EX-10.11 16 d297157dex1011.htm EX-10.11 AMENDED AND RESTATED INVENTORY FINANCING AND SECURITY AGREEMENT
Exhibit 10.11
AMENDED AND RESTATED INVENTORY FINANCING
AND SECURITY AGREEMENT
I. THE PARTIES TO THIS AGREEMENT
This Amended and Restated Inventory Financing and Security Agreement (“Agreement”) is effective as of July 27, 2015, and is made by and among the following parties:
A. | Ally Bank (Ally Capital in Hawaii, Mississippi, Montana and New Jersey), a Utah chartered state bank (“Bank”), with its principal executive offices located at 0000 Xxxxx Xxxx Xxxxxx, Xxxxxxx, Xxxx 00000; and |
B. | Ally Financial, a Delaware entity (“Ally”) with a local business office currently located at 0000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxx, XX 00000 (together with Bank, the “Ally Parties” and Bank and Ally each being, an “Ally Party”); and |
X. | Xxxxxxx, LLC, an Arizona limited liability company, with its principal executive office currently located at 0000 Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxxxx, XX 00000 (“Dealership”). |
II. THE RECITALS
The essential facts relied on by Bank, Ally and Dealership as true and complete, and giving rise to this Agreement, are as follows:
A. | From time to time, Dealership has and/or intends to acquire one or more Vehicles (defined below) from one or more manufacturer, distributor, dealers, auctioneer, merchant, customer, broker, seller, or other supplier (“Vehicle Seller(s)”), for the principal purpose of selling or leasing them to retail customers in the ordinary course of business. |
B. | To enable Dealership to acquire Vehicles and hold them in inventory, Dealership wants the Ally Parties to provide Dealership with wholesale inventory floorplan finance accommodations by i) advancing the purchase price of the Vehicles directly to the Vehicle Sellers; ii) advancing funds to other third parties who are not Vehicle Sellers; or iii) by loaning money directly to Dealership for Vehicles that were previously purchased from Vehicle Sellers by Dealership (“Inventory Financing”). (Vehicles acquired with or held as a result of Inventory Financing may be referred to as “Inventory Financed Vehicles.”) |
C. | Bank is willing to provide Dealership with Inventory Financing in accordance with all of the provisions of this Agreement. |
D. | Ally is willing to provide Dealership with Inventory Financing in accordance with all of the provisions of this Agreement. |
E. | The Inventory Financing will be governed by the terms of this Agreement. Accordingly, this Agreement sets forth the rights and duties between Bank and Dealership and between Ally and Dealership concerning Inventory Financing, including establishment of a credit line by which inventory financing advances will be made by either or both of the Ally Parties, payment of principal, interest, and other charges, the grant of security interests in collateral, and other terms and conditions. Before execution, each party has carefully read this Agreement and each related document and has consulted with or had an opportunity to consult with an attorney. |
In consideration of the premises and the mutual promises in this Agreement, which are acknowledged to be sufficient, Bank, Ally and Dealership agree to the following:
A. | Inventory Finance Accommodations. |
1. | Definition of “Vehicle”. As used in this Agreement, “Vehicle” means an automobile, van, or light duty truck that is not manufactured for a particular commercial purpose. Notwithstanding anything to the contrary in this Agreement or otherwise, Inventory Financing is available only for a Vehicle that can be registered for use on public highways, and is not a vehicle that is titled outside the United States or has been previously titled outside the United States, in each case: |
(a) | of the then-current model year, or nine previous model years, |
(b) | having fewer than 150,000 miles, |
(c) | that Dealership has purchased for at least $1,500, |
(d) | for which such Dealership has received the title and purchase documentation, |
(e) | that has not been purchased by Dealership for the use of its employees, |
(f) | that is not subject to a current arbitration proceeding between the purchaser and the Dealership with respect to the sale of such vehicle, and |
(g) | that is not subject to an existing consumer lease from Dealership or an affiliate of Dealership. |
2. | Establishment of a 364-Day Committed Inventory Financing Credit Line. Subject to the terms and conditions of this Agreement, |
(a) | Each of the Ally Parties commits to provide Inventory Financing to Dealership until the 364th calendar day (inclusive) from the effective date of this Agreement (“Day 364”). At least 45 calendar days before Day 364, Dealership may request the Ally Parties to extend this commitment by an additional 364 calendar day period, and the Ally Parties, in their sole discretion, may extend this commitment by an additional 364 day period. If the Ally Parties extend this commitment by an additional 364 day period, then, at least 45 calendar days before the second anniversary of Day 364, Dealership may request the Ally Parties to extend this commitment by an additional 364-day period, and the Ally Parties may, in their sole discretion, extend this commitment by an additional 364-day period. |
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(b) | The sum of all Inventory Financing by each Ally Party, plus any obligation of each Ally Party to make specific advances to a Vehicle Seller or other party, constitutes a single obligation of Dealership to such Ally Party. The sum of all Inventory Financing plus the sum of all obligations of both of the Ally Parties to make specific advances to Vehicle Sellers or other parties constitutes the Dealership’s “Wholesale Outstandings.” |
3. | Amount of the Credit Line. The aggregate amount of credit available pursuant to this Agreement (the “Credit Line”) is $60,000,000.00. |
4. | Advance. The advance rate for Inventory Financing, is as follows: |
(a) | Auction and rental Vehicles: initially funded within 30 calendar days of purchase, [***] of: |
(i) | the purchase price of such Vehicle, plus |
(ii) | fees charged by an auction in connection with the purchase of such Vehicle, plus |
(iii) | post-sale inspection fees in connection with the purchase of such Vehicle. |
The Ally Parties have no obligation to advance any amount for costs related to transportation or labor with respect to a Vehicle.
(b) | Trade-in Vehicles and any amounts re-borrowed against a Vehicle after repayment of the initial advance for that Vehicle and any amounts initially funded for an Auction or rental Vehicle after 30 calendar days from the purchase date: [***] of clean wholesale value (as used in this Agreement, clean wholesale value means BlackBook “clean” wholesale value with no addition for options) of trade-in Vehicles; Vehicles purchased directly from customers; and amounts that are re-borrowed under the Credit Line. |
5. | Method of Providing Inventory Financing. The Credit Line must be used exclusively for Inventory Financing in any of the following ways: |
(a) | Advances Directly to Vehicle Sellers. From time to time, upon notice from Dealership or Vehicle Sellers, either or both of the Ally Parties may advance money directly to Vehicle Sellers for Vehicles acquired or proposed to be acquired by Dealership as Inventory Financed Vehicles. The Ally Parties will make payment in accordance with and in reliance on any invoice, draft, debit, contract, advice or other communication received by the Ally Parties from the Vehicle Seller. The Ally Parties are not |
[***] | Indicates that text has been omitted which is the subject of a confidential treatment request. The text has been separately filed with the Securities and Exchange Commission. |
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required to verify the order or shipment of any Vehicle for which it pays a Vehicle Seller and are not responsible for any nonconformity of the Vehicle, delivery, or transaction between Dealership and a Vehicle Seller. If requested, Dealership will promptly provide invoices, bills of sale, title other transaction documents pertaining to such Vehicles. |
(b) | Advances Directly to or on behalf of Dealership. From time to time, either or both of the Ally Parties may advance money directly to Dealership or to other third parties who are not Vehicle Sellers on behalf of Dealership to finance Vehicles then owned or proposed to be acquired by Dealership. The amount that will be advanced to or on behalf of Dealership for the Vehicles will be determined in accordance with Subsection III.A.4 above. Upon request by either or both of the Ally Parties, Dealership must provide the Ally Parties with satisfactory evidence of the value, ownership, and title status of the Vehicle(s), including the manufacturer’s certificate of origin or title certificate (original or valid copy), invoice or xxxx of sale, and the shipping receipt, xxxx of lading, and the like. |
6. | Evidence of Inventory Financing. The Ally Parties will maintain on their books and records in accordance with their usual practices, one or more accounts detailing the Inventory Financing, Wholesale Outstandings, and all Interest, Principal Reductions, net settlements (as described in Section III.C.4 below), Other Charges and any other related fees, costs, expenses, and payments owed by Dealership. From time to time, ordinarily monthly, the Ally Parties will furnish Dealership with statements of its account information (“Wholesale Billing Statement”). If only one Wholesale Billing Statement is provided by the Ally Parties, the Wholesale Billing Statement will indicate (by account number or otherwise) the Inventory Financing provided by each of the Ally Parties. Unless Dealership advises the Ally Parties in writing of any discrepancy on the Wholesale Billing Statement within ten (10) calendar days of receipt, and absent manifest error, the Wholesale Billing Statement will be deemed acknowledged and agreed to by Dealership and conclusive proof of Dealership’s actual obligation to each of the Ally Parties as of the date of the Wholesale Billing Statement last received by Dealership. |
7. | Other Financing Accommodations. Upon Dealership’s request, either or both of the Ally Parties may provide other forms of finance and / or credit accommodations which arise out of or relate to the business operations of Dealership and / or any of its owners, officers, or affiliates, including, without limitation, the discount purchase of retail installment sale and lease agreements, working capital, revolving credit, equipment, and realty loans (such accommodations from either of the Ally Parties being, the “Other Financing Accommodations”). The availability, amount, terms, conditions, provisions, continuation, documentation, and administration of Other Financing Accommodations are separate and distinct from the Inventory Financing under this Agreement and may be provided, if at all, only according to the terms and conditions of the written agreement between such Ally Party and Dealership. If |
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Dealership requests additional Inventory Financing beyond the aggregate amount of the Credit Line stated in Subsection III.A.3 above, and the Ally Parties decline the request, then Dealership and the Ally Parties will negotiate in good faith to restructure the credit and collateral arrangements this Agreement to facilitate Dealership’s efforts to obtain the additional financing from another financial institution.
B. | Interest, Principal Reductions, Late Charges, Costs, Expenses and Other Charges and Fees. |
1. | Interest Accrual. Rate, and Method of Calculation. Wholesale Outstandings owed to the Ally Parties will bear interest on and from the day after each advance or loan through the date of repayment in full. Interest will be at a per annum rate and will be determined using a 365/360 simple interest method of calculation, unless expressly prohibited by law (“Interest”). The Interest rate is 1-M LIBOR Index Rate* plus 380 basis points. |
The 1-M LIBOR Index Rate in effect for a monthly billing period is defined as the arithmetic mean of the 1-Month LIBOR Rate for the calendar days from and including the 26th of the calendar month which is two months prior to the applicable monthly billing period and ending with the 25th of the month immediately preceding the applicable monthly billing period (“Measurement Period”). The 1-Month LIBOR Rate applicable to any day on which no rate is published will be the rate last quoted prior to such day. The “1-Month LIBOR Rate” is defined as: The per annum rate of interest for one month deposits in U.S. Dollars for each day of the Measurement Period that appears on the Bloomberg screen US0001M Index (London Interbank Offered Rate administered by the British Bankers’ Association, New York Stock Exchange Euronext or other successor administrator for LIBOR) at approximately 11:00 a m. London time, or if such source becomes unavailable or there is no such successor, the per annum rate of interest for one month deposits in U.S. Dollars for each day of the Measurement Period obtained from such other commercially available source providing quotations of LIBOR as Ally Bank may designate.
2. | Maximum Interest. In no event will Interest owed to either or both of the Ally Parties under this Agreement exceed the maximum rate of interest allowed by law in effect at the time it is assessed. Each of the Ally Parties and Dealership intend to faithfully comply with applicable usury laws, and this Agreement is to be construed in accordance with this intent. If circumstances cause the actual or imputed interest contracted for, charged, or received by either or both of the Ally Parties to be in excess of the maximum rate of interest allowed by law, Dealership must promptly notify the affected Ally Party(ies) of the circumstance, and such Ally Party(ies) will either, at their sole discretion, refund to Dealership, or credit the Wholesale Outstandings owed by Dealership to such Ally Party(ies), with so much of the imputed interest as will reduce the effective rate of interest to an amount one-tenth of one per cent (0.10%) per annum less than the maximum rate of interest allowed by law for the applicable period. |
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3. | Principal Reductions. Dealership must pay a monthly principal reduction of 10% of the original principal amount (each a “Principal Reduction”) for each Vehicle on Dealership’s floorplan for more than 180 days (regardless of repayment and re-borrowing) until the outstanding principal amount for that Vehicle is reduced to lesser of 50% of the original principal amount or 50% of the clean wholesale value. Principal Reductions may be billed to Dealership and will reduce the amount of the Wholesale Outstandings when paid by Dealership. Any change in the Principal Reductions required by either or both of the Ally Parties will not constitute an amendment to this Agreement. |
4. | Late Charge. Unless prohibited by law, each of the Ally Parties may assess a late charge of up to five percent (5%) of any amount owed to such Ally Party(ies) that is not paid when due and payable after giving effect to applicable grace periods (“Late Charge”). The Late Charge is in addition to Interest. |
5. | Costs, Expenses, Fees. Unless prohibited by law, Dealership must pay all expenses and reimburse each of the Ally Parties for any cost, expense, or other expenditures, including reasonable attorney fees and legal expenses; amounts expended by the Ally Parties on behalf of Dealership; collection and bankruptcy costs, fees and expenses; and all other amounts incurred by each of the Ally Parties in the enforcement of any right or remedy, collection of any Obligation (as defined in Subsection III.D.2, below), or defense of any claim or action in respect of this Agreement. |
6. | Other Charges and Fees. The Ally Parties may assess and Dealership will pay charges in connection with Inventory Financing in the areas of audit, collateral monitoring, non- compliance, and returned item (“Other Charges”). Provided no Default has occurred, the Ally Parties will provide advance notice of at least 30 calendar days of new charges or changes to existing charges. |
7. | Acquisition Fee. Simultaneously with the signing of this Agreement, Dealership will pay to the Ally Parties an acquisition fee in the amount of [***]. No additional acquisition fee is required in connection with any commitment extension pursuant to Section III.A.2.a. |
C. | Payments by Dealership. |
[***] | Indicates that text has been omitted which is the subject of a confidential treatment request. The text has been separately filed with the Securities and Exchange Commission. |
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(a) | the principal amount of the advance or loan by the Ally Parties for each Inventory Financed Vehicle as and when such Vehicle is sold, leased, consigned, gifted, exchanged, transferred, otherwise disposed of, registered, placed into service, or no longer in the possession of the Dealership, or if it is otherwise lost, stolen, confiscated, missing, or otherwise not received, or if it is damaged or destroyed; and |
(b) | the total amount specified in the Wholesale Billing Statement or other billing statements for Interest, Principal Reductions, Late Charges, Other Charges, costs, expenses, fees and any other payment obligations, immediately upon receipt from the Ally Parties. |
4. | “Full” Payment Defined. The requirement for making payments “fully” as set forth in this Agreement means that the required payment amount must be either actually remitted to and received by the Ally Parties in whole, without setoff or recoupment, or credited by either of the Ally Parties or any affiliate of either of the Ally Parties in accordance with the SmartCash Agreement among the Ally Parties and Dealership. This does not include funds actually received by the Ally Parties from or on behalf of Dealership for specific application to a required payment by way of: |
(a) | subvention, discount, subsidy, support, or supplementation from a Vehicle Seller; or |
(b) | credit, rebate, bonus, debit, disbursement, or other payment from either of the Ally Parties or any other person for the purchase of chattel paper, distribution from finance reserve accounts, application of account balances, and the like. |
Absent payment actually being remitted by Dealership to the Ally Parties or actually credited by either of the Ally Parties or any of their affiliates, payment is not “fully” made because either or both of the Ally Parties have:
(a) | a right of setoff, recoupment, and the like; |
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(b) | a Security Interest in or an assignment of Collateral (each as defined in Section III. D. below), or the proceeds thereof; or |
(c) | a direct or indirect claim against a Vehicle Seller, surety, guarantor, or any other person. |
Dealership’s obligation to pay each of the Ally Parties as set forth in this Agreement is independent of any other rights that Dealership or either of the Ally Parties may have to effect payment from other sources and persons, and neither of the Ally Parties has any duty to undertake the enforcement of any other rights.
In their sole discretion, either or both of the Ally Parties may permit more time between the event and payment due date to take into account factors such as delays in the administration, processing, and delivery of the payments (“Release Period”). The Release Period is available only for payments required under Subsection III.C.2.(a) above. The existence, duration, terms, and continuation of the Release Period are subject to change from time to time by each of the Ally Parties. Changes in the Release Period by the Ally Parties do not constitute amendments of this Agreement.
6. | “Sold” Defined. “Sold” as set forth in this Agreement means the delivery or transfer of ownership, title or interest in the property by Dealership to a third party (whether an affiliate or non-affiliate of Dealership). |
[***] | Indicates that text has been omitted which is the subject of a confidential treatment request. The text has been separately filed with the Securities and Exchange Commission. |
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D. | The Ally Parties’ Security Interests. |
1. | Grant of Security Interest. Dealership hereby grants to each of Bank and Ally a continuing security interest in and a collateral assignment of (“Security Interest”) all of the following described property in which Dealership has or may have any rights, wherever located, whether now existing or hereafter arising or acquired and any and all accessions, additions, attachments, replacements, substitutions, returns, profits, and proceeds in whatever form or type, of any of the property (“Collateral”): |
all Vehicles, including but not limited to those for which either of the Ally Parties provides Inventory Financing; other inventory; equipment; accounts, including factory open accounts of Dealership; deposit and other accounts with banks and other financial institutions; cash and cash equivalents; general intangibles; all documents; instruments; investment property; and chattel paper.
2. | The Obligations Secured. The Collateral secures payment and performance of all debts, obligations, and duties of Dealership to Bank and Ally of every kind and description, now existing or hereafter arising under this Agreement, whether primary or secondary, absolute or contingent, due or to become due, direct or indirect, presently contemplated or not contemplated by Bank, Ally or Dealership, or otherwise designated by the parties as secured or unsecured (“Obligations”). |
3. | Status of Collateral. The Collateral is held by Dealership in trust for each of the Ally Parties. The Collateral must be and remain free from all confiscations, assessments, forfeitures, loss, destruction, impairment, tax liens and other liens, security interests, pledges, claims, and encumbrances except for: |
(a) | the Security Interest arising under this Agreement, or as otherwise contemplated by this Agreement; |
(b) | non-consensual statutory liens resulting from deposits made in the ordinary course of business in connection with workers compensation, unemployment insurance, social security, and other similar laws; |
(c) | other security interests to which each of the Ally Parties specifically consents in writing. |
The grant of the Security Interest and the execution of any document, instrument, promissory note, or the like, in connection with it or the Obligations do not constitute payment or performance of any of the Obligations, except to the extent of actual, indefeasible payment of the Obligations from the realization by Dealership or the Ally Parties of the Collateral or otherwise. The Security Interest continues to the full extent provided in this Agreement until all Obligations are fully and indefeasibly paid and performed, even if the Credit Line is from time to time modified, suspended, or terminated and reestablished.
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4. | Perfection of Security Interest. The Ally Parties may each file financing statements, note their liens on titles, and take any other steps in order to establish, confirm, and maintain a perfected Security Interest in the Collateral. Dealership will execute and deliver any documents necessary and appropriate for these purposes and otherwise irrevocably appoints each of the Ally Parties to do so. Each of the Ally Parties may require Dealership to pay any fee, cost, tax, or assessment required by any government entity to perfect and / or maintain each of the Ally Parties’ Security Interest in the Collateral. All financing statements previously filed by either or both of the Ally Parties are hereby ratified and authorized by Dealership as of the date of filing. |
5. | Protection of Security Interest. Unless expressly prohibited by law, in the event of Default and unless and until the Default is cured to the satisfaction of the Ally Parties or in the event of material jeopardy to 10% or more of the Collateral pledged hereunder (based on clean wholesale value), upon either of the Ally Parties’ request, Dealership must immediately: |
(a) | turn over to Ally or some other party designated by the Ally Parties custody or control of all manufacturer’s certificates of origin, certificates of title, documents of title, bills of sale, invoices, and other records or instruments of ownership by Dealership pertaining to the Vehicles; |
(b) | establish and maintain an account, separate from other Dealership accounts, at a federally insured financial institution with which Dealership and/or its affiliates have had no business or lending relationship for a minimum of six (6) months before setting up the account, into which cash, instruments, and other proceeds of Collateral are to be deposited and segregated from other funds of Dealership; |
(c) | protect and defend the Collateral against the claims and demands of all other persons, including, but not limited to obtaining waivers from landlords, depository institutions and other parties which have access to or control over the Ally Parties’ Collateral or proceeds of the Ally Parties’ Collateral; and |
(d) | permit representative(s) of each of the Ally Parties to monitor Collateral by taking one or more of the following actions: |
(i) | to enter any locations where Dealership conducts business or maintains Collateral, and to remain on the premises for such time as such Ally Party(ies) may deem desirable; |
(ii) | to take possession and control over certificates of origin, title, and keys with respect to each Vehicle comprising Dealership’s inventory or equipment; |
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(iii) | to take constructive or actual possession and control over all documents, books, records, papers, accounts, chattel paper, electronic chattel paper, instruments, promissory notes, general intangibles, payment intangibles, supporting obligations, contract rights, software, or any similar types of tangible or intangible property relating to or comprising the Collateral; |
(iv) | to receive payment of all Collateral proceeds; and |
(v) | to take whatever additional actions as either or both of the Ally Parties may deem necessary or desirable to protect and preserve the Collateral, and to carry out, and to protect and preserve each of the Ally Parties’ security rights and remedies. |
6. | Offset. In addition to the Security Interest, each of the Ally Parties retains any and all rights of offset, recoupment, netting-out, and any other legal or equitable rights, in each case provided to it under applicable law, to credit those assets of Dealership in the possession or control of Ally Bank or Ally Financial, as applicable, against any Obligations of Dealership to Ally Bank or Ally Financial under this Agreement or any other auto finance related agreement (e.g., inventory financing; SmartAuction; purchase of retail installment sale contracts and leases), whether then matured, liquidated, or due. For clarity, the term “Obligations of Dealership” in the preceding sentence does not include the obligations of any affiliate of Dealership. |
7. | Authorization Regarding Proceeds of Collateral. Dealership hereby authorizes and empowers each of Bank and Ally to demand, collect and receive from auctions and others, and give such parties binding receipts for, all proceeds of Collateral and, in Dealership’s name or otherwise, to prosecute suits therefor. With or without a default, each of the Ally Parties may, at any time notify auctions and others to make payment directly to the Ally Parties of proceeds of Collateral. Dealership unconditionally and irrevocably authorizes and instructs auctions and others to make payment of proceeds of Collateral directly to the Ally Parties as instructed, and authorizes auctions and others to rely on a copy of this Agreement as evidence of the authorization and instruction. The Ally Parties will account to Dealership for all sums received pursuant to this Section III.D.7 and applied in the manner described in Subsection III.C.7 above. This authorization is irrevocable without the prior written consent of each of the Ally Parties and is provided as additional security for and not as payment of obligations now or hereafter arising to the Ally Parties. Dealership hereby appoints each Bank and Ally as its agent and attorney-in-fact for the sole purpose of executing or endorsing, on Dealership’s behalf, any document, check or other instrument necessary to cause payment of proceeds of Collateral, or to perfect Bank’s and/or Ally’s security interest in the proceeds of Collateral. |
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E. | Dealership’s Handling of Vehicles. |
(a) | for temporary relocation for repair, restoration, reconditioning, governmental inspection, and the like; |
(b) | as consistent with the usage of the Vehicle as a Demonstrator or Shop Rental (each as defined in Subsection III.E.4. below); |
(c) | upon advance or concurrent notice to the Ally Parties, for bailment to another person for upfitting, completion, upgrading, modification, and the like; or |
(d) | upon advance or concurrent notice to the Ally Parties, for storage and display at a temporary location. |
(a) | Demonstrators. From time to time, Dealership may use one or more Vehicles for demonstration and promotional purposes (“Demonstrator”), pursuant to the following additional terms and conditions: |
(i) | Reserved. |
(ii) | Dealership may provide a Vehicle to a person whose use of it will directly or indirectly promote the Dealership’s business including: |
• | owners or employees of the Dealership, provided the Vehicle is for local use, for short duration, and no fee is assessed; |
• | service customers, provided the Vehicle is for local use, short duration, and no fee is assessed. |
(iii) | Reserved. |
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(iv) | Upon either or both of the Ally Parties’ request, Demonstrators are subject to: |
• | a term of no more than twelve months; |
• | inspection by each of the Ally Parties (including all related documents); |
• | reductions in principal balance in an amount determined by such Ally Party(ie)s; |
• | removal from service as a Demonstrator; and |
• | any other limitation imposed by either or both of the Ally Parties from time to time. |
(v) | Dealership must obtain and maintain liability insurance coverage insuring Dealership and the Demonstrator user in an amount that is at least the greater of the minimum required by law or $100,000/$300,000 bodily injury and $25,000 property damage for vehicles used as Demonstrators. |
(b) | Shop Rentals. From time to time, Dealership may use one or more Vehicles for short term rental to customers (“Shop Rental”), pursuant to the following additional terms and conditions: |
(i) | Dealership must request permission from each of the Ally Parties to make the designation and use of the Vehicle as a Shop Rental. The request must be made in advance on a form provided by the Ally Parties for this purpose and include a detailed description of the Vehicle proposed for designation as a Shop Rental, including: |
• | Vehicle information: vehicle identification number; stock number; |
• | Shop Rental service information: term of service; effective date of service period; |
• | Vehicle financing information: amount financed; monthly amortization; first payment due date; balloon payment; and |
• | any additional information or document that either or both of the Ally Parties may request from time to time. |
(ii) | The Ally Parties may approve or deny the request for a Shop Rental and may rescind any approval previously granted. Any approval must be in writing. |
(iii) | The Shop Rental must be confined to a customer of Dealership who is in need of a temporary replacement motor vehicle: |
• | while the customer’s vehicle is being repaired by Dealership; |
• | for a thirty (30) day period following theft of the customer’s motor vehicle; or |
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• | pending delivery of a motor vehicle to customer pursuant to a bona fide order with Dealership. |
(iv) | Unless changed by either or both of the Ally Parties in their sole discretion, Dealership must make monthly principal reduction payments in the amount designated from time to time by the such Ally Party(ies) for the Shop Rental plus monthly interest or other service charges established by each of the Ally Parties from time to time. |
(v) | A Vehicle may not be used as a Shop Rental for a term longer than the term specified in the written approval provided by the Ally Parties, unless each of the Ally Parties consents in writing to a longer period. |
(vi) | Dealership must maintain insurance coverage on the Shop Rental as follows: |
• | comprehensive and collision coverage insuring each of the Ally Parties and Dealership (as their interests may appear); and |
• | liability insurance coverage insuring Dealership and the Shop Rental user in an amount that is at least the greater of the minimum required by law or $100,000/$300,000 bodily injury and $25,000 property damage. |
(vii) | Dealership must immediately notify each of the Ally Parties whenever a Shop Rental ceases to be used in this way by reason of its sale, lease, re-designation by either or both of the Ally Parties or Dealership, or otherwise. |
(viii) | All other terms and conditions of this Agreement will apply to a Shop Rental. |
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6. | Reserved. |
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3. | Legal Compliance. Dealership is in compliance with all federal, state, and local laws, regulations, and ordinances. |
4. | Financial Condition. Information on the financial condition of Dealership which has or may be submitted to either or both of the Ally Parties, either directly or indirectly (e.g., through a Vehicle Seller), by Dealership or an agent of Dealership (e.g., accountant), fairly presents the financial condition of Dealership in accordance with generally accepted accounting principles applied on a consistent basis. |
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G. | Additional Promises of Dealership. Dealership will: |
1. | Provide (directly or by posting to a secure site accessible by the Ally Parties) each of the Ally Parties with accurate and complete information, data, books, records, documentation, and the like, concerning: |
(a) | all financial and business matters of Dealership, upon request by either or both of the Ally Parties; and |
(b) | any of the following proposed or actual changes, immediately: |
(i) | the Dealership’s name, address, tax status, entity, structure, and |
(ii) | the Dealership’s solvency. |
(iii) | any change in ownership of the Dealership; and |
(c) | all financial and other reports made and information provided to any Vehicle Sellers and will allow each of the Ally Parties direct access to all such reports and information, and upon request by either or both of the Ally Parties, provide copies of such reports and information. |
2. | Provide audited financial statements within 120 days after the end of each of its fiscal years, and unaudited financial statements within 60 days after the end of the first three fiscal quarters of each fiscal year. |
3. | At all times, remain in good standing under, and have not received or sent notice of termination of, any contracts, franchise agreements, dealer sales and service agreements, and the like, provided by Vehicles Sellers which manufacture or distribute new Vehicles to Dealership. |
4. | Maintain, at all times, a Credit Balance (as defined in Dealership’s Credit Balance Agreement, dated as of July 27, 2015) of at least 5% of the total principal amount owed to the Bank from time to time for used vehicle inventory financed by the Bank under this Agreement so long as Dealership owes any debt to Bank or until Bank otherwise agrees in writing. |
5. | Maintain unrestricted cash and cash equivalents on hand in immediately available funds, excluding funds held by any of the Ally Parties under the above-referenced Credit Balance Agreement, of at least 10% of the Wholesale Outstandings, and submit to Ally a monthly certification by an officer of Dealership that this requirement was met. |
6. | Maintain minimum net worth of at least $15,000,000.00. |
7. | Maintain, at all times, at least 5% equity in its inventory, calculated as the amount expressed as a percentage equal to |
(a) | 1 minus |
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(b) | the amount of |
(i) | total Wholesale Outstandings divided by |
(ii) | with respect to Eligible Vehicles, 100% of the sum of: |
• | the purchase price of such Vehicle, |
• | fees charged by an auction in connection with the purchase of such Vehicle, |
• | post-sale inspection fees in connection with the purchase of such Vehicle, and |
• | the reconditioning parts, repair parts, and related labor cost with respect to such Vehicle. |
“Eligible Vehicles” means Vehicles that Dealership acquired by any means, excluding each Exception Vehicle.
“Exception Vehicle” means a Vehicle for which any part of the purchase price remains unpaid; a Vehicle that is or has been subject to a consumer lease from Dealership or an affiliate of Dealership; and/or a Vehicle provided to a Dealership employee or other representative for long-term use (i.e., a company vehicle).
(the foregoing calculation will not include any costs related to transportation with respect to a Vehicle),
8. | Promptly notify the Ally Parties of any material reduction in availability of loans, financing, credit lines, or other credit accommodations provided or made available by any bank, finance company, or other source. |
9. | Reserved. |
H. | Default by Dealership. An occurrence of any one or more of the following events constitutes a default under this Agreement (“Default”): |
1. | Failure of Dealership to pay when due the full amount owing to either of the Ally Parties under Section III.B. and C. above; |
2. | Material jeopardy to 10% or more of the Collateral (based on clean wholesale value) and such jeopardy has not abated for a period of two (2) calendar days after notice thereof by either of the Ally Parties; |
3. | The breach of, or the failure of Dealership to fully comply with or duly perform, any term, condition, or promise of this Agreement or any other Obligation and such failure continues unremedied for a period of five (5) business days after notice thereof by either of the Ally Parties; |
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4. | Any representation, statement, or warranty made by Dealership to either of the Ally Parties in this Agreement or otherwise, which was false or materially misleading when made; |
5. | The inability of Dealership to pay debts as they mature, or any proceeding in bankruptcy, insolvency, or receivership, instituted by or against Dealership or Dealership’s property; and/or |
6. | This Agreement is unenforceable or the security interest in the collateral created by this Agreement ceases to be in full force and effect. |
(a) | Claim Resolution. The resolution of any Claim (“Claim Resolution”) will occur, if at all, only in accordance with the following provisions and sequence: |
(i) | Informal discussion and negotiation between executive level managers of the Dealership and the Ally Party(ies) asserting a Claim or against which a Claim is asserted; |
(ii) | Mediation in accordance with the rules of commercial mediation as published from time to time by the American Arbitration Association, Endispute, the Better Business Bureau, or any other nationally recognized alternative dispute resolution organization, selected by the party against whom the Claim is being asserted; and (iii.) Binding arbitration in accordance with the rules of commercial arbitration as published from time to time by the American Arbitration Association, Endispute, the Better Business Bureau, or other nationally recognized alternative dispute resolution organization, selected by the party against whom the Claim is being asserted (“Arbitration”), except that the Arbitration must be decided based upon the terms and conditions of this Agreement. |
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(b) | Jurisdiction and Venue. |
(i) | All mediation and arbitration hearings and proceedings brought pursuant to Subsections III.I.1(a)(ii) and (iii) above shall occur at a location within fifty (50) miles of Ally’s local business office set forth in Section I.B above, or the current replacement for it. |
(ii) | The enforcement of any Claim or Claim Resolution provision and the enforcement of any Arbitration award must be brought, if at all, solely and exclusively in the state or federal court of original jurisdiction for the location of the Ally local business office set forth in Section I.B. above, or the current replacement for it. |
(c) | JURY WAIVER. BANK, ALLY AND DEALERSHIP WAIVE AND RENOUNCE THE RIGHT UNDER FEDERAL AND STATE LAW TO A TRIAL BY JURY FOR ANY CLAIM. |
2. | Choice of Law. This Agreement must be construed, interpreted, and enforced in accordance with the laws of the state of Arizona without regard to its conflict of laws rules. |
3. | Limitation of type and nature of damage Claims for violation. With respect to any Claim: |
(a) | Dealership’s damages under this Agreement are expressly limited to the following; |
(i) | the actual dollar amount of Dealership’s economic or financial loss; and |
(ii) | reasonable dollar amount of lost future profits for not more than two (2) years from the accrual date of the Claim. |
(b) | Neither party may assert a claim for any of the following: |
(i) | punitive or exemplary damages, unless the Claim would constitute a felony under the law of the state indicated in Subsection III.I.2, above; or |
(ii) | consequential and incidental damages. |
(c) | Any liability of either Ally Party to Dealership related to any Claim is limited to and will not exceed the amount of total Interest assessed by the Ally Party(ies) against whom the Claim is brought and actually paid by Dealership in the twenty-four (24) calendar months immediately preceding accrual of the Claim. |
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4. | Notification of information to Others. Bank and Ally each have the right, but not the obligation, to notify guarantors, sureties, Vehicle Sellers, Account Debtors and other third parties (e.g., owners, officers, etc.) of the terms, administration, or performance of this Agreement. |
1. | Demand. Either or both of the Ally Parties may demand immediate payment in full of all Obligations owed by Dealership to such Ally Party(ies). |
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3. | Suit at Law or in Equity. Either or both of the Ally Parties may institute proceedings in a proper court of law or equity to enforce any and all provisional remedies such Ally Party(ies) have at law or equity, including injunctive relief and action for possession of Collateral, an order for accounting, appointment of a receiver or examiner, or the like. Either or both of the Ally Parties may apply for and have granted any equitable or other legal relief appropriate to enforce any right or remedy including specific performance and the issuance of any ex parte preliminary injunction to protect the Collateral. |
8. | “Commercially Reasonable” Defined. Any of the following, nonexclusive, methods of Collateral disposition is deemed “commercially reasonable” in accordance with Article 9 of the Uniform Commercial Code: |
(a) | repurchase of any Vehicle, parts, or accessories manufactured by the original Vehicle Seller pursuant to the terms of a repurchase agreement between such Ally Party and Vehicle Seller; |
(b) | sale of any parts or accessories to the highest bidder in an auction sale, in lieu of a sale to a Vehicle Seller pursuant to a repurchase agreement, where the proceeds to either or both of the Ally Parties are reasonably believed to be higher than they would be under the repurchase agreement; |
(c) | sale to the highest cash bid from dealers in the type of property repossessed, whether in bulk or parcels; and |
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(d) | sale at any physical or virtual auction, including SmartAuction, at which only dealers of multiple or single Vehicle manufacturer are generally invited to attend. |
(a) | any invoice, xxxx of sale, certificate of title, manufacturer’s certificate of origin, application, and any other instrument or document pertaining to title or ownership or the transference thereof of any Collateral; |
(b) | any financing statement, notice, filing, or document pertaining to the enforcement of the Security Interest in Collateral; and |
(c) | any check, draft, certificate of deposit, credit voucher, or any other medium of payment, insurance claims, proof of loss, instrument, or document pertaining to or proceeds of any Collateral; |
This limited power of attorney is coupled with an interest and may be relied upon by any third party without any duty to inquire as to its continued effectiveness. Neither Bank nor Ally will be liable for any acts or omissions, nor for any error of judgment or mistake of law or fact in the exercise of any authorization under this limited power of attorney.
11. | Default Rate of Interest. To the extent permitted by law, each of the Ally Parties may immediately assess a default rate of Interest up to the current rate of Interest plus five percent (5%). |
K. | Additional Provisions. |
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(a) | acts in good faith; |
(b) | has no actual knowledge of information to the contrary; and |
(c) | the practice is customary with dealers generally or Dealership specifically. |
The Ally Parties have no obligation to scrutinize, inquire, or confirm any communication.
2. | Written Waivers Only. A waiver, release, estoppel, or defense of any provision of this Agreement is effective only if it is in writing signed by the party sought to be bound by it. |
(a) | No course of dealing nor the delay or failure of either or both of the Ally Parties to enforce any right or remedy, in whole or in part, to demand payment or to declare an event of Default under this Agreement will: |
(i) | alter or affect any of Dealership’s obligations or such Ally Party’s(ies’) rights and remedies; or |
(ii) | operate as a waiver, release, estoppel, or defense thereof. |
(b) | Any notice to or demand on Dealership by either or both of the Ally Parties in any event not specifically required under this Agreement does not entitle Dealership to any other or further notice or demand in the same, similar, or other circumstances unless specifically required by this Agreement. |
(c) | There can be no waiver of this Subsection III.K.2., except in writing signed by the party against whom the alleged waiver is asserted. Reliance by any party on an oral representation will be deemed unreasonable. |
4. | Amendments. No amendment of any provision of this Agreement is effective without the written, signed agreement of Dealership and the Ally Parties. |
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10. | Binding. This Agreement is binding on Bank, Ally and Dealership and their respective successors, administrators, and assigns. |
12. | Severability. Any provision of this Agreement prohibited by law is ineffective only to the extent of the prohibition without invalidating the remaining provisions of this Agreement. |
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(a) | United States certified, registered, or first class mail, postage prepaid; |
(b) | Use of a commercially recognized express delivery service; |
(c) | Electronic mail or facsimile transmission; or |
(d) | Personal delivery. |
15. | Time of the Essence. Time is of the essence as to this Agreement. There is no grace period, right to cure, or other indulgence provided in the terms and conditions of this Agreement unless expressly provided for in this Agreement or in a separate writing signed by the party against whom it is asserted. |
16. | Entire Agreement. This document amends and restates the Inventory Financing and Security Agreement, dated as of October 17, 2014, and, as amended and restated, contains the entire agreement of Bank, Ally and Dealership concerning the subject matter set forth herein. There are no other oral or implied agreements, understandings, or representations between them. Dealership has not relied on any statement, promise, or representation made by anyone connected with Bank or Ally, except as provided in this Agreement or any related document. |
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Ally Bank | Carvana, LLC | |||||||
By: | /s/ Xxxxxxx X. Xxxxxx | By: | /s/ Xxxxx Xxxxxx |
Print Name: | Xxxxxxx X. Xxxxxx | Print Name: | Xxxxx Xxxxxx |
Title: | Asst. Secy. | Title: | CEO |
Date: | 7/27/2015 | Date: | 7/27/2015 |
Ally Financial | ||||||||
By: | /s/ Xxxxxxx X. Xxxxxx |
Print Name: | Xxxxxxx X. Xxxxxx |
Title: | Asst. Secy. |
Date: | 7/27/2015 |
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