-off date as Lender may specify from time to time
under the terms of the Program; or
(v) the termination of this Agreement.
4
(c) PAYMENTS RECEIVED FROM MANUFACTURERS OR DISTRIBUTORS.
At the request of the Lender, in the event that Borrower receives any
payments from holdback reserves, manufacturer rebates, incentive payments or any
other form of payment from a manufacturer or a distributor, such payments shall
be immediately forwarded to Lender and Lender shall apply such sums to the
outstanding principal balance with respect to the applicable Loans.
(d) TIME OF PAYMENTS.
Payments on the Loans received by Lender no later than 1:00 p.m. in
the time zone where Lender is located, shall be credited to the Average Daily
Balance on the date of Lender's receipt of such payments or the date the
Lender's bank records a wire transfer of such payment.
3. Interest.
(a) RATES OF INTEREST.
(1) NEW MOTOR VEHICLE LOAN. The Average Daily Balance of the New
Motor Vehicle Loan shall bear interest at a per annum rate equal to the
Index Rate plus one half of one percent (.5%) until paid in full.
(2) USED MOTOR VEHICLE LOAN. The Average Daily Balance of the Used
Motor Vehicle Loan shall bear interest at a per annum rate equal to:
(i) the Index Rate plus one half of one percent (.5%) until
paid in full for any Used Motor Vehicle manufactured by
BMW.
(ii) the Index Rate plus one and one half of one percent (1.5%)
until paid in full for any Used Motor Vehicle which is not
manufactured by BMW:
(b) INTEREST RATE. The Interest Rate shall initially be determined by
Lender as of the Business Day preceding the Agreement Date, and shall remain in
effect for the remainder of such calendar month in which the Agreement Date
occurs; thereafter, the Index Rate shall be determined by Lender on the last
Business Day of each month and the Interest Rate on said date shall be based on
the Index Rate used in calculating the rates which are payable for the following
month or as announced by Lender from time to time pursuant to the Program.
Interest shall be calculated on the basis of a 360-day year for actual days
elapsed and shall be payable on the fifteenth (15th) day of each month for the
preceding month.
5
(c) INTEREST ACCRUAL ON ADVANCES. Interest on each Advance made under the
New Motor Vehicle Loan and the Used Motor Vehicle Loan shall begin to accrue on
the date of Lender's Advance for such Vehicle.
(d) CASH MANAGEMENT ACCOUNT. Lender will establish a non-interest bearing
cash management account ("Management Account") allowing the Borrower to wire
excess Borrower funds. The average daily balance in the Management Account will
offset the Average Daily Balance of the New Motor Vehicle Loan computed monthly
for billing purposes with respect to Advances, provided that the average daily
balance during any one month of the Management Account shall not exceed fifty
percent (50%) of the gross Average Daily Balance.
4. Term.
The term of this Agreement shall commence on the Agreement Date and shall
continue for three (3) years thereafter. After the initial term of three (3)
years, this Agreement shall be automatically renewed for one (1) year and from
year-to-year thereafter unless terminated by either party notifying the other in
writing no later than ninety (90) days prior to any anniversary of this
Agreement. This Agreement may be terminated at any time by Lender upon ninety
(90) days' prior written notice from Lender to Borrower; however if Borrower is
in default, the rights and remedies of Lender shall be governed by SECTION 16.
If Borrower is not in default, this Agreement may be terminated by Borrower upon
ninety (90) days' prior written notice from Borrower to Lender.
5. Collateral.
For the purpose of securing any indebtedness under this Agreement and any
other indebtedness of Borrower to Lender. Borrower hereby grants Lender a
security interest in the following property (herein after referred to as the
"Collateral"): all Vehicle inventory, parts and accessories inventory,
equipment, fixtures, accounts, holdback reserves, manufacturer rebates and
incentive payments, general intangibles of the Borrower now owned and hereafter
acquired, wherever located; all accessions to, substitutions for and all
replacements of any of the foregoing; all chattel paper, documents, instruments,
monies, residues and property of any kind related to any of the foregoing; all
books and records of Borrower related to any of the foregoing, including without
limitation, computer programs, print-outs, and other computer hardware and
software materials and records pertaining to any of the foregoing; together with
all proceeds and products of the foregoing, including, without limitation,
proceeds of insurance policies insuring any of the foregoing.
The security interest granted in this Agreement is in addition to and not
in substitution of any right of set-off or
6
netting which Lender may have against Borrower pursuant to any contract or under
applicable law. Borrower agrees to execute such supplemental documents or
financing statements as Lender may require to evidence or perfect the security
interest granted in this Agreement. Lender may obtain and retain the
certificate of title in its possession until any Vehicle is sold by Borrower and
Borrower's obligation is paid in full. Lender shall have the right to inspect
the Vehicle and other Collateral and Borrower's books and records at any time
and without advance notice. Borrower agrees to retain and preserve its books
and records at its principal place of business for a period of three (3) years
from the date of final billing under this Agreement.
6. Use and Protection of Collateral.
(a) Borrower may exhibit and sell Vehicles and may use and sell other
collateral in the ordinary course of business; (b) Borrower shall protect and
secure such Vehicles and other Collateral; (c) Borrower shall maintain and
preserve the Vehicles and other physical assets in good order and condition and
shall not impair the value of such Vehicles or physical assets; (d) Borrower
will keep the Vehicles and other Collateral free of taxes, liens or encumbrances
and any sums which may be paid by Lender in its discretion, in release or
discharge thereof shall be paid by Borrower to Lender upon demand; and (e)
Vehicles and other Collateral shall not be used illegally, improperly or for
hire.
7. Insurance.
Borrower is responsible for insurance covering the Vehicles and other
Collateral against all risks, including without limitation, business
interruption insurance of such types and in such amounts as lender may
reasonably require and will provide to the Lender copies of insurance policies
and certificates properly endorsed to show Lender's interest as loss payee and
additional insured. Such endorsement shall provide that the insurance companies
will give Lender at least thirty (30) days prior written notice before any such
policy or policies of insurance shall be altered or canceled and that no act or
default of Borrower or any other party shall affect the right of Lender to
recover under such policy or policies of insurance in case of loss or damage.
Borrower hereby directs all insurers under such policies of insurance to pay all
proceeds payable thereunder directly to Lender. Proceeds payable to Lender
under any such policies shall be applied to the indebtedness due Lender under
this Agreement on such basis as Lender shall determine.
In the event Borrower, at any time or times hereafter, shall fail to obtain
or maintain any of the policies of insurance required in this Agreement or to
pay any premium in whole or in part relating thereto, then Lender, without
waiving or releasing any obligation or default by Borrower under this Agreement,
may (but shall be under no obligation to do so) at any time or times
7
thereafter obtain and maintain such policies of insurance and pay such premium
and take any other action with respect thereto which Lender deems advisable.
All sums so disbursed by Lender, including, without limitation, attorneys' and
paralegals' fees, court costs, expenses and other charges relating thereto,
shall be payable, on demand, by Borrower to Lender and shall be additional
indebtedness due Lender under this Agreement and be secured by the Collateral.
8. Borrower's Financial Condition.
Borrower represents that it now has and covenants that it will have at the
time of any Advance through the date of repayment of the applicable Loan (a)
reasonably adequate cash and equity capital to conduct its business and pay its
debts as they mature, (b) capital and other financial resources reasonably
adequate to engage in the business in which it is engaged or in any business or
transaction in which it is about to engage and (c) the ability to pay its debts
and all debts it intends to incur as they mature.
9. Borrower's Financial Statements.
(a) At Lender's request, but not later than three (3) months after the
close of each fiscal year of Borrower, Borrower agrees to provide Lender with
the audited financial statements of Borrower as certified by the Borrower's
independent certified public accountant; (b) as soon as possible, but not later
than fifteen (15) days after the end of each month hereafter, Borrower's
unaudited interim financial statements, including balance sheets and statements
of income and expense as at the month-end and for the portion of Borrower's
fiscal year then elapsed, as prepared in accordance with generally accepted
accounting principles and fairly presenting the financial position at such date
and results of operations of Borrower for such period; and (c) Borrower
certifies that each monthly financial statement and each audited annual
financial statement shall be complete, accurate and current in all respects.
10. Other Agreements of Borrower.
Without Lender's prior written consent, which Lender may or may not, in its
sole discretion, give concurrently herewith or hereafter, Borrower agrees that
it shall not make:
(a) any distributions of its property or assets, except distributions of
earnings or payments of principal and interest to service indebtedness in the
ordinary course including shareholders loans, or sell, issue, or redeem, retire,
purchase or otherwise acquire, directly or indirectly any of its stock; (b) any
material change in its capital structure, or make any material change in any of
its business objectives, purposes and operations; nor (c) any loans or other
advances of money or any loans or advances of inventory or other property, to
any party,
8
including, without limitation, any officer, director, stockholder, employee, or
affiliate of Borrower, other than (1) advances against commissions, and other
similar advances to employees in the ordinary course of business, and (2) loans
not exceeding an aggregate of ten percent (10%) of the outstanding balance of
the Loan at any time.
11. Environmental Matters.
(a) Borrower represents that it is currently in compliance, and covenants
and agrees that it shall continue to manage and operate its business in
compliance, with all federal, state and local laws, regulations, codes, plans,
orders, decrees, judgments, injunctions, notices or demand letters issue,
entered, or promulgated, approved or otherwise relating to pollution or
protection of the environment ("Environmental Law"). (b) Borrower shall send to
Lender within five (5) days of receipt, any citation, notice of violation or
other notice of potential liability from any governmental or quasi-governmental
authority empowered to regulate or oversee any of the foregoing activities.
(c) At Lender's request, Borrower, on or before each anniversary date of this
Agreement, shall provide Lender, at Borrower's sole cost, with written
certification by a licensed environmental engineer, acceptable to Lender, that
it is in compliance with all Environmental Laws or shall otherwise specify the
extent of Borrower's noncompliance, including Borrower's intended course of
action and time frame for effecting compliance. Borrower shall additionally
provide Lender with a duplicate copy of any emergency preparedness and response
plans which it has prepared or had prepared. Lender assumes no responsibility
for implementation of the plan by virtue of possession of said duplicate copy.
(d) Borrower agrees to indemnify, defend with counsel reasonably acceptable to
Lender, at Borrower's sole cost, and hold Lender harmless against any claim,
response or other costs, damages, liability or demand (including, without
limitation, attorneys' fees and costs incurred by Lender) arising out of any
claimed violation of Borrower or Borrower's agents of any of the foregoing laws,
regulations or ordinances or breach of any of the foregoing covenants or
agreements. The foregoing indemnity shall survive repayment of all indebtedness
due Lender under this Agreement.
12. Conditions Precedent
Lender shall have no obligation to make the Loans on the Agreement Date
unless and until the following conditions have been satisfied, all in form and
substance satisfactory to Lender and its counsel:
(a) NO PROCEEDINGS. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, or prohibit, or to
obtain substantial damages in respect of, or which is related to or arises out
of
9
this Agreement, or the consummation of the transactions contemplated hereby or
thereby, or which, in Lender's sole discretion, would make it inadvisable to
consummate the transactions contemplated by this Agreement.
(b) NO MATERIAL ADVERSE CHANGE. There shall not have occurred any
material adverse change in the financial condition, results of operations,
businesses or prospects of the Borrower, or any event, condition or state of
facts which could materially adversely affect the financial condition, results
of operations, businesses or prospects of the Borrower, as determined by Lender
in its sole discretion; and
(c) LOAN DOCUMENTATION. Lender shall have received, on or prior to the
Agreement Date, the following documents, each duly executed and delivered to
Lender, and each to be in form and substance satisfactory to Lender and its
counsel;
(1) copies of all filing receipts or acknowledgments issued by any
governmental authority to evidence any filing or recordation necessary to
perfect the security interests of Lender in the Collateral and evidence in
a form acceptable to Lender that such security interests constitute valid
and perfected first priority interests in the Collateral;
(2) certified copies of Borrower's casualty and liability insurance
policies, together with loss payable and additional insured endorsements to
the casualty insurance policies, as required under SECTION 7;
(3) the New Motor Vehicle Note and the Used Motor Vehicle Note duly
executed and delivered to Lender;
(4) Articles of Incorporation and Bylaws from the Borrower;
(5) Certified resolutions from Borrower's Board of Directors
authorizing execution of this Agreement, the New Motor Vehicle Note, Used
Motor Vehicle Note, and related documents;
(6) an opinion from Borrower's counsel in form and substance
satisfactory to Lender which opines on the Borrower's ability to execute
the Loan Documents and perform its obligations thereunder;
(7) an incumbency certificate from the Borrower's Secretary in form
and substance satisfactory to the Lender;
(8) good standing certificates from each state where the Borrower is
incorporated;
10
(9) written instructions from Borrower to Lender as to the
disbursement to any Person of the proceeds of the Loan;
(10) environmental compliance certificate;
(11) payment authorization between Lender and Borrower; and
(12) such other documents, instruments and agreements as Lender shall
reasonably request, including without limitation, any guaranty from a
Guarantor.
13. Termination or Suspension of Financing.
Lender may terminate or suspend financing under this Agreement as follows:
(a) Upon the occurrence of an Event of Default as defined in SECTION 14 of this
Agreement or in any other Agreement with Lender, or (b) if Lender, in its sole
discretion, elects to terminate the Program provided, however, that Lender shall
give Borrower ninety (90) days' prior written notice of such termination; or (c)
if Lender in its judgment believes that future financing of Vehicles for
Borrower is not justified due to changes in Borrower's financial condition or
any other material change in the Borrower's business. All debts, obligations
and remedies existent at the time of any suspension or termination shall
continue in effect until the indebtedness of Borrower under this Agreement is
paid in full.
14. Event of Default.
An "Event of Default" shall include the following: (a) a default by
Borrower in the payment or performance of any obligation under this Agreement or
any other agreement with Lender; (b) the institution of a proceeding in
bankruptcy receivership or insolvency by or against Borrower or its property or
by or against any Guarantor; (c) an assignment by Borrower or any Guarantor for
the benefit of creditors; (d) a default by any Guarantor in the payment or
performance of any obligation under a guaranty; (e) the death or incompetence of
any Guarantor; or (f) if Lender shall deem itself insecure.
15. Setoff.
As additional security for payment and performance of all indebtedness due
Lender under this Agreement and any other agreement with Lender, Borrower hereby
gives Lender a lien on and Lender shall also have right of setoff against all of
Borrower's deposits, credits and any other property now or hereafter in the
possession or control of Lender or in transit to Lender. Lender may at any time
apply any or all of the property (or the proceeds thereof) to any amounts due
under said indebtedness.
11
16. Rights and Remedies.
Upon the occurrence of an Event of Default as set forth in SECTION 14 or if
Vehicles and other Collateral are in danger of misuse, loss, seizure or
confiscation, Lender may, in its discretion, accelerate the entire outstanding
amount due from Borrower under this Agreement, terminate this Agreement and may
take immediate possession of Vehicles and other Collateral without demand or
further notice and without legal process. In furtherance thereof, Borrower
shall, if Lender so requests, assemble Vehicles and other Collateral and make
them available to Lender at a reasonable place designated by Lender. Lender
shall have the right, and Borrower hereby authorizes and empowers Lender to
enter upon the premises wherever Vehicles and other Collateral may be and remove
same. Borrower shall pay all expenses and reimburse Lender for any
expenditures, including reasonable attorneys' fees and legal expenses, in
connection with Lender's exercise of any of its rights and remedies under this
Agreement. In the event of such repossession by Lender, in addition to the
rights specified in this Agreement, all the rights and remedies afforded by
applicable law shall apply.
17. Indemnity.
Borrower agrees to indemnify Lender from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever (including,
without limitation, attorneys' fees and court costs incurred by Lender) which
may be imposed on, incurred by, or asserted against Lender in any litigation,
proceeding or investigation instituted or conducted by any governmental agency
or instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement, whether or not Lender is a party thereto, except to the extent that
any of the foregoing arises out of the negligence or willful misconduct of
Lender.
18. Pricing Provisions.
Pricing provisions regarding the program related to insurance protection,
flat charges and the applicable percentage over the Index Rate ("Pricing
Provisions") will be distributed by the Lender from time to time. The Program
may be modified from time to time, upon thirty (30) days prior notice to
Borrower, by Lender by means of Lender's bulletins, rate notices and other
supplemental materials. The provisions of the Program are incorporated in this
Agreement by reference. If Borrower does not agree to the change in Pricing
Provisions as announced by Lender, Borrower may elect to terminate this
Agreement and all debts, obligations and remedies existent at the time of any
suspension or termination shall continue in effect until the indebtedness of
Borrower under this Agreement is paid in full. In the event of conflict between
the provisions of this Agreement
12
and the provisions of the Program, the Pricing Provisions shall be controlled by
the Program and all other provisions shall be controlled by this Agreement.
19. Power of Attorney.
(a) Upon the occurrence of an Event of Default, Borrower irrevocably
appoints Lender as Borrower's lawful attorney and Lender may, without notice to
Borrower, in Borrower's or Lender's name(s);
(1) endorse the name of Borrower upon any items of payment or
proceeds of Collateral and deposit the same to the account of Lender on
account of the indebtedness due under this Agreement;
(2) endorse the name of Borrower upon any chattel paper, document,
instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar document or
agreement relating to the Collateral; and
(3) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Collateral to which Borrower has access.
(b) At all times this Agreement, with or without the occurrence of an
Event of Default, Borrower irrevocably appoints Lender as Borrower's lawful
attorney and Lender may without notice to Borrower, in Borrower's name or
Lender's name, (1) execute such agreements and related documentation as may be
necessary for Borrower to acquire Vehicles from BMW NA and other manufacturers
or distributors; and (2) make, settle and adjust claims under policies of
insurance, as are required under SECTION 7, and to endorse any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect to such
policies of insurance.
20. General.
This Agreement shall be binding upon the parties, successors and assigns,
provided, however, that Borrower shall have no right of assignment, without the
prior written consent of Lender. Any provision in this Agreement prohibited by
law shall be ineffective to the extent of such prohibitions without invalidating
the remaining provisions in this Agreement. This Agreement shall be governed by
the internal laws of the State where the Borrower is located. Any amendment or
modification to this Agreement must be made in writing and must be executed by
13
the Borrower and Lender, provided; however, that this SECTION 20 may not be
amended in any circumstance.
Executed this ___________ day of October, 1996.
BORROWER: LENDER:
Borrower Name: United Auto Group BMW Financial Services NA, Inc.
Atlanta IV Motors,
Inc.
By: By:
------------------------------ ------------------------------
Title: Title:
--------------------------- ---------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
14
NEW MOTOR VEHICLE NOTE
$7,000,000.00 Duluth, Georgia
October _____, 1996
FOR VALUE RECEIVED, the undersigned, United Auto Group Atlanta IV
Motors, Inc., dba United BMW, a Georgia corporation ("Borrower"), promises to
pay to BMW Financial Services NA, Inc., a Delaware corporation ("Lender"), or
order, at its place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, Attention, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or at such other place as may be
designated in writing by the holder of this New Motor Vehicle Note ("Note"), so
much of the principal sum of Seven Million and no/Dollars ($7,000,000.00), which
has been advanced by Lender and remains outstanding pursuant to the terms of an
Inventory Financing and Security Agreement dated as of October, 1996 between
Borrower and Lender (the "Inventory Finance Agreement"), together with interest
on the unpaid principal balance advanced hereunder from the date of the Advance
until paid, at a fluctuating interest rate per annum equal to the Index Rate (as
hereinafter defined) plus an applicable percentage as set forth below and
provided, however, that amounts outstanding with respect to the following types
of Advances cannot exceed the limits listed below:
Applicable
Percentage Rate
Types of Advances Amount Over Index Rate
----------------- ------ ---------------
Advances for BMW New Motor Vehicles $7,000,000.00 0.50%
The initial Advance, all subsequent Advances and all payments made on
account of principal shall be reflected on monthly statements provided by Lender
to Borrower. From time to time, an Advance requested by the Borrower may cause
an outstanding principal balance ("Over Line Balance") in excess of the maximum
principal amount permitted under this Note; provided, however, Lender shall
notify Borrower pursuant to Lender's most recent monthly statement to Borrower
of the existence of any Over Line Balance and Borrower shall have the right to
instruct Lender in writing within ten (10) days of the date of such statement to
refuse to honor any future drafts from BMW or from any other manufacturer or
distributor of motor vehicles. Lender reserves the right to demand, and
Borrower agrees to execute and deliver upon such demand, a replacement note in a
principal amount, determined solely by Lender, sufficient to cover the then
outstanding principal balance. The aggregate unpaid principal amount shown on
any monthly statement, including any Over Line Balance, shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on this Note. The
failure to record the date and amount of any Advance on such monthly statement
shall not, however, limit or otherwise affect the
obligations of the Borrower under the Inventory Finance Agreement or under this
Note to repay the principal amount of the Advances together with all interest
accruing thereon.
"Index Rate" shall mean the base rate on corporate loans posted by at
least 75% of the nation's thirty (30) largest banks on the last business day of
each calendar month, which is quoted as the "Prime Rate" in the column entitled
"Money Rates" published in THE WALL STREET JOURNAL (in the event no such rate is
published in THE WALL STREET JOURNAL on such date, the Index Rate shall be the
"Prime Rate" shown in such column for the most recent business day preceding the
last business day of such month on which such rate was published) or, in the
event THE WALL STREET JOURNAL does not quote a "Prime Rate", the rate quoted as
the "Prime Rate" in a publication as Lender may, from time to time, hereafter
designate in writing. The Index Rate shall initially be determined by Lender as
of the Business Day preceding the date of the Loan Agreement and shall remain in
effect for the remainder of such calendar month in which such date occurs;
thereafter, the Index Rate shall be determined by Lender on the last Business
Day of each month and the Interest Rate based on such Index Rate shall be in
effect for the following month. Interest shall be calculated on the basis of a
360-day year for actual days elapsed.
Principal and interest hereunder shall be due and payable by Borrower
on the dates and in the manner as follows:
(a) Subject to any payment changes resulting from changes in the Index
Rate, Borrower will pay regular monthly installments of interest only,
due as of each payment date, commencing on the fifteenth (15th) day of
November, 1996, with all subsequent payments to be due on the
fifteenth (15th) day of each month thereafter; and
(b) Any Advance for a New Motor Vehicle Loan shall be payable on the
earliest of:
(i) forty-eight (48) hours from the time of sale or within twenty-
four (24) hours from the time Borrower receives payment by or on
behalf of the purchaser of such New Motor Vehicle; or
(ii) one hundred eighty (180) days from the date of the new model year
introduction for any such New Motor Vehicle; and
(c) With respect to any Loaner Vehicle or Demonstrator, Borrower shall pay
Lender, at Lender's election, either:
(i) monthly installments of one percent (1%) of the original amount
of the Advance with respect to
2
such Vehicle beginning thirty (30) days from the date of the
Advance for such Vehicle until payment in full is due thereon; or
(ii) Monthly payments in an amount equal to the total aggregate
monthly amounts received from any manufacturer or distributor
including holdback reserves, manufacturer rebates or incentive
payments beginning thirty (30) days from the date of the Advance
for such Vehicle until payment in full is due thereon; and
(d) Notwithstanding the principal and interest payment provisions set
forth in Sections (a), (b) and (c) above, the unpaid principal balance
plus any unpaid accrued interest thereon, shall be payable in one lump
sum on the earliest of:
(i) October 15, 1999 (or such other due date of the indebtedness as
extended pursuant to Section 4 of the Inventory Finance
Agreement); or
(ii) the termination of the Inventory Finance Agreement; or
(iii) the pay-off date as Lender may specify from time to time under
the terms of the Program.
Borrower may prepay at any time all or part of the principal balance
under this Note without penalty.
All principal and interest, costs and expenses due hereunder are
payable in lawful money of the United States of America.
This Note has been executed and delivered pursuant to the Inventory
Finance Agreement. Terms defined in the Inventory Finance Agreement and not
otherwise defined herein are used herein with the meanings defined for those
terms in the Inventory Finance Agreement. Upon the occurrence of an Event of
Default, the entire principal balance outstanding hereunder plus accrued
interest shall, at the option of Lender, mature and be immediately due and
payable.
The obligations under this Note are secured by the Collateral pledged
by the Borrower to the Lender pursuant to the Inventory Finance Agreement.
Borrower and all others who may become liable for all or any part of
this obligation, hereby waive and renounce presentment, protest, demand and
notice of dishonor and any and all lack of diligence or delays in collection or
endorsement hereof, and expressly consent to any extension of time, release of
any party liable for this obligation or any guaranty of this
3
obligation, release of any security which may have been or which may hereafter
be granted in connection herewith or any guaranty of this obligation, or any
other indulgence or forbearance which may be made without notice to said party
and without in any way affecting the liability of such party.
Nothing contained herein nor in any transaction related hereto shall
be construed or shall so operate either presently or prospectively (a) to
require the payment of interest at a rate greater than is now lawful in such
case to contract for, but shall require payment of interest only to the extent
of such lawful rate or (b) to require the payment or the doing of any act
contrary to law; but if any clause or provision herein contained shall otherwise
so operate to invalidate this Note and/or the transaction related hereto, in
whole or in part, then such clause(s) and provision(s) only shall be held for
naught as though not contained herein and the remainder of this Note shall
remain operative and in full force and effect.
If for any reason interest in excess of the amount as limited in the
foregoing paragraph shall have been paid hereunder, whether by reason of
acceleration or otherwise, then in that event any such excess interest shall
constitute and be treated as a payment of principal hereunder and shall operate
to reduce such principal by the amount of such excess, or if in excess of the
then principal indebtedness, such excess shall be refunded.
The rights and remedies of Lender as provided in this Note or any
document securing this Note shall be cumulative and concurrent, and may be
pursued singly, successively or together against Borrower, any guarantor of
these obligations or any security for the debt evidenced by this Note, at the
discretion of Lender.
The Borrower agrees that if, and as often as, this Note is placed in
the hands of an attorney for collection, to defend or enforce any of the
Lender's rights hereunder or under any document securing this Note, whether or
not litigation is commenced, Borrower shall pay to Lender its reasonable
attorneys' fees, together with all court costs and other expenses which may be
incurred or paid by Lender in connection therewith.
Failure to exercise any right or option herein given to Lender shall
not constitute a waiver of the right to exercise the same at a later time or
upon the occurrence of any subsequent event permitting such exercise.
This Note and all transactions hereunder and/or evidenced hereby shall
be governed by, construed under and enforced in accordance with the laws of the
State of Georgia.
This Note may not be changed, modified, amended or terminated orally,
but may only be changed, modified, amended or
4
terminated by an agreement in writing signed by both Borrower and Lender, except
that this paragraph may not be changed, modified, amended or terminated under
any circumstance.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed by
its duly authorized officer as of the date first above written.
United Auto Group Atlanta IV Motors, Inc. dba United
BMW
a Georgia corporation
By:________________________________
Name:______________________________
Title:_____________________________
Acknowledged by:
United Auto Group, Inc.
By:_____________________________
Its:____________________________
and as Guarantor of this New Motor
Vehicle Note.
5
USED MOTOR VEHICLE NOTE
$1,250,000.00 Duluth, Georgia
October _____, 1996
FOR VALUE RECEIVED, the undersigned, United Auto Group Atlanta IV
Motors, Inc., dba United BMW, a Georgia corporation ("Borrower"), promises to
pay to BMW Financial Services NA, Inc., a Delaware corporation ("Lender"), or
order, at its place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or at such other place as may be
designated in writing by the holder of this Used Motor Vehicle Note ("Note"), so
much of the principal sum of One Million Two Hundred Fifty Thousand and
no/Dollars ($1,250,000.00), which has been advanced by Lender and remains
outstanding pursuant to the terms of an Inventory Financing and Security
Agreement dated as of October __, 1996 between Borrower and Lender (the
"Inventory Finance Agreement"), together with interest on the unpaid principal
balance advanced hereunder from the date of the Advance until paid, at a
fluctuating interest rate per annum, equal to the Index Rate (as hereinafter
defined), plus an applicable percentage as set forth below and provided,
however, that amounts outstanding with respect to the following types of
Advances cannot exceed the limits listed below:
Applicable
Percentage Rate
Types of Advances Amount Over Index Rate
----------------- ------ ---------------
Advances for BMW Used Motor Vehicles $1,000,000.00 0.5%
Advances for non-BMW Used Motor Vehicles $250,000.00 0.75%
The initial Advance, all subsequent Advances and all payments made on
account of principal shall be reflected on monthly statements provided by Lender
to Borrower. From time to time, an Advance requested by the Borrower may cause
an outstanding principal balance ("Over Line Balance") in excess of the maximum
principal amount permitted under this Note; provided, however, Lender shall
notify Borrower pursuant to Lender's most recent monthly statement to Borrower
of the existence of any Over Line Balance and Borrower shall have the right to
instruct Lender in writing within ten (10) days of the date of such statement to
refuse to honor any future drafts from BMW or from any other manufacturer or
distributor of motor vehicles. Lender reserves the right to demand, and
Borrower agrees to execute and deliver upon such demand, a replacement note in a
principal amount, determined solely by Lender, sufficient to cover the then
outstanding principal balance. The aggregate unpaid principal amount shown on
any monthly statement, including any Over Line Balance, shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on this Note. The
failure to record the date and amount of any Advance on such monthly statement
shall not, however, limit or otherwise affect the
6
obligations of the Borrower under the Inventory Finance Agreement or under this
Note to repay the principal amount of the Advances together with all interest
accruing thereon.
"Index Rate" shall mean the base rate on corporate loans posted by at
least 75% of the nation's thirty (30) largest banks on the last business day of
each calendar month, which is quoted as the "Prime Rate" in the column entitled
"Money Rates" published in THE WALL STREET JOURNAL (in the event no such rate is
published in THE WALL STREET JOURNAL on such date, the Index Rate shall be the
"Prime Rate" shown in such column for the most recent business day preceding the
last business day of such month on which such rate was published) or, in the
event THE WALL STREET JOURNAL does not quote a "Prime Rate", the rate quoted as
the "Prime Rate" in a publication as Lender may, from time to time, hereafter
designate in writing. The Index Rate shall initially be determined by Lender as
of the Business Day preceding the date of the Loan Agreement and shall remain in
effect for the remainder of such calendar month in which such date occurs;
thereafter, the Index Rate shall be determined by Lender on the last Business
Day of each month and the Interest Rate based on such Index Rate shall be in
effect for the following month. Interest shall be calculated on the basis of a
360-day year for actual days elapsed.
Principal and interest hereunder shall be due and payable by Borrower
on the dates and in the manner as follows:
(a) Subject to any payment changes resulting from changes in the Index
Rate, Borrower will pay regular monthly installments of interest only,
due as of each payment date, commencing on the fifteenth (15th) day of
November, 1996, with all subsequent payments to be due on the
fifteenth (15th) day of each month thereafter, and
(b) Any Advance for a Used Motor Vehicle shall be payable on the earliest
of:
(i) forty-eight (48) hours from the time of sale or within twenty
four (24) hours from the time Borrower receives payment by or on
behalf of the purchaser of such Used Motor Vehicle; or
(ii) one hundred eighty (180) days subsequent to the date of an
Advance for a Used Motor Vehicle which is manufactured by BMW;
or
(iii) one hundred twenty (120) days subsequent to the date of an
Advance for a Used Motor Vehicle which is not manufactured by
BMW; and
7
(c) Unpaid principal balance plus any unpaid accrued interest thereon,
shall be payable in one lump sum on the earliest of:
(i) October 15, 1999 (or such other due date of the indebtedness as
extended pursuant to Section 4 of the Inventory Finance
Agreement); or
(ii) the payoff date as Lender may specify from time to time under
the terms of the Program; or
(iii) the termination of the Inventory Finance Agreement.
Borrower may prepay at any time all or part of the principal balance
under this Note without penalty.
All principal and interest, costs and expenses due hereunder are
payable in lawful money of the United States of America.
This Note has been executed and delivered pursuant to the Inventory
Finance Agreement. Terms defined in the Inventory Finance Agreement and not
otherwise defined herein are used herein with the meanings defined for those
terms in the Inventory Finance Agreement. Upon the occurrence of an Event of
Default, the entire principal balance outstanding hereunder plus accrued
interest shall at the option of Lender, mature and be immediately due and
payable.
The obligations under this Note are secured by the Collateral pledged
by the Borrower to the Lender pursuant to the Inventory Finance Agreement.
Borrower and all others who may become liable for all or any part of
this obligation, hereby agree to be jointly and severally bound, and jointly and
severally waive and renounce presentment, protest, demand and notice of dishonor
and any and all lack of diligence or delays in collection or endorsement hereof,
and expressly consent to any extension of time, release of any party liable for
this obligation or any guaranty of this obligation, release of any security
which may have been or which may hereafter be granted in connection herewith or
any guaranty of this obligation, or any other indulgence or forbearance which
may be made without notice to said party and without in any way affecting the
liability of such party.
Nothing contained herein nor in any transaction related hereto shall
be construed or shall so operate either presently or prospectively (a) to
require the payment of interest at a rate greater than is now lawful in such
case to contract for, but shall require payment of interest only to the extent
of such lawful rate or (b) to require the payment or the doing of any act
contrary to law; but if any clause or provision herein contained
8
shall otherwise so operate to invalidate this Note and/or the transaction
related hereto, in whole or in part, then such clause(s) and provision(s) only
shall be held for naught as though not contained herein and the remainder of
this Note shall remain operative and in full force and effect.
If for any reason interest in excess of the amount as limited in the
foregoing paragraph shall have been paid hereunder, whether by reason of
acceleration or otherwise, then in that event any such excess interest shall
constitute and be treated as a payment of principal hereunder and shall operate
to reduce such principal by the amount of such excess, or if in excess of the
then principal indebtedness, such excess shall be refunded.
The rights and remedies of Lender as provided in this Note or any
document securing this Note shall be cumulative and concurrent, and may be
pursued singly, successively or together against Borrower, any guarantor of
these obligations or any security for the debt evidenced by this Note, at the
discretion of Lender.
The Borrower agrees that if, and as often as, this Note is placed in
the hands of an attorney for collection to defend or enforce any of the Lender's
rights hereunder or under any document securing this Note, whether or not
litigation is commenced, Borrower shall pay to Lender its reasonable attorneys'
fees, together with all court costs and other expenses which may be incurred or
paid by Lender in connection therewith.
Failure to exercise any right or option herein given to Lender shall
not constitute a waiver of the right to exercise the same at a later time or
upon the occurrence of any subsequent event permitting such exercise.
This Note and all transactions hereunder and/or evidenced hereby shall
be governed by, construed under and enforced in accordance with the laws of the
State of Georgia.
This Note may not be changed, modified, amended or terminated orally,
but may only be changed, modified, amended or terminated by an agreement in
writing signed by both Borrower and Lender, except that this paragraph may not
be changed, modified, amended or terminated under any circumstance.
9
IN WITNESS WHEREOF, Borrower has caused this Note to be executed by
its duly authorized officer as of the date first above written.
United Auto Group Atlanta IV Motors,
Inc., dba United BMW
a Georgia corporation
By:________________________________
Name:______________________________
Title:_____________________________
Acknowledged by:
United Auto Group, Inc.
By:_____________________________
Its:____________________________
and as Guarantor of this Used Motor
Vehicle Note.
10
