BANK OF AMERICA AUTOMOBILE FLOORING
AND SECURITY AGREEMENT
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This Agreement dated as of March 6, 1997, is between Bank of America National
Trust and Savings Association, successor by merger to Bank of America Arizona
(the "Bank") and ▇▇▇▇▇▇▇ Automotive, Ltd. (the "Borrower").
1. DEFINITIONS In addition to the terms which are defined elsewhere in this
Agreement, the following terms have the meanings indicated for the purposes of
this Agreement:
"ADVANCE" means an advance made to the Borrower or on the Borrower's behalf
under this Agreement.
"BANKING DAY" means a day other than a Saturday or a Sunday on which the Bank
is open for business in Arizona. All payments and disbursements which would be
due on a day which is not a Banking Day will be due on the next Banking Day.
All payments received on a day which is not a Banking Day will be applied to
the credit on the next Banking Day.
"COLLATERAL" means the collateral required by Article 4 of this Agreement.
"COMMERCIAL VEHICLE" means a Vehicle of more than 1-1/2 ton rated capacity.
"DEALER TRADE" means a New Vehicle obtained by the Borrower from another dealer
in trade.
"DEMO" means any New Vehicle which is designated by the Borrower with the
consent of the Bank to be used as a demonstration unit.
"FLEET SALE" means (a) an agreement by the Borrower to sell more than one
Vehicle to the same purchaser, or (b) a series of sales by the Borrower of more
than one Vehicle to the same purchaser, unless the amount due from the
purchaser for each Vehicle is paid in full before the next Vehicle is sold.
"FLEET SALE PURCHASE CONTRACT" means the contract or contracts between the
Borrower and the purchaser under a Fleet Sale, including any delivery
agreement, purchase order, or other document evidencing the Fleet Sale and its
terms.
"NEW VEHICLE" means a Vehicle which has never been owned except by a
manufacturer, distributor or dealer, has never been registered; and has not
been driven more than 400 miles.
"NON-COMMERCIAL VEHICLE" means a Vehicle which is not a Commercial Vehicle.
"PAYMENT COMMITMENT" means a commitment entered into between the Bank and a
manufacturer or distributor, providing for payment of funds directly by the
Bank to the manufacturer or distributor in payment for the purchase of a New
Vehicle by the Borrower.
"PROGRAM VEHICLE" means a Used Vehicle which is obtained directly from the
manufacturer or distributor, which is from the current or prior model year, and
which has mileage not in excess of 25,000 miles.
"RENTAL VEHICLE" means a Vehicle which is held by the Borrower for short-term
rentals, which short-term rentals shall not exceed two (2) weeks.
"REFERENCE RATE" is the rate of interest publicly announced from time to time
by Bank of America National Trust and Savings Association ("BofA California")
as its "reference rate". The Reference Rate is set by BofA California based on
various factors, including BofA California's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans. The Bank and BofA California may price loans to its
customers at, above, or below the Reference Rate. Any change in the Reference
Rate will take effect at the opening of business on the day specified in the
public announcement of a change in BofA California's Reference Rate.
"RECREATIONAL VEHICLE" ("RV") means a vehicular-type unit primarily designed as
temporary living quarters for recreational, camping, travel, or seasonal use
that either has its own motive power or is mounted on, or towed by, another
vehicle.
"RELATED PRINCIPAL PORTION" means, with respect to each Vehicle, the amount of
principal advanced under this Agreement to finance that Vehicle.
"USED VEHICLE" means a Vehicle other than a New Vehicle.
"VEHICLE" means an automobile or truck which satisfies the following
requirements:
(a) The vehicle is owned by the Borrower free of any title defects or any
liens or interests of others except the security interest in favor of the
Bank and other liens to which the Bank consents in writing.
(b) Unless the vehicle is a Demo or is in transit from the seller, it is
permanently located at locations which the Borrower has disclosed to the
Bank and which are acceptable to the Bank. If the vehicle is in transit
from a seller, then upon receipt by the Borrower it will
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be permanently located at such locations disclosed to the Bank.
(c) The vehicle is held for sale in the ordinary course of the Borrower's
business and is of good and merchantable quality.
(d) The vehicle is otherwise acceptable to the Bank.
2. LINE OF CREDIT AMOUNT AND TERMS
2.1. COMMITMENT. During the availability period described below, upon the
specific request of the Borrower or pursuant to a Payment Commitment, the Bank
will make Advances to the Borrower to finance Vehicles. Each Advance must be
used for one of the purposes described in this Agreement. The amount of the
line of credit (the "Commitment") is Twenty Million and No/100 Dollars
($20,000,000.00). The Borrower agrees not to permit the outstanding principal
balance of the line of credit to exceed the Commitment.
2.2. AVAILABILITY PERIOD. The line of credit is available between the date of
this Agreement and April 30, 1998 (the "Expiration Date") unless the Borrower
is in default.
2.3. PURPOSE OF ADVANCES. Advances may be made: (a) to finance the acquisition
of New Vehicles and Program Vehicles directly from the manufacturer or
distributor pursuant to a Payment Commitment; (b) to finance the acquisition of
New Vehicles through Dealer Trades; (c) to finance other New Vehicles owned by
the Borrower; or (d) to finance Used Vehicles owned or acquired by the
Borrower.
2.4. ADVANCES FOR NEW NON-COMMERCIAL VEHICLES.
(a) The principal amount of Advances made to finance New Non-Commercial
Vehicles, (including Advances for Demos under Paragraph 2.6 below, and
including Fleet Sales) shall not exceed Seventeen Million and No/100
Dollars ($17,000,000.00) outstanding at any one time.
(b) The principal amount of Advances outstanding at any one time made to
finance New Non-Commercial Vehicles (including Demos and including Fleet
Sales) from the manufacturers or distributors listed below shall not
exceed the dollar limits stated below. (Advances shall not be made with
respect to New Non-Commercial Vehicles from manufacturers or distributors
not listed below without the prior consent of the Bank.)
Manufacturer/Distributor Dollar Amount Within Line Fleet Limit
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Dodge $9,000,000.00 ($5,000,000.00)
Chrysler/Plymouth/Jeep/Eagle $8,000,000.00 ($3,500,000.00)
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(c) Each Advance to finance New Non-Commercial Vehicles shall not exceed an
amount equal to one hundred percent (100%) of the amount of the invoice
for the Vehicles. In the case of Dealer Trades, the Advance shall not
exceed an amount equal to one hundred percent (100%) of the acquisition
cost for the Dealer Trade.
2.5. ADVANCES FOR RENTAL VEHICLES.
(a) The principal amount of Advances made to finance Rental Vehicles shall not
exceed Five Hundred Thousand and No/100 Dollars ($500,000.00) outstanding
at any one time.
(b) The principal amount of Advances outstanding at any one time made to
finance Rental Vehicles from the manufacturers or distributors listed
below shall not exceed the following dollar limits (advances shall not be
made with respect to Rental Vehicles from manufacturers or distributors
not listed below without prior written consent of the Bank):
Manufacturer Dollar Amount
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Dodge/Chrysler/Plymouth/Jeep/Eagle $500,000.00
(c) Each Advance to finance New Rental Vehicles will be One Hundred percent
(100%) of manufacturers invoice.
(d) Each Advance to finance Used Rental Vehicles shall not exceed the lesser
of One Hundred percent (100%) of acquisition cost or eighty percent (80%)
of wholesale value as determined by the Bank.
2.6. ADVANCES FOR DEMOS.
(a) The principal amount of Advances made to finance Demos shall not exceed
Seven Hundred Thousand and No/100 Dollars ($700,000.00) outstanding at any
one time.
(b) Within the foregoing limit, the principal amount of Advances outstanding
at any one time made to finance Demos from the manufacturers or
distributors listed below shall not exceed the dollar limits stated below,
and the Borrower shall have no more than the number of Demos indicated
from that Manufacturer/Distributor at any one time.
Manufacturer/Distributor Number of Demos Dollar Amount
------------------------ --------------- -------------
Dodge 10 $200,000.00
Chrysler/Plymouth/Jeep/Eagle 25 $500,000.00
(c) The Borrower shall have no more than 35 Demos at any one time.
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(d) Each Advance to finance a Demo shall be subject to the percent limitations
stated in subparagraph 2.4(c) above.
2.7. ADVANCES FOR NEW COMMERCIAL VEHICLES. No New Commercial Vehicles may be
financed under this Agreement.
2.8. ADVANCES FOR USED VEHICLES.
(a) The principal amount of Advances made to finance Used Vehicles shall not
exceed Five Hundred Thousand and No/100 Dollars ($500,000.00) outstanding
at any one time.
(b) Each Advance to finance Used Vehicles shall not exceed the lesser of
eighty percent (80%) of wholesale value as determined by the Bank or 100%
of acquisition cost. As a condition precedent for Used Vehicles to be
eligible for financing by Bank, Used Vehicles must be: (i) listed in a
current used car guide acceptable to the Bank; and (ii) aged less than
five (5) years of current model year.
2.9. ADVANCES FOR PROGRAM VEHICLES.
(a) The principal amount of Advances made to finance Program Vehicles shall
not exceed the amount outstanding at any one time as indicated from that
Manufacturer/Distributor listed below:
Manufacturer/Distributor Amount
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Dodge $1,000,000.00
Chrysler/Plymouth/Jeep/Eagle $1,000,000.00
(b) Each Advance to finance Program Vehicles shall not exceed an amount equal
to one hundred percent (100%) of the amount of invoice for the Program
Vehicles.
Notwithstanding the above paragraphs 2.4, 2.5, 2.6, 2.8 and 2.9, at
the Bank's sole option, Bank may redistribute the above dollar limits
referenced in paragraphs 2.4, 2.5, 2.6, 2.8 and 2.9.
2.10. ADVANCES FOR USED COMMERCIAL VEHICLES. No Used Vehicle which is
Commercial Vehicle may be financed under this Agreement.
2.11. ADVANCES FOR FLEET SALES. In addition to the requirements set forth
above, for Fleet Sales of Non-Commercial Vehicles with a total consideration of
Five Hundred Thousand and No/100 Dollars ($500,000.00) or more, the Borrower
shall provide to the Bank a copy of the Fleet Sale Purchase Contract and an
executed Bank form Assignment of Proceeds covering the Fleet Sale immediately
following consummation of the Fleet Sale Purchase Contract. Such Assignment of
Proceeds may require special language acceptable to the Bank if the Borrower
has executed a power of attorney allowing the fleet purchaser to order Vehicles
directly from the manufacturer.
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2.12. ADVANCES IN EXCESS OF LIMITATIONS. The Bank shall have no obligation to
make an Advance which would cause the principal amount outstanding under this
Agreement to exceed the Commitment or any of the other limitations stated in
this Agreement; including, without limitation, Advances made pursuant to a
Payment Commitment or in response to a specific request by the Borrower.
Notwithstanding the foregoing, the Borrower shall remain liable for any
Advances in excess of such limitations. Upon demand by the Bank, the Borrower
shall immediately pay to the Bank the amount of any excess over such
limitations.
2.13. PAYMENT COMMITMENT. The Bank is authorized to make Advances on the
Borrower's behalf directly to individual manufacturers or distributors of
Vehicles listed above, in accordance with the terms and conditions of the
Payment Commitment agreed to between the Bank and each manufacturer or
distributor. The Bank may revise, terminate or suspend a Payment Commitment at
any time by giving written notice to the manufacturer or distributor. The
Borrower shall remain liable to the Bank for all payments made to a
manufacturer or distributor pursuant to a Payment Commitment.
2.14. AUTHORIZATION. The Borrower authorizes and requests the Bank to furnish
each manufacturer or distributor listed above information reflecting the
flooring line of credit provided by this Agreement. The Bank is further
instructed and authorized to advise said manufacturer or distributor of any
change or termination which may occur with respect to said flooring line of
credit.
2.15. DEMONSTRATION VEHICLES; USED VEHICLES.
(a) The Borrower may designate certain Vehicles financed under this Agreement
as Demos, in accordance with procedures and criteria established by the
Bank. Unless otherwise stipulated by the Bank in writing, the Bank shall
have the right to inspect each demo at least monthly.
(b) For each Demo with mileage in excess of 6,000 miles, the Borrower shall
repay the Related Principal Portion in monthly installments on the
fifteenth (15th) day of each month following the date that the mileage on
the applicable Demo reaches 6,000. Each installment shall be in an amount
equal to three percent (3%) of the original amount of the Related
Principal Portion of the applicable Demo. Notwithstanding what may
otherwise be provided in this paragraph 2.15, any remaining unpaid
amount(s) of the Related Principal Portion shall be repaid in full in
accordance with the provisions of paragraph 2.16 below.
(c) Demos shall be used only for demonstration purposes and shall at all
times be under the direct control of the Borrower; provided, however,
that the Borrower may allow
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a prospective purchaser to use a Demo. The Borrower assumes full
responsibility for the use, operation, maintenance and care of Demos,
including all damage thereto, and assumes full responsibility of loss.
(d) Except as modified in this paragraph, all other provisions of this
Agreement shall apply to Demos.
(e) The Borrower agrees that no Used Vehicle financed under this Agreement
other than a Demo shall be driven more than 6,000 additional miles over
the mileage at the time it is acquired by the Borrower.
2.16. PRINCIPAL PAYMENTS. The Borrower will repay in full all principal
outstanding under this Agreement on the earlier of the Expiration Date or the
date(s) determined as follows:
(a) For Advances made to finance New Non-commercial Vehicles (except Fleet
Sales): For each financed Vehicle, the Borrower shall pay the Bank the
Related Principal Portion by the earlier of (i) three (3) Banking Days
following receipt of proceeds from sale of the Vehicle, or (ii) ten (10)
Banking Days following the date of the sale of the Vehicle. If the
Vehicle is not earlier sold, a monthly principal reduction equal to ten
percent (10%) of the Related Principal Portion will be paid by the
Borrower on the fifteenth (15th) day of the next calendar month with
respect to any New Vehicle with an unpaid balance at the end of three
hundred sixty (360) calendar days from the original date of Advance for
such Vehicle and continue for ninety (90) days until a seventy percent
(70%) Loan to Original Value is achieved at which time no curtailments
will be due for ninety (90) days at the end of such period the vehicle(s)
must be paid off in full.
(b) For Advances made to finance Used Non-commercial Vehicles, including
Program Vehicles: For each financed Vehicle, the Borrower shall pay the
Bank the Related Principal Portion by the earlier of (i) three (3)
Banking Days following receipt of proceeds from sale of the Vehicle, or
(ii) ten (10) Banking Days following the date of sale of the Vehicle. If
the Vehicle is not earlier sold, a monthly principal reduction equal to
ten percent (10%) of the Related Principal Portion will be paid by
Borrower on the fifteenth day of the next month with respect to any Used
or Program Vehicle with an unpaid balance at the end of ninety (90)
calendar days from the original date of Advance for such Vehicle. If any
Related Principal Portion remains after one hundred eighty (180) calendar
days from the original date of Advance for any such Vehicle, the Borrower
shall pay the Bank the remaining Related Principal Portion.
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(c) For Fleet Sales: For each financed Vehicle sold, as part of a Fleet Sale,
the Borrower shall pay the Bank the Related Principal Portion by the
earliest of:
(i) For ▇▇▇▇▇▇ County, Texas only: (1) the next two (2) Banking Days
following receipt of proceeds from sale of the Vehicle, (2)
forty-five (45) calendar days following the date of sale of the
Vehicle, or (3) the date specified for payment for the Vehicles
by the purchaser in the Fleet Sale Purchase Contract.
(ii) All other Fleet Sales: (1) the next two (2) Banking Days
following receipt of proceeds from sale of the Vehicle, (2)
thirty (30) calendar days following the date of sale of the
Vehicle, or (3) the date specified for payment for the Vehicles
by the purchaser in the Fleet Sale Purchase Contract.
(d) For Advances made to finance Rental Vehicles: For each financed Vehicle
which is a Rental Vehicle, the Borrower shall pay the Bank the Related
Principal Portion as follows:
(1) Three percent (3%) of the original amount of the Related Principal
Portion shall be paid to the Bank on the fifteenth (15th) day of
each calendar month, beginning on the fifteenth (15th) day of the
first (1st) calendar month that the Vehicle became a Rental Vehicle;
(2) The remaining unpaid Related Principal Balance for any Rental
Vehicle shall be due and payable on the fifteenth (15th) day of the
twenty fourth (24th) calendar month following the date that the
Vehicle became a Rental Vehicle.
(3) Upon sale of a Rental Vehicle, the entire unpaid Related Principal
Portion shall be due and payable by the earlier of (i) three (3)
Banking Days following receipt of proceeds from sale of the Vehicle,
or (ii) ten (10) Banking Days following the date of the sale of the
Vehicle.
For the purposes of this paragraph, if the Borrower disposes of a Vehicle by a
dealer trade or otherwise or if the Vehicle ceases to meet the criteria
contained in the definition of Vehicle in this Agreement, such event will be
considered to be a sale of the Vehicle.
(e) Optional Payments: In addition to any payments otherwise required by this
Agreement, the Borrower may reduce the principal balance outstanding
under this Agreement subject to the following:
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(i) At the Borrower's request, the Bank will establish for the
Borrower a Dealer Cash Management (DCM) Account. The DCM Account
is not a deposit account, and the Borrower shall have no right or
interest in any balance in such account, except as provided by
this sub-paragraph. The DCM Account is intended for the sole
purpose of recording voluntary reductions in principal under this
Agreement. Any voluntary reduction is available for new Advances
under the simplified procedures of this sub-paragraph.
(ii) The Borrower may, at its discretion, make payments to the DCM
Account.
(iii) The balance in the DCM Account will be applied to reduce the
outstanding aggregate Related Principal Portion for New and/or
Used Vehicles including Program Vehicles only for the purpose of
computation of interest and any required net free collected
balances, and shall in no way limit or modify the principal
payment requirements set forth elsewhere in this Agreement.
(iv) Any balance in the DCM Account may be reborrowed as a new Advance
by submitting a written or telephonic request pursuant to
procedures established by the Bank. Such Advance shall be subject
to all the terms and conditions of this Agreement, except for the
provisions in Paragraph 6.7, "Conditions to Each Advance."
(v) Payment into and Advances from the DCM Account must be in amounts
of at least $100,000, except the Borrower may obtain an Advance
in the amount of the remaining balance in the DCM Account if such
amount is less than $100,000.
(vi) The total balance in the DCM Account may not exceed twenty
percent (20%) of the aggregate outstanding Related Principal
Portion for New Vehicles and/or Used Vehicles including Program
Vehicles.
(vii) The DCM Account shall bear interest per annum at 0.00 basis
points less than the lowest effective rate of interest charged on
the Revolving Line. Any change in the interest rate shall take
effect on the same day as the interest rate change on the
Revolving Line. All interest and fees, if any, will be computed
on the basis of a 360-day year and the actual days elapsed. This
will result in more interest or a higher fee than if a 365-day
year were used.
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(viii) Information regarding the DCM Account will be provided in the
monthly statement described in Paragraph 2.20.
(ix) The Bank may terminate the optional payments provided by this
sub-paragraph at any time at the Bank's sole discretion by
providing at least ten days written notice to the Borrower. In
addition, the Bank may terminate this sub-paragraph without prior
notice if the Borrower is in breach of any term or condition of
this Agreement.
(x) Notwithstanding any other provision in this subparagraph, any
balance in the DCM Account may not be used to reduce any
principal amount outstanding for purposes of determining any
remaining availability under the Commitment or any of the other
limitations stated in this Agreement.
(xi) Subject to the provisions of this Agreement, upon the happening
of an event of default as defined in Article 10 below (subject to
any notice and right to cure periods provided therein), Bank may,
at its option and without further demand or notice to the
Borrower, retain all monies in the DCM Account apply the proceeds
to the Revolving Line debt in such order and amounts as Bank
elects in its sole and absolute discretion.
2.17. INTEREST RATE.
(a) Unless the Borrower elects an optional interest rate as described below,
the entire principal amount outstanding under this Agreement shall bear
interest at the following rates per annum:
(i) The Related Principal Portion of the principal amount outstanding
under this Agreement for all New Vehicles shall bear interest at
the Reference Rate; and
(ii) The Related Principal Portion of the principal amount outstanding
under this Agreement for all Program shall bear interest at the
Reference Rate; and
(iii) The Related Principal Portion of the principal amount outstanding
under this Agreement for all Used Vehicles and Rental Vehicles
shall bear interest at the Reference Rate plus 0.25 percentage
points.
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(b) The Borrower will pay interest for each month on the fifteenth (15th) day
of the next month, but no later than the Expiration Date.
(c) Except as otherwise stated in this Agreement, all interest and fees, if
any, will be computed on the basis of a 360-day year and actual number of
days elapsed. This results in more interest or a higher fee than if a
365-day year is used.
2.18. OPTIONAL INTEREST RATES. Instead of the interest rate based on the
Reference Rate, the Borrower may elect to have all or portions of the line of
credit for New, Used, Program, and Rental Vehicles (during the availability
period) bear interest at the rate(s) described below during an interest period
agreed to by the Bank and the Borrower. Each interest rate is a rate per year.
Interest will be paid for each month on the fifteenth (15th) day of the next
month. At the end of any interest period, the interest rate will revert to the
rate based on the Reference Rate, unless the Borrower has designated another
optional interest rate for the portion.
2.19. FIXED RATE. The Borrower may elect to have all or portions of the
principal balance of the line of credit bear interest at the Fixed Rate,
subject to the following requirements:
(a) The "Fixed Rate" means the fixed interest rate the Bank and the Borrower
agree will apply to the portion during the applicable interest period.
(b) The interest period during which the Fixed Rate will be in effect will be
one year or less.
(c) Each Fixed Rate portion will be for an amount not less than the
following:
(i) for interest periods of 14 days or longer, Five Hundred Thousand
Dollars ($500,000)
(ii) for interest periods of 1 to 3 days, Five Million Dollars
($5,000,000)
(iii) for interest periods of between 4 days and 13 days, an amount
which, when multiplied by the number of days in the applicable
interest period, is not less than fifteen million (15,000,000)
dollar-days.
(d) The Borrower may not elect a Fixed Rate with respect to any portion of
the principal balance of the line of credit which is scheduled to be
repaid before the last day of the applicable interest period.
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(e) Any portion of the principal balance of the line of credit already
bearing interest at the Fixed Rate will not be converted to a different
rate during its interest period.
(f) The Borrower may prepay the loan in full or in part at any time. The
prepayment will be applied to the most remote installment of principal
due under this Agreement.
(g) Each prepayment of a Fixed Rate portion, whether voluntary, by reason of
acceleration or otherwise, will be accompanied by the amount of accrued
interest on the amount prepaid, and a prepayment fee equal to the amount
(if any) by which:
(i) the additional interest which would have been payable on the
amount prepaid had it not been paid until the last day of the
interest period, exceeds
(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the certificate of
deposit market for a period starting on the date on which it was
prepaid and ending on the last day of the interest period for
such portion.
2.20. MONTHLY STATEMENTS. The monthly statements provided by the Bank shall be
conclusively presumed to be correct and accurate, unless the Borrower delivers
to the Bank a written objection specifying the errors the Borrower believes
were made, within thirty (30) days after the Bank mails the statement.
2.21. INTEREST ON LATE PAYMENTS. At the Bank's sole option in each instance,
any amount not paid when due under this Agreement (including interest) shall
bear interest from the due date at the Reference Rate plus 0.50 percentage
points. This may result in compounding of interest.
2.22. DEFAULT RATE. Upon the occurrence and during the continuation of any
default under this Agreement, Advances under this Agreement will at the option
of the Bank bear interest at a rate per annum which is 2.00 percentage point(s)
higher than the rate of interest otherwise provided under this Agreement. This
will not constitute a waiver of any default.
3. EXPENSES
3.1. EXPENSES. The Borrower agrees to immediately repay the Bank for expenses
that include, but are not limited to, filing, recording and search fees,
appraisal fees, title report fees, and documentation fees.
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3.2. REIMBURSEMENT COSTS.
(a) The Borrower agrees to reimburse the Bank for any expenses it incurs in
the preparation of this Agreement and any agreement or instrument
required by this Agreement. Expenses include, but are not limited to,
reasonable attorneys' fees, including any allocated costs of the Bank's
in-house counsel.
4. COLLATERAL
4.1. PERSONAL PROPERTY. The Borrower's obligations to the Bank under this
Agreement will be secured by and Bank is hereby granted a security interest in
the following personal property:
(a) all inventory now owned or hereafter acquired by Borrower;
(b) all accounts, contract rights, chattel paper, deposit accounts,
instruments and general intangibles now owned or hereafter acquired by
Borrower;
(c) all negotiable and non-negotiable documents of title now owned or
hereafter acquired by Borrower;
(d) all rights under contract of insurance now owned or hereafter acquired by
Borrower covering any of the above-described properties;
(e) all proceeds now owned or hereafter acquired by Borrower of any of the
above-described properties; and
(f) all books and records now owned or hereafter acquired by Borrower
pertaining to any of the above-described property, including but not
limited to any computer-readable memory and any computer hardware or
software necessary to process such memory.
In addition, all personal property Collateral securing this Agreement shall
also secure all other present and future obligations of the Borrower to the
Bank (excluding any consumer credit covered by the federal Truth in Lending
law, unless the Borrower otherwise agreed in writing). All personal property
collateral securing any other present or future obligations of the Borrower to
the Bank shall also secure this Agreement.
5. DISBURSEMENTS, PAYMENTS AND COSTS
5.1. REQUESTS FOR CREDIT. Each request for an extension of credit will
be made pursuant to a Payment Commitment; in writing in a format acceptable
to the Bank; or by another means acceptable to the Bank.
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5.2. DISBURSEMENTS AND PAYMENTS. Each disbursement by the Bank and each payment
by the Borrower will be:
(a) made at Dealer Corporate Service #55030, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other location as selected by the Bank from time
to time;
(b) made in immediately available funds, or such other type of funds as may
be selected by the Bank.
(c) evidenced by records kept by the Bank. In addition, the Bank may, at its
discretion, require the Borrower to sign one or more promissory notes.
5.3. TELEPHONE AND TELEFAX AUTHORIZATION.
(a) The Bank may honor telephone or telefax instructions for advances or
repayments or for the designation of optional interest rates given by any
one of the individual signer(s) of this Agreement or a person or persons
authorized by any one of the signer(s) of this Agreement.
(b) Advances will be deposited in and repayments will be withdrawn from the
Borrower's accounts with the Bank or such other financial institution as
designated in writing by the Borrower.
(c) The Borrower indemnifies and excuses the Bank (including its officers,
employees, and agents) from all liability, loss, and costs in connection
with any act resulting from telephone or telefax instructions it
reasonably believes are made by any individual authorized by the Borrower
to give such instructions. This indemnity and excuse will survive this
Agreement's termination.
5.4. DIRECT DEBIT.
(a) The Borrower agrees that interest will be deducted automatically on the
due date from Borrower's account, at such financial institutions as
designated in writing by the Borrower (the "Designated Account"). In
addition, principal payments may, at the discretion of the Bank, be
deducted automatically on the due date from this checking account.
Nothing in this paragraph shall relieve the Borrower of the obligation to
pay an Advance from the proceeds of the sale of the Related Vehicle
within the time limits specified under the "Principal Payments" section
above.
(b) The Bank will debit the account on the dates the payments become due. If
a due date does not fall on a banking day, the Bank will debit the
account on the first banking day following the due date.
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(c) The Borrower will maintain sufficient funds in the account on the dates
the Bank enters debits authorized by this Agreement. If there are
insufficient funds in the account on the date the Bank enters any debit
authorized by this Agreement, the debit will be reversed.
5.5. TAXES. The Borrower will not deduct any taxes from any payments it makes
to the Bank. If any government authority imposes any taxes on any payments made
by the Borrower, the Borrower will pay the taxes and will also pay to the Bank,
at the time interest is paid, any additional amount which the Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
taxes had not been imposed. Upon request by the Bank, the Borrower will confirm
that it has paid the taxes by giving the Bank official tax receipts (or
notarized copies) within 30 days after the due date. However, the Borrower will
not pay the Bank's net income taxes.
5.6. ADDITIONAL COSTS. The Borrower will pay the Bank, on demand, for the
Bank's costs or losses relating to Advances made hereunder, arising from any
statute or regulation or any request or requirement of a regulatory agency. The
costs and losses will be allocated to the Advances in a manner determined by
the Bank, using any reasonable method. The costs include the following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to the Bank's assets and commitments
for credit.
6. CONDITIONS The Bank must receive the following items, in form and content
acceptable to the Bank in its sole and absolute discretion, before it is
required to extend any credit to the Borrower under this Agreement:
6.1. AUTHORIZATIONS. Evidence that the execution, delivery and
performance by the Borrower and each guarantor and subordinating creditor of
this Agreement and any instrument or agreement required under this Agreement
have been duly authorized.
6.2. GOVERNING DOCUMENTS. A copy of the Borrower's partnership agreement.
Borrower agrees to provide Bank with any amendments or modifications to
the partnership agreement within 30 days of execution.
6.3. SECURITY AGREEMENTS. Signed original security agreements, assignments,
financing statements and fixture filings (together with Collateral in which
the Bank requires a possessory security interest), which the Bank requires.
6.4. EVIDENCE OF PRIORITY. Evidence that security interests and liens in
favor of the Bank are valid, enforceable, and prior
-15-
to all others' rights and interests, except those the Bank consents to in
writing.
6.5. INSURANCE. Evidence of insurance coverage, as required in the
"Covenants" section of this Agreement.
6.6. ENVIRONMENTAL QUESTIONNAIRE. A completed Bank form Environmental
Questionnaire and Disclosure Statement.
6.7. GUARANTIES. Guaranties signed by United Auto Group, Inc. ("UAG"),
UAG Texas, Inc. ("UAGTX"), and UAG Texas II, Inc. ("UAGTXII") on the Bank's
standard form in an amount as may be acceptable, from time to time, to the
Bank.
6.8. CONDITIONS TO EACH ADVANCE. As a condition precedent to the making
of any Advance hereunder, including the first, the Borrower shall deliver to
the Bank the following:
(a) For Advances made under a Payment Commitment: Manufacturer/Distributor
invoice, cashdraft, electronic record, depository transfer check, sight
draft, or such other documents as specified in the applicable Payment
Commitment, identifying the Related Vehicles delivered or to be delivered
to the Borrower.
(b) For Advances made to finance Used Vehicles: Certificate of Ownership
showing a release by the previous registered and legal owners for the
Related Vehicles and, for Program Vehicles, the Manufacturer/Distributor
invoice.
(c) For Advances made to finance Dealer Trades: Copy of original invoice (or
substitute acceptable to the Bank) and ▇▇▇▇ of sale duly executed by the
parties to the transaction, evidencing the acquisition cost to the
Borrower of such trades.
(d) For Advances made to finance Fleet Sales: Copy of the Fleet Sale Purchase
Contract(s) and the Assignment of Proceeds, if required under this
Agreement, in form and content acceptable to the Bank.
(e) For Advances made to finance any other New Vehicle (including Program
Vehicles): Manufacturer/Distributor invoice or such other documents
identifying a New Vehicle owned by the Borrower.
(f) For Advances made to finance Rental Vehicles: Certificate of Title
showing Bank as lienholder.
6.9. OTHER ITEMS. Any other items that the Bank reasonably requires.
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7. REPRESENTATIONS AND WARRANTIES When the Borrower signs this Agreement,
and until the Bank is repaid in full, the Borrower makes the following
representations and warranties. Each request for an extension of credit
constitutes a renewed representation:
7.1. ORGANIZATION OF BORROWER. The Borrower is a partnership duly formed
and existing under the laws of the state where organized.
7.2. AUTHORIZATION. This Agreement, and any instrument or agreement
required hereunder, are within the powers of the Borrower and, as the case
may be of each Guarantor or other party thereto, and have been duly
authorized, and do not conflict with any of such party's organizational
papers.
7.3. ENFORCEABLE AGREEMENT. This Agreement, and each other agreement or
document executed by the Borrower, any Guarantor or any other party and
delivered to the Bank in connection with this Agreement, is a legal, valid and
binding agreement of such party enforceable against such party in accordance
with its terms, and any instrument or agreement required hereunder, when
executed and delivered, will be similarly legal, valid, binding and
enforceable.
7.4. GOOD STANDING. In each state in which the Borrower does business,
it is property licensed, in good standing, and, where required, in compliance
with fictitious or assumed name statutes.
7.5. NO CONFLICTS. This Agreement does not conflict with any law, agreement,
or obligation by which the Borrower is bound.
7.6. FINANCIAL INFORMATION. All financial and other information that has been
or will be supplied to the Bank (including, but not limited to, the Borrower's
Proforma Balance Sheet prepared January 21, 1997 showing the ▇▇▇▇▇▇▇/UAG
Buy-Out adjustments) is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's and any guarantors historical and proforma financial
condition.
(b) in form and content required by the Bank.
(c) in compliance with all government regulations that apply.
Since the date of the financial statement and proforma specified above, there
has been no material adverse change in the assets or the financial condition of
the Borrower or any guarantor.
7.7. LAWSUITS. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if lost, would impair the Borrower's
financial condition or ability
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to repay the loan, except as has been disclosed in writing to the Bank prior to
the date of this Agreement.
7.8. COLLATERAL. All Collateral is owned by the grantor of the security
interest free of any title defects or any liens or interests of others.
7.9. PERMITS, FRANCHISES. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade
name rights, patent rights and fictitious or assumed name rights necessary to
enable it to conduct the business in which it is now engaged.
7.10. OTHER OBLIGATIONS. The Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.
7.11. INCOME TAX RETURNS. The Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year.
7.12. NO EVENT OF DEFAULT. There is no event which is, or with notice or lapse
of time or both would be, a default under this Agreement.
7.13. LOCATION OF BORROWER. The Borrower's place of business (or, if the
Borrower has more than one place of business, its chief executive office) is
located at the address listed under the Borrower's signature on this Agreement.
8. COVENANTS The Borrower agrees, so long as credit is available under this
Agreement and until the Bank is repaid in full:
8.1. USE OF PROCEEDS. To use the proceeds of the credit only for financing
Vehicles as contemplated by this Agreement.
8.2. LOCATION OF VEHICLES. To keep the Vehicles only at the Borrower's regular
dealer locations as approved from time to time by the Bank, except (a) Demos
may be moved to other locations and demonstrated in accordance with the terms
and conditions established by the Bank; and (b) Vehicles subject to a Fleet
Sale Purchase Contract approved by the Bank may be located as provided therein
and (c) Rental Vehicles may be located as provided in the Rental Agreement. For
purpose of this Agreement, "Rental Agreement' means any rental agreement used
by Borrower, the form and substance of which has been approved by Bank in its
sole and absolute discretion.
8.3. MAINTENANCE OF COLLATERAL. To maintain and care for the Collateral and
keep the Collateral free from all liens and encumbrances, of any kind, except
for the Bank's security interests.
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8.4. SALE OF COLLATERAL. Not to sell, contract for sale or otherwise dispose
of any Collateral except in the ordinary course of business.
8.5. NOTICE REGARDING COLLATERAL. To notify Bank in writing of any event which
effects the value of any Collateral, the ability of Borrower or Bank to dispose
of any Collateral, or the rights and remedies of Bank in relation thereto,
including, but not limited to, the levy of any legal process against any
Collateral and the adoption of any marketing order, arrangement or procedure
affecting the Collateral, whether governmental or otherwise.
8.6. DELIVERY OF CERTAIN DOCUMENTS. To immediately deliver to Bank any
negotiable document of title including any warehouse receipt or ▇▇▇▇ of lading,
if any Collateral is or becomes the subject of such document.
8.7. COLLECTIONS. Unless Bank exercises its rights to make collection, to
diligently collect all Collateral.
8.8. ADDITIONAL REQUIREMENTS REGARDING COLLATERAL. At the option of the Bank,
whether or not the Borrower is in default:
(a) To segregate all collections and proceeds of Collateral so that they are
capable of identification and deliver daily such collections and proceeds
to Bank in kind;
(b) To deliver to Bank (i) copies of or extracts from its books and records,
and (ii) information on any contracts or other matters affecting the
Collateral; and
(c) To permit Bank to examine the Collateral, including the books and
records, and make copies or extracts from the books and records, and for
such purposes enter at any reasonable time upon the property where any
Collateral or any books and records are located.
8.9. TAXES. To pay all federal, state & local taxes or assessments pertaining
to the Borrower's business or the Vehicles.
8.10. FINANCIAL INFORMATION. To provide the following financial information and
statements and such additional information as may be requested by the Bank from
time to time:
(a) Within 120 days of UAG's fiscal year end, UAG's annual financial
statements. These financial statements must be audited by a Certified
Public Accountant ("CPA") acceptable to the Bank. The statements shall be
prepared on a consolidated and consolidating basis showing UAGTXII, UAGTX
and/or ▇▇▇▇▇▇▇ Automotive, Ltd. as separate entities. Such consolidating
statement may be
-19-
in the form of CPA supplementary schedule(s) or work papers.
(b) Copies of each financial statement delivered to a manufacturer or
distributor as required by the dealership franchise agreement with such
manufacturer or distributor, within 30 days of such delivery.
(c) Copies of the Borrower's annual projections by 90 days of each fiscal
year end.
(d) Copies of the Borrower's consolidated Form 10-K, Annual Report and Form
l0-Q Quarterly Report within 30 days after the date of filing with the
Securities and Exchange Commission.
8.11. CURRENT RATIO. To maintain a ratio of current assets to current
liabilities of at least 1.15:1.0, measured quarterly.
For the purposes of this paragraph, inventory asset values shall be based on
actual cost.
8.12. WORKING CAPITAL. To maintain current assets in excess of current
liabilities by at least Three Million Five Hundred Thousand and No/100 Dollars
($3,500,000.00), measured quarterly.
For the purposes of this paragraph, inventory asset values shall be based on
actual cost.
8.13. TANGIBLE NET WORTH. To maintain tangible net worth equal to at least Four
Million Eight Hundred Thousand and No/100 Dollars ($4,800,000.00), measured
quarterly.
"Tangible net worth" means the gross book value of the Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, deferred research and
development costs, deferred marketing expenses, other non-franchised assets,
and other like intangibles, and monies due from affiliates, officers, directors
or shareholders of the Borrower) less total liabilities, including but not
limited to accrued and deferred income taxes, and any reserves against assets.
For the purposes of this paragraph, inventory asset values shall be based on
actual cost.
8.14. TOTAL LIABILITIES TO TANGIBLE NET WORTH. To maintain a ratio of Total
Liabilities to Tangible Net Worth not exceeding 4.50:1.0, measured quarterly.
"Total Liabilities" means the sum of current liabilities plus long term
liabilities.
8.15. PROFITABILITY. To maintain a positive net income before taxes for each
year end accounting period, of which 10% must be retained by the Borrower.
-20-
8.16. OTHER DEBTS. Not to have outstanding or incur any direct or contingent
debts or lease obligations (other than those to the Bank), or become liable for
the debts of others without the Bank's written consent. This does not prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade credit.
(b) Endorsing negotiable instruments received in the usual course of
business.
(c) Obtaining surety bonds in the usual course of business.
(d) Debts and lines of credit and leases in existence on the date of this
Agreement disclosed in writing to the Bank.
(e) Additional debts and lease obligations for the acquisition of fixed or
capital assets and for business purposes which do not exceed a total
principal amount of Two Hundred Thousand and No/100 Dollars ($200,000.00)
outstanding at any one time.
(f) Contingent liabilities ("Contingent Liabilities") of the Borrower shall
be permitted up to a total of Fifty Million and No/100 Dollars
($50,000,000.00) at any one time; provided, however, that such Contingent
Liabilities (1) shall be limited to guarantees of indebtedness of its
parent corporation, UAG; (2) such guaranteed indebtedness also requires
substantially similar guarantees (in form, substance and amount) from all
other UAG operating dealership subsidiaries; and (3) Borrower shall
provide (or cause UAG to provide) a copy of all loan documentation
supporting the guarantee(s) including the Loan Agreement(s) and any
amendment(s) to the Bank within 30 days of execution of such
documentation. While any such Contingent Liabilities exist, UAG shall be
hereinafter referred to as the "Supported Parent".
8.17. OTHER LIENS. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property the Borrower now or later owns,
except:
(a) Deeds of trust and security agreements in favor of the Bank.
(b) Liens for taxes not yet due.
(c) Liens outstanding on the date of this Agreement disclosed in writing to
the Bank.
(d) Additional purchase money security interests in property acquired after
the date of this Agreement, if the total principal amount of debts
secured by such liens does not
-21-
exceed Two Hundred Thousand and No/100 Dollars ($200,000.00) at any one
time.
8.18. CAPITAL EXPENDITURES. Not to spend (including the total amount of any
capital leases) for more than Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) in any single fiscal year to acquire fixed or capital assets.
8.19. NOTICES TO BANK. To promptly notify the Bank in writing of:
(a) any lawsuit over Two Hundred Fifty Thousand and no/100 Dollars
($250,000.00) against the Borrower or any guarantor.
(b) any substantial dispute between the Borrower or any guarantor and any
government authority.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's or any guarantor's
financial condition or operations.
(e) any change in the Borrower's name, legal structure, place of business, or
chief executive office if the Borrower has more than one place of
business.
(f) any material change in the relationship between the Borrower and any
Vehicle manufacturer or distributor including, without limitation, the
loss or cancellation, or threatened loss or cancellation, of a franchise.
(g) any event which affects the value of the Collateral or the ability of the
Bank or the Borrower to dispose of the Collateral.
(h) any default in any Contingent Liabilities.
8.20. BOOKS AND RECORDS. To maintain correct and accurate books and records,
including, but not limited to, an itemization and description of the cost,
price, kind, type, quality and quantity of the Vehicles.
8.21. AUDITS. To allow the Bank and its agents to inspect the Borrower's
properties, including the Vehicles, and to examine, audit and make copies of
books and records at any reasonable time. If any of the Borrower's properties,
Vehicles, books or records are in the possession of a third party, the Borrower
authorizes that third party to permit the Bank or its agents to have access to
perform inspections or audits and to respond to the Bank's requests for
information concerning such properties, Vehicles, books and records.
-22-
8.22. COMPLIANCE WITH LAWS. To comply with the laws (including any fictitious
or assumed name statute), regulations, and orders of any government body with
authority over the Borrower's business.
8.23. PRESERVATION OF RIGHTS. To maintain and preserve all rights, privileges,
and franchises, including dealer franchises, the Borrower now has.
8.24. MAINTENANCE OF PROPERTIES. To make any repairs, renewals, or replacements
to keep the Borrower's properties in good working condition.
8.25. PERFECTION OF LIENS. To help the Bank perfect and protect its security
interests and liens, and reimburse it for related costs it incurs to protect
its security interests and liens.
8.26. COOPERATION. To take any action requested by the Bank to carry out the
intent of this Agreement.
8.27. INSURANCE.
(a) Insurance Covering Collateral. To maintain all risk property damage
insurance policies covering the tangible property comprising the
Collateral. Each insurance policy must be in an amount acceptable to the
Bank. The insurance must be issued by an insurance company acceptable to
the Bank and must include a lender's loss payable endorsement in favor of
the Bank in a form acceptable to the Bank.
(b) General Business Insurance. To maintain insurance satisfactory to the
Bank as to amount, nature and carrier covering property damage (including
loss of use and occupancy) to any of the Borrower's properties, public
liability insurance including coverage for contractual liability, product
liability and workers' compensation, and any other insurance which is
usual for the Borrower's business.
(c) Evidence of Insurance. Upon the request of the Bank, to deliver to the
Bank a copy of each insurance policy or, if permitted by the Bank, a
certificate of insurance listing all insurance in force.
8.28. ADDITIONAL NEGATIVE COVENANTS. Not to, without the Bank's written
consent:
(a) engage in any business activities substantially different from the
Borrower's present business.
(b) liquidate or dissolve the Borrower's business.
-23-
(c) enter into any consolidation, merger, pool, joint venture, syndicate, or
other combination.
(d) lease or dispose of all or a substantial part of the Borrower's business
or the Borrower's assets.
(e) acquire or purchase a business or its assets.
(f) sell or otherwise dispose of any assets for less than fair market value
or enter into any sale and leaseback agreement covering any of its fixed
or capital assets.
(g) voluntarily suspend its business.
9. HAZARDOUS WASTE INDEMNIFICATION The Borrower will indemnify and hold
harmless the Bank from any loss or liability directly or indirectly arising out
of the use, generation, manufacture, production, storage, release, threatened
release, discharge, disposal or presence of a hazardous substance. This
indemnity will apply whether the hazardous substance is on, under or about the
Borrower's property or operations or property leased to the Borrower. The
indemnity includes but is not limited to attorneys' fees (including the
reasonable estimate of the allocated cost of in-house counsel and staff). The
indemnity extends to the Bank, its parent, subsidiaries and all of their
directors, officers, employees, agents, successors, attorneys and assigns. For
these purposes, the term "hazardous substances" means any substance which is or
becomes designated as "hazardous" or "toxic" under any federal, state or local
law. This indemnity will survive repayment of the Borrower's obligations to the
Bank.
10. DEFAULT If any of the following events occur, the Bank may do one or more
of the following: declare the Borrower in default, stop making any additional
credit available to the Borrower, and require the Borrower to repay its entire
debt immediately and without prior notice. If an event of default occurs under
the paragraph entitled "Bankruptcy" below with respect to the Borrower, the
entire debt outstanding under this Agreement will automatically be due
immediately.
10.1. FAILURE TO PAY. The Borrower fails to make a payment under this Agreement
when due.
10.2. LIEN PRIORITY. The Bank fails to have an enforceable first lien
(except for any prior liens to which the Bank has consented in writing) on or
security interest in any property given as security for this loan.
10.3. OTHER LIENS. Any levies of attachment, executions, tax assessments
or similar proceedings shall be brought against the Collateral.
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10.4. FALSE INFORMATION. The Borrower or any guarantor has given the Bank
false or misleading information or representations.
10.5. BANKRUPTCY. The Borrower, any guarantor, any general partner of the
Borrower, or the Supported Parent files a bankruptcy petition, a bankruptcy
petition is filed against the Borrower, any guarantor, any general partner of
the Borrower, or the Supported Parent, or the Borrower, any guarantor, any
general partner of the Borrower, or the Supported Parent makes a general
assignment for the benefit of creditors.
10.6. RECEIVERS. A receiver or similar official is appointed for the
Borrower's or any guarantor's business, or the business is terminated.
10.7. LAWSUITS. Any lawsuit or lawsuits are filed on behalf of one or more
trade creditors against the Borrower in an aggregate amount of Seven Hundred
Fifty Thousand and No/100 Dollars ($750,000.00) or more in excess of any
insurance coverage.
10.8. JUDGMENTS. Any judgments or arbitration awards are entered against the
Borrower or any guarantor, or the Borrower or any guarantor enters into any
settlement agreements with respect to any litigation or arbitration, in an
aggregate amount of One Hundred Thousand and No/100 Dollars ($100,000.00) or
more in excess of any insurance coverage.
10.9. GOVERNMENT ACTION. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's or any guarantors
financial condition or ability to repay.
10.10. MATERIAL ADVERSE CHANGE. A material adverse change occurs in the
Borrower's or any guarantor's financial condition, properties or prospects, or
such parties ability to repay the extensions of credit under this Agreement
and, as applicable, under any guaranty.
10.11. CROSS-DEFAULT. Any default occurs under any agreement in connection with
any credit the Borrower or any guarantor has obtained from anyone else or which
the Borrower or any guarantor has guaranteed.
10.12. DEFAULT UNDER RELATED DOCUMENTS. A breach or default has occurred under
any guaranty, subordination agreement, security agreement, deed of trust, or
other document required by this Agreement or such document (unless any such
termination is consented to in writing by Bank) no longer in effect, or is
revoked in whole or in part.
10.13. OTHER BANK AGREEMENTS. The Borrower or any guarantor fails to meet
the conditions of, or fails to perform any obligation under any
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other agreement the Borrower or any guarantor has with the Bank or any
affiliate of the Bank.
10.14. OTHER BREACH UNDER AGREEMENT. The Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of this
Agreement not specifically referred to in this Article.
11. ADDITIONAL REMEDIES AFTER DEFAULT In the event of any default as
described in Article 10 of this Agreement, in addition to the remedies set
forth in such Article, Bank may do any one or more of the following:
(a) Require Borrower to deliver to Bank any instruments or chattel paper.
(b) Require Borrower to obtain Bank's prior written consent to any sale,
lease, agreement to sell or lease, or other disposition of any
inventory.
(c) Notify any account debtors, any buyers of the Collateral, or any other
persons of Bank's interest in the Collateral.
(d) Require Borrower to direct all account debtors to forward all payments
and proceeds of the Collateral to a post office box under Bank's
exclusive control.
(e) Demand and collect any payments and proceeds of the Collateral. In
connection therewith Borrower irrevocably authorizes Bank to endorse or
sign Borrower's name on all checks, drafts, collections, receipts and
other documents, and to take possession of and open the mail addressed
to Borrower and remove therefrom any payments and proceeds of the
Collateral.
(f) Enforce the security interest given hereunder pursuant to the Uniform
Commercial Code and any other applicable law.
(g) Enforce the security interest of Bank in any deposit account of Borrower
maintained with Bank by applying such account to the indebtedness.
(h) Require Borrower to assemble the Collateral, including the books and
records, and make them available to Bank at a place designated by Bank.
(i) Enter upon the property where any Collateral, including any books and
records are located and take possession of such Collateral and such
books and records, and use such property (including any buildings and
facilities) and any of Borrower's equipment, if Bank deems such use
necessary or advisable in order to take possession of, hold, preserve,
process, assemble, prepare for sale or lease,
-26-
market for sale or lease, sell or lease, or otherwise dispose of, any
Collateral.
(j) Grant extensions and compromise or settle claims with respect to the
Collateral for less than face value, all without prior notice to
Borrower.
(k) Use or transfer any of Borrower's rights and interest in any
Intellectual Property now owned or hereafter acquired by Borrower, if
Bank deems such use or transfer necessary or advisable in order to take
possession of, hold, preserve, process, assemble, prepare for sale or
lease, market for sale or lease, sell or lease, or otherwise dispose of,
any Collateral. Borrower agrees that such use or transfer shall be
without any additional consideration to Borrower. As used in this
paragraph, "Intellectual Property" includes, but is not limited to, all
trade secrets, computer software, service marks, trademarks, trade
names, trade styles, copyrights, patents, applications for any of the
foregoing, customer lists, working drawings, instructional manuals, and
rights in processes for technical manufacturing, packaging and labeling
in which Borrower has any right or interest, whether by ownership,
license, contract or otherwise.
(l) Have a receiver appointed by any court of competent jurisdiction to take
possession of the Collateral.
(m) Take such measures as Bank may deem necessary or advisable to take
possession of, hold, preserve, process, assemble, insure, prepare for
sale or lease, market for sale or lease, sell or lease, or otherwise
dispose of, any Collateral, and Borrower hereby irrevocably constitutes
and appoints Bank as Borrower's attorney-in-fact to perform all acts and
execute all documents in connection therewith.
12. ENFORCING THIS AGREEMENT; MISCELLANEOUS
12.1. GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made
under generally accepted accounting principles, consistently applied.
12.2. ARIZONA LAW. THIS AGREEMENT IS GOVERNED BY ARIZONA LAW.
12.3. SUCCESSORS AND ASSIGNS. This Agreement is binding on the Borrower's and
the Bank's successors and assignees. The Borrower agrees that it may not assign
this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower with actual or potential participants or assignees. If
-27-
a participation is sold or the loan is assigned, the purchaser will have the
right of set-off against the Borrower.
12.4. ARBITRATION.
(a) This paragraph concerns the resolution of any controversies or claims
between the Borrower and the Bank, including but not limited to those
that arise from:
(i) This Agreement (including any renewals, extensions or
modifications of this Agreement);
(ii) Any document, agreement or procedure related to or
delivered in connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business conducted
between the Borrower and the Bank, including claims for
injury to persons, property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United
States Arbitration Act. THE UNITED STATES ARBITRATION ACT WILL APPLY
EVEN THOUGH ITS AGREEMENT PROVIDES THAT IT IS GOVERNED BY ARIZONA LAW.
(c) Arbitration proceedings will be administered by the American Arbitration
Association and will be subject to its commercial rules of arbitration.
(d) For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the equivalent of
the filing of a lawsuit, and any claim or controversy which may be
arbitrated under this paragraph is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide whether
any such claim or controversy is barred by the statute of limitations
and, if so, to dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
(g) This provision does not limit the right of the Borrower or the Bank to:
(i) exercise self-help remedies such as setoff;
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(ii) foreclose against or sell any real or personal property
collateral; or
(iii) act in a court of law, before, during or after the
arbitration proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(h) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank, including
the suing party, to submit the controversy or claim to arbitration if
the other party contests the lawsuit.
(i) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under
the deed of trust or mortgage, or to proceed by judicial foreclosure.
12.5. SEVERABILITY; WAIVERS. If any part of this Agreement is not enforceable,
the rest of the Agreement may be enforced. The Bank retains all rights, even if
it makes a loan after default. If the Bank waives a default, it may enforce a
later default. Any consent or waiver under this Agreement must be in writing.
12.6. ADMINISTRATION COSTS. The Borrower shall pay the Bank for all reasonable
costs incurred by the Bank in connection with administering this Agreement.
12.7. ATTORNEYS' FEES. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with
the enforcement or preservation of any rights or remedies under this Agreement
and any other documents executed in connection with this Agreement, and
including any amendment, waiver, "workout" or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys' fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. As used in this paragraph, "attorneys' fees" includes the
allocated costs of in-house counsel.
12.8. ONE AGREEMENT. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between the Bank
and the Borrower concerning this credit; and
(b) replace any prior oral or written agreements between the Bank and the
Borrower concerning this credit; and
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(c) are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
12.9. EXCHANGE OF INFORMATION. The Borrower agrees that the Bank may exchange
financial information about the Borrower with BankAmerica Corporation
affiliates and other related entities.
12.10. USURY LAWS. This paragraph covers the transactions described in this
Agreement and any other agreements with the Bank or its affiliates executed in
connection with this Agreement, to the extent they are subject to the Arizona
usury laws (the "Transactions"). The Borrower understands and believes that the
Transactions comply with the Arizona usury laws. However, if any interest or
other charges paid or payable in connection with the Transactions are ever
determined to exceed the maximum amount permitted by law, the Borrower agrees
that:
(a) the amount of interest or other charges payable by the Borrower pursuant
to the Transactions shall be reduced to the maximum amount permitted by
law; and
(b) any excess amount previously collected from the Borrower in connection
with the Transactions which exceeded the maximum amount permitted by law
will be credited against the then outstanding principal balance. If the
outstanding principal balance has been repaid in full, the excess amount
paid will be refunded to the Borrower.
All fees, charges, goods, things in action or any other sums or things of
value, other than interest at the interest rate described in this Agreement,
paid or payable by the Borrower (collectively the "Additional Sums"), that may
be deemed to be interest with respect to the Transactions, shall, for the
purpose of any laws of the State of Arizona that may limit the maximum amount
of interest to be charged with respect to the Transactions, be payable by
Borrower as, and shall be deemed to be, additional interest. For such purposes
only, the agreed upon and "contracted for rate of interest" of the Transactions
shall be deemed to be increased by the rate of interest resulting from the
Additional Sums.
12.11. NOTICES. All notices required under this Agreement shall be personally
delivered or sent by first class mail, postage prepaid, to the addresses on the
signature page of this Agreement, or to such other addresses as the Bank and
the Borrower may specify from time to time in writing.
12.12. REMEDIES. All rights and remedies herein provided are cumulative
and not exclusive of any rights or remedies otherwise
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provided by law. Any single or partial exercise of any right or remedy shall
not preclude the further exercise thereof or the exercise of any other right or
remedy.
12.13. OTHER DOCUMENTS. Borrower shall, at the request of Bank, execute such
other agreements, documents, instruments, or financing statements in connection
with this agreement as Bank may reasonably deem necessary.
12.14. HEADINGS. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.
12.15. COUNTERPARTS. This Agreement may be executed in as many counterparts as
necessary or convenient, and by the different parties on separate counterparts
each of which, when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same agreement.
12.16. PRIOR AGREEMENT SUPERSEDED. This Agreement supersedes the Automobile
Flooring and Security Agreement entered into as of June 18, 1996, between the
Bank and the Borrower, as such agreement may have been amended from time to
time prior to the date hereof, and any credit outstanding thereunder shall be
deemed to be outstanding under this Agreement.
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This Agreement is executed as of the date stated at the top of the first page.
BANK OF AMERICA NATIONAL TRUST ▇▇▇▇▇▇▇ AUTOMOTIVE, LTD.
AND SAVINGS ASSOCIATION
BY: UAG TEXAS II, INC.
General Partner
By: /s/ M. ▇▇▇▇▇▇▇▇ ▇▇▇
-------------------------------
M. ▇▇▇▇▇▇▇▇ ▇▇▇, Vice President
By: /s/ ▇.▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Address where notices to the Bank ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice
are to be sent: President & Secretary
Dealer Corporate Services #55030 BY: UAG TEXAS, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Limited Partner
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇.▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
& Secretary
Address where notices to the
Borrower are to be sent:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
-▇▇-
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
AMENDMENT TO DOCUMENTS
==============================================================================
FIRST AMENDMENT TO AUTOMOBILE FLOORING AND SECURITY AGREEMENT
This First Amendment to Automobile Flooring and Security Agreement is entered
into as of March 26, 1997, between Bank of America National Trust and Savings
Association (the "Bank") and ▇▇▇▇▇▇▇ Automotive, Ltd. (the "Borrower").
RECITALS
--------
A. WHEREAS, Bank and Borrower have entered into that certain Automobile
Flooring and Security Agreement dated March 6, 1997, (the "Agreement"); and
B. WHEREAS, Borrower and Bank desire to amend certain terms and
provisions of said Agreement as more specifically hereinafter set forth.
AGREED
------
NOW, THEREFORE, in consideration of the foregoing recitals, Bank and Borrower
mutually agree to amend said Agreement as follows:
1. Paragraph 8.13 (Tangible Net Worth) of the Agreement is amended in its
entirety to read as follows:
8.13 TANGIBLE NET WORTH. To maintain tangible net worth equal to the
amounts indicated for each quarterly period specified below:
Period Amounts
------ -------
March 31, 1997 $4,600,000.00
June 30, 1997 and thereafter $4,800,000.00
"Tangible net worth" means the gross book value of the Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, deferred research and
development costs, deferred marketing expenses, other non-franchise assets, and
other like intangibles, and monies due from affiliates, officers, directors or
shareholders of the Borrower) less total liabilities, including but not limited
to accrued and deferred income taxes, and any reserves against assets. For the
purposes of this paragraph, inventory asset values shall be based on actual
cost.
This Amendment will become effective as of March 26, 1997 (the "Effective
Date"), provided that each of the following conditions precedent have been
satisfied:
The Bank has received from the Borrower a duly executed original of this
Amendment, together with a duly executed Guarantor Acknowledgment and
Consent in the form attached hereto (the "Consent").
Except as provided in this Amendment, all of the terms and provisions of the
Agreement shall remain in full force and effect.
This Amendment shall be effective between the parties as of the date hereof.
The Agreement, as amended hereby, shall hereinafter constitute the Agreement
between the parties.
IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto as
of the date first written above.
BANK OF AMERICA NATIONAL TRUST ▇▇▇▇▇▇▇ AUTOMOTIVE, LTD.
AND SAVINGS ASSOCIATION
By: UAG TEXAS II, INC.
General Partner
/s/ M. ▇▇▇▇▇▇▇▇ ▇▇▇
-----------------------------
By: M. ▇▇▇▇▇▇▇▇ ▇▇▇,
Vice President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President
By:
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice
President & Secretary
By: UAG TEXAS, INC.,
Limited Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President
By:
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice
President & Secretary
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shall hereinafter constitute the Agreement between the parties.
IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto as
of the date first written above.
BANK OF AMERICA NATIONAL TRUST ▇▇▇▇▇▇▇ AUTOMOTIVE, LTD.
AND SAVINGS ASSOCIATION
By: UAG TEXAS II, INC.
General Partner
/s/ M. ▇▇▇▇▇▇▇▇ ▇▇▇
-----------------------------
By: M. ▇▇▇▇▇▇▇▇ ▇▇▇,
Vice President
By:
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice
President & Secretary
By: UAG TEXAS, INC.,
Limited Partner
By:
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President
By:
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice
President & Secretary
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GUARANTOR ACKNOWLEDGMENT
AND CONSENT
-----------
The undersigned, each a guarantor or third party pledgor with respect to the
Borrower's obligations to the Bank under the Agreement, each hereby (i)
acknowledge and consent to the execution, delivery, and performance by Borrower
of the foregoing First Amendment to Agreement (the "Amendment"), and (ii)
reaffirm and agree that the respective guaranty, third party pledge or security
agreement to which the undersigned is party and all other documents and
agreements executed and delivered by the undersigned to the Bank in connection
with the Agreement are in full force and effect, without defense, offset, or
counterclaim. (Capitalized terms used herein have the meanings specified in the
Amendment.)
UAG TEXAS, INC
Dated: April 9, 1997 X /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------- ---------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Dated: X
------------- ---------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Vice President & Secretary
-3-
GUARANTOR ACKNOWLEDGMENT
AND CONSENT
-----------
The undersigned, each a guarantor or third party pledgor with respect to the
Borrower's obligations to the Bank under the Agreement, each hereby (i)
acknowledge and consent to the execution, delivery, and performance by Borrower
of the foregoing First Amendment to Agreement (the "Amendment"), and (ii)
reaffirm and agree that the respective guaranty, third party pledge or security
agreement to which the undersigned is party and all other documents and
agreements executed and delivered by the undersigned to the Bank in connection
with the Agreement are in full force and effect, without defense, offset, or
counterclaim. (Capitalized terms used herein have the meanings specified in the
Amendment.)
UAG TEXAS, INC
Dated: X
------------- ------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Dated: April 9, 1997 X /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------- ------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Vice President & Secretary
-3-
GUARANTOR ACKNOWLEDGMENT
AND CONSENT
-----------
The undersigned, each a guarantor or third party pledgor with respect to the
Borrower's obligations to the Bank under the Agreement, each hereby (i)
acknowledge and consent to the execution, delivery, and performance by Borrower
of the foregoing First Amendment to Agreement (the "Amendment"), and (ii)
reaffirm and agree that the respective guaranty, third party pledge or security
agreement to which the undersigned is party and all other documents and
agreements executed and delivered by the undersigned to the Bank in connection
with the Agreement are in full force and effect, without defense, offset, or
counterclaim. (Capitalized terms used herein have the meanings specified in the
Amendment.)
UAG TEXAS II, INC.
Dated: April 9, 1997 X /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------- ---------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Dated: X
------------- ---------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Vice President & Secretary
-4-
GUARANTOR ACKNOWLEDGMENT
AND CONSENT
-----------
The undersigned, each a guarantor or third party pledgor with respect to the
Borrower's obligations to the Bank under the Agreement, each hereby (i)
acknowledge and consent to the execution, delivery, and performance by Borrower
of the foregoing First Amendment to Agreement (the "Amendment"), and (ii)
reaffirm and agree that the respective guaranty, third party pledge or security
agreement to which the undersigned is party and all other documents and
agreements executed and delivered by the undersigned to the Bank in connection
with the Agreement are in full force and effect, without defense, offset, or
counterclaim. (Capitalized terms used herein have the meanings specified in the
Amendment.)
UAG TEXAS II, INC.
Dated: X
------------- ------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Dated: April 9, 1997 X /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------- ------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Vice President & Secretary
-4-
GUARANTOR ACKNOWLEDGMENT
AND CONSENT
-----------
The undersigned, each a guarantor or third party pledgor with respect to the
Borrower's obligations to the Bank under the Agreement, each hereby (i)
acknowledge and consent to the execution, delivery, and performance by Borrower
of the foregoing First Amendment to Agreement (the "Amendment"), and (ii)
reaffirm and agree that the respective guaranty, third party pledge or security
agreement to which the undersigned is party and all other documents and
agreements executed and delivered by the undersigned to the Bank in connection
with the Agreement are in full force and effect, without defense, offset, or
counterclaim. (Capitalized terms used herein have the meanings specified in the
Amendment.)
UNITED AUTO GROUP, INC., a Delaware
corporation
Dated: April 9, 1997 X /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------- ------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive
Vice President
-5-