Document:

Filed by Avantafile.com - I-Minerals Inc. - Exhibit 10.18

THIS LOAN AGREEMENT (“this
Agreement”) is dated September 11, 2018.

AMONG:

	 	
I-Minerals Inc., a body corporate, continued under the laws of Canada, having its head office at Suite 880 – 580 Hornby Street, Vancouver, British Columbia, Canada V6C 3B6

	 	(hereinafter called the “Company”)

OF THE FIRST PART

AND:

	 	
i-minerals USA Inc., an Idaho limited liability company, having an office c/o the Company, at Suite 880 – 580 Hornby Street, Vancouver, British Columbia, Canada V6C 3B6

	 	(hereinafter called the “Subsidiary”)

OF THE SECOND PART

AND:

	 	
BV Lending, LLC, an Idaho limited liability company, having its head office at Suite 201 – 901 Pier View Drive, Idaho Falls, Idaho, U.S.A. 83402

	 	(hereinafter called “BV”)

OF THE THIRD PART

WHEREAS:

	A.
	       As of August 31, 2018, the Company was indebted to BV pursuant to cash advances made by BV, together with accrued and unpaid interest thereon, pursuant to various loan agreements among the parties hereto, which cash advances were made to provide funding to the Company to advance its Bovill Kaolin Project in the State of Idaho, U.S.A.;

	B.
	       The Company continues to require additional funding to advance said Bovill Kaolin Project;

	C.
	       BV has agreed to provide additional funding to the Company pursuant to the terms and conditions of this Agreement;

	D.
	       The Subsidiary is a wholly-owned subsidiary of the Company and is the legal owner of the Helmer-Bovill Property hosting the Bovill Kaolin Project in the State of Idaho, U.S.A. referred to in Recitals A. and B. herein;

NOW THEREFORE
THIS AGREEMENT WITNESSETH  that in consideration of
these presents and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties, the parties
hereby agree as follows:

 2

	
1. 
	
        Definitions

	1.01
	    In this Agreement, the following words and phrases shall have the following meanings, namely:

	 	(a)
	       “Advance” means the principal amount of cash advances from BV to the Company pursuant to this Agreement, as well as interest owing under this Agreement, at BV’s election;

	 	(b)
	       “Bonus Shares” has the meaning set out in Exchange Policy 5.1;

	 	(c)
	       “Discounted Market Price” has the meaning set out in Exchange Policy 1.1;

	 	(d)
	      “Effective Date” means the date of this Agreement as set forth on the first page hereof;

	 	(e)
	       “Exchange” means the TSX Venture Exchange;

	 	(f)
	       “Exchange Policy 1.1” means TSX Venture Exchange Policy 1.1, entitled “Interpretation”;

	 	(g)
	       “Exchange Policy 5.1” means TSX Venture Exchange Policy 5.1, entitled “Loans, Bonuses, Finder’s Fees and Commissions”;

	 	(h)
	       “Exchange Policy 5.9” means TSX Venture Exchange Policy 5.9, entitled “Protection of Minority Security Holders in Special Transactions”;

	 	(i)
	        “Exchange Rate” means the Bank of Canada Noon Rate for Canadian/U.S. dollars on the applicable dates provided for herein;

	 	(j)
	        “Indebtedness” means the principal amount of each cash Advance pursuant to this Agreement, collectively, as well as interest which is considered an Advance in accordance with sections 2.01 and 2.02 hereof;

	 	(k)
	       “Market Price” has the meaning set out in Exchange Policy 1.1;

	 	(l)
	        “this Agreement” means this Loan Agreement.

	
2. 
	
        Cash Advances to be made

	2.01
	    BV hereby agrees to advance up to an additional $2,500,000 in cash to the Company in tranches in accordance with Schedule A attached hereto (individually an “Advance” and collectively “Advances”), with each Advance to be considered a secured loan accruing interest at the rate of fourteen percent (14%) per annum calculated from the date of each Advance as at May 31 and as at November 30 of each year in which such interest is payable hereunder, such interest also to be considered Advances hereunder over and above the amounts set forth in Schedule A, unless BV elects otherwise, as provided for in paragraph 2.02 herein.  If applicable this interest will be considered an Advance received on the date such interest is payable as provided for in paragraph 2.02 herein.

 3

	 	The Company will repay to BV the principal amount of each Advance as provided for in paragraph 6.01 herein.  Advances hereunder, other than interest when considered an Advance hereunder, will be made in accordance with Schedule A attached hereto.  Advances are to be made on the first business day of each month in which Advances are to be made. 

	2.02
	    As provided for in paragraph 2.01 herein, interest owing on Advances will also be considered Advances, unless BV elects otherwise, in which event it may direct that the Company pay the interest owing on the Advances hereunder either in cash or in common shares in its capital stock (“Shares”).  In the event BV elects to have the interest paid either in cash or in Shares, it will so notify the Company within ten (10) business days prior to the date such interest payments become due and payable.  The interest will be due on or before June 30 and December 31 of each year in which such interest is payable hereunder.  In the event interest is to be paid in Shares, they would be issued at a deemed price per Share equal to the greater of:

	 	(a)
	       the Discounted Market Price of the Company’s common shares as of the close of the market on the date of the Company’s news release announcing the proposed payment of interest in Shares, provided that said news release shall be issued on the date that BV elects to receive the payment of interest in Shares; and

	 	(b)
	       the volume weighted average trading price (the “VWAP”) of the Company’s common shares over the twenty (20) trading days prior to the date such interest  is calculated (being May 31 and November 30 each year), with the VWAP to be calculated by dividing the total value of common shares of the Company as traded on the Exchange (or on such other stock exchange or quotation system where the majority of the Company’s trading takes place) by the total volume of shares traded, with the amount of interest to be calculated in Canadian funds based on the  Exchange Rate as of the date such interest is calculated.

	2.03
	    The Company shall pay to BV a late charge equal to five percent (5%) of each payment due under this Agreement, or under any other instrument evidencing or securing this Agreement, that is not paid in full within ten (10) days after the applicable due date as provided for in paragraph 6.01 herein.  Such late charge shall accrue and be due as of the due date for such payment and represents a reasonable estimate of fair compensation for the loss that may be sustained by BV for the failure of the Company to make timely payment.  Such late charge shall be paid without prejudice to the right of BV to collect any other amounts provided for hereunder or to pursue any other rights and remedies available to BV under this Agreement, under any documents securing and/or guaranteeing this Agreement, at law or in equity.

	2.04
	    All past due principal (whether in due course or by acceleration), past due interest and past due late charges shall, both before and after judgment, bear interest at the default rate of eighteen percent (18%) per annum compounded monthly from and after the applicable due date, as provided for in paragraph 6.01 herein, until paid in full.

	2.05
	    The Company agrees to pay any and all reasonable costs and expenses (regardless of the particular nature thereof and whether incurred before or after the initiation of suit or before or after judgment) which may be incurred by BV in connection with the enforcement of any of its rights under this Agreement and/or any instrument securing or guaranteeing this Agreement, including but not limited to attorney fees and all costs and expenses of collection.

 4

	2.06
	    The Company, and all sureties, guarantors, and endorsers hereof, severally waive presentment for payment, demand, and notice of dishonor and nonpayment of this Agreement, and consent to any and all extensions of time, renewals, waivers, or modifications that may be granted by BV with respect to the payment or other provisions of this Agreement, and to the release of any security, or any part thereof, with or without substitution.

	2.07
	    Notwithstanding any other provision contained in this Agreement or in any instrument given to evidence or secure the obligations evidenced hereby:

	 	(a)
	       the rates of interest and charges provided for herein and therein shall in no event exceed the rates and charges which would result in interest being charged at a rate equaling the maximum allowed by law; and

	 	(b)
	       if for any reason whatsoever BV ever receives as interest in connection with the transaction of which this Agreement is a part an amount which would result in interest being charged at a rate exceeding the maximum allowed by law, such amount or portion thereof as would otherwise be excessive interest shall automatically be applied toward reduction of the unpaid principal balance then outstanding hereunder and not toward payment of interest.

	
3. 
	
        Bonus Shares

	3.01
	    As additional consideration for the cash Advances made by BV to the Company pursuant to paragraph 2.01 hereof, the Company agrees to issue to or as directed by BV the Bonus Shares referred to in sub-paragraph 3.01(a) herein as follows, with such Bonus Shares to be issued within ten (10) business days of each of June 30 and December 31 of each year in which such securities are to be issued hereunder, with the number of Bonus Shares to be calculated as set forth below:

	 	(a)
	       that number of Bonus Shares in its capital equal to six percent (6%) of the amount of the Advance, divided by the Market Price of the Company’s common shares as of the close of business on the date of the Advance, as adjusted by the Exchange Rate on the date of the Advance, subject to the minimum price per share and the maximum number of Bonus Shares provided for in Exchange Policy 5.1; and

	 	(b)
	       for greater certainty, Bonus Shares shall not be issuable in respect of interest which is deemed to be an Advance in accordance with sections 2.01 and 2.02 hereof.

	
4. 
	
        Security for Advances

 5

	4.01 
	    As security for the repayment of the Advances made pursuant to this Agreement, together with all accrued and unpaid interest thereon, the Company hereby grants, mortgages and charges in favour of BV, by way of a floating charge, its undertaking and all of its other property and assets for the time being, real and personal, movable and immovable, of whatsoever nature and kind, both present and in the future (the “Property”), including all of the issued and outstanding shares of the Subsidiary.  For greater certainty, the parties specifically acknowledge and agree that the charges hereby created in favour of BV constitute a first charge and will rank pari passuwith the floating charge granted in favour of BV in respect of cash advances made pursuant to earlier loan agreements among the parties, together with all accrued and unpaid interest thereon; the parties also acknowledge and agree that these charges are in priority to any and all specific or floating charges created by the Company in favour of any other creditors.  The Company and the Subsidiary each agree to take all steps and actions as are reasonably necessary to assist BV with the registration of its interest in the Property in any provincial, state or federal property or title registries.  It is also acknowledged by the parties that the Company shall be at liberty to, in the future, create or suffer to be created mortgages, charges, liens or encumbrances, by other specific charges or floating charges, ranking subsequent to the floating charges hereby created; it is also acknowledged by the parties that, unless otherwise specifically agreed to in writing by BV, the Company shall not be at liberty to, and shall not create or suffer to be created, any mortgage, charge, lien or encumbrance upon the Property or the issued and outstanding shares of the Subsidiary ranking in priority to or pari passuwith the charges hereby created, or to sell or dispose of the same otherwise than in the ordinary course of its business as at present conducted.

	4.02
	    The parties also agree that the security provided for in paragraph 4.01 herein will be cancelled and of no further force or effect in the event of the repayment of the Indebtedness.

	
5. 
	
        Board Representation

	5.01
	    During the period any portion of the Indebtedness remains outstanding, the Company, if requested to do so by BV, agrees to include an individual designated by BV as one of management’s nominees for director in the notice of meeting and information circular to be distributed to the shareholders of the Company in connection with the next annual general meeting of its shareholders held subsequent to its receipt of said request from BV.

 6

	
6. 
	
        Repayment Provisions

	6.01
	    The parties agree that the Company will repay the Indebtedness on the earlier of:

	 	(a)
	       December 31, 2019; and

	 	(b)
	       in the event the Company enters receives the requisite financing for the capital expenditures required to put the Bovill Kaolin Project into full commercial production, five (5) business days following the closing of said financing.

	
7. 
	
        Participation Right

	7.01
	    If at any time after the Effective Date hereof and for so long as any Advance is outstanding, the Company proposes to issue or sell any common shares or convertible securities (“Additional Securities”) other than:

	 	(a)
	       pursuant to the exercise of any stock options granted under the Company’s stock option plan; or

	 	(b)
	       pursuant to the exercise of any share purchase warrants issued pursuant to previously-completed private placements; or

	 	(c)
	       for property interests other than money;

	 	BV shall have the right to subscribe for and purchase (directly or through an affiliate) Additional Securities, at the price at which such Additional Securities are offered for sale to other purchasers, up to its then pro rata interest in the issued and outstanding common shares of the Company, in each case, prior to giving effect to the issuance or sale of such Additional Securities (the “Maximum Additional Securities”).

	7.02
	    If the Company intends to authorize and/or issue Additional Securities that give rise to BV’s rights pursuant to paragraph 7.01, the Company shall provide notice to BV (the “Rights Notice”) no less than six business days before the date on which the Company intends to issue Additional Securities giving rise to BV’s rights pursuant to paragraph 7.01.

	7.03
	    The Rights Notice shall provide the same information to BV regarding the particulars of the issuance or sale of the Additional Securities as is provided to other persons proposing to participate in the subscription for Additional Securities.  BV shall give notice (an “Acceptance Notice”) to the Company not later than 5:00 p.m. (Vancouver time) on the fifth business day following the receipt of any Rights Notice, setting out the number of Additional Securities, if any, up to the Maximum Additional Securities, which BV intends to subscribe for and purchase.  Following receipt of an Acceptance Notice, BV shall be entitled to participate in the subscription for Additional Securities in the same manner as other persons subscribing for Additional Securities and shall be entitled to subscribe for the number of Additional Securities specified in the Acceptance Notice under such subscription.

 7

	
8. 
	
        Acceptances and Approvals

	8.01
	    The Company agrees to make application to the Exchange for its acceptance for the issuance of any Shares payable in settlement of interest owing on any Advances as provided for in paragraph 2.02 herein, and for the issuance of the Bonus Shares pursuant to paragraph 3.01 herein, which applications will include all required supporting documents and information and the applicable filing fees.  The issuance of any such Shares and/or Bonus Shares will in each case be subject to the Company receiving written acceptance from the Exchange therefor.

	8.02
	    In the event the provisions of Exchange Policy 5.9 and Multilateral Instrument 61-101 (each entitled “Protection of Minority Security Holders in Special Transactions”) apply to any of the provisions of this Agreement, the Company also agrees to seek the required approval of its shareholders thereunder at its next annual general meeting of its shareholders, to be held on or before December 31, 2018, in order to seek the requisite approval from its shareholders for the provisions hereof requiring such approval.

	
9. 
	
        Notices

	9.01
	    All notices, payments and other communications given in connection with this Agreement shall be in writing, and the respective addresses of the parties for the service of any notice, payment or other communication shall be as follows:

	 	(a)
	       if to the Company:

	 	
I-Minerals Inc.
Suite 880 – 580 Hornby Street
Vancouver, British Columbia, Canada
V6C 3B6

	 	
Attention:  Barry Girling, Director
Email: wbg@imineralsinc.com

	 	(b)
	       if to the Subsidiary:

	 	
i-minerals USA Inc.
Suite 880 – 580 Hornby Street
Vancouver, British Columbia, Canada
V6C 3B6

	 	
Attention:  Barry Girling, Director
Email: wbg@imineralsinc.com

 8

	 	(c)
	       if to BV:

	 	
BV Lending, LLC
Suite 201 – 901 Pier View Drive
Idaho Falls, Idaho, U.S.A.
83402

	 	
Attention:  Cortney Liddiard, Chief Executive Officer
Email: flyfish@ballventures.com

	 	with a copy to:

	 	
Thel W. Casper, Esq.
General Counsel to Ball Ventures, LLC
P. O. Box 51298
Idaho Falls, Idaho, U.S.A.
83402

	 	Email: tcasper@ballventures.com 

	 	Any notice, payment or other communication shall be sufficiently given if delivered by email or by hand or by reputable courier service, or, absent postal disruption, if sent by registered mail, postage prepaid, posted within either Canada or the United States of America, to the parties at their respective addresses for service as set forth above.  Any notice, payment or other communication shall be deemed to have been given and received on the first business day on which it is presented during normal business hours at the address for service of the addressee.  Any party may change its address for service by notice in writing to the other parties.

	
10. 
	
      Time of the Essence

	10.01
	  Time shall be of the essence of this Agreement.

	
11. 
	
      U.S. Dollars

	11.01
	  All references herein to dollar amounts are to lawful currency of the United States of America, unless otherwise specifically provided for herein.

	
12. 
	
      Headings

	12.01
	  The headings contained herein are for convenience only and shall not affect the meaning or interpretation hereof.

	
13. 
	
      Singular and Plural, etc.

	13.01
	  Where the context so requires, words importing the singular number include the plural and vice versa, and words importing gender shall include the masculine, feminine and neuter genders.

 9

	
14. 
	
      Entire Agreement

	14.01
	  This Agreement constitutes the only agreement among the parties with respect to the subject matter hereof and shall supersede any and all prior negotiations and understandings.  This Agreement may be amended or modified in any respect by written instrument only.

	
15. 
	
      Severability

	15.01
	  The invalidity or unenforceability of any particular provision of this Agreement shall not effect or limit the validity or enforceability of the remaining provisions of this Agreement.

	
16. 
	
      Governing Law

	16.01
	  This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein.  The parties irrevocably attorn to the jurisdiction of the courts of British Columbia, which will have non-exclusive jurisdiction over any matter arising out of this Agreement.

	
17. 
	
      Dispute Resolution

	17.01
	  If any dispute arises between any of the Parties (the Parties in dispute being the “Participants”) concerning this Agreement or its interpretation or the respective rights, duties or liabilities of the Parties, then a Participant may give to the other Participants notice in writing of the existence of such dispute, specifying its nature and the point at issue and the Participants agree:

	 	(a)
	        to try to resolve the dispute by participating in a structured negotiation with a mediator under the Commercial Mediation Rules of British Columbia International Commercial Arbitration Centre (“BCICAC”);

	 	(b)
	       where a dispute is not resolved by mediation within a period of 30 days after the appointment of a mediator or within such further period of time to which the Participants agree, any Participant may refer the dispute to be finally resolved by arbitration under the BCICAC Rules.  The appointing authority will be the BCICAC, the case shall be administered by the BCICAC in accordance with its “Procedures for Cases under the BCICAC Rules” and the place of arbitration shall be Vancouver, British Columbia. The appointment by the BCICAC is binding upon all of the Participants;

	 	(c)
	       the arbitrator will give his decision in writing within three weeks of his being appointed and the decision, both on the dispute and on the costs of the arbitration will be final and binding upon the Participants;

	 	(d)
	      the arbitrator will have full authority to rule on any question of law in the same manner as any Judge in any Court of the Province of British Columbia and the ruling of the arbitrator on any question of law will be final and binding upon the Participants; and

 10

	 	(e)
	       the failure of any Participant to abide by the decision of the arbitrator is considered a material breach of this Agreement.

	 	This paragraph shall survive any termination of this Agreement and continues in full force and effect notwithstanding any determination by a court or the Parties that one or more other provisions of this Agreement are invalid, contrary to law or unenforceable.

	
18. 
	
      Successors and Assigns

	18.01 
	  The terms and provisions of this Agreement shall be binding upon and enure to the benefit of each of the parties and their respective successors and permitted assigns; provided thatthis Agreement shall not be assignable by any party without the written consent of each of the other parties hereto.

	
19. 
	
      Further Assurances

	19.01
	  Each of the parties hereto shall do or cause to be done all such acts and things and execute or cause to be executed all such documents, agreements and other instruments as may reasonably be necessary or desirable for the purpose of carrying out the provisions and intent of this Agreement.

	
20. 
	
      Effective Date

	20.01
	  This Agreement is intended to and shall take effect as of the date first set forth above, notwithstanding its actual date of execution or delivery.

	
21. 
	
      Counterparts and Facsimile

	21.01
	  This Agreement may be executed in any number of counterparts by original, facsimile or other form of electronic signature, each of which so executed shall constitute an original and all of which taken together shall form one and the same agreement.

IN WITNESS WHEREOF the parties have executed
and delivered this Agreement as of the day and year first above written.

  Executed by
I-Minerals Inc.

  in the presence of:

   
   
 

/s/ Barry Girling                                   
Authorized Signatory
   
  

 
11

  Executed by
i-minerals USA Inc.

  in the presence of:

   
   
 

/s/ Barry Girling                                   

Authorized Signatory

Executed by

BV Lending, LLC

	
By:
	
     Ball Ventures, LLC, an   Idaho limited
liability company, the Member

	 	Per:	/s/ Cortney Liddiard                               

	 	Cortney Liddiard, CEO

 
SCHEDULE
A

	
  2018
  
	
  Budget
  	 	 	 	
  September
  	
  October
  	
  November
  	
  December
  	 
	 	 	 	 	
  $290,000
  	
  $420,000
  	
  $375,000
  	
  $485,000
  	 
	 	 	 	 	 	 	 	 	 

	
  2019
  
	
  Budget
  	 	
  January
  	
  February
  	
  March
  	 	 	 	 
	 	 	
  $435,000
  	
  $250,000
  	
  $245,000
  	 	 	 	 
	 	 	 	 	 	 	 	 	 

 

	 	DATED:         September 11, 2018	 
	 	 	 
	 	 	 
	 	Among:

      I-Minerals Inc.

      OF THE FIRST PART

      And:

      i-minerals USA Inc.

      OF THE SECOND PART

      And:

      BV Lending, LLC

    OF THE THIRD PART
	 
	 	 	 
	 	 	 
	 	LOAN AGREEMENT	 
	 	 	 
	 	 	 
	 	Tupper Jonsson & Yeadon

      1710 - 1177 West Hastings Street

        Vancouver, B. C.

        V6E 2L3

    Telephone: (604) 640-6355EXHIBIT 10.4

EXECUTION VERSION

 

SECOND AMENDED AND RESTATED

SALE AND ASSIGNMENT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED SALE AND ASSIGNMENT AGREEMENT (this “Agreement”) dated as of September 13, 2018 is between FORD MOTOR COMPANY, a Delaware Corporation (“Seller”), and FORD MOTOR CREDIT COMPANY LLC, a Delaware limited liability company (“Purchaser”).

 

Background

 

In connection with Vehicles ordered by any Dealer for purchase from Seller, Dealer takes ownership of each Vehicle at the time such Vehicle is released by Seller for shipment to Dealer, but is generally only obligated to pay Seller for such Vehicle, by draft on the Dealer’s finance source or otherwise, on the day that the Vehicle is delivered to Dealer.

 

Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, all of Seller’s rights to payments at the end of the related In-Transit Period from Dealers relating to Vehicles ordered by any Dealer for purchase from Seller, together with all Related Security.

 

Seller and Purchaser previously entered into a Sale and Assignment Agreement dated as of November 13, 2000, as amended and restated as of June 1, 2001 (the “Existing Agreement”), providing for the assignment from time to time of Dealer Receivables and Related Security by Seller to Purchaser.

 

Seller and Purchaser wish to modify the terms of the Existing Agreement and replace them in their entirety with the terms set forth in this Agreement.

 

Agreement

 

In consideration of the promises, covenants and undertakings set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, Seller and Purchaser agree as follows:

 

1.                                    Definitions.  For purposes of this Agreement, the following terms will have the meanings assigned to them as set forth below.

 

(a)                               “Benchmark Rate” means the benchmark interest rate (i.e., the prime rate or secured overnight funding rate) used by Purchaser to determine the per annum rate of interest for Dealers designated from time to time by Purchaser pursuant to the Sales and Service Agreements, such benchmark rate to be determined by Purchaser in the same manner as determined under the Sales and Service Agreements.

 

(b)                              “Dealer(s)” means any franchised Ford Motor Company motor vehicle dealer party to a Sales and Service Agreement with Seller.

 

(c)                               “Dealer Receivable” means, with respect to any Vehicle, all of Seller’s right, title and interest in, to and under any Dealer payment for a Vehicle under the Sales and

 

 

Service Agreement as well as all related rights of the Seller in, to and under the Sales and Service Agreement.

 

(d)                             “Draft” means the advance of funds by a Dealer’s finance source on behalf of the Dealer for the purchase of a Vehicle.

 

(e)                               “Estimated Invoice Amount” means the estimated amount payable by a Dealer to Seller for a Vehicle as set forth in a transmittal from Seller to Purchaser and designated as an estimated invoice amount.  A Vehicle may be assigned an Estimated Invoice Amount only if no Invoice Amount is assigned to the Vehicle.

 

(f)                                “Invoice Amount” means the total amount payable by a Dealer to Seller for a Vehicle as set forth on the Vehicle invoice issued by Seller.

 

(g)                              “In-transit Period” means, with respect to any Vehicle, the period from and including the day the Vehicle is released by Seller for shipment to a Dealer to and including the day of delivery of the Vehicle to such Dealer; provided, however, that if an Invoice Amount has not yet been established for such Vehicle on the day of delivery, the In-transit Period with respect to such Vehicle will continue to and including the day on which the Invoice Amount is established, but in no event more than 30 days following the day of delivery.

 

(h)                              “Related Security” has the meaning assigned to such term in Section 2(a) of this Agreement.

 

(i)                                  “Sales and Service Agreement” means the Sales and Service Agreement between Seller and a Dealer together with any related Vehicle Terms of Sale Bulletins, as the same may be amended, modified or supplemented from time to time.

 

(j)                                  “Unadjusted Purchase Price” means, with respect to any Dealer Receivable purchased hereunder, unless otherwise agreed by both Seller and Purchaser, an amount equal to 100% of the related Invoice Amount or Estimated Invoice Amount, as applicable; provided, however, that such price will be reduced as necessary to ensure that it will not be materially less favorable to Purchaser than prices for comparable transactions of a generally similar character at the time of the purchase taking into account the quality of the assets being purchased and other pertinent factors; and provided, further, that such price will be increased as necessary to ensure that it will not represent less than reasonably equivalent value therefor.

 

(k)                              “Vehicle” means a new motor vehicle manufactured by Seller and ordered by a Dealer from Seller.

 

2.                                    Sale of Dealer Receivables; Assignment of Related Security to Purchaser.

 

(a)                               Sale and Assignment.  Against payment of the Unadjusted Purchase Price in immediately available funds drawn to the order of Seller, Seller hereby agrees to sell, transfer, assign, set over and otherwise convey to Purchaser, without recourse (except as otherwise set forth herein), all Dealer Receivables created from time to time together with (i) the security interest Seller retains in each related Vehicle, along with the portions of any documents 

 

2

 

necessary to enforce such security interest, including, but not limited to, all applicable portions of the Sales and Service Agreement, and (ii) the security interest in all proceeds from the sale or other disposition of the related Vehicles (clauses (i) and (ii) together being referred to herein as the “Related Security”).

 

(b)                              Monitor Delivery and Draw on Financing Source.  Seller will monitor the delivery of Vehicles to Dealers in a manner consistent with its customary standards and practices. Seller will promptly draw on the Dealer’s financing source (or, if applicable, collect directly from the Dealer) an amount equal to the Invoice Amount with respect to each Dealer Receivable conveyed hereunder at the end of the related In-transit Period and promptly remit such amounts to Purchaser in full satisfaction of the related Dealer Receivable.

 

(c)                               Adjustment of Estimated Invoice Amounts.  If an Invoice Amount is established for a Vehicle previously assigned an Estimated Invoice Amount, the Unadjusted Purchase Price will be recomputed and Seller will refund to Purchaser any resulting reduction in the Unadjusted Purchase Price, or Purchaser will remit to Seller any resulting increase in the Unadjusted Purchase Price, as the case may be, in either case on the day the Invoice Amount is established.

 

(d)                             Perfection of Rights.  Seller will assist Purchaser in the filing or renewal of financing statements as required to perfect the sale and assignment to Purchaser of Seller’s right, title and interest in the Dealer Receivables and Related Security under the applicable state version of the Uniform Commercial Code, and Seller will take any other actions required to ensure that Purchaser’s security interest is enforceable as a first priority security interest.

 

(e)                               Computer Files.  Seller will indicate in its computer files that the Dealer Receivables have been sold, and the Related Security assigned, to Purchaser pursuant to this Agreement and will provide Purchaser with access to its computer systems and files for purposes of this Agreement and monitoring the Dealer Receivables and Related Security.

 

(f)                                True Sale.  Seller and Purchaser intend that the transfers of Dealer Receivables and Related Security hereunder constitute sales, conveying good title thereto free and clear of any liens and encumbrances, from Seller to Purchaser and that such property not be part of Seller’s estate or property of Seller in the event of any insolvency by Seller.  If such conveyance is deemed to be, or to be made as security for, a loan, the parties intend that Seller will be deemed to have granted and does hereby grant to Purchaser a first priority perfected security interest in all of Seller’s right, title and interest in and to the Dealer Receivables and Related Security and the related documents, and that this Agreement will constitute a security agreement under applicable law.

 

(g)                              Reassignment of Certain Related Security.  For any Vehicle as to which the Dealer Receivable has been satisfied in full by the related Dealer and for which Purchaser has not paid a Draft, Purchaser hereby agrees to reassign to Seller any security interest Purchaser may have in such Vehicle along with any documents or portions of documents assigned to Purchaser under Section 2(a) above.

 

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3.                                    Payment of Adjustment Fee Amount to Purchaser.  Seller will remit to Purchaser an adjustment fee amount in respect of each Dealer Receivable purchased hereunder in immediately available funds drawn to the order of Purchaser on the 15th day of each calendar month.  The adjustment fee amount for any Dealer Receivable for any month will be calculated by multiplying the applicable Unadjusted Purchase Price by a rate equal to the Benchmark Rate plus a spread (which may be negative) as agreed by the parties from time to time and further multiplied by a factor equal to the actual days included in the related In-transit Period during the immediately preceeding month divided by 360 days.

 

4.                                    Representations, Warranties and Covenants of Seller.

 

(a)                               Relating to Seller.  Seller hereby represents and warrants to Purchaser as of the date of each sale hereunder that:

 

(i)                                  Organization and Good Standing.  Seller is a corporation duly organized and validly existing and in good standing under the law of the State of Delaware and has, in all material respects, full corporate power, authority and legal right to own its properties and conduct its business as such properties are presently owned and such business is presently conducted, and to execute, deliver and perform its obligations under this Agreement.

 

(ii)                              Due Qualification.  Seller is duly qualified to do business and, where necessary, is in good standing as a foreign corporation (or is exempt from such requirement) and has obtained all necessary licenses and approvals in each jurisdiction in which the conduct of its business requires such qualification except where the failure to so qualify or obtain licenses or approvals would not have a material adverse effect on its ability to perform its obligations hereunder.

 

(iii)                      Due Authorization.  The execution and delivery of this Agreement and the consummation of the transactions provided for or contemplated by this Agreement have been duly authorized by Seller by all necessary corporate action on the part of Seller.

 

(iv)                          No Conflict.  The execution and delivery of this Agreement, the performance of the transactions contemplated by this Agreement and the fulfillment of the terms hereof and thereof, will not conflict with, result in any breach of any of the material terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under, any indenture, contract, agreement, mortgage, deed of trust, or other instrument to which Seller is a party or by which it or its properties are bound.

 

(v)                              No Violation.  The execution and delivery of this Agreement, the performance of the transactions contemplated by this Agreement and the fulfillment of the terms hereof and thereof applicable to Seller, will not conflict with or violate any material requirements of law applicable to Seller.

 

(vi)                          No Proceedings.  There are no proceedings or, to the best knowledge of Seller, investigations, pending or threatened against Seller, before any 

 

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governmental authority (A) asserting the invalidity of this Agreement, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, (C) seeking any determination or ruling that, in the reasonable judgment of Seller, would materially and adversely affect the performance by Seller of its obligations under this Agreement, (D) seeking any determination or ruling that would materially and adversely affect the validity or enforceability of this Agreement or (E) seeking to affect adversely the income tax attributes of any related securitization trust under the United States Federal or any other applicable state, local or foreign jurisdiction’s income, single business or franchise tax systems.

 

(vii)                      All Consents Required.  All appraisals, authorizations, consents, orders, approvals or other actions of any person or of any governmental body or official required in connection with the execution and delivery of this Agreement, the performance of the transactions contemplated by this Agreement, and the fulfillment of the terms hereof or thereof, have been obtained.

 

(viii)                  Enforceability.  This Agreement constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity).

 

(ix)                          Valid Transfer.  This Agreement constitutes a valid sale, transfer and assignment to Purchaser of all right, title and interest of Seller in the Dealer Receivables and the Related Security and the proceeds thereof.  Upon the filing of the financing statements with the appropriate authorities in the manner described in Section 2(d) and, in the case of the Dealer Receivables hereafter created and the proceeds thereof, upon the creation thereof, Purchaser will have a first priority perfected ownership interest in such property.  Except as otherwise provided in any contract or agreement relating to a securitization transaction, neither Seller nor any person claiming through or under Seller has any claim to or interest in the assets sold hereunder.

 

(b)                              Relating to the Dealer Receivables and Related Security.  Seller hereby represents and warrants to Purchaser as of the date of each sale hereunder that:

 

(i)                                  Each Dealer Receivable and all Related Security conveyed hereunder is conveyed to Purchaser free and clear of any lien.

 

(ii)                          With respect to each Dealer Receivable and all Related Security conveyed hereunder, all consents, licenses, approvals or authorizations of or registrations or declarations with any governmental authority required to be obtained, effected or given by Seller in connection with the conveyance of such Dealer Receivable or Related Security to Purchaser have been duly obtained, effected or given and are in full force and effect.

 

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(iii)                          Each Dealer Receivable and all Related Security conveyed hereunder was originated by Seller in compliance with all legal requirements and otherwise in accordance with its customary standards and practices applicable to comparable Vehicle sales generally to Dealers and Seller will continue to observe and comply with all covenants made in this Agreement and in the Sales and Service Agreement with respect thereto.

 

(iv)                          With respect to each Dealer Receivable and all Related Security conveyed hereunder, a finance source has been established by the related Dealer providing for an advance to such Dealer of an amount sufficient to cover in full the Invoice Amount of the related Vehicle (after giving effect to all prior advances on such finance source), which finance source has not been revoked or rescinded, and instructions for drafting against that finance source currently are in effect; provided, however, that the foregoing will not apply with respect to any Dealer that has established procedures acceptable to Seller providing for direct cash settlement by such Dealer to cover in full the Invoice Amount of the related Vehicle.

 

(c)                               Survival; Notice of Breach.  The representations and warranties set forth in this Section 4 will survive the transfer and assignment of the Dealer Receivables and Related Security to Purchaser.  Upon discovery by Seller or Purchaser of a breach of any of the representations, warranties or covenants set forth in this Section 4 or elsewhere in this Agreement, the party discovering such breach will give prompt written notice to the other party.

 

(d)                             Remedies for Breach.  Within 60 days of its discovery or its receipt of notice of any breach of representation, warranty or covenant that materially and adversely affects the value of any Dealer Receivable or Related Security, Seller will promptly cure such breach in all material respects or, if such breach cannot be cured, Seller will repurchase such Dealer Receivable and Related Security at a price equal to the Unadjusted Purchase Price paid by Purchaser in connection with the purchase of such Dealer Receivable.

 

5.                                    Indemnification.  Seller will defend, indemnify, and hold harmless Purchaser from and against any and all costs, expenses, losses, damages, claims and liabilities arising out of or resulting from (i) any breach of any of Seller’s representations, warranties and covenants contained in this Agreement and (ii) the negligence, willful misfeasance or bad faith of Seller in the performance of its duties under this Agreement or by reason of reckless disregard of Seller’s obligations and duties under this Agreement, to the extent caused thereby; provided, however, that any indemnification amounts owed pursuant to this Section 5 with respect to a Dealer Receivable will give effect to and not be duplicative of any repurchase amounts paid by Seller pursuant to Section 4(d) of this Agreement.  These indemnity obligations will be in addition to any obligation that Seller may otherwise have.

 

6.                                    Miscellaneous.

 

(a)                               This Agreement will be deemed to have been made under, and will be governed by and construed according to the laws of the State of Michigan, including matters of construction, validity and performance.

 

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(b)                              The terms and conditions of this Agreement may not be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is asserted, and then such modification, waiver or consent will be effective only in the specific instance and for the specific purpose given.

 

(c)                               This Agreement may not be assigned by Seller without the prior consent of Purchaser.  Purchaser may assign its rights, remedies, powers and privileges under this Agreement to any of its affiliates and to one or more trusts or other vehicles established in connection with securitization transactions.

 

(d)                             Seller and Purchaser each agree to do and perform, from time to time, any and all acts and to execute any and all further instruments required or reasonably requested by the other party to more fully effect the purposes of this Agreement.

 

(e)                               This Agreement will inure to the benefit of and be binding upon the parties hereto and any other beneficiaries (including noteholders or other investors in a securitization trust) and their respective successors and permitted assigns.  Except as otherwise provided in this Agreement, no other person will have any right or obligation hereunder.

 

 

	
FORD   MOTOR COMPANY
    	
 
    	
FORD   MOTOR CREDIT COMPANY LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By
    	
/s/   David Webb
    	
 
    	
By
    	
/s/   Dale Jones
    	
 
    
	
 
    	
Name:   David Webb
    	
 
    	
 
    	
Name:   Dale Jones
    
	
 
    	
Title:   Assistant Treasurer
    	
 
    	
 
    	
Title:   Executive Vice President
    

 

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