SKYLINE AUTO CENTER, INC.
Participation Agreement
This Participation Agreement (this Agreement) is entered into as of the belowdate, between SKYLINE AUTO CENTER, INC., a California Corporation(SKYLINE) and the undersigned party ______(Participant) with referenceto the following:
WITNESSETH:
A.Skyline Auto Center, Inc. has made or proposes to commit, upon certain
terms and conditions, vehicle loans to individuals identified therein
(Borrower(s)), pursuant to the Loan Agreement(s) (as hereafter renewed,
extended, amended, or supplemented, the Loan Agreement(s)) between
Skyline Auto Center, Inc and the Borrower(s).
B. Participant has been furnished a copy of the Loan Agreement(s) and the
other documents and instruments described on Exhibit A attached hereto
(collectively, the Loan Papers) and has agreed to purchase a ratable
participation in, and to assume a ratable part of the aggregate obligations
of Skyline Auto Center, Inc with respect to, the Loan Papers for the purchase
price and in the percentage amount indicated below (hereinafter referred to
as Participant's Pro Rata Part):
NOW THEREFORE, in consideration of the premises and for other good andvaluable consideration, the receipt and adequacy of which are hereby acknowledged,
Skyline Auto Center, Inc and Participant hereby agree as follows:
Section 1. Participation. Skyline Auto Center, Inc hereby sells, transfers, andassigns to Participant, and Participant hereby purchases and accepts from Skyline Auto
Center, Inc., an undivided participation interest in the Loan Papers and the loans made and to be made pursuant thereto, equal to Participant's Pro Rata Part.
Section 2. Funds. Skyline Auto Center, Inc. shall notify Participant to fundhereunder. On said date, Participant shall pay to Skyline Auto Center, Inc. Participants Pro Rata Part thereof in funds available for immediate use by Skyline Auto Center, Inc.
Section 3. Credit. Except as expressly provided herein to the contrary, Skyline
Auto Center, Inc. shall promptly credit to Participant the Participant's Pro Rata Part of each payment of principal or interest received by Skyline Auto Center, Inc. under the Loan Papers. Except for the obligation of Skyline Auto Center, Inc. to account for payments received by it, the sale and purchase of the participation hereunder shall be without recourse on or representation or warranty by, Skyline Auto Center, Inc.
Section 4. Information. To the extent not already available to Participant,
Skyline Auto Center, Inc. shall use its best efforts to provide Participant, promptly after
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Skyline Auto Center, Inc. receipt of Participant's written request therefore, suchinformation as is then in Skyline Auto Center, Inc. possession in respect of the current
status of principal and interest payments under the Loan Papers and in respect of the current status ofaccrual of interest under the Loan Papers; provided that nothing contained in thisparagraph shall impose any liability upon Skyline Auto Center, Inc. for its failure toprovide Participant any of such information except for Skyline Auto Center, Inc. own badfaith, willful misconduct, or gross negligence; and provided further, that Skyline AutoCenter, Inc. shall not be obligated to provide Participant with any information in violationof applicable law or any contractual restrictions on the disclosure thereof.
Section 5. Rights Under Loan Papers. Except as expressly provided herein tothe contrary, all rights pursuant to the Loan Papers or otherwise and all collateral (if any)held by Skyline Auto Center, Inc. to secure payment of the obligations of Borrower(s)
under the Loan Papers shall be so held (and such rights shall be exercised or not exercisedat the sole option of Skyline Auto Center, Inc. and without the consent of Participant) forthe ratable benefit of Skyline Auto Center, Inc. and Participant and Participant shall haveno right or responsibility to exercise such rights or to require Skyline Auto Center, Inc. toexercise such rights. Participant hereby acknowledges and agrees that neither hisAgreement nor the participation created hereby confers on Participant any right to voteon, approve, or sign amendments or waivers of the Loan Agreement or any of the otherLoan Papers, or any other independent benefit of any legal or equitable right, remedy, orother claim under the Loan Agreement or any of the other Loan Papers, except asotherwise provided in the Loan Papers.
Section 6. Application of Sums Collected. Except as expressly providedherein to the contrary, if either Skyline Auto Center, Inc. or Participant ever receives(pursuant to the Loan Papers or by voluntary payment, exercise of setoff or banker's lien,counterclaim, cross-action, realization, on or with respect to collateral, of any, orotherwise) any sum applied to the obligations of the Borrowers under the Loan Papers,each sum shall be shared in a manner so that Participant receives (or retain) up to, but notin excess of, its Pro Rata Part thereof.
Section 7. Collection Costs. Participant shall pay its Pro Rata Part of allreasonable attorneys' fees, administrative overhead, and other expenses incurred bySkyline Auto Center, Inc. in connection with enforcement of the obligations ofBorrower(s) under the Loan Papers, and Participant shall be entitled to a Pro Rata Part ofany payments subsequently received by Skyline Auto Center, Inc. with respect to suchfees andexpenses.
Section 8. Skyline Auto Center, Inc. Share of Collection Costs. Except asexpressly provided herein to the contrary, nothing herein shall be deemed (a) to giveeither Skyline Auto Center, Inc. or Participant any advantage over the other with respectto reimbursement for or other payment on account of any of Borrower's obligations under
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the Loan Papers or of any attorneys' fees, administrative overhead or expenses incurred byeither of them in connection with enforcement of the obligations of Borrowers under anyLoan Paper, or (b) to relieve either Skyline Auto Center, Inc. or Participant from
absorbing its Pro Rata Part of any losses sustained with respect to the amount of any of
the Borrowers' obligations under the Loan Papers, except to the extent unilateral actions
or inactions by either party results in any credit, allowance, setoff, defense, orcounterclaim solely with respect to all or any part of such party's Pro Rata Part of any
Borrower's obligations under the Loan Papers.
Section 9. Repayment of Sums Collected if Required. Skyline Auto Center, Inc. will be solely responsible to repay any sums paid to Skyline Auto Center,Inc. by any Borrower(s) and distributed by Skyline Auto Center, Inc. to Participant whichSkyline Auto Center, Inc. shall be required to return to such Borrower(s) or to anyreceiver, trustee, or custodian for Borrower(s).
Section 10.Participant Representations. Participant represents and warrantsthat (a) it has independently reviewed the Loan Papers and all other documents relatedthereto in the possession of Skyline Auto Center, Inc. and requested by Participant, andthat there shall be no recourse on, or any liability incurred by, Skyline Auto Center, Inc.for any misstatement (whether material or immaterial) or omission (whether negligent orotherwise) of any person contained in any such documents or otherwise, (b) Participanthas conducted, to the extent it deemed necessary, any independent investigation of
Borrower(s), including, without limitation, an investigation relating to creditworthiness ofBorrower(s), and the risk involved to Participation in the advance of its funds pursuant tothe Loan Agreement. Prior to the execution of any Loan Papers, Skyline Auto Center, Inc.will verify the credit worthiness all Borrowers.
Section 11. Good Faith Actions. Neither Skyline Auto Center, Inc. nor any of
its officers, employees, or agents shall be liable for any action taken or omitted to be takenby it or them under this Agreement or any Loan Papers in good faith and believed by it orthem to be within the discretion or power conferred upon it or them by this Agreement orany Loan Paper, or be responsible for the consequences of any error of judgment. SkylineAuto Center, Inc. will exercise the same care in administering the Loan Papers and thecollection from Borrowers as it exercises with respect to similar transactions entered intosolely for its own account and shall otherwise have no liability or responsibility toParticipant except for actions taken or omitted to be taken or omitted to be taken bySkyline Auto Center, Inc. which constitute gross negligence or willful misconduct.
Section 12. Securities Law. Participant represents and warrants to Skyline Auto
Center, Inc. that (a) Participant does not consider the acquisition of its participationhereunder to constitute the "purchase" or "sale" of a "security" within the meaning of the
Securities Act of 1933, the Securities Exchange Act of 1934 or Rule 10b-5 promulgatedthere-under, the Trust Indenture Act of 1939, the Securities Act of the State of California,any other applicable securities statute or law, or any rule or regulation under any of the
foregoing (collectively, as amended, the Acts), (b) such participation merely constitutes a-3-
commercial transaction by Participant with Skyline Auto Center, Inc. regarding
Participant's Pro Rata Part of the obligations of Borrower(s) under the Loan Papers and
does not represent an "investment" (as that term is commonly understood) in Skyline AutoCenter, Inc. or Borrower(s), (c) Participant is purchasing its participation hereunder for itsown account in respect of a commercial transaction made in the ordinary course of itsbusiness and not with a view to or in connection with any subdivision, resale, ordistribution thereof, and (d) Participant is engaged in the business of entering intocommercial transactions (including transactions of the nature contemplated herein and inthe Loan Papers), can bear the economic risk related to the purchase of the same, and hashad access to all information deemed necessary by it in making its decision whether or notto purchase the same.
Section 13. No Loans. No amount paid by Participant to purchase anyparticipation in the obligations of Borrower(s) under the Loan Papers shall be considereda loan by Participant to Skyline Auto Center, Inc. Skyline Auto Center, Inc. shall have noobligation to repurchase the participations sold under this Agreement upon any default byany Borrower(s) under any of its obligations or otherwise.
Section 14. Loan Paper Modifications. Skyline Auto Center, Inc. shall beentitles, at its option, from time to time at any time, to enter into any amendment of, orwaive compliance with the terms of, any Loan Paper without obtaining prior approvalfrom Participant, so long as Skyline Auto Center, Inc. exercises the same degree of care,skill, caution, and prudence it customarily exercises in connection with transactions for itsown account; provided that (a) without obtaining Participant's prior written approval(which approval shall not be unreasonably withheld or delayed), Skyline Auto Center, Incsill not enter into or execute such amendment or waiver, the result of which would be toextend the final maturity of the payment obligations of Borrower(s) under the Loan Papersor to reduce the rate of interest of amount of fees payable under the Loan Papers or torelease any collateral for the obligations of Borrower(s) under the Loan Papers, (b)without obtaining the prior written consent of Participant, Skyline Auto Center, Inc. willnot enter into or execute any other such amendment or waiver with respect to the LoanPapers, the result of which would be to waive the effects of default by Borrower thereunder,and (c) subject to the indemnity provisions hereof, upon receiving written requestsfromParticipant, Skyline Auto Center, Inc. shall exercise the remedies available toSkyline Auto Center, Inc. under the Loan Papers.
Section 15. No Partnership or Joint Venture. Neither the execution of this
Agreement, the sharing in the Loan Papers, nor any agreement to share in profits or loses
arising as a result of the transactions contemplated hereby is intended to be or to create,and the foregoing shall be construed not to be or to create, any partnership, join venture,or other joint enterprise between Skyline Auto Center, Inc. and Participant; and neither theexecution of this Agreement is intended to be or to create any express, implied, orconstructive trust or other fiduciary relationship between Skyline Auto Center, Inc. andParticipant.
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Section 16.Miscellaneous.
16.1 Governing Laws.
This Participation Agreement shall be interpreted and construed in accordance with the laws of the State of California.
16.2 Arbitration of All Disputes.
In the event of any dispute, question or disagreement arising out of or relating to this Participation Agreement or breach thereof, the parties hereto shall use their best efforts to settle such disputes, claims, questions or disagreement. If the parties do not reach a solution, then either party may file for arbitration, which shall be the sole forum for resolving such matter. Both parties are entitled to have an attorney represent them in the arbitration. All costs or fees, to include attorney’s fees associated with the submission of any and all disputes to arbitration as provided herein, shall be the sole and exclusive responsibility of the party requesting such Arbitration.
16.3 Severability.
If any provision of this Participation Agreement is prohibited by or under the laws of any jurisdiction in which this Agreement may be used or to which it may be applicable, said provision shall be, as to said jurisdiction, ineffective to the extent of such prohibition, without invalidating thereby any of the remaining provisions of this Agreement.
16.4 Prior Agreements.
This Participation Agreement supersedes and cancels all prior discussions, Agreements and understandings with respect to the subject matter hereof between the parties, written oral or implied.
16.5 Entire Agreement.
This Participation Agreement evidences the entire Agreement of the parties, and may not be changed except by a written Agreement signed by the parties hereto.
16. 6 Notices.
Any notice required or contemplated by this Participation Agreement shall be in writing, delivered by registered mail with return receipt requested, addressed to the parties at their addresses here in below set forth, or at such other address as may from time to time be substituted there for by notice in writing sent by the party changing its address.
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If to SKYLINE AUTO CENTER, INC.:
If to PARTICIPANTS :
16.7 Non-Waiver and Amendment.
Failure by either party to enforce or take advantage of any provision hereof shall not constitute a waiver of the right to subsequently enforce or take advantage of such provision.
16.8 Time is of the Essence.
Time is of the essence with respect to this Participation Agreement and each and every provision hereof.
16.9 Construction.
SKYLINE and PARTICIPANTS warrant and represent that in executing this Participant Agreement, they each have relied upon legal advice of counsel of their own choice, and that the terms of this Agreement have been read and its consequences have been completely explained to them by said counsel. Each and every provision of this Agreement shall be construed as though both of the parties participated equally in the drafting of the said Agreement, and any rule of construction that a document is to be construed against the drafting party shall not be applicable to this Agreement.
16.10 Obligations and Rights re Assign ability.
The provisions of this Participation Agreement shall inure to the benefit of and be binding upon the parties hereto, their heirs, legal representatives, successors, and assigns. The obligations of SKYLINE and the PARTICIPANTS under this Agreement shall be personal and not assignable or delegable in any manner whatsoever.
Section 17. Approval.
In witness whereof, each of the parties has caused this Participation Agreement to be executed. Each party hereto warrants that theyhaveauthority to sign this Agreement on behalf of themselves individually and any corporation or business entity whom they represent insofar as this Agreement is concerned.
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INVESTED AMOUNT: $ ______
ATTACH EXIBIT A
EXECUTED on:May 1, 2012
Skyline Auto Center, Inc.: PARTICIPANT:
______
Douglas Garcia, President ______
Skyline Auto Center, Inc., a Investor
California Corporation
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