EXHIBIT 10.1
CREDIT AGREEMENT
Dated as of August 10, 2000
between
SONIC AUTOMOTIVE, INC.
as Borrower
and
FORD MOTOR CREDIT COMPANY,
CHRYSLER FINANCIAL COMPANY, L.L.C. and
the other Lenders party hereto,
as the Lenders
and
FORD MOTOR CREDIT COMPANY,
as Agent.
TABLE OF CONTENTS
Section Page
------- ----
Article I: Definitions 3
Article II: Loan Facilities 23
Article III: Conditions Precedent 28
Article IV: Representations and Warranties 30
Article V: Covenants 36
Article VI: Events of Default 51
Article VII: Agent 54
Article VII: Acceleration, Waivers, 54
Amendments and Remedies
Article IX: General Provisions 54
Article X: Benefit of Agreement; 61
Assignments; Participations
Article Xi: Notices 62
Article XII: Counterparts 62
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EXHIBITS AND SCHEDULES
Exhibits
--------
EXHIBIT A -- Form of Note
EXHIBIT B -- Form of Borrowing Notice
EXHIBIT C-1 -- Form of Dealership Guaranty
EXHIBIT C-2 -- Form of Subsidiary Holding Company Guaranty
EXHIBIT C-3 -- Form of Non-Dealership Guaranty
EXHIBIT D-1 -- Form of Dealership Security Agreement
EXHIBIT D-2 -- Form of Subsidiary Holding Company Security Agreement
EXHIBIT D-3 -- Form of Non-Dealership Security Agreement
EXHIBIT E -- Closing Statement
EXHIBIT F -- Form of Officer's Certificate
EXHIBIT G -- Form of Waiver, Guaranty and Disbursement Agreement
Schedules
---------
Schedule 1.1.0 -- Irregular Franchise Agreements
Schedule 1.1.1 -- Permitted Existing Indebtedness
Schedule 1.1.2 -- Permitted Existing Investments
Schedule 1.1.3 -- Permitted Existing Liens
Schedule 1.1.4 -- Lender's Commitments
Schedule 1.1.5 -- Dealership Guarantors
Schedule 1.1.6 -- Non-Dealership Guarantors
Schedule 4.8 -- Subsidiaries
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CREDIT AGREEMENT
This Credit Agreement dated August 10, 2000 is entered into among SONIC
AUTOMOTIVE, INC., a Delaware corporation, (the "Borrower") FORD MOTOR CREDIT
COMPANY, a Delaware corporation, ("Ford Credit") CHRYSLER FINANCIAL COMPANY,
L.L.C., a Michigan limited liability company, ("Chrysler Financial"), the other
Lenders from time to time party hereto, and Ford Credit, as administrative agent
and collateral agent (in such capacity and together with any Successor Agent
appointed pursuant to Article VII, the "Agent") for the Secured Parties. The
parties hereto agree as follows:
ARTICLE I: DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings, applicable both to the singular and the
plural forms of the terms defined.
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or a Subsidiary of the Borrower (i) acquires any going business or all
or substantially all of the assets of any automobile dealership and/or related
operations (e.g. body shop and service repair centers), whether through purchase
of assets, merger or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions) at
least a majority (in number of votes) of the securities of such a corporation
which have ordinary voting power for the election of directors (other than
securities having such power only by reason of the happening of a contingency)
or a majority (by percentage of voting power) of the outstanding equity
interests of such an entity.
"Acquisition Documents" means all documents, instruments and agreements
entered into in connection with any Acquisition.
"Additional Subordinated Debt" means indebtedness of the Borrower which
(i) Required Lenders have determined to be sufficiently subordinate to the
payment of the Obligations, (ii) Required Lenders have consented to in writing,
and (iii) Required Lenders have agreed to deduct from the calculation of Total
Adjusted Debt (as defined herein).
"Advance" means any Advance made under Section 2.1 hereof or otherwise
deemed made under the Loan Documents.
"Adjusted Leverage Ratio" is defined in Section 5.4(F) hereof.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person is the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934) of greater than five percent (5%) or more of any class of voting
securities (or other voting interests) of the controlled Person or possesses,
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directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
Capital Stock, by contract or otherwise.
"Agent" has the meaning set forth in the recital of parties to this
Agreement.
"Agent's Account" means any account maintained in the name of the Agent
of which the Agent gives written notice to the Borrower or any Lender, as
applicable, is the Agent's Account.
"Agreement" means this Credit Agreement, as it may be amended, restated
or otherwise modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles in effect from time to time, applied in a manner consistent with that
used in preparing the financial statements referred to in Section 5.1(A) hereof,
provided, however, that with respect to the calculation of financial ratios and
other financial tests required by this Agreement, "Agreement Accounting
Principles" means generally accepted accounting principles as in effect as of
the date of this Agreement, applied in a manner consistent with that used in
preparing the financial statements referred to in Section 5.1(A) hereof;
provided, further, however, all pro forma financial statements reflecting
Acquisitions shall be prepared in accordance with the requirements established
by the Commission for acquisition accounting for reporting acquisitions by
public companies (whether or not such Acquisitions are required to be publicly
reported).
"Applicable LIBOR Rate" means as of any Payment Date, the LIBOR Rate
plus two and fifty hundredths percent (2.50%) per annum."
"Asset Sale" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including by way of a sale-leaseback transaction and including the sale or
other transfer of any of the Equity Interests of any Subsidiary of such Person).
"Assignment and Acceptance" has the meaning set forth in Section 10.3
(a) hereof.
"Authorized Officer" means any executive officer or assistant treasurer
of the Borrower, acting singly.
"Benefit Plan" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multi-employer Plan) in respect of which the Borrower or
any other member of the Controlled Group is, or within the immediately preceding
six (6) years was, an "employer" as defined in Section 3(5) of ERISA.
"Borrower" means Sonic Automotive, Inc., a Delaware corporation,
together with its successors and assigns, including a debtor-in-possession on
behalf of the Borrower.
"Borrower Pledges" means each of (i) that certain Pledge Agreement,
dated as of even date herewith, from the Borrower to the Agent pursuant to which
the Borrower pledges the Capital Stock of certain corporate Subsidiaries, as it
may be amended, restated or otherwise modified and in effect from time to time,
(ii) that certain Pledge Agreement, dated as of even
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date herewith, from the Borrower to the Agent pursuant to which the Borrower
pledges the Capital Stock of certain limited liability company Subsidiaries, as
it may be amended, restated or otherwise modified and in effect from time to
time and (iii) any other pledge of Capital Stock delivered by a member of the
Sonic Group from time to time to the Agent.
"Borrower Security Agreement" means that certain Security Agreement,
dated as of even date herewith from the Borrower to the Agent pursuant to which
the Borrower has pledged all of its assets to secure the Obligations hereunder,
as it may be amended, restated or otherwise modified and in effect from time to
time.
"Borrowing" means a borrowing consisting of either (i) simultaneous
Advances by the Lenders pursuant to Section 2.1 (A), (ii) any Advance by Ford
Credit under Section 2.1 (B) or (iii) Advances collectively made by Ford Credit
and the other Lenders after giving effect to purchases by such Lenders pursuant
to Section 2.2 (C).
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.4 hereof.
"Business Day" means a day (other than a Saturday or Sunday) on which
banks are open for business in both Dearborn, Michigan and Charlotte, North
Carolina.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures (other than in connection with Permitted Acquisitions), whether
paid in cash or accrued as liabilities, including Capitalized Lease Obligations,
by the Borrower and its Subsidiaries during that period that, in conformity with
Agreement Accounting Principles, are required to be included in or reflected by
the property, plant, equipment or similar fixed asset accounts reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited), (iv) in the case of a limited liability
company, any and all membership interests or other equivalents (however
designated) and (v) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Capitalized Lease" of a Person means any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be capitalized
on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank
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organized under the laws of the United States, any state thereof, the District
of Columbia, or its branches or agencies; (iii) shares of money market, mutual
or similar funds having assets in excess of $100,000,000.00 and the investments
of which are limited to investment grade securities (i.e., securities rated at
least Baa by ▇▇▇▇▇'▇ Investors Service, Inc. or at least BBB by Standard &
Poor's Corporation); (iv) commercial paper of United States and foreign banks
and bank holding companies and their subsidiaries and United States and foreign
finance, commercial industrial or utility companies which, at the time of
acquisition, are rated A-1 (or better) by Standard & Poor's Ratings Group or P-1
(or better) by ▇▇▇▇▇'▇ Investors Services, Inc.; (v) corporate bonds,
mortgage-backed securities and municipal bonds in each case of a domestic issuer
rated at the date of acquisition not less than Aaa by ▇▇▇▇▇'▇ Investor Services,
Inc. or AAA by Standard & Poor's Corporation with maturities of no more than two
(2) years from the date of acquisition; and (vi) money market funds with respect
to which not less than 90% of such funds are invested in the type of investments
specified in clauses (i) through (v) above; provided, unless the context
otherwise requires, that the maturities of such Cash Equivalents shall not
exceed 365 days.
"Change of Control" means an event or series of events by which:
(i) the Principals and their Related Parties cease to own,
directly or indirectly, more than fifty percent (50%) of the combined
voting power of the Borrower's Capital Stock ordinarily having the
right to vote at an election of directors;
(ii) during any period of 24 consecutive calendar months,
individuals:
(a) who were directors of the Borrower on the first
day of such period, or
(b) whose election or nomination for election to the
board of directors of the Borrower was recommended or approved
by at least a majority of the directors then still in office
who were directors of the Borrower on the first day of such
period, or whose election or nomination for election was so
approved,
shall cease to constitute a majority of the board of directors of the
Borrower; and
(iii) the Borrower consolidates with or merges into another
corporation or conveys, transfers or leases all or substantially all of
its property to any Person, or any corporation consolidates with or
merges into the Borrower, in either event pursuant to a transaction in
which the outstanding Capital Stock of the Borrower is reclassified or
changed into or exchanged for (A) cash or Cash Equivalents or (B)
securities, and the holders of the Capital Stock in the Borrower
immediately prior to such transaction do not, as a result of such
transaction, own, directly or indirectly, more than fifty percent (50%)
of the combined voting power of the Borrower's Capital Stock or the
Capital Stock of its successor entity in such transaction.
"Charter Documents" means (i) in the case of a corporation, such
entity's articles of incorporation and by-laws, (ii) in the case of a limited
liability company, such entity's articles of organization and operating
agreement or equivalent (however designated), (iii) in the case of a
partnership, such entity's partnership agreement or equivalent (however
designated) and (iv) in the case of an association or other business entity not
described above, such entity's founding documents (however designated).
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"Chrysler Financial" means Chrysler Financial Company, L.L.C., a
Michigan limited liability company, and its successors and assigns.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time, or any successor statute.
"Collateral" means all property and interests in property now owned or
hereafter acquired by the Borrower or any of its Subsidiaries in or upon which a
security interest, lien or mortgage is granted to the Agent, whether under the
Borrower Security Agreement, under any of the other Collateral Documents or
under any of the other Loan Documents.
"Collateral Documents" means all agreements, instruments and documents
executed in connection with this Agreement that are intended to create or
evidence Liens to secure the Obligations, including, without limitation, the
Borrower Security Agreement, the Borrower Pledges, the Subsidiary Holding
Company Pledges, the Cross Agreement, the Waiver, Guaranty and Disbursement
Agreement, Sonic Financial's Pledge, each Dealership Security Agreement,
Subsidiary Holding Company Security Agreement and all other security agreements,
mortgages, deeds of trust, loan agreements, notes, guaranties, subordination
agreements, pledges, powers of attorney, consents, assignments, contracts, fee
letters, notices, leases, financing statements and all other written matter
whether heretofore, now, or hereafter executed by or on behalf of the Borrower
or any of its Subsidiaries and delivered to the Agent, together with all
agreements and documents referred to therein or contemplated thereby.
"Commission" means the Securities and Exchange Commission and any
Person succeeding to the functions thereof.
"Commitment" means (a) with respect to any Lender other than Ford
Credit at any time, the amount set forth opposite such Lender's name on Schedule
I hereto under the caption "Commitment" or, if such Lender has entered into one
or more Assignment and Acceptances, set forth for such Lender in the Register
maintained by the Agent pursuant to Section 9.2,10.3, and (b) with respect to
Ford Credit at any time, the difference between the Maximum Availability minus
the aggregate outstanding sum of the Advances made by all Lenders (whether
pursuant to Section 2.1(A), 2.1(B), 2.2(C) or otherwise) at such time, in either
case as any such amount may be reduced pursuant to Section 2.5.
"Consolidated Net Worth" means, at a particular date, the amount by
which the total consolidated assets of the Borrower and its consolidated
Subsidiaries exceeds the total consolidated liabilities of the Borrower and its
consolidated Subsidiaries.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls ("PCBs"), or any
constituent of any such substance or waste, and includes but is not limited to
these terms as defined in Environmental, Health or Safety Requirements of Law.
"Contingent Obligation", as applied to any Person, means any
Contractual Obligation, contingent or otherwise, of that Person with respect to
any Indebtedness of another or other
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obligation or liability of another, including, without limitation, any such
Indebtedness, obligation or liability of another directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made or discounted or sold with recourse by that Person,
or in respect of which that Person is otherwise directly or indirectly liable,
including Contractual Obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge thereof (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain solvency, assets,
level of income, or other financial condition, or to make payment other than for
value received.
"Contractual Obligation" as applied to any Person, means any material
provision of any equity or debt securities issued by that Person or any material
indenture, mortgage, deed of trust, security agreement, pledge agreement,
guaranty, contract, undertaking, agreement or instrument, in each case in
writing, to which that Person is a party or by which it or any of its properties
is bound, or to which it or any of its properties is subject.
"Contribution Agreement" means that certain Contribution Agreement,
dated as of even date herewith, and as such agreement may be further amended,
restated or otherwise modified and in effect from time to time.
"Controlled Group" means the group consisting of (i) any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as the Borrower; (ii) a partnership or
other trade or business (whether or not incorporated) which is under common
control (within the meaning of Section 414(c) of the Code) with the Borrower;
and (iii) a member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as the Borrower, any corporation described in clause
(i) above or any partnership or trade or business described in clause (ii)
above.
"Controlled Subsidiary" of any Person means a Subsidiary of such Person
(i) 80% or more of the total Equity Interests or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more wholly-owned Subsidiaries of such Person and (ii)
of which such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies, whether through the ownership
of voting securities, by agreement or otherwise.
"Cross Agreement" means that certain Cross Default Agreement dated as
of even date herewith, as such agreement may be amended, restated or otherwise
modified from time to time.
"Current Assets" means, at a particular date, all amounts which would,
in conformity with Agreement Accounting Principles, be included under current
assets on a balance sheet as at such date.
"Current Liabilities" means, at a particular date, all amounts which
would, in conformity with Agreement Accounting Principles, be included under
current liabilities on a balance sheet as at such date.
"Current Ratio" is defined in Section 5.4(C) hereof.
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"Customary Permitted Liens" means:
(i) Liens (other than Environmental Liens, Liens in favor of
the IRS and Liens in favor of the PBGC) with respect to the payment of
taxes, assessments or governmental charges in all cases which are not
yet due or (if foreclosure, distraint, sale or other similar
proceedings shall not have been commenced) which are being contested in
good faith by appropriate proceedings properly instituted and
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
Agreement Accounting Principles;
(ii) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
similar Liens imposed by law created in the ordinary course of business
for amounts not yet due or which are being contested in good faith by
appropriate proceedings properly instituted and diligently conducted
and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with Agreement Accounting
Principles;
(iii) Liens (other than Environmental Liens, Liens in favor of
the IRS and Liens in favor of the PBGC) incurred or deposits made, in
each case, in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders, sales,
contracts (other than for the repayment of borrowed money), surety,
appeal and performance bonds; provided that (A) all such Liens do not
in the aggregate materially detract from the value of the Borrower's or
such Subsidiary's assets or property taken as a whole or materially
impair the use thereof in the operation of the businesses taken as a
whole, and (B) with respect to Liens securing bonds to stay judgments
or in connection with appeals do not secure at any time an aggregate
amount exceeding $2,500,000.00;
(iv) Liens arising with respect to zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar charges or
encumbrances on the use of real property which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Borrower or
any of its Subsidiaries;
(v) Liens of attachment or judgment with respect to judgments,
writs or warrants of attachment, or similar process against the
Borrower or any of its Subsidiaries which do not constitute an Event of
Default under Section 6.1(h) hereof; and
(vi) any interest or title of the lessor in the property
subject to any operating lease entered into by the Borrower or any of
its Subsidiaries in the ordinary course of business.
"Dealership Guarantors" means each entity listed on Schedule 1.1.5
hereof providing a Dealership Guaranty and a Dealership Security Agreement to
the Agent, and each other entity providing a Dealership Guaranty and a
Dealership Security Agreement to Agent pursuant to Section 5.2 (L) of this
Agreement, and their respective successors and assigns.
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"Dealership Guaranty" means each Guaranty in the form attached hereto
as Exhibit C-1, provided by a Sonic Dealership to the Agent, as the same may be
amended, modified, supplemented, reaffirmed and/or restated, and as in effect
from time to time.
"Dealership Security Agreement" means any Security Agreement in the
form attached hereto as Exhibit D-1, pursuant to which a Sonic Dealership grants
the Agent a security interest in all of its assets, as the same may be amended,
modified, supplemented and/or restated, and as in effect from time to time.
"Debt Offering Notes" means, collectively, each of these certain
promissory notes from the Borrower to various investors issued in accordance
with and pursuant to the terms of either Indenture.
"Decision Period" is defined in Section 5.2(G) hereof.
"Decision Reserve" is defined in Section 5.2(G) hereof.
"Defaulted Amount" means, with respect to any Lender, any amount
required to be paid by such Lender to the Agent or any other Lender hereunder or
under any other Loan Document at or prior to such time that has not been so paid
as of such time. In the event that a portion of a Defaulted Amount shall be
deemed paid pursuant to Section 2.15, the remaining portion of such Defaulted
Amount shall be considered a Defaulted Amount originally required to be paid
hereunder or under any other Loan Document on the same date as the Defaulted
Amount so deemed paid in part.
"Defaulted Advance" means, with respect to any Lender at any time, the
portion of any Advance which such Lender has not purchased upon demand by Ford
Credit pursuant to Section 2.1 (B) (2) (b) or which otherwise is required to be
made by such Lender at or prior to such time that has not been made by such
Lender as of such time.
"Defaulting Lender" means, at any time, any Lender that, at such time,
(a) owes a Defaulted Advance or (b) shall take any action or be the subject of
any action or proceeding of a type described in Section 6.1(f) or 6.1(g).
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the Termination Date.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"Dollar" and "$" means dollars in the lawful currency of the United
States.
"EBITDA" means, for any period, on a consolidated basis for the
Borrower and its Subsidiaries, the sum of the amounts for such period, without
duplication, of:
(i) Net Income,
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plus (ii) Interest Expense, to the extent deducted in
computing Net Income,
plus (iii) charges against income for foreign, federal,
state and local taxes, to the extent deducted in
computing Net Income,
plus (iv) depreciation expense, to the extent deducted in
computing Net Income,
plus (v) amortization expense, including, without
limitation, amortization of goodwill, other
intangible assets and Transaction Costs, to the
extent deducted in computing Net Income,
plus (vi) other non-cash charges classified as long-term
deferrals in accordance with Agreement Accounting
Principles, to the extent deducted in computing Net
Income,
minus (vii) all extraordinary gains (and any nonrecurring
unusual gains arising in or outside of the ordinary
course of business not included in extraordinary
gains determined in accordance with Agreement
Accounting Principles which have been included in the
determination of Net Income).
EBITDA shall be calculated for any period by including the actual amount for the
applicable period ending on such day, including the EBITDA attributable to
Permitted Acquisitions occurring during such period on a pro forma basis for the
period from the first day of the applicable period through the date of the
closing of each Permitted Acquisition, utilizing (a) where available or required
pursuant to the terms of this Agreement, historical audited and/or reviewed
unaudited financial statements obtained from the seller, broken down by fiscal
quarter in the Borrower's reasonable judgment or (b) unaudited financial
statements (where no audited or reviewed financial statements are required
pursuant to the terms of this Agreement) reviewed internally by the Borrower,
broken down in the Borrower's reasonable judgment.
"EBITDAR" means, for any period, on a consolidated basis for the
Borrower and its Subsidiaries, the sum of the amounts for such period, without
duplication, of (i) EBITDA and (ii) Rentals.
"Effective Date" is defined in Section 1.3 hereof.
"Eligible Assignee" is defined in Section 10.3 hereof.
"Environmental, Health or Safety Requirements of Law" means all
Requirements of Law derived from or relating to federal, state and local laws or
regulations relating to or addressing pollution or protection of the
environment, or protection of worker health or safety, including, but not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 et seq., the Occupational Safety and Health Act of 1970,
29 U.S.C. ss. 651 et seq., and the Resource Conservation and Recovery Act of
1976, 42 U.S.C. ss.
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6901 et seq., in each case including any amendments thereto, any successor
statutes, and any regulations or guidance promulgated thereunder, and any state
or local equivalent thereof.
"Environmental Property Transfer Act" means any applicable requirement
of law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called "Industrial Site Recovery
Act" or "Responsible Property Transfer Act."
"Equipment" means all of the Borrower's and each Dealership Guarantor's
present and future furniture, machinery, service vehicles, supplies and other
equipment and any and all accessions, parts and appurtenances attached to any of
the foregoing or used in connection therewith, and any substitutions therefor
and replacements, products and proceeds thereof.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.
"Event of Default" means an event described in Article VI hereof.
"Fair Value" means (a) with respect to the Capital Stock of the
Borrower, the closing price for such Capital Stock on the trading date
immediately preceding the date of the applicable acquisition agreement; and (b)
with respect to other assets, the value of the relevant asset as of the date of
acquisition or sale determined in an arm's-length transaction conducted in good
faith between an informed and willing buyer and an informed and willing seller
under no compulsion to buy.
"Fixed Charge Coverage Ratio" is defined in Section 5.4(D) hereof.
"Floor Plan Indebtedness" means any and all loans, advances, debts,
liabilities and obligations, owing by a Sonic Dealership to GMAC or any Lender
or any Affiliate or Subsidiary thereof, of any kind or nature, present or
future, arising under a Wholesale Line, whether or not evidenced by any note,
guaranty or other instrument, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty, indemnification, or
in any other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, attorneys' fees and disbursements,
paralegals' fees (in each case whether or not allowed), and any other sum
chargeable to the Borrower, a Sonic Dealership or Sonic Financial under this
Agreement or any other Loan Document.
"Ford Credit" means Ford Motor Credit Company, a Delaware corporation,
and its successors and assigns.
12
"Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Gross Negligence" means recklessness, the absence of the slightest
care or the complete disregard of consequences. Gross Negligence does not mean
the absence of ordinary care or diligence, or an inadvertent act or inadvertent
failure to act. If the term "gross negligence" is used with respect to the
Lender or any indemnitee in any of the other Loan Documents, it shall have the
meaning set forth herein.
"Guarantor" means each Dealership Guarantor, Subsidiary Holding Company
Guarantor and Non-Dealership Guarantor.
"Guaranty" means each Dealership Guaranty, Subsidiary Holding Company
Guaranty and Non-Dealership Guaranty.
"Hedging Obligations" of a Person means any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefore), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Indebtedness" of any Person means, without duplication, such Person's
(a) obligations for borrowed money, (b) obligations representing the deferred
purchase price of property or services (other than accounts payable arising in
the ordinary course of such Person's business payable on terms customary in the
trade), (c) obligations, whether or not assumed, secured by Liens or payable out
of the proceeds or production from property or assets now or hereafter owned or
acquired by such Person, (d) obligations which are evidenced by notes,
acceptances or other instruments, (e) Capitalized Lease Obligations, (f)
reimbursement obligations with respect to letters of credit (other than
commercial letters of credit) issued for the account of such Person, (g) Hedging
Obligations, (h) Off Balance Sheet Liabilities and (i) Contingent Obligations in
respect of obligations of another Person of the type described in the foregoing
clauses (a) through (h). The amount of Indebtedness of any Person at any date
shall be without duplication (i) the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability of any
such Contingent Obligations at such date and (ii) in the case of Indebtedness of
others secured by a Lien to which the property or assets owned or held by such
Person is subject, the lesser of the fair market value at such date of any asset
subject to a Lien securing the Indebtedness of others and the amount of the
Indebtedness secured.
"Indemnified Matters" is defined in Section 9.6(B) hereof.
"Indemnitees" is defined in Section 9.6(B) hereof.
13
"Indenture" means, collectively, (i) the Indenture dated as of July 1,
1998 and entered into by and among Borrower, certain of its Subsidiaries and
U.S. Bank Trust National Association, as trustee (the "1998 Indenture"), or (ii)
upon its execution and delivery, the Indenture to be entered into by and among
Borrower, certain of its Subsidiaries of Borrower and U.S. Bank Trust National
Association, as trustee, providing for the issuance of an aggregate of no more
than $150,000,000.00 of senior subordinated debt of the Borrower, which such
debt will be subordinated in right of payment to the Indebtedness under this
Agreement and the Notes, on terms identical to those in the 1998 Indenture (the
"2000 Indenture").
"Interest Expense" means, for any period, the total interest expense of
the Borrower and its consolidated Subsidiaries, whether paid or accrued
(including the interest component of Capitalized Leases, commitment and letter
of credit fees), but excluding interest expense not payable in cash (including
amortization of discount), all as determined in conformity with Agreement
Accounting Principles.
"Interest Reconciliation Date" is defined in Section 2.1 (B) hereof.
"Inventory" shall mean any and all motor vehicles, tractors, trailers,
service parts and accessories and other inventory of the Borrower and each
Dealership Guarantor.
"Investment" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of any Indebtedness, Equity Interests or other
securities, or of a beneficial interest in any Indebtedness, Equity Interests or
other securities, issued by any other Person, (ii) any purchase by that Person
of all or substantially all of the assets of a business conducted by another
Person, and (iii) any loan, advance (other than deposits with financial
institutions available for withdrawal on demand, prepaid expenses, accounts
receivable, advances to employees and similar items made or incurred in the
ordinary course of business) or capital contribution by that Person to any other
Person, including all Indebtedness to such Person arising from a sale of
property by such Person other than in the ordinary course of its business.
"Irregular Franchise Agreement" means any franchise agreement listed on
Schedule 1.1.0.
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Lenders" means, collectively, Ford Credit, and Chrysler Financial, and
their respective successors and Eligible Assignees; each of the Lenders may be
referred to individually as a "Lender."
"Lender's Commitment" means, with respect to any Lender at any time,
the amount set forth opposite such Lender's name on Schedule 1.1.4 hereto under
the caption "Commitment" or, if such Lender has entered into one or more
Assignment and Acceptances, set forth for such Lender in the Register maintained
by the Agent pursuant to Section 10.3 (b) hereof as such lender's "Commitment,"
as such amount may be reduced pursuant to Section 2.3.
14
"LIBOR Rate" means the monthly arithmetic average of the per annum
interest rate announced from time to time as the one month London Interbank
Offered Rates quoted each Monday for the previous Friday under the Money Rates
Column of the Wall Street Journal, or, if the Wall Street Journal is unavailable
for any reason, as published in such other publications as Lender may designate.
In the event such rate is not quoted on Monday for the previous Friday, the rate
quoted on the first business day of the week for the last business day of the
previous week shall be utilized.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, encumbrance or security agreement or preferential
arrangements of any kind or nature whatsoever (including, without limitation,
the interest of a vendor or lessor under any conditional sale, Capitalized Lease
or other title retention agreement).
"Loan Documents" means this Agreement, the Notes, the Sonic Guaranties,
the Collateral Documents and all other documents, instruments and agreements
executed in connection therewith or contemplated thereby, as the same may be
amended, restated or otherwise modified and in effect from time to time.
"Loan to Value Ratio" is defined in Section 5.4(G) hereof.
"Margin Stock" shall have the meaning ascribed to such term in
Regulation U.
"Material Adverse Effect" means a material adverse effect upon (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower, any Material Subsidiary of the
Borrower, or the Borrower and its Subsidiaries, taken as a whole, (b) the
ability of the Borrower or any of its Subsidiaries to perform their respective
obligations under the Loan Documents in any material respect, or (c) the ability
of the Lender to enforce in any material respect the Obligations or its rights
with respect to the Collateral.
"Material Subsidiary" means (a) any "Significant Subsidiary" as defined
in Regulation S-X issued pursuant to the Securities Act and the Exchange Act and
(b) any other Subsidiary of the Borrower which at any time comprises five
percent (5%) or more of the Borrower's Tangible Base Capital.
"Maximum Availability" means the lesser of (a) $500,000,000.00 and (b)
the sum of (1) the Scaled Assets of the Sonic Group, plus (2) fifty percent
(50%) of the Speedway Stock Value, and plus (3) $170,000,000.00, as either such
amount may be reduced pursuant to Section 2.3 hereof.
"Maximum Rate" means the maximum nonusurious interest rate under
applicable law.
"Minority Holder" means any holder of an Equity Interest in a
Subsidiary which such Equity Interest may not exceed 20% of the Capital Stock of
such Subsidiary.
"Multi-employer Plan" means a "Multi-employer Plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by either the Borrower or any member of the
Controlled Group.
15
"Net Income" means, for any period, the net earnings (or loss) after
taxes of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with
Agreement Accounting Principles.
"New Subsidiary" is defined in Section 5.3(F)(ii).
"Non-Dealership Guarantor" means each entity listed on Schedule 1.1.6
and each other Subsidiary which is not a Sonic Dealership or Subsidiary Holding
Company but which has been designated as a "Non-Dealership Guarantor" pursuant
to Section 5.2 (L) (ii).
"Non-Dealership Guaranty" means each Guaranty in the form attached
hereto as Exhibit C-3, provided by a Non-Dealership Guarantor to Agent, as the
same may be amended, modified, supplemented, reaffirmed and/or restated, and as
in effect from time to time.
"Non-Dealership Security Agreement" means each Security Agreement, in
the form attached hereto as Exhibit C-4, provided by a Non-Dealership Guarantor
to Agent, as the same may be amended, modified, supplemented, reaffirmed and/or
restated, and as in effect from time to time.
"Notes" means collectively, all promissory notes of the Borrower
payable to the order of a Lender, in substantially the form of Exhibit A hereto,
evidencing the indebtedness of the Borrower to such Lender, including any
amendment, restatement, modification, renewal, increase or replacement thereof.
"Obligations" means all Advances, debts, liabilities, obligations,
covenants and duties owing by the Borrower, a Non-Dealership Guarantor, a Sonic
Dealership or Sonic Financial to the Lenders or any Indemnitee, of any kind or
nature, present or future, arising under this Agreement, the Notes, the
Collateral Documents or any other Loan Document, whether or not evidenced by any
note, guaranty or other instrument, whether or not for the payment of money,
whether arising by reason of an extension of credit, loan, guaranty,
indemnification, or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The term includes, without
limitation, all interest, charges, expenses, fees, attorneys' fees and
disbursements, paralegals' fees (in each case whether or not allowed), and any
other sum chargeable to the Borrower, a Non-Dealership Guarantor, a Sonic
Dealership or Sonic Financial under this Agreement or any other Loan Document.
"Off Balance Sheet Liabilities" of a Person means (a) any repurchase
obligation or liability of such Person or any of its Subsidiaries with respect
to accounts or notes receivable sold by such Person or any of its Subsidiaries,
(b) any liability under any sale and leaseback transactions which do not create
a liability on the consolidated balance sheet of such Person, (c) any liability
under any financing lease or so-called "synthetic" lease transaction, or (d) any
obligations arising with respect to any other transaction which is the
functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the consolidated balance sheets of such Person and its
Subsidiaries.
"Original Credit Agreement" means that certain Credit Agreement between
Borrower and Ford Credit, dated as of October 15, 1997, as amended by that
certain Credit Agreement dated as of November 12, 1997, as amended by that
certain Amended and restated Credit
16
Agreement dated as of December 15, 1997, as amended by that certain Letter
Agreement dated July 28, 1998, as amended by that certain Letter Agreement dated
September 21, 1998, as amended by that certain Letter Agreement dated October
15, 1998, as amended by that certain Amendment to Amended and Restated Credit
Agreement dated March 2, 1999, as further amended by that certain Second Amended
and Restated Credit Agreement dated July 28, 1999, as amended by the First
Amendment to Second Amended and Restated Credit Agreement dated December 6,
1999, as amended by that certain Letter Agreement dated February 21, 2000, and
as amended by that certain Letter Agreement dated May 31, 2000.
"Other Taxes" is defined in Section 2.11(B) hereof.
"Participants" is defined in Section 10.2(A) hereof.
"Payment Date" means the fifteenth day of each calendar month,
provided, however if such day is not a Business Day, then the Payment Date shall
be the next succeeding Business Day following such fifteenth day.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Acquisition" is defined in Section 5.3(F)(iii) hereof.
"Permitted Existing Indebtedness" means the Indebtedness of the
Borrower and its Subsidiaries identified as such on Schedule 1.1.1 to this
Agreement.
"Permitted Existing Investments" means the Investments of the Borrower
and its Subsidiaries identified as such on Schedule 1.1.2 to this Agreement.
"Permitted Existing Liens" means the Liens on assets of the Borrower
and its Subsidiaries identified as such on Schedule 1.1.3 to this Agreement.
"Permitted Refinancing Indebtedness" means any replacement, renewal,
refinancing or extension of any Indebtedness permitted by this Agreement that
(i) does not exceed the aggregate principal amount (plus associated fees and
expenses) of the Indebtedness being replaced, renewed, refinanced or extended,
(ii) does not rank at the time of such replacement, renewal, refinancing or
extension senior to the Indebtedness being replaced, renewed, refinanced or
extended, and (iii) does not contain terms (including, without limitation, terms
relating to security, amortization, interest rate, premiums, fees, covenants,
event of default and remedies) materially less favorable to the Borrower or to
the Lenders than those applicable to the Indebtedness being replaced, renewed,
refinanced or extended.
"Person" means any individual, corporation, firm, enterprise,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, limited liability company or other entity of any kind, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" means an employee benefit plan defined in Section 3(3) of ERISA
in respect of which the Borrower or any member of the Controlled Group is, or
within the immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA.
17
"Principal Reconciliation Date" is defined in Section 2.1 (B) hereof.
"Principals" means O. ▇▇▇▇▇▇ ▇▇▇▇▇ and B. ▇▇▇▇▇ ▇▇▇▇▇.
"Ratable Share" means with respect to any Lender at any time, a
percentage represented by a fraction the numerator of which is the amount of
such Lender's Commitment at such time and the denominator of which is the sum of
all Commitments at such time, in either case as reduced pursuant to the terms
hereof.
"Receivable(s)" means and includes all of the Borrower's and each
Dealership Guarantor's presently existing and hereafter arising or acquired
accounts, contract rights, chattel paper, instruments, notes, letters of credit,
documents, documents of title, investment property, deposit accounts, other bank
accounts, general intangibles, tax refunds and other obligations of third
persons of any kind, now or hereafter existing, whether arising out of or in
connection with the sale or lease of goods, the rendering of services or
otherwise, and all rights now or hereafter existing in and to all security
agreements, leases, and other contracts securing or otherwise relating to any
such accounts, contract rights, chattel paper, instruments, notes, letters of
credit, documents, documents of title, investment property, deposit accounts,
other bank accounts, general intangibles, tax refunds or obligations of third
persons.
"Register" has the meaning set forth in Section 10.3 (b).
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by nonbank, nonbroker lenders for the purpose of purchasing
or carrying margin stock (as defined therein).
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by and to brokers and dealers of securities for the purpose
of purchasing or carrying margin stock (as defined therein).
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying Margin
Stock applicable to member banks of the Federal Reserve System.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by foreign lenders for the purpose of purchasing or carrying
margin stock (as defined therein).
"Related Party" with respect to any Principal means (i) any spouse or
immediate family member of such Principal or (ii) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons beneficially holding the outstanding
18
Equity Interest of which consist of such Principal and/or such other Persons
referred to in the immediately preceding clause (i).
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Contaminants
through or in the air, soil, surface water or groundwater.
"Rentals" of a Person means the aggregate fixed amounts payable by such
Person under any lease of real or personal property but does not include any
amounts payable under Capitalized Leases of such Person.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days after
such event occurs, provided, however, that a failure to meet the minimum funding
standards of Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section 412(d)
of the Code.
"Required Lenders" means, at any time, Lenders owed or holding at least
a majority in interest of the sum of (a) the aggregate principal amount of the
Advances outstanding at such time, and (b) the Commitments at such time;
provided, however, that if any Lender shall be a Defaulting Lender at such time,
there shall be excluded from the determination of Required Lenders at such time
(X) the aggregate principal amount of the Advances owing to such Lender (in its
capacity as a Lender) and outstanding at such time, (Y) the Unused Commitment of
such Lender at such time.
"Requirements of Law" means, as to any Person, the charter and by-laws
or other organizational or governing documents of such Person, and any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act of 1933, the Securities
Exchange Act of ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇, U and X, ERISA, the Fair Labor Standards
Act, the Worker Adjustment and Retraining Notification Act, Americans with
Disabilities Act of 1990, and any certificate of occupancy, zoning ordinance,
building, environmental or land use requirement or permit or environmental,
labor, employment, occupational safety or health law, rule or regulation,
including Environmental, Health or Safety Requirements of Law.
"Restricted Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any Equity Interests of the Borrower now or
hereafter outstanding, except a dividend payable solely in the Borrower's
Capital Stock (other than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock, (ii) any redemption, retirement, purchase
or other acquisition for value, direct or indirect, of any Equity Interests of
the Borrower or any of its Subsidiaries now or hereafter outstanding, other than
in exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of the Borrower) of other Equity Interests of the
Borrower (other than Disqualified Stock), and (iii) any payment of a claim for
the rescission of the purchase or sale of, or for material damages arising from
the
19
purchase or sale of any Equity Interests of the Borrower or any of the
Borrower's Subsidiaries, or of a claim for reimbursement, indemnification or
contribution arising out of or related to any such claim for damages or
rescission.
"Restricted Franchise Agreement" is defined in Section 5.3(F)(iii)(b).
"Revolving Credit Availability" means, at any particular time, the
amount by which the Commitment at such time exceeds the Revolving Credit
Obligations at such time.
"Revolving Credit Obligations" means, at any particular time, the sum
of the outstanding principal amount of all Advances at such time.
"Scaled Assets" means with respect to the Sonic Group, the sum of (A)
an amount equal to 75% of the Sonic Group's Receivables which constitute factory
receivables, (B) an amount equal to 60% of the Sonic Group's Receivables which
constitute current finance receivables, (C) an amount equal to 60% of the Sonic
Group's Receivables which constitute receivables for parts and services (after
netting any amounts payable in connection with such parts and services by any
member of the Sonic Group), (D) an amount equal to 55% of the Sonic Group's
Inventory which constitutes parts and accessories, (E) an amount equal to 80% of
the that portion of the Sonic Group's Inventory which constitutes used vehicles
less the amount of any outstanding Floor Plan Indebtedness of any member of the
Sonic Group incurred in connection with such used vehicles, and (F) an amount
equal to 45% of the difference between (i) the value of the Sonic Group's
Equipment and (ii) the amount of Indebtedness of any member of the Sonic Group
incurred in connection with such Equipment. The value of the Sonic Group's
Scaled Assets shall be calculated by the Agent and shall be determined based on
the financial statements and monthly factory statements delivered to the Agent
pursuant to Section 5.1(A). Scaled Assets shall be measured as of the most
recent quarterly report of Scaled Assets published by Borrower prior to the date
of this Agreement and as of the end of each calendar quarter.
"Secretary's Certificate" with respect to any entity in the Sonic
Group, means any certificate, delivered by a secretary, assistant secretary,
managing member, general partner or governor of such entity which certifies (i)
the names and true signatures of the incumbent officers or managers of such
entity authorized to sign each Transaction Document to which it is a party and
the other documents to be executed thereunder, (ii) a true and correct copy of
such entity's Certificate of Incorporation, or similar charter document and all
amendments thereto, (iii) a true and correct copy of the by-laws or similar
governing document of such entity and all amendments thereto, and (iv) a true
and correct copy of the resolutions of such entity's board of directors or
members approving and authorizing the execution, delivery and performance by
such entity of each Transaction Document to which it is a party and the other
documents to be executed thereunder;
"Secured Parties" means the Lenders and the Agent.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Solvent" means, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities,
20
including, without limitation, contingent liabilities, of such Person, (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay such debts and liabilities as they mature and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
an unreasonably small capital. The amount of contingent liabilities at any time
shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Sonic Dealership" means any Subsidiary dealership and/or related body
shop or service repair center owned, operated or acquired by the Borrower or any
Subsidiary of the Borrower.
"Sonic Financial" means Sonic Financial Corporation, a Delaware
corporation.
"Sonic Financial's Pledge" means that certain Pledge Agreement, dated
as of even date herewith, from Sonic Financial to the Agent pursuant to which
Sonic Financial pledges 5,000,000 shares of capital stock in Speedway Motor
Sports, Inc., as it may be amended, restated or otherwise modified and in effect
from time to time.
"Sonic Group" means each of the Borrower and each Subsidiary of the
Borrower.
"Sonic Guaranties" means each Subsidiary Holding Company Guaranty, each
Dealership Guaranty, each Non-dealership Guaranty and the Contribution
Agreement.
"Speedway Stock Value" means the value of the 5,000,000 shares of stock
in Speedway Motor Sports, Inc., pledged by Sonic Financial to Lender pursuant to
the terms of Sonic Financial's Pledge, and determined by multiplying 5,000,000
by the closing price for Speedway Motor Sports Inc. stock as reported on the New
York Stock Exchange on the last trading day of the month. Any such calculation
of the Speedway Stock Value will be in effect for the next calendar month until
the final trading day of such month, upon which Agent will recalculate the
Speedway Stock Value.
"Successor Agent" is defined in Section 7.6 of this Agreement.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Holding Companies" means each of Sonic Automotive of
Tennessee, Inc., a corporation organized under the laws of the State of
Tennessee, Sonic Automotive of Nevada, Inc., a corporation organized under the
laws of the State of Nevada, Sonic Automotive of Georgia, Inc., a corporation
organized under the laws of the State of Georgia, Sonic of
21
Texas, Inc., a corporation organized under the laws of the State of Texas, and
any other Subsidiary of Borrower which owns any Equity Interests in any other
entity in the Sonic Group, in each case together with its successors and
assigns.
"Subsidiary Holding Company Guaranty" means each Guaranty in the form
attached hereto as Exhibit C-2, provided by a Subsidiary Holding Company to
Agent, as the same may be amended, modified, supplemented, reaffirmed and/or
restated, and in effect from time to time.
"Subsidiary Holding Company Pledges" means each Pledge Agreement
delivered by any Subsidiary Holding Company to Lender, pursuant to which such
Persons pledge their Capital Stock of certain corporation, limited liability
company and/or partnership subsidiaries, as such pledge agreement may be
amended, restated or otherwise modified from time to time.
"Subsidiary Holding Company Security Agreements" means any Security
Agreement in the form attached hereto as exhibit D-2, pursuant to which a
Subsidiary Holding company grants the Lender a security interest in all of its
assets, as the same may be amended, modified, supplemented and/or restated, and
in effect from time to time.
"Tangible Base Capital" means, at a particular date of calculation, the
amount determined by the Lender to be equal to :
(i) Consolidated Net Worth
plus
(ii) the sum of
(A) Indebtedness of the Borrower or its Subsidiaries to
officers of the Borrower, which Indebtedness is
subordinated in writing to the Obligations on terms
and conditions acceptable to the Lender; and
(B) an amount equal to 64% of the LIFO reserve (as
determined in accordance with Agreement Accounting
Principles) reflected on the Borrower's balance
sheet;
(C) Indebtedness of the Borrower and/or its Subsidiaries
evidenced by the Debt Offering Notes;
minus
(iii) the sum of
(A) Receivables with respect to which the account debtor
is a director, officer, employee, Subsidiary or
Affiliate of the Borrower or other amounts (whether
or not classified as Receivables) from Affiliates of
the Borrower or its Subsidiaries (other than those
payable within 30 days and incurred in the ordinary
course of business); and
22
(B) the value of leasehold improvements after deductions
for depreciation of the Borrower and its Subsidiaries
on a consolidated basis;
(C) that part of the Borrower's and its Subsidiaries (on
a consolidated basis) capitalization or reserves
attributable to any writing up of book values on any
fixed assets after the date of the most recently
delivered financial statements of the Borrower and
its Subsidiaries;
(D) the aggregate amount of the Borrower's and its
Subsidiaries Investments in Affiliates (other than
the Borrower's Subsidiaries);
(E) organizational expenses related to start-up of
operations with respect to the Borrower and its
Subsidiaries;
(F) goodwill and other intangible assets (as determined
in accordance with Agreement Accounting Principles);
(G) any amount paid to a third-party as consideration for
no-competition agreements;
(H) the value of daily rental franchise payments made by
the Borrower or its Subsidiaries under any franchise
agreements (net of any amounts owed by a franchisor
to Borrower or its Subsidiaries); and
(I) other assets (including, without limitation,
airplanes, cattle, etc.) not related to the
operations of the Dealerships as automobile
dealerships.
"Taxes" is defined in Section 2.11(A) hereof.
"Termination Date" means the earlier of (a) October 31, 2003 or such
other "Termination Date" specified in an Extension Notice and agreed to by
Lender and (b) the date of termination of the Commitment pursuant to either of
Section 2.3 or Section 8.1 hereof.
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Borrower or any member of the
Controlled Group from a Benefit Plan during a plan year in which the Borrower or
such Controlled Group member was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of twenty percent (20%) of Benefit Plan participants
who are employees of the Borrower or any member of the Controlled Group; (iii)
the imposition of an obligation on the Borrower or any member of the Controlled
Group under Section 4041 of ERISA to provide affected parties written notice of
intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Benefit Plan; (v) any event or condition which might constitute
grounds under Section 4042 of ERISA for the Termination of, or the appointment
of a trustee to administer, any Benefit Plan; or (vi) the partial or complete
withdrawal of the Borrower or any member of the Controlled Group from a
Multi-employer Plan.
"Total Adjusted Debt" means, for any period, on a consolidated basis
for the Borrower and its Subsidiaries, the amount of Total Debt less any Floor
Plan Indebtedness, less the
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outstanding principal balance of the Debt Offering Notes, and less the
outstanding principal balance of any Additional Subordinated Debt, and further
less accounts payable and accruals.
"Total Debt" means, for any period, on a consolidated basis for the
Borrower and its Subsidiaries, the sum of Indebtedness of the Borrower and its
Subsidiaries, other than Hedging Obligations.
"Transaction Costs" means the fees, costs and expenses payable by the
Borrower in connection with the execution, delivery and performance of the
Transaction Documents.
"Transaction Documents" means the Loan Documents and the Acquisition
Documents.
"Unfunded Liabilities" means (i) in the case of Single Employer Plans,
the amount (if any) by which the present value of all vested nonforfeitable
benefits under all Single Employer Plans exceeds the fair market value of all
such Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plans, and (ii) in the case of Multi-employer
Plans, the withdrawal liability that would be incurred by the Controlled Group
if all members of the Controlled Group completely withdrew from all
Multi-employer Plans.
"Unmatured Default" means an event which, but for the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
"Unused Commitment" means, with respect to any Lender, such Lender's
Commitment at such time minus the aggregate principal amount of Advances made by
such Lender and outstanding at such time.
"Waiver, Guaranty and Disbursement Agreement" means each Waiver,
Guaranty and Disbursement Agreement delivered by Borrower or any Subsidiary
Holding Company in the form attached hereto as Exhibit G to Lender, as the same
may be amended, restated, or otherwise modified from time to time.
"Wholesale Line" means any automotive floor plan wholesale credit line
made by Ford Credit, Chrysler Financial, General Motors Acceptance Corporation,
any Lender or any affiliate or subsidiary thereof to a Sonic Dealership.
Any accounting terms used in this Agreement which are not specifically
defined herein shall have the meanings customarily given them in accordance with
generally accepted accounting principles in existence as of the date hereof.
1.2 References. The existence throughout the Agreement of references to
the Borrower's Subsidiaries is for a matter of convenience only. Any references
to Subsidiaries of the Borrower set forth herein shall (i) with respect to
representations and warranties which deal with historical matters be deemed to
include each of the Subsidiaries existing on the date hereof; and (ii) shall not
in any way be construed as consent by a Lender to the establishment, maintenance
or acquisition of any Subsidiary, except as may otherwise be permitted
hereunder.
1.3 Effectiveness of this Agreement. Upon the satisfaction of all of
the conditions precedent set forth in Section 3.1 of this Agreement (the date
upon which such conditions
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precedent are satisfied being hereinafter referred to as the "Effective Date"),
this Agreement shall become effective.
ARTICLE II: THE LOAN FACILITIES
2.1 Making Advances; Accounting for Advances.
(A) Making Advances.
(1) Initial Advance. On the Effective Date, (a) Chrysler
Financial will make an Advance in an amount (as notified in writing by Ford
Credit prior to the Effective Date) sufficient to retire 50% of the outstanding
principal indebtedness owed by Borrower to Ford Credit pursuant to the terms of,
and as evidenced by that certain Fourth Amended and Restated Promissory Note
dated December 6, 1999, plus other amounts due and owing thereunder on the
Effective Date (all such Indebtedness evidenced by such note is referred to
herein as the "Existing Sonic Indebtedness"); Borrower authorizes Chrysler
Financial to fund such Advance directly to Ford Credit (via wire transfer,
pursuant to wire transfer instructions provided by Ford Credit to Chrysler
Financial in writing prior to the Effective Date), and (b) Ford Credit will make
an Advance in an amount sufficient to retire 50% of the Existing Sonic
Indebtedness; Borrower acknowledges that such Advance will be in the form of an
internal balance transfer performed by Ford Credit;
(2) Additional Advances. Upon satisfaction of the conditions
precedent set forth in Sections 3.1 and 3.2, from and including the date of this
Agreement and prior to the Termination Date, Agent will (on behalf of each
Lender) on the terms and conditions set forth in this Agreement, make Advances
to the Borrower from time to time, in Dollars, in an amount not to exceed the
Revolving Credit Availability at such time; provided, however, at no time shall
the Revolving Credit Obligations exceed the Commitment at such time. Subject to
the terms of this Agreement, the Borrower may borrow, repay and re-borrow
Advances at any time prior to the Termination Date. The Borrower shall repay in
full the outstanding principal balance of each Advance on or before the
Termination Date. Agent may make Advances (on behalf of each Lender) in reliance
upon the agreement of each Lender to make available to Agent funds required to
perform the accounting as described in the following Section 2.1 (B), unless all
Lenders will have jointly decided, as provided for in Section 8.1 hereof, to
terminate or suspend their obligations to make Advances hereunder.
(B) Accounting for Advances. From the date hereof until the Termination
Date, Agent and Lenders will account for all activity under this Article II in
the following manner:
(1) Interest. (a) On the tenth (10th) day of each month, or if
such day is not a Business Day, on the next succeeding Business Day, no
later than 12:00 noon (Eastern Standard Time), Agent will provide to
each Lender a written statement identifying the amount of interest
payment to be received from Borrower by Agent on each such Lender's
Ratable Share of the Advances outstanding on the immediately succeeding
Payment Date, pursuant to section 2.9 (B) (i) hereof (such amount is
referred to herein as the "Interest Due Lenders");
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(b) No later than 12:00 noon (Eastern Standard Time) on the
first Business Day following a Payment Date upon which Agent has
received payment in full from Borrower of the amount required pursuant
to Section 2.9 (b)(ii) hereof (each such date being referred to herein
as an "Interest Reconciliation Date"), Agent will make remittance to
each Lender (via wire transfer, pursuant to wire transfer instructions
provided to Agent by each Lender in writing from time to time) of each
such Lender's Ratable Share of the Interest Due Lenders; provided,
however that the Administration Fee due to Agent (pursuant to Section
2.13 hereof) for the month immediately preceding such Interest
Reconciliation Date will be netted out of the Interest Due Lenders and
be maintained by Agent for the benefit of Agent; and
(2) Principal.
(a) Ford Credit will make a written demand (which demand shall
be made in accordance with Section 2.1 (B) (2) (c); (the date each such
demand is made is referred to herein as a "Principal Reconciliation
Date")) with a copy of such demand to the Agent, which such demand will
identify (a) the then current (as of such Principal Reconciliation
Date) outstanding aggregate amount of Advances made to Borrower under
this Agreement and the Notes (the "Balance Due"), and (b) the aggregate
amount of Advances made to Borrower by Ford Credit from and after the
immediately preceding Principal Reconciliation Date (or if no previous
demand has been made, since the Effective Date).
(b) No later than 12:00 noon (Eastern Standard Time) on the
first Business Day following the Principal Reconciliation Date, each
Lender will purchase, and Ford Credit shall sell and assign to each
other Lender, its Ratable Share of the Balance Due not theretofore sold
by Ford Credit to, or otherwise held by such Lender, by making
available to Ford Credit, in same day funds, an amount equal to the
portion of the Balance Due to be purchased by such Lender, provided,
however, that the aggregate principal amount of all Advances purchased
by an Lender may not at any time exceed the amount of such Lender's
Commitment. Upon any such assignment by Ford Credit to any other Lender
of a portion of Advance pursuant to this Section 2.2(B) (2) (b), Ford
Credit represents and warrants to such other Lender that Ford Credit is
the legal and beneficial owner of such interest being assigned by it,
but makes no other representation or warranty and assumes no
responsibility with respect to such Advance, the Loan Documents, the
Borrower or its Subsidiaries. If and to the extent that any Lender
shall not have so made the amount of such Advance available, such
Lender shall become a Defaulting Lender. If such Lender shall have made
such amount available to Ford Credit, such amount so paid in respect of
principal shall constitute an Advance made by such Lender on such
Business Day for purposes of this Agreement, and the aggregate
outstanding principal amount of the Advances made by Ford Credit shall
be reduced by such amount on such Business Day. Ford Credit shall
notify the agent of all Advances sold by Ford Credit pursuant to this
Section 2.2(B) (2) (b).
(c) Ford Credit may make demand under Section 2.1 (B) (2) (b)
on (i) any Business Day on which the aggregate Revolving Credit
Obligations owing
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to Ford Credit on such Business Day (after giving effect to any
Advances to be made by Ford Credit on such Business Day) exceed
$250,000,000.00 and otherwise (ii) the last Business Day of any month,
in each case no later than 5:00 p.m. Eastern Standard Time on such
Business Day.
2.2 Optional Payments; Mandatory Prepayments
2.2 (A) Optional Payments. The Borrower may from time to time repay or
prepay, without penalty or premium all or any part of outstanding Advances;
provided, however, that the Borrower may not so prepay Advances unless it shall
have provided notice to Agent of such prepayment by 12:00 p.m. on the day such
payment will be made, and the amount of such prepayment is not less than
$500,000.00.
(B) Mandatory Prepayments. If at any time and for any reason the
Revolving Credit Obligations are greater than the Maximum Availability, the
Borrower shall immediately make a mandatory prepayment of the Obligations in an
amount equal to such excess. Amounts equal to a Decision Reserve or net cash
proceeds of an Asset Sale in connection with or following restoration,
rebuilding or replacement of insured property shall be mandatorily applied
against the Revolving Credit Obligations in the amounts and in the manner set
forth in Section 5.2(G) hereof.
2.3 Changes in the Commitment. Reduction of Commitment. The Borrower
may permanently reduce the Commitment in whole, or in part, in an aggregate
minimum amount of $50,000,000.00 and integral multiples of $10,000,000.00 in
excess of that amount (unless the Commitment is reduced in whole); any
reductions in the Commitment will be made ratably among the Lenders in
accordance with each Lender's Commitment. Any such reduction may be made only
upon at least three (3) Business Day's written notice to Agent, which notice
shall specify the amount of any such reduction, and upon payment of a
termination/reduction fee (payable to Agent for the account of each Lender)
equal to the amount by which the Commitment is reduced multiplied by:
(a) one-half of one percent (.50%), if Borrower terminates/reduces the
Commitment on or before October 31, 2001; or
(b) three-eighths of one percent (.375%), if Borrower
terminates/reduces the Commitment after October 31, 2001 but on or
before October 31, 2002; or
(c) one-quarter of one percent (0.25%), if Borrower terminates/reduces
the Commitment after October 31, 2002 but before October 31, 2003.
Notwithstanding the foregoing, the amount of the Commitment may not be
reduced below the aggregate principal amount of the outstanding
Revolving Credit Obligations. All accrued commitment fees and
termination fees shall be payable on the effective date of any partial
or complete termination of the obligations of the Lenders to make
Advances hereunder. Lenders will share in any termination/reduction fee
paid under this Section 2.3 in proportion with each such Lender's
Commitment. On the first Business Day following Agent's receipt of a
termination/reduction fee hereunder, Agent will remit to each Lender
its portion of the termination/reduction fee received by Agent
hereunder.
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2.4 Method of Borrowing. The Borrower shall give Agent irrevocable
notice in substantially the form of Exhibit B hereto (a "Borrowing Notice") not
later than 12:00 noon (Eastern Standard Time) on the Borrowing Date of each
Advance, specifying: (i) the Borrowing Date (which must be a Business Day) of
such Advance; (ii) the aggregate amount of such Advance; (iii) the use of
proceeds of such Advance, and (iv) the account or accounts into which the
Advances should be funded. Each Borrowing Notice shall be irrevocable and
binding on the Borrower. The Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in such Notice of Borrowing for such
Borrowing the applicable conditions set forth in Article III, including, without
limitation, any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Advance to be made by such Lender as part of
such Borrowing when such Advance, as a result of such failure, is not made on
such date. Not later than 2:00 p.m. (Eastern Standard Time) on each Borrowing
Date, Agent (on behalf of each Lender) shall make available the Advance, in
funds immediately available to the Borrower at such account or accounts as shall
have been notified to the Agent. Each Advance shall bear interest from and
including the date of the making of such Advance to (but not including) the date
or repayment thereof at the Applicable LIBOR Rate, changing when and as the
underlying LIBOR Rate changes, which such interest shall be payable in
accordance with Section 2.9(B).
2.5 Minimum Amount of Each Advance. Except with respect to any Advance
to be made pursuant to Section 2.1 (a) (1), Borrower may request Ford Credit to
make, and Ford Credit will make, on the terms and conditions hereinafter set
forth, Advances to the Borrower from time to time on any Business Day during the
period from the Effective Date until the Termination Date in an amount not to
exceed the aggregate of the Unused Commitment of Ford Credit at such time. Each
Advance shall be in the minimum amount of $500,000.00, provided, however, that
any Advance may be in the amount of the unused Commitment.
2.6 Default Rate: Late Payment Fee. After the occurrence and during the
continuation of an Event of Default, at the option of the Required Lenders, the
interest rate(s) applicable to the Advances shall be equal to the Applicable
LIBOR Rate plus three percent (3.0%) per annum. To the extent not in excess of
the Maximum Rate and in accordance with applicable law, any amount not paid by
the Borrower when due shall accrue interest at an additional five percent (5.0%)
per annum above the rate applicable thereto until such amounts have been paid in
full and shall be payable on demand by the Agent, at the direction of the
Required Lenders, and at any rate no later than the next succeeding Payment
Date.
2.7 Method of Payment. (A) All payments of principal, interest, and
fees hereunder shall be made, without setoff, deduction or counterclaim, in
immediately available funds to Agent at the Agent's address specified pursuant
to Article XI, at any other address specified in writing by Agent to the
Borrower, or via wire transfer pursuant to wire transfer instructions provided
by Agent from time to time, by 12:00 noon (Eastern Standard Time) on the date
when due. Agent will promptly thereafter cause like funds to be distributed (i)
if such payment by the Borrower is in respect of principal, interest, commitment
fees or any other Obligation then payable hereunder and under the Notes to more
than one Lender, to such Lender for its account ratably in accordance with the
amounts of such respective Obligations then payable to such Lenders and (ii) if
such payment by the Borrower is in respect of any Obligation then payable
hereunder to one Lender, to such Lender for its account, in each case to be
applied in
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accordance with the terms of this Agreement; provided, however that the
Administration Fee due to Agent (pursuant to Section 2.13 hereof) for the month
immediately preceding such date will be netted out of such amounts and be
maintained in or remitted to the Agent's Account by and for the benefit of the
Agent. Upon its acceptance of an Assignment and Acceptance and recording of the
information contained therein in the Register pursuant to Section 10.3 from and
after the effective date of such Assignment and Acceptance, the Agent shall make
all payments hereunder and under the Notes in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(B) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to any Lender hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may (but shall not be obligated to), in reliance upon such assumption, cause to
be distributed to each such Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower shall not have so
made such payment in full to the Agent, each such Lender shall repay to the
Agent forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Agent, at the
Applicable LIBOR Rate.
2.8 Advances, Telephonic Notices. Agent is authorized to record the
principal amount of each Advance and each repayment with respect to its Advances
on the schedules attached to the Notes; provided, however, that the failure to
so record shall not affect the Borrower's obligations under the Notes. The
Borrower authorizes the Lender to extend Advances and Agent to transfer funds
based on telephonic notices made by any person or persons Agent in good faith
believes to be acting on behalf of the Borrower. The Borrower agrees to deliver
promptly to Agent a written confirmation, signed by an Authorized Officer, if
such confirmation is requested by Agent, of each telephonic notice. If the
written confirmation differs in any material respect from the action taken by
Agent, (i) the telephonic notice shall govern absent manifest error and (ii)
Agent shall promptly notify the Authorized Officer who provided such
confirmation of such difference.
2.9 Promise to Pay; Interest and Commitment Fees; Interest Payment
Dates; Interest and Fee Basis; Taxes.
(A) Promise to Pay. The Borrower shall repay to the Agent, for the
ratable account of the Lenders, on the Termination Date, the aggregate principal
amount of the Advances then outstanding. The Borrower unconditionally promises
to pay when due the principal amount of each Advance and all other Obligations
incurred by it, and to pay all unpaid interest accrued thereon, in accordance
with the terms of this Agreement, the Notes and the other Loan Documents.
(B) Interest Payment Date.
(i) Interest Payable on Advances. Interest accrued on each
Advance, owing to each Lender shall be payable to the Agent on each Payment
Date, commencing with the first such date to occur after the date hereof and on
the Termination Date (whether by acceleration
29
or otherwise). Borrower will make interest payments to the Agent on each Payment
Date via wire transfer (pursuant to wire transfer instructions provided to
Borrower by Agent from time to time).
(ii) Interest on other Obligations. Interest accrued on the
principal balance of all other Obligations shall be payable in arrears (i) on
the last Business Day of each calendar month, commencing on the first such day
following the incurrence of such Obligation, (ii) upon repayment thereof in full
or in part, and (iii) if not theretofore paid in full, at the time such other
Obligation becomes due and payable (whether by acceleration or otherwise).
(C) Commitment Fees; Accounting for Commitment Fees; Previously Accrued
Commitment Fees.
(i) Commitment Fees. The Borrower shall pay to Agent (for the
account of the Lenders), from and after the date hereof and from the effective
date specified in the Assignment and Acceptance pursuant to which it became a
Lender (in the case of each other Lender) until the date on which the Commitment
shall be terminated in whole, a commitment fee equal to one-quarter of one
percent (0.25%) per annum, on the amount by which (A) the Commitment in effect
from time to time exceeds (B) the Revolving Credit Obligations in effect from
time to time, provided, however, that any commitment fee accrued with respect to
any of the Commitments of a Defaulting Lender during the period prior to the
time such Lender became a Defaulting Lender and unpaid at such time shall not be
payable by the Borrower so long as such Lender shall be a defaulting Lender
except to the extent that such commitment fee shall otherwise have been due and
payable by the Borrower prior to such time; and provided, further that no
commitment fee shall accrue on any of the Commitments of a Defaulting Lender so
long as such Lender shall be a Defaulting Lender. All such commitment fees
payable under this clause (C) shall be payable annually in arrears (via wire
transfer, pursuant to wire transfer instructions provided to Borrower by Agent
in writing from time to time) on each November 15th occurring after the
Effective Date (provided, however, that if any such November 15th is not a
Business Day, the commitment fee must be paid on the next succeeding Business
Day) and, in addition, on the date on which the Commitment shall be terminated
in whole.
(ii) Accounting for Commitment Fees. On the first Business Day
after each Principal Reconciliation Date following the date of a payment of the
commitment fee provided for in the preceding section, Agent will remit to each
Lender such Lender's Ratable Share of the commitment fee received by Agent,
based on each such Lender's Commitment (via wire transfer, pursuant to wire
transfer instructions provided to Agent by Lender in writing from time to time).
(iii) Previously Accrued Commitment Fees. Borrower
acknowledges that commitment fees have accrued under the Original Credit
Agreement and pursuant to Section 2.9 (C) of the Original Credit Agreement, Ford
Credit could require payment of those commitment fees on the Effective Date of
this Agreement. Ford Credit agrees to postpone payment of such commitment fees
until November 15, 2000, at which time Borrower must pay Ford Credit the full
amount of such commitment fees (via wire transfer pursuant to wire transfer
instructions provided by Ford Credit to Borrower). No Lender other than Ford
Credit may share in such previously accrued commitment fees.
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(D) Interest and Fee Basis. Agent will calculate interest and fees for
actual days elapsed on the basis of a 365 day year. Interest shall be payable
for the day an Obligation is incurred but not for the day of any payment on the
amount paid if payment is received prior to 12:00 noon (Eastern Standard Time)
at the place of payment. If any payment of principal of or interest on an
Advance or any payment of any other Obligations shall become due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
shall be included in computing interest in connection with such payment. Absent
manifest error, each determination by the Agent of an interest rate, fee or
commission hereunder shall be conclusive and binding for all purposes.
2.10 Termination Date. This Agreement shall be effective until the
Termination Date. The Borrower shall have the right to submit a notice (an
"Extension Notice") requesting an extension of the initial Termination Date for
additional one-year periods. The Borrower shall deliver the Extension Notice to
Agent on or before the date that is at least 45 and not more than 90 days prior
to the first anniversary of the Effective Date (and each like period in each
subsequent year thereafter in which such option is available). Required Lenders,
acting jointly, shall, on or before the date that is 30 days after receipt of
any such Extension Notice notify the Borrower in writing whether or not the then
applicable Termination Date is extended for one year; provided, however, failure
to give such notice shall mean that no such extension shall have been granted;
and provided further, nothing herein shall obligate the Lenders to extend the
initial Termination Date or any other Termination Date and any determination
whether or not to so extend the Termination Date shall be made by the Lenders in
their sole discretion. Notwithstanding the termination of this Agreement on the
Termination Date, until all of the Obligations (other than contingent indemnity
obligations, but including all Floor Plan Indebtedness owed to either (i) Ford
Credit and any of its Subsidiaries or Affiliates, or (ii) Chrysler Financial and
any of its Subsidiaries or Affiliates) shall have been fully and indefeasibly
paid and satisfied and all financing arrangements between the Borrower and each
Lender in connection with this Agreement shall have been terminated (other than
with respect to Hedging Obligations), all of the rights and remedies under this
Agreement and the other Loan Documents shall survive and each Lender shall be
entitled to retain its security interest in and to all existing and future
Collateral.
2.11 Taxes. (A) Any and all payments by the Borrower hereunder shall be
made free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings or any liabilities
with respect thereto including those arising after the date hereof as a result
of the adoption of or any change in any law, treaty, rule, regulation, guideline
or determination of a Governmental Authority or any change in the interpretation
or application thereof by a Governmental Authority but excluding such taxes
(including income taxes, franchise taxes and branch profit taxes) as are imposed
on or measured by any Lender's income by the United States of America or any
Governmental Authority of the jurisdiction under the laws of which any Lender is
organized or having jurisdiction over any Lender by virtue of any Lender's
location(s) (other than solely as a result of the transaction evidenced by this
Agreement) (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings, and liabilities which any Lender determines to be applicable to
this Agreement, the other Loan Documents, the Commitment or the Advances being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under the
other Loan Documents to any Lender, (i) the sum payable shall be increased as
may be necessary so that after making
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all required deductions (including deductions applicable to additional sums
payable under this Section 2.11(A)) any Lender receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions, and (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(B) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges, or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
other Loan Documents, the Commitment or the Advances (hereinafter referred to as
"Other Taxes").
(C) The Borrower indemnifies each Lender for the full amount of Taxes
and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed
by any Governmental Authority on amounts payable under this Section 2.11 paid by
any Lender and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. This indemnification shall be made
within thirty (30) days after the date a Lender makes written demand therefor. A
certificate as to any additional amount payable to a Lender under this Section
2.11 submitted to the Borrower by such Lender shall show in reasonable detail
the amount payable and the calculations used to determine such amount and shall,
absent manifest error, be final, conclusive and binding upon each of the parties
hereto. With respect to such deduction or withholding for or on account of any
Taxes and to confirm that all such Taxes have been paid to the appropriate
Governmental Authorities, the Borrower shall promptly (and in any event not
later than thirty (30) days after receipt) furnish to such Lender such
certificates, receipts and other documents as may be required (in the judgment
of the Lender) to establish any tax credit to which such Lender may be entitled.
(D) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes by the Borrower, the Borrower shall furnish to the Lender having
made such payment and seeking reimbursement the original or a certified copy of
a receipt evidencing payment thereof.
(E) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.11 shall survive the payment in full of principal and interest
hereunder and the termination of this Agreement.
2.12 Loan Account. Each Lender may maintain, in accordance with its
respective usual practices, an account or accounts (a "Loan Account") evidencing
the Obligations of the Borrower to such Lender owing to such Lender from time to
time, including the amount of principal and interest payable and paid to such
Lender from time to time hereunder and under the Notes. The entries made in any
Loan Account maintained by Agent shall be conclusive and binding for all
purposes, absent manifest error, unless the Borrower objects to information
contained in such Loan Account within thirty (30) days of the Borrower's receipt
of such information. Any Lender's failure to maintain such an account not affect
the Borrower's obligations under the Notes
2.13 Loan Administration Fee. On each Interest Reconciliation Date,
each Lender will pay Agent a fee in consideration for Agent's performance of the
administrative functions more particularly described herein (the "Administration
Fee"). With respect to each Lender, such fee
32
will be in an amount equal to one tenth of one percent (0.1%) per annum on such
Lender's Ratable Share of the Balance Due for the month immediately preceding
such Interest Reconciliation Date. Each Lender agrees to pay Agent the
Administration Fee, on each Interest Reconciliation Date, by allowing Agent to
net the Administration Fee out of the Interest Due Lenders.
2.14. Defaulting Lenders. (A) In the event that, at any one time, (i)
any Lender shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a
Defaulted Amount to the Agent or any of the other Lenders and (iii) the Borrower
shall make any payment hereunder or under any other Loan Document to the Agent
for the account of such Defaulting Lender, then (1) the Agent may, on its behalf
or on behalf of such other Lenders and to the fullest extent permitted by
applicable law, apply at such time the amount so paid by the Borrower to or for
the account of such Defaulting Lender to the payment of each such Defaulted
Amount to the extent required to pay such Defaulted Amount, and (2) such
Defaulting Lender shall be liable to the Agent or any other Lender with respect
to such Defaulted Advance for an amount equal to the Applicable LIBOR Rate plus
two and fifty hundredths percent (2.5%) per annum on the Defaulted Advance for
so long as such Defaulted Advance remains outstanding. In the event that the
Agent shall so apply any such amount to the payment of any such Defaulted Amount
on any date, the amount so applied by the Agent shall constitute for all
purposes of this Agreement and the other Loan Documents payment, to such extent,
of such Defaulted Amount on such date. Any such amount so applied by the Agent
shall be retained by the Agent or distributed by the Agent to such other Agent
or such other Lenders, ratably in accordance with the respective portions of
such Defaulted Amounts payable at such time to the Agent, such other Agent and
such other Lenders and, if the amount of such payment made by the Borrower shall
at such time be insufficient to pay all Defaulted Amounts owing at such time to
the Agent, such other Agent and such other Lenders, in the following order of
priority:
(i) first, to the Agent for any Defaulted Amounts then owing
to it, in its capacity as such, ratably in accordance with such respective
Defaulted Amounts then owing to the Agent; and
(ii) second, to any other Lenders for any Defaulted Amounts
then owing to such other Lenders, ratably in accordance with such respective
Defaulted Amounts then owing to such other Lenders.
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Agent pursuant to this subsection (a), shall be applied by the Agent as
specified in subsection (b) of this Section 2.14.
(b) In the event that, at any one time, (i) any Lender shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted Amount and (iii) the Borrower, any Agent or any other Lender
shall be required to pay or distribute any amount hereunder or under any other
Loan Document to or for the account of such Defaulting Lender, then the Borrower
or such Agent or such other Lender shall pay such amount to the Agent to be held
by the Agent, to the fullest extent permitted by applicable law, in escrow or
the Agent shall, to the fullest extent permitted by applicable law, hold in
escrow such amount otherwise held by it. Any funds held by the Agent in escrow
under this subsection (b) shall be deposited by the Agent in an account with an
escrow agent (which is a bank or financial institution which acts as escrow
agent in the ordinary course of its business and is reasonably
33
acceptable to the Agent and the Required Lenders), in the name and under the
control of the Agent, but subject to the provisions of this subsection (b). The
terms applicable to such escrow account, including the rate of interest payable
with respect to the credit balance of such account from time to time, shall be
such escrow agent's standard terms applicable to escrow accounts maintained with
it. Any interest credited to such account from time to time shall be held by the
Agent in escrow under, and applied by the Agent from time to time in accordance
with the provisions of, this subsection (b). The Agent shall, to the fullest
extent permitted by applicable law, apply all funds so held in escrow from time
to time to the extent necessary to make any Advances required to be made by such
Defaulting Lender and to pay any amount payable by such Defaulting Lender
hereunder and under the other Loan Documents to the Agent or any other Lender,
as and when such Advances or amounts are required to be made or paid and, if the
amount so held in escrow shall at any time be insufficient to make and pay all
such Advances and amounts required to be made or paid at such time, in the
following order of priority:
(i) first, to the Agent for any amounts then due and payable
by such Defaulting Lender to it hereunder, in its capacity as such, ratably in
accordance with such amounts then due and payable to the Agent; and
(ii) second, to any other Lenders for any amount then due and
payable by such Defaulting Lender to such other Lenders hereunder, ratably in
accordance with such respective amounts then due and payable to such other
Lenders.
In the event that any Lender that is a Defaulting Lender shall, at any time,
cease to be a Defaulting Lender, any funds held by the Agent in escrow at such
time with respect to such Lender shall be distributed by the Agent to such
Lender and applied by such Lender to the Obligations owing to such Lender at
such time under this Agreement and the other Loan Documents ratably in
accordance with the respective amounts of such Obligations outstanding at such
time.
(c) The rights and remedies against a Defaulting Lender under this
Section 2.14 are in addition to other rights and remedies that the Borrower may
have against such Defaulting Lender with respect to any Defaulted Advance and
that any Agent or any Lender may have against such Defaulting Lender with
respect to any Defaulted Amount.
2.15. Evidence of Debt. (A) The Register maintained by the Agent
pursuant to Section 10.3 shall record (i) the date and amount of each Advance
made hereunder, (ii) the terms of each Assignment and Acceptance delivered to
and accepted by it, (iii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder,
and (iv) the amount of any sum received by the Agent from the Borrower hereunder
and each Lender's share thereof.
(B) Entries made in good faith by the Agent in the Register pursuant to
subsection (A) above, shall be prima facie evidence of the amount of principal
and interest due and payable or to become due and payable from the Borrower to,
in the case of the Register, each Lender and, in the case of such account or
accounts, such Lender, under this Agreement, absent manifest error; provided,
however, that the failure of the Agent or such Lender to make an entry, or any
finding that an entry is incorrect, in the Register or such account or accounts
shall not limit or otherwise affect the obligations of the Borrower under this
Agreement.
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(C) The Agent is authorized to record the principal amount of each
Advance and each repayment with respect to its Advances on the schedules
attached to the Notes; provided, however, that the failure to so record shall
not affect the Borrower's obligations under the Notes; and provided further that
notwithstanding the face amount of any Note, the aggregate principal amount of
all Advances outstanding at any time to a Lender under a Note shall not exceed
the aggregate principal amount of all Advances outstanding to such Lender. The
Borrower authorizes the Lenders to extend Advances and the Agent to transfer
funds based on telephonic notices made by any person or persons the Agent in
good faith believes to be acting on behalf of the Borrower. The Borrower agrees
to deliver promptly to Agent a written confirmation, signed by an Authorized
Officer, if such confirmation is requested by Agent, of each telephonic notice.
If the written confirmation differs in any material respect from the action
taken by Agent, (i) the telephonic notice shall govern absent manifest error and
(ii) Agent shall promptly notify the Authorized Officer who provided such
confirmation of such difference.
ARTICLE III: CONDITIONS PRECEDENT
3.1 Conditions of Effectiveness. The Effective Date of this Agreement
shall be _________________, 2000 or any such later date on which all of the
following conditions shall have been satisfied:
(A) no law, regulation, order, judgment or decree of any Governmental
Authority shall, and no Lender shall have received any notice that
litigation is pending or threatened which is likely to, (a) enjoin,
prohibit or restrain the making of an Advance hereunder or (b) impose
or result in the imposition of a Material Adverse Effect;
(B) all due diligence materials requested by the Lenders from the
Borrower shall have been delivered to the Lenders and such due
diligence materials shall be in form and substance satisfactory to the
Lenders;
(C) the Borrower has furnished to the Agent each of the following, all
in form and substance satisfactory to the Agent:
(i) this Agreement, duly executed by the Borrower;
(ii) the Notes, duly executed by the Borrower in favor of each
Lender;
(iii) the Cross Agreement executed by Borrower, each
Dealership Guarantor, each Non-Dealership Guarantor and each Subsidiary
Holding Company;
(iv) a Dealership Guaranty executed by each Sonic Dealership
to the Agent;
(v) a Dealership Security Agreement executed by each Sonic
Dealership to the Agent;
(vi) a Subsidiary Holding Company Guaranty executed by each
Subsidiary Holding Company to Agent;
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(vii) a Subsidiary Holding Company Security Agreement executed
by each Subsidiary Holding Company to Agent;
(viii) the Contribution Agreement;
(ix) the Borrower Pledges, the Subsidiary Holding Company
Pledges and Sonic Financial's Pledge, together with, for each corporate
entity so acquired, a stock certificate evidencing the issued and
outstanding pledged stock and undated stock powers executed in blank;
(x) to the extent any Sonic Dealership, Non-Dealership
Guarantor or Subsidiary Holding Company has any Indebtedness other than
Permitted Indebtedness, pay-out letters, releases and UCC-3 Termination
Statements, where applicable, from all third-party creditors releasing
all Liens securing any such Indebtedness;
(xi) Certificates of good standing for the Borrower, and if
requested by Lender, each Subsidiary Holding Company, each
Non-Dealership Guarantor and each Dealership Guarantor from its
jurisdiction of incorporation and each other jurisdiction where the
nature of its business requires it to be qualified as a foreign
corporation;
(xii) a Secretary's Certificate from the Borrower, each
Subsidiary Holding Company, each Non-Dealership Guarantor and each
Sonic Dealership acquired by the Borrower on or prior to the date
hereof.
(xiii) a certificate, in form and substance satisfactory to
the Lender, signed by the chief financial officer of the Borrower
stating that as of the Effective Date, no Event of Default or Unmatured
Default has occurred and is continuing and setting forth the
calculation of the Sonic Group's Scaled Assets as of most recent
quarterly report of Scaled Assets published by Borrower prior to the
date of this Agreement, and the representations and warranties of the
Borrower are true and correct with full force and effect as if made on
the Effective Date;
(xiv) to the extent not included in the foregoing, the
documents, instruments and agreements set forth on the closing list
attached as Exhibit E hereto;
(xv) such consents, waivers or other documents as the Lender
or its counsel may have reasonably requested;
(xvi) a Non-Dealership Guaranty executed by each
Non-Dealership Guarantor to the Agent; and
(xvii) a Non-Dealership Security Agreement executed by each
Non- Dealership Guarantor to the Agent.
3.2 Conditions Precedent to Each Advance. No Lender shall be required
to make any Advance, unless on the applicable Borrowing Date:
(i) There exists no Event of Default or Unmatured Default; and
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(ii) The representations and warranties contained in Article
IV are true and correct as of such Borrowing Date (unless such
representation and warranty expressly relates to an earlier date or is
no longer true solely as a result of transactions permitted by this
Agreement).
Each Borrowing Notice with respect to each such Advance shall
constitute a representation and warranty by the Borrower that the conditions
contained in Sections 3.2(i) and (ii) have been satisfied. If Agent has a
reasonable basis for believing an Event of Default or Unmatured Default may have
occurred and is continuing or that the Borrower is not able to make one or more
of the representations and warranties set forth in Article IV, Agent may require
a duly completed officer's certificate in substantially the form of Exhibit F
hereto as a condition to making an Advance.
3.3 Condition Precedent to Additional Advance. Notwithstanding anything
to the contrary in this Agreement, Agent (on behalf of the Lenders) shall be
under no obligation to make an Advance to the Borrower hereunder, until and
unless the following requirements shall have been satisfied:
(i) There shall exist no Liens on the Collateral other than Permitted
Existing Liens and those Permitted Existing Liens appearing on Schedule
1.1.3 marked with an asterisk shall have been released and or
terminated, and the Borrower shall have confirmed delivery of such
releases, UCC-3 termination statements or other documentation
reasonably requested by the Agent evidencing such release or
termination; and
(ii) The loss payable endorsements referenced in Section 5.2(G) shall
have been delivered to Agent.
3.4 Obligations to Purchase Advances. Notwithstanding any term or
condition of this Agreement to the contrary, if, on the date that any Advance is
made by Ford Credit pursuant to section 2.2(B) the Agent deemed each of the
conditions in Sections 3.1 and 3.2 applicable to such Advance satisfied or
waived in accordance with this Agreement, then each Lender other than Ford
Credit shall be obligated to purchase Advances pursuant to Section 2.2(C)
regardless of whether such conditions have been satisfied or waived as of the
date such purchase under Section 2.2(C) is required to be made.
ARTICLE IV: REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows to the Lenders as of
the date hereof and as of the Effective Date:
4.1 Organization; Corporate Powers. The Borrower and each of its
Subsidiaries (i) is a corporation, limited liability company or limited
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, (ii) is duly qualified to do business
and is in good standing under the laws of each jurisdiction in which failure to
be so qualified and in good standing could not reasonably be expected to have a
Material Adverse Effect and (iii) has all requisite corporate, company or
partnership power and authority to own,
37
operate and encumber its property and to conduct its business as presently
conducted and as proposed to be conducted.
4.2 Authority.
(A) The execution, delivery, performance and filing, as the case may
be, of each of the Transaction Documents which must be executed or filed by the
Borrower or any of its Subsidiaries or which have been executed or filed as
required by this Agreement and to which the Borrower or any of its Subsidiaries
is party, and the consummation of the transactions contemplated thereby, have
been duly approved by the respective boards of directors or managers, or by the
partners, as applicable, and, if necessary, the shareholders, members or
partners, as applicable, of the Borrower and its Subsidiaries, and such
approvals have not been rescinded. No other corporate, company or partnership
action or proceedings on the part of the Borrower or its Subsidiaries are
necessary to consummate such transactions.
(B) Each of the Transaction Documents to which the Borrower or any of
its Subsidiaries is a party has been duly executed, delivered or filed, as the
case may be, by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, is in full force and effect
and no material term or condition thereof has been amended, modified or waived
without the prior written consent of the Required Lenders, and the Borrower and
its Subsidiaries have, and, to the best of the Borrower's and its Subsidiaries'
knowledge, all other parties thereto have, performed and complied with all the
material terms, provisions, agreements and conditions set forth therein and
required to be performed or complied with by such parties on or before the date
hereof, and no unmatured default, default or breach of any material covenant by
any such party exists thereunder.
4.3 No Conflict; Governmental Consents. The execution, delivery and
performance of each of the Loan Documents and other Transaction Documents to
which the Borrower or any of its Subsidiaries is a party do not and will not (i)
conflict with the Charter Documents of the Borrower or any such Subsidiary, (ii)
constitute a tortious interference with any Contractual Obligation of any Person
or conflict with, result in a breach of or constitute (with or without notice or
lapse of time or both) a default under any Requirement of Law (including,
without limitation, any Environmental Property Transfer Act) or Contractual
Obligation of the Borrower or any such Subsidiary, or require termination of any
Contractual Obligation, (iii) result in or require the creation or imposition of
any Lien whatsoever upon any of the property or assets of the Borrower or any
such Subsidiary, other than Liens permitted by the Loan Documents, or (iv)
require any approval of the Borrower's or any such Subsidiary's shareholders
except such as have been obtained. The execution, delivery and performance of
each of the Transaction Documents to which the Borrower or any of its
Subsidiaries is a party do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by any
Governmental Authority, including under any Environmental Property Transfer Act,
except (i) filings, consents or notices which have been made, obtained or given,
or which, if not made, obtained or given, individually or in the aggregate could
not reasonably be expected to have a Material Adverse Effect and (ii) filings
necessary to create or perfect security interests in the Collateral.
4.4 Financial Statements. All balance sheets, statements of profit and
loss and other financial data that have been given to each Lender by or on
behalf of Borrower and the Subsidiaries (the "Financial Information") are
complete and correct in all material respects,
38
accurately present the financial condition of Borrower and the Subsidiaries as
of the dates, and the results of its operations for the periods specified in the
Financial Information, and have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the periods
covered thereby. Except as specifically disclosed as to creditor, debtor, amount
and security) by the Financial Information, Borrower and Subsidiaries do not
have outstanding any loan or indebtedness, direct or contingent, to any party,
other than the indebtedness due and owing to Lenders, and none of its assets is
subject to any security interest, lien or other encumbrance in favor of anyone
other than Agent (except for the Permitted Existing Liens). There has been no
change in the assets, liabilities or financial condition of Borrower from that
set forth in the Financial Information other than changes in the ordinary course
of affairs, none of which changes has been materially adverse to Borrower. After
giving effect to the Acquisitions, neither Borrower nor any of the Guarantors
are or will be rendered insolvent by the indebtedness incurred in connection
therewith, will be left with unreasonably small capital with which to engage its
business or will have incurred debts beyond its ability to pay such debts as
they mature.
4.5 No Material Adverse Change Since the date hereof, there has
occurred no event or circumstance which has had or could reasonably be expected
to have a Material Adverse Effect.
4.6 Taxes.
(A) Tax Examinations. All material deficiencies which have been
asserted against the Borrower or any of the Borrower's Subsidiaries as a result
of any federal, state, local or foreign tax examination for each taxable year in
respect of which an examination has been conducted have been fully paid or
finally settled or are being contested in good faith, and as of the date hereof
no issue has been raised by any taxing authority in any such examination which,
by application of similar principles, reasonably can be expected to result in
assertion by such taxing authority of a material deficiency for any other year
not so examined which has not been reserved for in the Borrower's consolidated
financial statements to the extent, if any, required by Agreement Accounting
Principles.
(B) Payment of Taxes. All tax returns and reports of the Borrower and
its Subsidiaries required to be filed have been timely filed, and all taxes,
assessments, fees and other governmental charges thereupon and upon their
respective property, assets, income and franchises which are shown in such
returns or reports to be due and payable have been paid except those items which
are being contested in good faith and have been reserved for in accordance with
Agreement Accounting Principles or for which the failure to file could not be
reasonably expected to result in the payment of amounts by the Borrower and its
Subsidiaries in the aggregate in excess of $2,500,000.00. The Borrower has no
knowledge of any proposed tax assessment against the Borrower or any of its
Subsidiaries that will have or could reasonably be expected to have a Material
Adverse Effect.
4.7 Litigation; Loss Contingencies and Violations. There is no action,
suit, proceeding, arbitration or (to the Borrower's knowledge after diligent
inquiry) investigation before or by any Governmental Authority or private
arbitrator pending or, to the Borrower's knowledge after diligent inquiry,
threatened against the Borrower or any of its Subsidiaries or any property of
any of them (i) challenging the validity or the enforceability of any material
provision of the Transaction Documents or (ii) which will have or could
reasonably be expected to have a
39
Material Adverse Effect. There is no material loss contingency within the
meaning of Agreement Accounting Principles which has not been reflected in the
consolidated financial statements of the Borrower and its Subsidiaries prepared
and delivered pursuant to Section 5.1(A) for the fiscal period during which such
material loss contingency was incurred. Neither the Borrower nor any of its
Subsidiaries is (A) in violation of any applicable Requirements of Law which
violation will have or could reasonably be expected to have a Material Adverse
Effect, or (B) subject to or in default with respect to any final judgment,
writ, injunction, restraining order or order of any nature, decree, rule or
regulation of any court or Governmental Authority which will have or could
reasonably be expected to have a Material Adverse Effect.
4.8 Subsidiaries. Schedule 4.8 to this Agreement (i) contains a
description as of the Effective Date (or as of the date of any supplement
thereto) of the corporate structure of, the Borrower and its Subsidiaries and
any other Person in which the Borrower or any of its Subsidiaries holds an
Equity Interest; and (ii) accurately sets forth as of the Effective Date (or as
of the date of any supplement thereto) (A) the correct legal name, the
jurisdiction of incorporation or formation and the jurisdictions in which each
of the Borrower and the Subsidiaries of the Borrower is qualified to transact
business as a foreign corporation or other foreign entity and (B) a summary of
the direct and indirect partnership, joint venture, or other Equity Interests,
if any, of the Borrower and each Subsidiary of the Borrower in any Person that
is not a corporation. After the formation or acquisition of any New Subsidiary
permitted under Section 5.3(F)(ii), if requested by the Agent, the Borrower
shall provide a supplement to Schedule 4.8 to this Agreement. None of the issued
and outstanding Capital Stock of the Borrower or any of its Subsidiaries is
subject to any redemption or repurchase agreement. The outstanding Capital Stock
of the Borrower and each of the Borrower's Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable. The Borrower has no Subsidiaries
other than (i) the Subsidiaries set forth on Schedule 4.8 and (ii) any
Subsidiaries acquired in connection with a Permitted Acquisition, in connection
with which the Borrower shall have provided all of the documents, instruments
and agreements as required by this Agreement.
4.9 ERISA. No Benefit Plan has incurred any material accumulated
funding deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the
Code) whether or not waived. Neither the Borrower nor any member of the
Controlled Group has incurred any material liability to the PBGC which remains
outstanding other than the payment of premiums, and there are no premium
payments which have become due which are unpaid. Schedule B to the most recent
annual report filed with the IRS with respect to each Benefit Plan and, if so
requested, furnished to the Lender, is complete and accurate. Since the date of
each such Schedule B, there has been no material adverse change in the funding
status or financial condition of the Benefit Plan relating to such Schedule B.
Neither the Borrower nor any member of the Controlled Group has (i) failed to
make a required contribution or payment to a Multiemployer Plan or (ii) made a
complete or partial withdrawal under Sections 4203 or 4205 of ERISA from a
Multiemployer Plan, in either event which could result in any material
liability. Neither the Borrower nor any member of the Controlled Group has
failed to make a required installment or any other required payment under
Section 412 of the Code, in either case involving any material amount, on or
before the due date for such installment or other payment. Neither the Borrower
nor any member of the Controlled Group is required to provide security to a
Benefit Plan under Section 401(a)(29) of the Code due to a Plan amendment that
results in an increase in current liability for the plan year. Neither the
Borrower nor any of its Subsidiaries maintains or contributes to any employee
welfare benefit plan within the meaning of Section 3(1) of ERISA which provides
benefits to employees after termination of employment other than as required by
Section 601 of
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ERISA. Each Plan which is intended to be qualified under Section 401(a) of the
Code as currently in effect is so qualified, and each trust related to any such
Plan is exempt from federal income tax under Section 501(a) of the Code as
currently in effect. The Borrower and all Subsidiaries are in compliance in all
material respects with the responsibilities, obligations and duties imposed on
them by ERISA and the Code with respect to all Plans. Neither the Borrower nor
any of its Subsidiaries nor any fiduciary of any Plan has engaged in a nonexempt
prohibited transaction described in Sections 406 of ERISA or 4975 of the Code
which could reasonably be expected to subject the Borrower or any Dealership
Guarantor to material liability. Neither the Borrower nor any member of the
Controlled Group has taken or failed to take any action which would constitute
or result in a Termination Event, which action or inaction could reasonably be
expected to subject the Borrower to material liability. Neither the Borrower nor
any Subsidiary is subject to any liability under Sections 4063, 4064, 4069, 4204
or 4212(c) of ERISA and no other member of the Controlled Group is subject to
any liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of ERISA which
could reasonably be expected to subject the Borrower or any Dealership Guarantor
to material liability. Neither the Borrower nor any of its Subsidiaries has, by
reason of the transactions contemplated hereby, any obligation to make any
payment to any employee pursuant to any Plan or existing contract or
arrangement. For purposes of this Section 4.9 "material" means any noncompliance
or basis for liability which could reasonably be likely to subject the Borrower
or any of its Subsidiaries to liability individually or in the aggregate for all
such matters in excess of $2,500,000.00.
4.10 Accuracy of Information. The information, exhibits and reports
furnished by or on behalf of the Borrower and any of its Subsidiaries to the
Lenders in connection with the negotiation of, or compliance with, the Loan
Documents, the representations and warranties of the Borrower and its
Subsidiaries contained in the Transaction Documents, and all certificates and
documents delivered to the Lenders pursuant to the terms thereof, taken as a
whole, do not contain as of the date furnished any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein or therein, taken as a whole, in light of the
circumstances under which they were made, not misleading.
4.11 Securities Activities. Neither the Borrower nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
4.12 Material Agreements. Neither the Borrower nor any of its
Subsidiaries is a party to any Contractual Obligation or subject to any charter
or other corporate restriction which individually or in the aggregate will have
or could reasonably be expected to have a Material Adverse Effect. Neither the
Borrower nor any of its Subsidiaries has received notice or has knowledge that
(i) it is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation
applicable to it, or (ii) any condition exists which, with the giving of notice
or the lapse of time or both, would constitute a default with respect to any
such Contractual Obligation, in each case, except where such default or
defaults, if any, individually or in the aggregate will not have or could not
reasonably be expected to have a Material Adverse Effect.
4.13 Compliance with Laws; Compliance with Franchise Agreements. The
Borrower and its Subsidiaries are in compliance with all Requirements of Law
applicable to them and their respective businesses, in each case where the
failure to so comply individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect. The execution, delivery and
performance by each Sonic Dealership of any Loan Document to which it is a party
41
does not and will not conflict with the franchise agreement to which it is a
party. Each Sonic Dealership is, other than with respect to any Sonic Dealership
operating under an Irregular Franchise Agreement from the date hereof until the
condition set forth in Section 3.3(i) has been satisfied, operating under a
valid and enforceable franchise agreement.
4.14 Assets and Properties. The Borrower and each of its Subsidiaries
has good and marketable title to all of its assets and properties (tangible and
intangible, real or personal) owned by it or a valid leasehold interest in all
of its leased assets (except insofar as marketability may be limited by any laws
or regulations of any Governmental Authority affecting such assets), except
where the failure to have any such title will not have or could not reasonably
be expected to have a Material Adverse Effect, and all such assets and property
are free and clear of all Liens, except Liens permitted under Section 5.3(C).
Substantially all of the assets and properties owned by, leased to or used by
the Borrower and/or each such Subsidiary of the Borrower are in adequate
operating condition and repair, ordinary wear and tear excepted. Neither this
Agreement nor any other Transaction Document, nor any transaction contemplated
under any such agreement, will affect any right, title or interest of the
Borrower or such Subsidiary in and to any of its assets in a manner that will
have or could reasonably be expected to have a Material Adverse Effect.
4.15 Statutory Indebtedness Restrictions. Neither the Borrower nor any
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or the
Investment Company Act of 1940, or any other federal, state or local statute,
ordinance or regulation which limits its ability to incur indebtedness or its
ability to consummate the transactions contemplated hereby.
4.16 Insurance. The Borrower's and its Subsidiaries' insurance policies
and programs reflect coverage that is reasonably consistent with prudent
industry practice.
4.17 Labor Matters. As of the date hereof, to the Borrower's and its
Subsidiaries' knowledge, there are no material labor disputes to which the
Borrower or any of its Subsidiaries may become a party, including, without
limitation, any strikes, lockouts or other disputes relating to such Persons'
plants and other facilities.
4.18 Acquisitions. As of the Effective Date and as of the date of each
Acquisition, all material conditions precedent to, all consents from applicable
Governmental Authorities, and all other material consents necessary to permit,
the Acquisitions pursuant to the Acquisition Documents have been or will be
satisfied or waived by the Borrower with the prior written consent of the
Lender.
4.19 Environmental Matters. (a) (i) The operations of the Borrower and
its Subsidiaries comply in all material respects with Environmental, Health or
Safety Requirements of Law;
(ii) the Borrower and its Subsidiaries have all material
permits, licenses or other authorizations required under Environmental,
Health or Safety Requirements of Law and are in material compliance
with such permits;
(iii) neither the Borrower, any of its Subsidiaries nor any of
their respective present property or operations, or, to the best of,
the Borrower's or any of its Subsidiaries' knowledge, any of their
respective past property or operations, are subject
42
to or the subject of, any investigation known to the Borrower or any of
its Subsidiaries, any judicial or administrative proceeding, order,
judgment, decree, settlement or other agreement respecting: (A) any
material violation of Environmental, Health or Safety Requirements of
Law; (B) any material remedial action; or (C) any material claims or
liabilities arising from the Release or threatened Release of a
Contaminant into the environment;
(iv) there is not now, nor to the best of the Borrower's or
any of its Subsidiaries' knowledge has there ever been on or in the
property of the Borrower or any of its Subsidiaries any landfill, waste
pile, underground storage tanks, aboveground storage tanks, surface
impoundment or hazardous waste storage facility of any kind, any
polychlorinated biphenyls (PCBs) used in hydraulic oils, electric
transformers or other equipment, or any asbestos containing material
that in the case of any of the foregoing could be reasonably expected
to result in any material claims or liabilities; and
(v) neither the Borrower nor any of its Subsidiaries has any
material Contingent Obligation in connection with any Release or
threatened Release of a Contaminant into the environment.
(b) For purposes of this Section 4.19 "material" means any
noncompliance or basis for liability which could reasonably be likely to subject
the Borrower or any of its Subsidiaries to liability individually or in the
aggregate in excess of $5,000,000.00.
4.20 Benefits. The Borrower, each of its Subsidiaries and Sonic
Financial will benefit from the financing arrangement established by this
Agreement. Each Lender has stated and the Borrower acknowledges that, but for
the agreement by each of the Subsidiary Holding Companies, the Non-Dealership
Guarantors and the Dealership Guarantors to execute and deliver their respective
Subsidiary Holding Company Guaranty, Non-Dealership Guaranty, Dealership
Guaranty, Subsidiary Holding Company Security Agreement, Non-Dealership Security
Agreement and Dealership Security Agreement, and Sonic Financial's agreement to
deliver Sonic Financial's Pledge, no Lender would have made available the credit
facilities established hereby on the terms set forth herein.
4.21 Solvency. The Borrower and each of its Subsidiaries executing and
delivering any Loan Document is Solvent.
ARTICLE V: COVENANTS
The Borrower covenants and agrees that so long as any Commitment is
outstanding and thereafter until payment in full of all of the Obligations
(other than contingent indemnity obligations, but including Floor Plan
Indebtedness owed to either (i) Ford Credit or any of its Subsidiaries or
Affiliates, or (ii) Chrysler Financial or any of its Affiliates or
Subsidiaries), unless each Lender shall otherwise give its prior written consent
(or, in those instances as more particularly described in Section 7.1 hereof,
unless Ford Credit (in its capacity as Agent) alone shall otherwise give its
prior written consent):
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5.1 Reporting. The Borrower shall:
(A) Financial Reporting. Furnish to Agent (with sufficient copies for
each Lender), or with respect to subsection (iii) below, to each Lender in the
manner more particularly set forth therein:
(i) Quarterly Reports. As soon as practicable, and in any
event within forty five (45) days after the end of each fiscal quarter
in each fiscal year, the consolidated and consolidating balance sheet
of the Borrower and its Subsidiaries as at the end of such period and
the related consolidated and consolidating statements of income and
cash flows of the Borrower and its Subsidiaries for such fiscal quarter
and for the period from the beginning of the then current fiscal year
to the end of such fiscal quarter, certified by the chief financial
officer of the Borrower on behalf of the Borrower as fairly presenting
the consolidated and consolidating financial position of the Borrower
and its Subsidiaries as at the dates indicated and the results of their
operations and cash flows for the periods indicated in accordance with
Agreement Accounting Principles, subject to normal year end
adjustments.
(ii) Annual Reports. As soon as practicable, and in any event
within ninety (90) days after the end of each fiscal year, (a) the
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income, stockholders'
equity and cash flows of the Borrower and its Subsidiaries for such
fiscal year, and in comparative form the corresponding figures for the
previous fiscal year and (b) an audit report on the items listed in
clause (a) hereof (other than the consolidating statements) of
independent certified public accountants of recognized national
standing, which audit report shall be unqualified and shall state that
such financial statements fairly present the consolidated financial
position of the Borrower and its Subsidiaries as of the dates indicated
and the results of their operations and cash flows for the periods
indicated in conformity with Agreement Accounting Principles and that
the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards. The deliveries made pursuant to
this clause (ii) shall be accompanied by any management letter prepared
by the above-referenced accountants.
(iii) Monthly Statements. As soon as practicable after a
Lender's request, and in any event within five (5) Business Days after
such request, with respect to a Sonic Dealership with which such Lender
has outstanding a Wholesale Line, certified copies of direct (factory)
statements provided by such Sonic Dealership to a manufacturer.
(iv) Officer's Certificate. Together with each delivery of any
financial statement pursuant to clauses (i) and (ii) of this Section
5.1(A), an Officer's Certificate of the Borrower, substantially in the
form of Exhibit F attached hereto and made a part hereof, stating that
no Event of Default or Unmatured Default exists, or if any Event of
Default or Unmatured Default exists, stating the nature and status
thereof and setting forth (X) such financial statements and information
as shall be reasonably acceptable to the Lender and (Y) a valuation of
the Collateral.
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(B) Notice of Event of Default. Promptly upon any of the chief
executive officer, chief operating officer, chief financial officer, treasurer
or controller of the Borrower or any of its Subsidiaries obtaining knowledge (i)
of any condition or event which constitutes an Event of Default or Unmatured
Default, or (ii) that any Person has given any written notice to the Borrower or
any Subsidiary of the Borrower or taken any other action with respect to a
claimed default or event or condition of the type referred to in Section 6.1(e),
deliver to the Agent a notice specifying (a) the nature and period of existence
of any such claimed default, Event of Default, Unmatured Default, condition or
event, (b) the notice given or action taken by such Person in connection
therewith, and (c) what action the Borrower has taken, is taking and proposes to
take with respect thereto.
(C) Lawsuits. (i) Promptly upon the Borrower obtaining knowledge of the
institution of, or written threat of, any action, suit, proceeding, governmental
investigation or arbitration against or affecting the Borrower or any of its
Subsidiaries or any property of the Borrower or any of its Subsidiaries, which
action, suit, proceeding, governmental investigation or arbitration exposes, or
in the case of multiple actions, suits, proceedings, governmental investigations
or arbitrations arising out of the same general allegations or circumstances
which expose, in the Borrower's reasonable judgment, the Borrower or any of its
Subsidiaries to liability in an amount aggregating $5,000,000.00 or more, give
written notice thereof to Agent and provide such other information as may be
reasonably available to enable each Lender and its respective counsel to
evaluate such matters; and (ii) in addition to the requirements set forth in
clause (i) of this Section 5.1(C), upon request of Agent, promptly give written
notice of the status of any action, suit, proceeding, governmental investigation
or arbitration covered by a report delivered pursuant to clause (i) above or
disclosed in any filing with the Commission and provide such other information
as may be reasonably available to it that would not violate any attorney-client
privilege by disclosure to each Lender and the Agent to enable each Lender or
the Agent and its counsel to evaluate such matters.
(D) ERISA Notices. Deliver or cause to be delivered to Agent, at the
Borrower's expense, the following information and notices as soon as reasonably
possible, and in any event:
(i) (a) within ten (10) Business Days after the Borrower
obtains knowledge that a Termination Event has occurred, a written
statement of the chief financial officer of the Borrower describing
such Termination Event and the action, if any, which the Borrower has
taken, is taking or proposes to take with respect thereto, and when
known, any action taken or threatened by the IRS, DOL or PBGC with
respect thereto and (b) within ten (10) Business Days after any member
of the Controlled Group obtains knowledge that a Termination Event has
occurred which could reasonably be expected to subject the Borrower or
any member of the Controlled Group to liability individually or in the
aggregate in excess of $2,500,000.00, a written statement of the chief
financial officer of the Borrower describing such Termination Event and
the action, if any, which the member of the Controlled Group has taken,
is taking or proposes to take with respect thereto, and when known, any
action taken or threatened by the IRS, DOL or PBGC with respect
thereto;
(ii) within ten (10) Business Days after the Borrower or any
of its Subsidiaries obtains knowledge that a prohibited transaction
(defined in Sections 406 of ERISA and Section 4975 of the Code) has
occurred, a statement of the chief financial
45
officer of the Borrower describing such transaction and the action
which the Borrower or such Subsidiary has taken, is taking or proposes
to take with respect thereto;
(iii) within ten (10) Business Days after the Borrower or any
of its Subsidiaries receives notice of any unfavorable determination
letter from the IRS regarding the qualification of a Plan under Section
401(a) of the Code, copies of each such letter;
(iv) within ten (10) Business Days after the filing thereof
with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and all communications received by the Borrower or
a member of the Controlled Group with respect to such request;
(v) within ten (10) Business Days after receipt by the
Borrower or any member of the Controlled Group of the PBGC's intention
to terminate a Benefit Plan or to have a trustee appointed to
administer a Benefit Plan, copies of each such notice;
(vi) within ten (10) Business Days after receipt by the
Borrower or any member of the Controlled Group of a notice from a
Multi-employer Plan regarding the imposition of withdrawal liability,
copies of each such notice;
(vii) within ten (10) Business Days after the Borrower or any
member of the Controlled Group fails to make a required installment or
any other required payment under Section 412 of the Code on or before
the due date for such installment or payment, a notification of such
failure; and
(viii) within ten (10) Business Days after the Borrower or any
member of the Controlled Group knows or has reason to know that (a) a
Multi-employer Plan has been terminated, (b) the administrator or plan
sponsor of a Multi-employer Plan intends to terminate a Multi-employer
Plan, or (c) the PBGC has instituted or will institute proceedings
under Section 4042 of ERISA to terminate a Multi-employer Plan.
For purposes of this Section 5.1(D), the Borrower, any of its Subsidiaries and
any member of the Controlled Group shall be deemed to know all facts known by
the Administrator of any Plan of which the Borrower or any member of the
Controlled Group or such Subsidiary is the plan sponsor.
(E) Labor Matters. Notify Agent in writing, promptly upon the
Borrower's learning thereof, of (i) any material labor dispute to which the
Borrower or any of its Subsidiaries may become a party, including, without
limitation, any strikes, lockouts or other disputes relating to such Persons'
plants and other facilities and (ii) any material liability incurred under the
Worker Adjustment and Retraining Notification Act with respect to the closing of
any plant or other facility of the Borrower or any of its Subsidiaries.
(F) Other Indebtedness. Deliver to Agent (i) a copy of each notice or
communication regarding potential or actual defaults (including any accompanying
officer's certificate) delivered by or on behalf of the Borrower or any of its
Subsidiaries to the holders of funded Indebtedness pursuant to the terms of the
agreements governing such Indebtedness, such delivery to be made at the same
time and by the same means as such notice or other communication is
46
delivered to such holders, and (ii) a copy of each notice or other communication
regarding potential or actual defaults received by the Borrower or any of its
Subsidiaries from the holders of funded Indebtedness pursuant to the terms of
such Indebtedness, such delivery to be made promptly after such notice or other
communication is received by the Borrower or any such Subsidiary.
(G) Other Reports. Deliver or cause to be delivered to Agent copies of
all financial statements, reports and notices, if any, sent or made available
generally by the Borrower to its securities holders or filed with the Commission
by the Borrower, all press releases made available generally by the Borrower or
any of the Borrower's Subsidiaries to the public concerning material
developments in the business of the Borrower or any such Subsidiary and all
notifications received from the Commission by the Borrower or its Subsidiaries
pursuant to the Securities Exchange Act of 1934 and the rules promulgated
thereunder (other than customary comment letters received in connection with
registration statements or other routine communications between the Commission
and the Borrower).
(H) Environmental Notices. As soon as possible and in any event within
ten (10) days after receipt by the Borrower or any of its Subsidiaries, a copy
of (i) any notice or claim to the effect that the Borrower or any of its
Subsidiaries is or may be liable to any Person as a result of the Release by the
Borrower, any of its Subsidiaries, or any other Person of any Contaminant into
the environment, and (ii) any notice alleging any violation of any
Environmental, Health or Safety Requirements of Law by the Borrower or any of
its Subsidiaries if, in either case, such notice or claim relates to an event
which could reasonably be expected to subject the Borrower or any Subsidiary to
liability individually or in the aggregate in excess of $5,000,000.00.
(I) Other Information. Promptly upon receiving a request therefore from
Agent, prepare and deliver to Agent such other information with respect to the
Borrower, any of its Subsidiaries, or the Collateral, including, without
limitation, schedules identifying and describing the Collateral and any
dispositions thereof, as from time to time may be reasonably requested by Agent.
5.2 Affirmative Covenants.
(A) Existence, Etc. Except for mergers permitted pursuant to Section
5.3(H), the Borrower shall, and shall cause each of its Subsidiaries to, at all
times maintain its corporate company or partnership existence, as applicable,
and preserve and keep, or cause to be preserved and kept, in full force and
effect its rights and franchises material to its businesses.
(B) Powers; Conduct of Business. The Borrower shall, and shall cause
each of its Subsidiaries to, qualify and remain qualified to do business in each
jurisdiction in which the nature of its business requires it to be so qualified
and where the failure to be so qualified will have or could reasonably be
expected to have a Material Adverse Effect. The Borrower will, and will cause
each Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted.
(C) Compliance with Laws, Etc The Borrower shall, and shall cause its
Subsidiaries to, (a) comply with all Requirements of Law and all restrictive
covenants affecting such Person or the business, properties, assets or
operations of such Person, and (b) obtain as needed all permits necessary for
its operations and maintain such permits in good standing, unless failure to
comply or obtain could not reasonably be expected to have a Material Adverse
Effect.
47
(D) Payment of Taxes and Claims; Tax Consolidation. The Borrower shall
pay, and cause each of its Subsidiaries to pay, (i) all taxes, assessments and
other governmental charges imposed upon it or on any of its properties or assets
or in respect of any of its franchises, business, income or property before any
penalty or interest accrues thereon, and (ii) all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or may become a Lien (other
than a Lien permitted by Section 5.3(C)) upon any of the Borrower's or such
Subsidiary's property or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided, however, that no such taxes,
assessments and governmental charges referred to in clause (i) above or claims
referred to in clause (ii) above (and interest, penalties or fines relating
thereto) need be paid if being contested in good faith by appropriate
proceedings diligently instituted and conducted and if such reserve or other
appropriate provision, if any, as shall be required in conformity with Agreement
Accounting Principles shall have been made therefor. The Borrower will not, nor
will it permit any of its Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any other Person other than the consolidated
return of the Borrower.
(E) Insurance. The Borrower shall maintain for itself and its
Subsidiaries, or shall cause each of its Subsidiaries to maintain in full force
and effect, insurance policies and programs reflecting coverage that is
reasonably consistent with prudent industry practice.
(F) Inspection of Property; Books and Records; Discussions. The
Borrower shall permit and cause each of the Borrower's Subsidiaries to permit,
any authorized representative(s) designated by Agent or any Lender to visit and
inspect any of the properties of the Borrower or any of its Subsidiaries, to
examine, audit, check and make copies of their respective financial and
accounting records, books, journals, orders, receipts and any correspondence and
other data relating to their respective businesses or the transactions
contemplated hereby or by the Acquisitions (including, without limitation, in
connection with environmental compliance, hazard or liability), and to discuss
their affairs, finances and accounts with their officers and independent
certified public accountants, all upon reasonable notice and at such reasonable
times during normal business hours, as often as may be reasonably requested;
provided, that while no Event of Default exists, all of the foregoing shall be
at the joint expense of the Lenders. The Borrower shall keep and maintain, and
cause each of the Borrower's Subsidiaries to keep and maintain, in all material
respects, proper books of record and account in which entries in conformity with
Agreement Accounting Principles shall be made of all dealings and transactions
in relation to their respective businesses and activities, including, without
limitation, transactions and other dealings with respect to the Collateral. If
an Event of Default has occurred and is continuing, the Borrower, upon the
request of Agent or any Lender, shall turn over any such records to Agent, such
Lender, or their respective representatives.
(G) Insurance and Condemnation Proceeds. The Borrower directs (and, if
applicable, shall cause its Subsidiaries to direct) all insurers under policies
of property damage, boiler and machinery and business interruption insurance and
payors of any condemnation claim or award relating to the property to pay all
proceeds payable under such policies or with respect to such claim or award for
any loss with respect to the Collateral directly to Agent (for the benefit of
the Lenders); provided, however, in the event that such proceeds or award are
less than $250,000.00 ("Excluded Proceeds"), unless an Event of Default shall
have occurred and be continuing, Agent shall remit such Excluded Proceeds to the
Borrower or Subsidiary, as
48
applicable. Each such policy shall contain a long-form loss-payable endorsement
naming Agent (for the benefit of the Lenders)as loss payee, which endorsement
shall be in form and substance acceptable to Agent. Agent shall, upon receipt of
such proceeds (other than Excluded Proceeds) and at the Borrower's direction,
either apply the same to the principal amount of the Advances outstanding at the
time of such receipt and create a corresponding reserve against the Commitment
in an amount equal to such application (the "Decision Reserve") or hold them as
cash collateral for the Obligations in an interest bearing account. For up to
150 days from the date of any loss (the "Decision Period"), the Borrower may
notify Agent that it intends to restore, rebuild or replace the property subject
to any insurance payment or condemnation award and shall, as soon as practicable
thereafter, provide Agent detailed information, including a construction
schedule and cost estimates. Should an Event of Default occur at any time during
the Decision Period, should the Borrower notify Agent that it has decided not to
rebuild or replace such property during the Decision Period, or should the
Borrower fail to notify Agent of the Borrower's decision during the Decision
Period, then the amounts held as cash collateral pursuant to this Section 5.2(G)
or as the Decision Reserve shall be applied as a mandatory prepayment of the
Advances pursuant to Section 2.2(B). Proceeds held as cash collateral pursuant
to this Section 5.2(G) or constituting the Decision Reserve shall be disbursed
as payments for restoration, rebuilding or replacement of such property become
due; provided, however, should an Event of Default occur after the Borrower has
notified Agent that it intends to rebuild or replace the property, the Decision
Reserve or amounts held as cash collateral shall be applied as a mandatory
prepayment of the Advances pursuant to Section 2.2(B). In the event the Decision
Reserve is to be applied as a mandatory prepayment to the Advances, the Borrower
shall be deemed to have requested Advances in an amount equal to the Decision
Reserve, and such Advances shall be made regardless of any failure of the
Borrower to meet the conditions precedent set forth in Article III. Upon
completion of the restoration, rebuilding or replacement of such property, the
unused proceeds shall constitute net cash proceeds of an Asset Sale and shall be
applied as a mandatory prepayment of the Advances pursuant to Section 2.2(B).
(H) ERISA Compliance. The Borrower shall, and shall cause each of the
Borrower's Subsidiaries to, establish, maintain and operate all Plans, if any,
to comply in all material respects with the provisions of ERISA, the Code, all
other applicable laws, and the regulations and interpretations thereunder and
the respective requirements of the governing documents for such Plans, except
where the failure to comply will not or could not reasonably be expected to
subject the Borrower and its Subsidiaries to liability individually or in the
aggregate in excess of $2,500,000.00.
(I) Maintenance of Property. The Borrower shall cause all property used
or useful in the conduct of its business or the business of any Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Borrower may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 5.2(H) shall prevent the
Borrower from discontinuing the operation or maintenance of any of such property
if such discontinuance is, in the judgment of the Borrower, desirable in the
conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to any Lender.
49
(J) Environmental Compliance. The Borrower and its Subsidiaries shall
comply with all Environmental, Health or Safety Requirements of Law, except
where noncompliance could not reasonably be expected to subject the Borrower and
its Subsidiaries to liability individually or in the aggregate in excess of
$5,000,000.00. Neither the Borrower nor any of its Subsidiaries shall be the
subject of any proceeding or investigation pertaining to (i) the Release by the
Borrower or any of its Subsidiaries of any Contaminant into the environment or
(ii) the liability of the Borrower or any of its Subsidiaries arising from the
Release by any other Person of any Contaminant into the environment, which, in
either case, subjects or is reasonably likely to subject the Borrower and its
Subsidiaries individually or in the aggregate to liability in excess of the
amount set forth above.
(K) Use of Proceeds. Except as otherwise provided in Section 2.1 (A)
(1) hereof, the Borrower shall use the proceeds of Advances to (i) fund
Permitted Acquisitions and (ii) provide funds for working capital needs and
other general corporate purposes of the Borrower. The proceeds of Advances
hereunder may not be used to make any mandatory prepayment under Section 2.2(B).
The Borrower will not, nor will it permit any Subsidiary to, use any of the
proceeds of the Loans to purchase or carry any "Margin Stock" or to make any
Acquisition, other than any Permitted Acquisition pursuant to Section 5.3(F).
(L) Addition of Guarantors. (i) Dealership Guarantors and Subsidiary
Holding Company Guarantors. The Borrower shall cause each present and future
Subsidiary Holding Company and each Sonic Dealership which has not heretofore
provided a Subsidiary Holding Company Guaranty or a Dealership Guaranty to
Agent, to deliver to Agent a Subsidiary Holding Company Guaranty, in the form of
Exhibit C-2, or a Dealership Guaranty, in the form of Exhibit C-1, a Subsidiary
Holding Company Security Agreement, in the form of Exhibit D-2, or a Dealership
Security Agreement, in the form of Exhibit D-1, UCC-1 Financing Statements, an
acknowledgment to be bound by the Cross Agreement, and an acknowledgment to be
bound by the Contribution Agreement, together with appropriate corporate
resolutions, opinions and other documentation in form and substance reasonably
satisfactory to Agent. Each Subsidiary Holding Company and each Sonic Dealership
shall provide such Subsidiary Holding Company Guaranty or Dealership Guaranty
and Collateral Documents prior to or simultaneously with its Acquisition.
(ii) Non-Dealership Guarantors. The Borrower may, but shall
not be obligated to, designate from time to time by written notice to Agent,
additional Subsidiaries whose principal line of business is incidental to the
retail sales of automobiles and related services, to guaranty the Obligations as
"Non-Dealership Guarantors." Upon such designation, Borrower will cause each
such Non-Dealership Guarantor to deliver to Agent a Non-Dealership Guaranty, in
the form of Exhibit C-3, a Non-Dealership Security Agreement, in the form of
Exhibit D-3, UCC-1 Financing Statements, an acknowledgment to be bound by the
Cross Agreement, and an acknowledgment to be bound by the Contribution
Agreement, together with appropriate corporate resolutions, opinions and other
documentation in form and substance reasonably satisfactory to Agent.
(M) Future Liens on Real Property. The Borrower shall, and shall cause
each of its Subsidiaries that is required to guarantee the Obligations to,
execute and deliver to Agent, immediately upon its acquisition or leasing of any
real property after the date hereof, a mortgage, deed of trust, collateral
assignment or other appropriate instrument evidencing a Lien upon any such
acquired property, lease or interest, to be in form and substance reasonably
50
acceptable to the Lenders and subject only to such Liens as otherwise shall be
permitted by this Agreement and the Borrower or the applicable Subsidiary, as
the case may be, shall have provided the Agent or any Lender with such opinions,
landlord and mortgagee waivers or title insurance as the Agent or any Lender
shall have reasonably requested in connection with such acquisition or leasing
of real property. The foregoing provision shall apply to the leasing of any real
property only if (i) the term of such lease (without regard to any extension
thereof at then current market rent) is more than five years or (ii) such lease
has a material value by reason of a purchase option, below-market rent or
otherwise.
(N) Franchise Agreements. The Borrower shall use its reasonable best
efforts to obtain waivers under existing and future franchise agreements on
terms and conditions acceptable to the Lenders sufficient to permit the security
interests and liens contemplated hereunder. To the extent any franchise
agreement materially limits the security interests and liens contemplated
hereunder or under any Collateral Document, the Borrower shall notify the Agent
of such restriction or limitation and to the extent such franchise agreement
relates to an Acquisition to be effected by the Borrower, prior to such
Acquisition becoming a Permitted Acquisition, the Initial Lender shall have
provided their written approval of such franchise agreement.
(O) Pledge of Capital Stock. The Borrower shall, and shall cause each
of the Subsidiary Holding Companies and any Subsidiary owning any Capital Stock
in an Non-Dealership Guarantor to pledge to and grant Agent (for the benefit of
the Lenders) a first perfected security interest in all of its Capital Stock in
each Sonic Dealership and/or other Subsidiary Holding Company and/or
Non-Dealership Guarantor, as the case may be; provided, however, such Capital
Stock will be required to be pledged only to the extent permitted by the
manufacturer under the applicable franchise agreement. In the event that a
manufacturer refuses to consent to the pledge by the Borrower or a Subsidiary
Holding Company of the Borrower's or Subsidiary Holding Companies' Capital Stock
in a Sonic Dealership, the Borrower and/or Subsidiary Holding Company must
execute a Waiver, Guaranty and Disbursement Agreement.
5.3 Negative Covenants.
(A) Indebtedness. Neither the Borrower nor any of its Subsidiaries
shall directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness, except:
(i) the Obligations;
(ii) Permitted Existing Indebtedness and Permitted Refinancing
Indebtedness;
(iii) Indebtedness in respect of obligations secured by
Customary Permitted Liens;
(iv) Indebtedness constituting Contingent Obligations in
respect of Indebtedness otherwise permitted hereunder;
(v) Indebtedness arising from intercompany loans from the
Borrower to any Guarantor or from any Subsidiary to the Borrower or any
Guarantor; provided that in
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each case such Indebtedness is subordinated upon terms satisfactory to
the Agent and the Required Lenders to the obligations of the Borrower
and its Subsidiaries with respect to the Obligations;
(vi) Guaranties by the Borrower of Indebtedness permitted to
be incurred by any Subsidiary;
(vii) Indebtedness with respect to surety, appeal and
performance bonds obtained by the Borrower or any of its Subsidiaries
in the ordinary course of business;
(viii) Indebtedness arising under any Guaranty;
(ix) Indebtedness constituting that portion of the deferred
purchase price payable by the Borrower in connection with an
Acquisition, which such Indebtedness shall not be secured by any of the
Collateral;
(x) Indebtedness not in excess of $2,500,000.00 in connection
with the Liens set forth in Section 5.3(C)(iv);
(xi) Floor Plan Indebtedness incurred by a Subsidiary ;
(xii) Indebtedness existing under the Indentures;
(xiii) Indebtedness issued by Borrower (which may or may not
be guaranteed by the Subsidiaries of Borrower) and otherwise pari passu
or subordinated in right of payment to Indebtedness under the
Indentures and subordinated to the Obligations on terms reasonably
satisfactory to the Required Lenders (it being acknowledged that the
subordination provisions relating to the Indebtedness issued pursuant
to the Indentures are and would be satisfactory to the Required
Lenders), provided, however, that the aggregate amount of Indebtedness
allowed under this Section 5.3 (a) (xiii) may not exceed in dollar
amount the difference between $300,000,000.00 and the amount of
Indebtedness issued under the 2000 Indenture.
(B) Sales of Assets. Neither the Borrower nor any of its Subsidiaries
shall sell, assign, transfer, lease, convey or otherwise dispose of any property
(including the Capital Stock of any Subsidiary), whether now owned or hereafter
acquired, or any income or profits therefrom, or enter into any agreement to do
so, except:
(i) sales of inventory in the ordinary course of business;
(ii) the disposition in the ordinary course of business of
equipment that is obsolete, excess or no longer useful in the
Borrower's or its Subsidiaries' business; and
(iii) sales, assignments, transfers, leases, conveyances or
other dispositions of other assets (including sales of Capital Stock of
a Subsidiary) if such transaction (a) is for all cash consideration,
(b) is for not less than Fair Value, (c) when combined with all such
other transactions (each such transaction being valued at book value)
(i) during the immediately preceding twelve-month period, represents
the disposition of not greater than $2,500,000.00, and (ii) during the
period from the date hereof to the date of such
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proposed transaction, represents the disposition of not greater than
$5,000,000.00 and (d) is a sale by the Borrower of Capital Stock in any
Subsidiary, except as provided in subclause (c) above, the Borrower
shall continue to own, of record and beneficially, with sole voting and
dispositive power, 100% (unless required by the Subsidiary's franchise
agreement to be less, in which event at least 80%) of the outstanding
shares of Capital Stock of any such Subsidiary.
(C) Liens. Neither the Borrower nor any of its Subsidiaries shall
directly or indirectly create, incur, assume or permit to exist any Lien on or
with respect to any of their respective property or assets, except:
(i) Permitted Existing Liens;
(ii) Customary Permitted Liens;
(iii) Liens securing the Obligations;
(iv) Liens securing Floor Plan Indebtedness, provided,
however, that with respect to Floor Plan Indebtedness owing to any
finance source which is not a Lender, only the following assets may be
encumbered by a Lien: (i) the Inventory specifically financed under the
terms of such Floor Plan Indebtedness, and (ii) any and all proceeds of
the sale or other disposition of or realization upon any such item of
Inventory; and
(v) Liens (other than on the stock of any Subsidiaries)
securing other obligations not exceeding $2,500,000.00 in the aggregate
at any time outstanding.
In addition, neither the Borrower nor any of its Subsidiaries shall become a
party to any agreement, note, indenture or other instrument, or take any other
action, which would prohibit the creation of a Lien on any of its properties or
other assets in favor of the Agent (for the benefit of the Lenders), as
collateral for the Obligations; provided that any agreement, note, indenture or
other instrument in connection with Liens permitted pursuant to clause (i) above
may prohibit the creation of a Lien in favor of the Agent (for the benefit of
the Lenders) on the items of property subject to such Lien.
(D) Investments. Except to the extent permitted pursuant to paragraph
(G) below, neither the Borrower nor any of its Subsidiaries shall directly or
indirectly make or own any Investment except:
(i) Investments in Cash Equivalents;
(ii) Permitted Existing Investments in an amount not greater
than the amount thereof on the date hereof;
(iii) Investments in trade receivables or received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course
of business;
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(iv) Investments consisting of intercompany loans from any
Subsidiary to the Borrower or any other Subsidiary permitted by Section
5.3(A)(v);
(v) Investments in any Guarantor;
(vi) Investments constituting Permitted Acquisitions; and
(vii) Investments in addition to those referred to elsewhere
in this Section 5.3(D) in an amount not to exceed $500,000.00 in the
aggregate at any time outstanding;
provided, however, that the Investments described in clauses (vii) and (viii)
above shall not be permitted if either an Event of Default or Unmatured Default
shall have occurred and be continuing on the date thereof or would result
therefrom.
(E) Restricted Payments. Neither the Borrower nor any of its
Subsidiaries shall declare or make any Restricted Payments, except:
(i) where the consideration therefor consists solely of Equity
Interests (but excluding Disqualified Stock) of the Borrower or its
Subsidiaries provided no Change of Control would occur as a result
thereof;
(ii) in connection with the payment of dividends by a
Subsidiary to tits parent provided such parent is a Guarantor; and
(iii) the redemption or repurchase by Borrower of any Equity
Interests of the Borrower or a Subsidiary of Borrower, now or hereafter
outstanding, provided that after giving effect to such redemption or
repurchase, Borrower remains in compliance with the Financial Covenants
set forth in Section 5.4 hereof.
(F) Conduct of Business; Subsidiaries; Acquisitions. (i) Neither the
Borrower nor any of its Subsidiaries shall engage in any business other than the
businesses engaged in by the Borrower on the date hereof and any business or
activities which are substantially similar, related or incidental thereto.
(ii) The Borrower may create, acquire and/or capitalize any
Subsidiary (a "New Subsidiary") after the date hereof pursuant to any
transaction that is permitted by or not otherwise prohibited by this Agreement;
provided that upon the creation or acquisition of each New Subsidiary, the
requirements set forth in Section 5.2(L) hereof shall have been satisfied and
all New Subsidiaries that are Material Subsidiaries shall be Controlled
Subsidiaries. To the extent any Subsidiary has Equity Interests issued to a
Minority Holder, the franchise agreement under which such Subsidiary operates
shall be limited to a Restricted Franchise Agreement.
(iii) The Borrower shall not make any Acquisitions, other than
Acquisitions meeting the following requirements (each such Acquisition
constituting a "Permitted Acquisition"):
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(a) no Event of Default or Unmatured Default shall have
occurred and be continuing or would result from such Acquisition or the
incurrence of any Indebtedness in connection therewith;
(b) in the case of an Acquisition of Equity Interests of an
entity, such Acquisition shall be of one hundred percent (100%) of the
Equity Interests of such entity or if so restricted by such entity's
franchise agreement (a "Restricted Franchise Agreement"), such
Acquisition shall be of at least eighty percent (80%) of the Equity
Interests of such entity, provided, however, that such Equity Interests
of Minority Holders will be required to be pledged directly to the
Lender as a precondition to such Acquisition;
(c) the businesses being acquired shall be substantially
similar, related or incidental to the businesses or activities engaged
in by the Borrower and its Subsidiaries on the date hereof;
(d) after the end of each Quarter, or at such other frequency
as Agent or an Initial Lender may request, the Borrower shall deliver
to Agent a certificate from one of the Authorized Officers,
demonstrating to the reasonable satisfaction of Agent and the Required
Lenders that after giving effect to such Acquisition and the incurrence
of any Indebtedness hereunder and in connection herewith, on a pro
forma basis (both historically and on a projected basis), as if the
Acquisition and such incurrence of Indebtedness had occurred on the
first day of the twelve-month period ending on the last day of the
Borrower's most recently completed fiscal quarter, the Borrower would
have been in compliance with all of the covenants contained in this
Agreement, including, without limitation, the financial covenants set
forth in Section 5.4;
(f) the purchase is consummated pursuant to a negotiated
acquisition agreement on a non-hostile basis;
(g) after giving effect to such Acquisition, the
representations and warranties set forth in Article IV hereof shall be
true and correct in all material respects on and as of the date of such
Acquisition with the same effect as though made on and as of such date;
and
(h) the written consent of the Agent and the Required Lenders
shall have been obtained, which such consent shall not be unreasonably
withheld, in connection with any Acquisition if the acquisition price
therefore (including the maximum amount of any deferred portion thereof
or contingency payments payable in connection therewith) (computed with
any non-cash portion of the acquisition price being valued at the fair
value thereof as of the date of computation) exceeds $3,000,000.00 for
such Acquisition or series of related Acquisitions.
(i) the Borrower shall have obtained (and shall have based the
calculations set forth above on) historical audited financial
statements for the target and/or reviewed unaudited financial
statements for the target for a period of not less than (A) two (2)
years for Acquisitions in excess of $20,000,000.00 and (B) one (1) year
for any other Acquisition, together with tax returns for the one year
prior to such year, in each case obtained from the seller or provided
by independent certified public accountants retained
55
for the purposes of such Acquisition, broken down by fiscal quarter in
the Borrower's reasonable judgment, copies of which shall be provided
to Agent.
(j) the Borrower shall have obtained either (i) a new
franchise agreement between the Sonic Dealership and the manufacturer
on substantially the same terms as the franchise agreement entered into
between the manufacturer and the entity to be acquired in such
Permitted Acquisition or (ii) any consent required from a manufacturer
for the continued enforceability and validity of such franchise
agreement after the completion of a Permitted Acquisition shall have
been obtained.
(G) Transactions with Shareholders, Affiliates or Holders of Equity
Interests. Neither the Borrower nor any of its Subsidiaries shall directly or
indirectly enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder or holders of any of the Equity
Interests of the Borrower, or with any Affiliate of the Borrower which is not a
Guarantor, on terms that are less favorable to the Borrower or any of its
Subsidiaries, as applicable, than those that might be obtained in an arm's
length transaction at the time from Persons who are not such a holder or
Affiliate.
(H) Restriction on Fundamental Changes. Neither the Borrower nor any of
its Subsidiaries shall enter into any merger or consolidation, or liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of the Borrower's or any such
Subsidiary's business or property, whether now or hereafter acquired, except (i)
transactions permitted under Sections 5.3(B) or 5.3(G) (ii) the merger of a
Subsidiary of the Borrower into a Person acquired in connection with a Permitted
Acquisition; (iii) the merger of a wholly-owned Subsidiary of the Borrower with
and into the Borrower; and (iv) the merger of a Subsidiary of the Borrower with
another Subsidiary of the Borrower; provided, however, (i) with respect to any
such permitted mergers involving any Guarantor, the surviving corporation in the
merger shall also be or become a Guarantor; and (ii) after the consummation of
any such transaction, the Borrower shall be in compliance with the provisions of
Sections 5.2(K) and 5.3(E).
(I) Sales and Leasebacks. Except for transactions relating to any real
property financed under either the Permanent Loan Agreement, between Ford Credit
and certain Subsidiaries of Borrower, dated June 23, 2000, or the Master
Construction Loan Agreement, between Ford Credit and certain Subsidiaries of
Borrower, dated June 23, 2000, and subsequently sold by one of such Subsidiaries
of Borrower, neither the Borrower nor any of its Subsidiaries shall, without the
prior written consent of the Agent and the Required Lenders, become liable,
directly, by assumption or by Contingent Obligation, with respect to any lease,
whether an operating lease or a Capitalized Lease, of any property (whether real
or personal or mixed) (i) which it or one of its Subsidiaries sold or
transferred or is to sell or transfer to any other Person, or (ii) which it or
one of its Subsidiaries intends to use for substantially the same purposes as
any other property which has been or is to be sold or transferred by it or one
of its Subsidiaries to any other Person in connection with such lease.
(J) Margin Regulations. Neither the Borrower nor any of its
Subsidiaries, shall use all or any portion of the proceeds of any credit
extended under this Agreement to purchase or carry Margin Stock.
56
(K) ERISA. The Borrower shall not
(i) engage, or permit any of its Subsidiaries to engage, in
any prohibited transaction described in Sections 406 of ERISA or 4975
of the Code for which a statutory or class exemption is not available
or a private exemption has not been previously obtained from the DOL;
(ii) permit to exist any accumulated funding deficiency (as
defined in Sections 302 of ERISA and 412 of the Code), with respect to
any Benefit Plan, whether or not waived;
(iii) fail, or permit any Controlled Group member to fail, to
pay timely required contributions or annual installments due with
respect to any waived funding deficiency to any Benefit Plan;
(iv) terminate, or permit any Controlled Group member to
terminate, any Benefit Plan which would result in any liability of the
Borrower or any Controlled Group member under Title IV of ERISA;
(v) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any Controlled Group member
may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto;
(vi) fail, or permit any Controlled Group member to fail, to
pay any required installment or any other payment required under
Section 412 of the Code on or before the due date for such installment
or other payment; or
(vii) amend, or permit any Controlled Group member to amend, a
Plan resulting in an increase in current liability for the plan year
such that the Borrower or any Controlled Group member is required to
provide security to such Plan under Section 401(a)(29) of the Code,
except where such transactions, events, circumstances, or failures will not have
or is not reasonably likely to subject the Borrower and its Subsidiaries to
liability individually or in the aggregate in excess of $2,500,000.00.
(L) Issuance of Equity Interests. The Borrower shall not issue any
Equity Interests if as a result of such issuance a Change of Control shall
occur. None of the Borrower's Subsidiaries shall issue any Equity Interests
other than to the Borrower or if required by the applicable manufacturer in
connection with a Restricted Franchise Agreement or the state motor vehicle
dealer licensing authority, to Minority Holders whose Equity Interests (i) do
not exceed 20% of the Equity Interests of such Subsidiary and (ii) have been
pledged to the Lender (other than with respect to Equity Interests held by
Minority Holders as of the Effective Date); provided, however, that no such
issuance of Equity Interests shall be permitted hereunder unless the Subsidiary
with respect to which operates only under a Restricted Franchise Agreement.
(M) Corporate Documents; Franchise Agreements. Neither the Borrower nor
any of its Subsidiaries shall amend, modify or otherwise change any of the terms
or provisions in any of their respective constituent documents as in effect on
the date hereof in any manner adverse in
57
any material respect to the interests of either Initial Lender without the prior
written consent of each Initial Lender. The Borrower shall not permit any Sonic
Dealership to amend, modify or otherwise change any of the terms or provisions
of such Sonic Dealership's franchise agreement in any manner adverse in any
material respect to the interests of either Initial Lender without the prior
written consent of each Initial Lender.
(N) Fiscal Year. Neither the Borrower nor any of its consolidated
Subsidiaries shall change its fiscal year for accounting or tax purposes from a
period consisting of the 12-month period ending on December 31 of each calendar
year.
(O) Subsidiary Covenants. The Borrower will not, and will not permit
any Subsidiary to, create or otherwise cause to become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary to pay
dividends or make any other distribution on its stock, or make any other
Restricted Payment, pay any Indebtedness or other Obligation owed to the
Borrower or any other Subsidiary, make loans or advances or other Investments in
the Borrower or any other Subsidiary, or sell, transfer or otherwise convey any
of its property to the Borrower or any other Subsidiary.
(P) Hedging Obligations. The Borrower shall not and shall not permit
any of its Subsidiaries to enter into any interest rate, commodity or foreign
currency exchange, swap, collar, cap or similar agreements evidencing Hedging
Obligations, other than interest rate, foreign currency or commodity exchange,
swap, collar, cap or similar agreements entered into by the Borrower or a
Subsidiary pursuant to which the Borrower or such Subsidiary has hedged its
actual interest rate, foreign currency or commodity exposure.
(R) Payments on Subordinated Debt. The Borrower shall not make any
payments on any of the Debt Offering Notes except in accordance with the
Indenture.
5.4 Financial Covenants. The Borrower shall comply with the following:
(A) Current Ratio. The Borrower shall not at any time permit the ratio
(the "Current Ratio") of Current Assets of the Sonic Group on a consolidated
basis to Current Liabilities of the Sonic Group on a consolidated basis to be
less than 1.23 : 1.
(B) Fixed Charge Coverage Ratio. The Borrower shall maintain a ratio
("Fixed Charge Coverage Ratio") of (i) EBITDAR less Capital Expenditures, to
(ii) the sum of (a) Interest Expense plus (b) scheduled amortization of the
principal portion of all Indebtedness for money borrowed plus (c) Rentals plus
(d) taxes paid in cash during such period of the Borrower and its consolidated
Subsidiaries of at least 1.4 : 1 for each fiscal quarter ending from and after
the Effective Date. In each case the Fixed Charge Coverage Ratio shall be
determined as of the last day of each fiscal quarter for the four-quarter period
ending on such day.
(C) Interest Coverage Ratio. The Borrower shall maintain a ratio (the
"Interest Coverage Ratio") of EBITDA to Interest Expense of at least 2 : 1 for
each fiscal quarter ending from and after the Effective Date. In each case the
Interest Coverage Ratio shall be determined as of the last day of each fiscal
quarter for the four-quarter period ending on such day.
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(D) Total Adjusted Debt to EBITDA Ratio. The Borrower shall not at any
time permit the ratio (the "Adjusted Leverage Ratio") of (i) Total Adjusted Debt
of the Borrower and its consolidated Subsidiaries to (ii) EBITDA of the Borrower
and its consolidated Subsidiaries, to be greater than 2.25 : 1. The Adjusted
Leverage Ratio shall be calculated, in each case, determined as of the last day
of each fiscal quarter based upon (a) for Total Adjusted Debt, Total Adjusted
Debt as of the last day of each such fiscal quarter; and (b) for EBITDA, EBITDA
for the twelve-month period ending on such day calculated as set forth in the
definition thereof.
All financial covenants set forth in this Section 5.4 shall be
calculated by Agent based on the calculations set forth in and the financial
statements attached to Officer's Certificates delivered hereunder and shall be
binding on the Borrower for all purposes of this Agreement absent manifest
error.
ARTICLE VI: EVENT OF DEFAULTS
6.1 Event of Defaults. Each of the following occurrences shall
constitute an Event of Default under this Agreement:
(a) Failure to Make Payments When Due. The Borrower shall (i) fail to
pay when due any of the Obligations consisting of principal with respect to the
Advances or (ii) shall fail to pay within ten (10) days of the date when due any
of the other Obligations under this Agreement or the other Loan Documents.
(b) Breach of Certain Covenants. The Borrower shall fail duly and
punctually to perform or observe any agreement, covenant or obligation binding
on the Borrower under Sections 5.2(F), 5.2(K), 5.3 or 5.4.
(c) Breach of Representation or Warranty. Any representation or
warranty made or deemed made by the Borrower to the Lenders herein or by the
Borrower or any of its Subsidiaries in any of the other Loan Documents or in any
written statement or certificate at any time given by any such Person pursuant
to any of the Loan Documents shall be false or misleading in any material
respect on the date as of which made (or deemed made).
(d) Other Defaults. The Borrower shall default in the performance of or
compliance with any term contained in this Agreement (other than as covered by
paragraphs (a), (b) or (c) of this Section 6.1), or the Borrower or any of its
Subsidiaries shall default in the performance of or compliance with any term
contained in any of the other Loan Documents, and such default shall continue
for thirty (30) days after the occurrence thereof.
(e) Default as to Other Indebtedness. The Borrower or any of its
Subsidiaries shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with respect
to any Indebtedness (other than Indebtedness constituting the deferred portion
of the purchase price of an asset which is subject to a good faith dispute,
which, together with all such other outstanding disputed Indebtedness, is not in
excess of $5,000,000.00 and which is being contested by the Borrower, and
provided that the Borrower has set aside adequate reserves covering such
disputed Indebtedness) the outstanding principal amount of which Indebtedness is
in excess of $1,000,000.00; or any breach, default or event of default shall
occur, or any other condition shall exist under any instrument, agreement or
indenture pertaining to any such Indebtedness, if the effect thereof is
59
to cause an acceleration, mandatory redemption, a requirement that the Borrower
offer to purchase such Indebtedness or other required repurchase of such
Indebtedness, or permit the holder(s) of such Indebtedness to accelerate the
maturity of any such Indebtedness or require a redemption or other repurchase of
such Indebtedness; or any such Indebtedness shall be otherwise declared to be
due and payable (by acceleration or otherwise) or required to be prepaid,
redeemed or otherwise repurchased by the Borrower or any of its Subsidiaries
(other than by a regularly scheduled required prepayment) prior to the stated
maturity thereof.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case shall be commenced against the
Borrower or any of the Borrower's Subsidiaries and the petition shall
not be dismissed, stayed, bonded or discharged within sixty (60) days
after commencement of the case; or a court having jurisdiction in the
premises shall enter a decree or order for relief in respect of the
Borrower or any of the Borrower's Subsidiaries in an involuntary case,
under any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted
under any applicable federal, state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over the
Borrower or any of the Borrower's Subsidiaries or over all or a
substantial part of the property of the Borrower or any of the
Borrower's Subsidiaries shall be entered; or an interim receiver,
trustee or other custodian of the Borrower or any of the Borrower's
Subsidiaries or of all or a substantial part of the property of the
Borrower or any of the Borrower's Subsidiaries shall be appointed or a
warrant of attachment, execution or similar process against any
substantial part of the property of the Borrower or any of the
Borrower's Subsidiaries shall be issued and any such event shall not be
stayed, dismissed, bonded or discharged within sixty (60) days after
entry, appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Borrower or
any of the Borrower's Subsidiaries shall (i) commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (ii) consent to the entry of an order for relief in an involuntary case,
or to the conversion of an involuntary case to a voluntary case, under any such
law, (iii) consent to the appointment of or taking possession by a receiver,
trustee or other similar custodian for the benefit of creditors for all or a
substantial part of its property, (iv) make any assignment for the benefit of
creditors or (v) take any corporate action to authorize any of the foregoing.
(h) Judgments and Attachments. Any money judgment(s) (other than a
money judgment covered by insurance as to which the insurance company has not
disclaimed coverage or if it has reserved the right to disclaim coverage, such
letter reserving the right to disclaim coverage is outstanding twelve months
after such money judgment was rendered), writ or warrant of attachment, or
similar process against the Borrower or any of its Subsidiaries or any of their
respective assets involving in any single case or in the aggregate an amount in
excess of $2,500,000.00 is or are entered and shall remain undischarged,
unvacated, unbonded or unstayed for a period of sixty (60) days or in any event
later than fifteen (15) days prior to the date of any proposed sale thereunder.
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(i) Dissolution. Any order, judgment or decree shall be entered against
the Borrower or any of its Subsidiaries decreeing its involuntary dissolution or
split up and such order shall remain undischarged and unstayed for a period in
excess of sixty (60) days; or the Borrower or any of its Subsidiaries shall
otherwise dissolve or cease to exist except as specifically permitted by this
Agreement.
(j) Loan Documents; Failure of. At any time, for any reason, (i) any
Loan Document as a whole that materially affects the ability of the Lender to
enforce the Obligations or enforce its rights against the Collateral ceases to
be in full force and effect or the Borrower or any of the Borrower's
Subsidiaries party thereto seeks to repudiate its obligations thereunder and the
Liens intended to be created thereby are, or the Borrower or any such Subsidiary
seeks to render such Liens, invalid or unperfected, or (ii) any Lien on
Collateral in favor of Agent (for the benefit of the Lenders) contemplated by
the Loan Documents shall, at any time, for any reason, be invalidated or
otherwise cease to be in full force and effect or such Lien shall not have the
priority contemplated by this Agreement or the Loan Documents and such failure
shall continue for three (3) days after the occurrence thereof.
(k) Termination Event. Any Termination Event occurs which is reasonably
likely to subject the Borrower or any of its Subsidiaries to liability
individually or in the aggregate in excess of $2,500,000.00, and such
Termination Event shall continue for three (3) days after the occurrence
thereof, provided however, if such Termination Event is a Reportable Event, then
prior to such Termination Event causing an Event of Default under this Section
6.1(k), such Termination Event shall continue for ten (10) days after the
occurrence thereof.
(l) Waiver of Minimum Funding Standard. If the plan administrator of
any Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code and the Lenders believe the
substantial business hardship upon which the application for the waiver is based
could reasonably be expected to subject either the Borrower or any Controlled
Group member to liability individually or in the aggregate in excess of $2,
500,000.00.
(m) Change of Control. A Change of Control shall occur.
(n) Hedging Agreements. Nonpayment by the Borrower or any Subsidiary of
any obligation under any contract with respect to Hedging Obligations entered
into by the Borrower or such Subsidiary with a Lender (or Affiliate thereof) or
the breach by the Borrower or Subsidiary of any other term, provision or
condition contained in any agreement and such nonpayment or breach shall
continue for ten (10) days after the occurrence thereof.
(o) Guarantor Default or Revocation. Any Sonic Guaranty shall fail to
remain in full force or effect or any action shall be taken by the Borrower or
any Guarantor to discontinue or to assert the invalidity or unenforceability of
any Sonic Guaranty or any Guarantor shall fail to comply with any of the terms
or provisions of any Sonic Guaranty to which it is a party, or the Borrower or
any Guarantor denies that it has any further liability under any Sonic Guaranty
to which it is a party, or gives notice to such effect.
(p) Environmental Matters. The Borrower or any of its Subsidiaries
shall be the subject of any proceeding or investigation pertaining to (i) the
Release by the Borrower or any of its
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Subsidiaries of any Contaminant into the environment, (ii) the liability of the
Borrower or any of its Subsidiaries arising from the Release by any other person
of any Contaminant into the environment, or (iii) any violation of any
Environmental, Health or Safety Requirements of Law by the Borrower or any of
its Subsidiaries, which, in any case, has subjected or is reasonably likely to
subject the Borrower or any of its Subsidiaries to liability individually or in
the aggregate in excess of $2,500,000.00.
An Event of Default shall be deemed "continuing" until cured or until
waived in writing in accordance with Section 8.3.
ARTICLE VII: THE AGENT
7.1 Authorization and Action. (a) Each Lender hereby appoints and
authorizes Agent to take such action as agent on its own behalf and to exercise
such powers and discretion under this Agreement and the other Loan Documents as
are delegated to Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto. As to any matters
not expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), Agent shall be required to exercise
only such discretion or take only such action as is: (a) in accordance with the
manner in which Agent acts or refrains from acting (and shall be fully protected
in so acting or refraining from acting) in connection with matters in which it
is the sole lender, and (b) jointly agreed upon by Agent and the Lenders in
writing (such agreement will be binding upon each Lender and all holders of the
Note); provided, however, that Agent shall not be required to take any action
that exposes it to personal liability or that is contrary to this Agreement or
applicable law.
(b) For so long as Ford Credit is acting as Agent hereunder,
each Lender agrees that Ford Credit may unilaterally grant requests for and
waivers of, the following matters only, provided, however, that Ford Credit must
notify each Lender prior to issuing such consents or waivers to Borrower:
(1) any Event of Default (as set forth in Article VI
hereof) which can be cured, and which based upon the
reasonable representation of Borrower will be cured, within
ninety (90) days from the date upon which Ford Credit will
have learned of the occurrence of such Event of Default. With
respect to any Event of Default which, by its nature, cannot
be cured, Ford Credit may not respond unilaterally to any
request made by Borrower. If any such Event of Default is not
cured within such ninety (90) day period, Ford Credit may not
take any further action unilaterally;
(2) noncompliance with any covenant or obligation
binding on the Borrower, provided Borrower has reasonably
represented that the condition causing such noncompliance will
last for no more than ninety (90) days. If any such condition
causing noncompliance lasts more than ninety (90) days, Ford
Credit may not take any further action unilaterally.
Nothing contained in this Section 7.1 (b) may be construed to obligate either
Ford Credit or a Lender to grant any such consents or forbear from exercising
any of its rights with respect to any Event of Default which may occur from time
to time. The rights and powers set forth in this Section 7.1 (b) apply only to
Ford Credit acting as Agent and are not intended to benefit any Successor Agent.
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(c) Agent will provide to each Lender the following:
(1) copies of all reports and notices furnished
by Borrower to Agent pursuant to the Loan
Documents, within 5 Business Days after
Agent's receipt thereof;
(2) reports of the calculation of Scaled Assets
and all other calculations made by Agent
pursuant to Section 5.4 hereof, within 5
Business Days after Agent will have made
such calculations; and
(3) copies of all documents delivered to Agent
by Borrower pursuant to Sections 5.2 (L),
5.2 (M) and 5.2 (O) hereof, within 5
Business Days after Agent's receipt thereof.
7.2 Agent's Reliance, Etc. Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with the Loan Documents, except
for its or their own gross negligence or willful misconduct. Without limitation
of the generality of the foregoing, Agent: (a) may treat the payee of the Note
as the holder thereof until it receives written notice of the assignment thereof
signed by such payee and including the agreement of the assignee to be bound
thereby as it would have been if it had been an original party to this
Agreement, in form satisfactory to Agent, as provided for in Section 10.3; (b)
may consult with legal counsel (including counsel for any Lender), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with the Loan Documents; (d) shall not, other than as specifically
set forth in the Loan Documents, have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
any Loan Document on the part of any party to any of the Loan Documents or to
inspect the property of any party to any of the Loan Documents; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (f) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
7.3 Agent and Affiliates. With respect to its Commitments, the Advances
made by it and the Notes issued to it, Agent shall have the same rights and
powers under the Loan Documents as any other Lender and may exercise the same as
though it were not an agent.
7.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent and based on the financial
statements referred to in Section 4.4 and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon Agent and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.
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7.5 Indemnification. (a) Each Lender agrees to indemnify Agent and its
directors, officers, agents and employees (to the extent not promptly reimbursed
by the Borrower) from and against each Lender's Ratable Share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of the Loan Documents or any
action taken or omitted by Agent under the Loan Documents (collectively, the
"Indemnified Costs"); provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct as found in a final, non-appealable judgment by
a court of competent jurisdiction. Without limitation of the foregoing, each
Lender agrees to reimburse Agent promptly upon demand for its Ratable Share of
any costs and expenses (including, without limitation, fees and expenses of
counsel) payable by the Borrower under Section 9.6 (A) , to the extent that
Agent is not promptly reimbursed for such costs and expenses by the Borrower. In
the case of any investigation, litigation or proceeding giving rise to any
Indemnified Costs, this Section 7.5 applies whether any such investigation,
litigation or proceeding is brought by any Lender or any other Person.
(b) For purposes of this Section 7.5, each Lender's Ratable Share of
any amount shall be determined, at any time, according to the aggregate
principal amount of the Advances outstanding at such time and owing to the
respective Lender. Without prejudice to the survival of any other agreement of
any Lender hereunder, the agreement and obligations of Chrysler Financial
contained in this Section 7.5 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the other Loan
Documents.
7.6 Successor Agents. An Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, which resignation will become
effective at such times as more specifically set forth in this Section 7.6. Upon
any such resignation, the Required Lenders shall have the right to appoint a
successor agent, provided, however, that any such appointment of a successor
agent must have been consented to in writing by Borrower, which consent shall
not be unreasonably withheld or delayed, unless an Event of Default shall have
occurred and be continuing, in which case no consent of Borrower shall be
required. If no successor agent shall have been so appointed by the Lenders, and
shall have accepted such appointment, within 30 days after Agent's giving of
notice of resignation, then Agent may, on behalf of the Lenders, appoint a
successor agent, which shall be a commercial bank or finance company organized
under the laws of the United States or of any State thereof and having a
combined capital and surplus of at least $250,000,000 (any successor agent
appointed under this Section 7.6 is referred to herein as a "Successor Agent").
Upon the acceptance of any appointment as Agent hereunder by a Successor Agent
and, in the case of a Successor Agent to Agent's agency duties with respect to
the Collateral and as provided for in the Collateral Documents, upon the
execution and filing or recording of such financing statements, or amendments
thereto, and amendment to such other instruments or notices, as may be necessary
or desirable, or as the Lenders may request, in order to continue the perfection
of the Liens granted or purported to be granted by the Collateral Documents,
such Successor Agent shall succeed to and become vested with such rights,
powers, discretion, privileges and duties of Agent in its capacity as agent, and
Agent shall be discharged from such duties and obligations as Agent under the
Loan Documents. If within 45 days after written notice is given of the retiring
Agent's resignation under this Section 7.6 no Successor Agent shall have been
appointed and shall have accepted such appointment, then on such 45th day (a)
Agent's
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resignation shall become effective, (b) Agent shall thereupon be discharged from
such agency duties and obligations under the Loan Documents and as identified in
its notice of resignation and (c) the Lenders shall thereafter perform all
duties of Agent under the Loan Documents until such time, if any, as the Lenders
appoint a Successor Agent as provided above. After Agent's resignation hereunder
as agent shall have become effective, the provisions of this Article VII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was acting in its capacity as agent under this Agreement.
ARTICLE VIII: ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1 Termination of Commitments; Acceleration. If any Event of Default
described in Section 6.1(f) or 6.1(g) occurs with respect to the Borrower, the
obligations of any Lender to make Advances hereunder shall automatically
terminate and the Obligations shall immediately become due and payable without
any election or action on the part of any Lender. If any other Event of Default
occurs, Agent shall at the request, and may with the consent, of the Required
Lenders, declare the obligations of the Lenders to make Advances hereunder to be
terminated, whereupon the same shall be terminated, and/or shall at the request,
and may with the consent, of the Required Lenders, declare the Obligations to be
due and payable, or both, whereupon, after written notice to the Borrower, the
Obligations shall become immediately due and payable, without presentment,
demand, protest or other notice of any kind, all of which the Borrower expressly
waives.
8.2 Amendments. Other than as specifically set forth in Section 7.1 of
this Agreement, no amendment or waiver of any provision of this Agreement or the
Notes or any other Loan Document, nor consent to any departure, therefrom by the
Borrower or any Affiliate or Subsidiary of the Borrower party thereto shall in
any event be effective unless the same shall be in writing and signed (or, in
the case of the Collateral Documents, consented to) by the Agent and the
Required Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that (a) no amendment, waiver or consent shall, unless in writing and
signed by the Agent and all of the Lenders (other than any Lender that is, at
such time, a Defaulting Lender), do any of the following at any time: (i) waive
any of the conditions specified in Section 3.1 or, in the case of the initial
Borrowing, Section 3.2, (ii) change the number of Lenders or the percentage of
(x) the Commitments or (y) the aggregate unpaid principal amount of the Advances
that, in each case, shall be required for the Lenders or any of them to take any
action hereunder, (iii) reduce or limit the obligations of any Guarantor or
otherwise limit such Guarantor's liability with respect to the Obligations owing
to the Agent and the Lenders, (iv) release Collateral in any transaction or
series of related transactions or permit the creation, incurrence, assumption or
existence of any Lien on Collateral in any transaction or series of related
transactions to secure any Obligations other than Obligations under the Loan
Documents, (v) amend this Section 8.2, (vi) increase the Commitments of the
Lenders other than in accordance with terms of the Loan Documents, (vii) reduce
the principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, (viii) postpone any date scheduled for any payment of principal of,
or interest on, the Notes or any date fixed for payment of fees or other amounts
payable hereunder, or (ix) limit the liability of the Borrower or any of its
Affiliates under any of the Loan Documents and (b) no amendment, waiver or
consent shall, unless in writing and signed by the Required Lenders and each
Lender (other than any Lender that is, at such time, a Defaulting Lender) that
has a Commitment if such Lender is directly affected by such amendment, waiver
or consent, (i) increase the Commitments of such Lender, (ii) reduce the
principal of, or interest on, the
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Notes held by such Lender or any fees or other amounts payable hereunder to such
Lender, (iii) postpone any date fixed for any payment of principal of, or
interest on, the Notes held by such Lender or any fees or other amounts payable
hereunder to such Lender, (iv) change the order of application of any prepayment
under the Loan Documents in any manner that materially affects such Lender; and
provided further that no amendment, waiver or consent shall, unless in writing
and signed by the Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Agent under this Agreement or the
other Loan Documents.
8.3 Preservation of Rights. No delay or omission of any Lender or Agent
to exercise any right under the Loan Documents shall impair such right or be
construed to be a waiver of any Event of Default or an acquiescence therein, and
the making of an Advance notwithstanding the existence of an Event of Default or
the inability of the Borrower to satisfy the conditions precedent to such
Advance shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation
of the terms, conditions or provisions of the Loan Documents whatsoever shall be
valid unless in writing signed by the Required Lenders, and then only to the
extent in such writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be available
to any Lender until the Obligations have been paid in full.
ARTICLE IX: GENERAL PROVISIONS
9.1 Survival of Representations. All representations and warranties of
the Borrower contained in this Agreement shall survive delivery of the Note and
the making of the Advances herein contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3 Performance of Obligations. The Borrower agrees that Agent may, at
the direction of the Required Lenders, but shall have no obligation to (i) at
any time, pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against any Collateral, unless
such claims are being contested in good faith by the Borrower and the Borrower
has set aside adequate reserves covering such tax, lien, security interest or
other encumbrance and no Event of Default has occurred and is outstanding and
(ii) after the occurrence and during the continuance of an Event of Default to
make any payment or perform any act required of the Borrower under any Loan
Document or take any other action which the Required Lenders, in their
reasonable discretion deem necessary or desirable to protect or preserve the
Collateral, including, without limitation, any action to (y) effect any repairs
or obtain any insurance called for by the terms of any of the Loan Documents and
to pay all or any part of the premiums therefor and the costs thereof and (z)
pay any rents payable by the Borrower which are more than 30 days past due, or
as to which the landlord has given notice of termination, under any lease. Agent
shall use its reasonable efforts to give the Borrower notice of any action taken
under this Section 9.3 prior to the taking of such action or promptly thereafter
provided the failure to give such notice shall not affect the Borrower's
obligations in respect thereof. The Borrower agrees to pay Agent (for the
benefit of the Lenders), upon
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demand, the principal amount of all funds advanced by each Lender under this
Section 9.3, together with interest thereon at the rate from time to time
applicable to Advances from the date of such advance until the outstanding
principal balance thereof is paid in full. All outstanding principal of, and
interest on, advances made under this Section 9.3 shall constitute Obligations
for purposes hereof.
9.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.5 Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Borrower and the Lenders and the Loan Documents
delivered on the Effective Date supersede all prior agreements and
understandings among the Borrower and the Lenders relating to the subject matter
thereof.
9.6 Expenses; Indemnification.
(A) Expenses. The Borrower shall reimburse the Agent and each Lender
for any reasonable costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' and paralegals' fees and time charges of attorneys and
paralegals for the Agent or any Lender, which attorneys and paralegals may be
employees of the Agent or any Lender) paid or incurred by Agent or any Lender in
connection with the preparation, negotiation, execution, delivery, review,
amendment, modification, and administration of the Loan Documents. The Borrower
also agrees to reimburse the Agent and each Lender for any reasonable costs,
internal charges and out-of-pocket expenses (including attorneys' and
paralegals' fees and time charges of attorneys and paralegals for the Agent and
each Lender, which attorneys and paralegals may be employees of the Agent or any
Lender) paid or incurred by the Agent or any Lender in connection with the
collection of the Obligations and enforcement of the Loan Documents. In addition
to expenses set forth above, the Borrower agrees to reimburse the Agent and each
Lender, promptly after the Agent's or any Lender's request therefor, for each
audit or other business analysis performed by it in connection with this
Agreement or the other Loan Documents at a time when an Event of Default exists
in an amount equal to the Agent's or a Lender's then reasonable and customary
charges for each person employed to perform such audit or analysis, plus all
costs and expenses (including without limitation, travel expenses) incurred by
the Agent or a Lender in the performance of such audit or analysis. The Agent or
the Lender shall provide the Borrower with a detailed statement of all
reimbursements requested under this Section 9.6(A).
(B) Indemnity. The Borrower further agrees to defend, protect,
indemnify, and hold harmless the Agent, each Lender and each of its respective
Affiliates, and each of the Agent's, Lender's, or Affiliate's respective
officers, directors, employees, attorneys and agents (including, without
limitation, those retained in connection with the satisfaction or attempted
satisfaction of any of the conditions set forth in Article III) (collectively,
the "Indemnitees") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
of any kind or nature whatsoever (including, without limitation, the fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto), imposed on, incurred by, or
asserted against such Indemnitees in any manner relating to or arising out of:
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(i) this Agreement, the other Loan Documents or any of the
Transaction Documents, or any act, event or transaction related or
attendant thereto, the making of the Advances, hereunder, the
management of such Advances, the use or intended use of the proceeds of
the Advances hereunder, or any of the other transactions contemplated
by the Transaction Documents; or
(ii) any liabilities, obligations, responsibilities, losses,
damages, personal injury, death, punitive damages, economic damages,
consequential damages, treble damages, intentional, willful or wanton
injury, damage or threat to the environment, natural resources or
public health or welfare, costs and expenses (including, without
limitation, attorney, expert and consulting fees and costs of
investigation, feasibility or remedial action studies), fines,
penalties and monetary sanctions, interest, direct or indirect, known
or unknown, absolute or contingent, past, present or future relating to
violation of any Environmental, Health or Safety Requirements of Law
arising from or in connection with the past, present or future
operations of the Borrower, its Subsidiaries or any of their respective
predecessors in interest, or, the past, present or future
environmental, health or safety condition of any respective property of
the Borrower or its Subsidiaries, the presence of asbestos-containing
materials at any respective property of the Borrower or its
Subsidiaries or the Release or threatened Release of any Contaminant
into the environment (collectively, the "Indemnified Matters");
provided, however, the Borrower shall have no obligation to an Indemnitee
hereunder with respect to Indemnified Matters caused by or resulting from the
willful misconduct or Gross Negligence of such Indemnitee as determined by the
final non-appealed judgment of a court of competent jurisdiction. If the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrower shall contribute the maximum portion which it is permitted
to pay and satisfy under applicable law, to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnitees.
(C) Notwithstanding anything else in this Agreement to the contrary, no
party shall have any obligation to reimburse any person for attorneys' fees and
expenses unless such fees and expenses are (i) reasonable in amount, (ii)
determined without reference to any statutory presumption and (iii) calculated
using the actual time expended and the standard hourly rate for the attorneys
and paralegals performing the tasks in question and the actual out-of-pocket
expenses incurred.
(D) Waiver of Certain Claims; Settlement of Claims. The Borrower
further agrees to assert no claim against any of the Indemnitees on any theory
of liability for consequential, special, indirect, exemplary or punitive
damages. No settlement shall be entered into by the Borrower or any if its
Subsidiaries with respect to any claim, litigation, arbitration or other
proceeding relating to or arising out of the transactions evidenced by this
Agreement, the other Loan Documents (whether or not any Lender or any Indemnitee
is a party thereto) unless such settlement releases all Indemnitees from any and
all liability with respect thereto.
(E) Survival of Agreements. The obligations and agreements of the
Borrower under this Section 9.6 shall survive the termination of this Agreement.
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9.7 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.8 Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.9 Nonliability of Lender. The relationship between the Borrower and
each Lender shall be solely that of borrower and lender. No Lender shall have
fiduciary responsibilities to the Borrower and no Lender takes any
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or operations.
9.10 GOVERNING LAW. ANY DISPUTE BETWEEN THE BORROWER AND A LENDER, OR
ANY INDEMNITEE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT
REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF NORTH CAROLINA.
9.11 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL. EXCEPT AS
PROVIDED IN SUBSECTION (B), EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES
AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN
NORTH CAROLINA, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NORTH CAROLINA. EACH
OF THE PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION
(A) ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE
DISPUTE.
(B) OTHER JURISDICTIONS. THE BORROWER AGREES THAT ANY LENDER OR ANY
INDEMNITEE SHALL HAVE THE RIGHT TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY
IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL
JURISDICTION OVER THE BORROWER OR (2) REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS OR ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED
IN FAVOR OF SUCH PERSON. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO REALIZE ON
THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. THE BORROWER WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION (B).
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(C) SERVICE OF PROCESS. THE BORROWER WAIVES PERSONAL SERVICE OF ANY
PROCESS UPON IT AND IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY WRITS,
PROCESS OR SUMMONSES IN ANY SUIT, ACTION OR PROCEEDING BY THE MAILING THEREOF BY
AGENT BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER
ADDRESSED AS PROVIDED HEREIN. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT
THE ABILITY OF AGENT TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY OTHER
MANNER PERMITTED BY APPLICABLE LAW THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(E) WAIVER OF BOND. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
THE BORROWER WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF ANY PARTY
HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO ENFORCE ANY JUDGMENT
OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PARTY, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF THIS SECTION 9.11, WITH ITS COUNSEL.
9.12 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
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9.13 Subordination of Intercompany Indebtedness. The Borrower agrees
that any and all claims of the Borrower against any Guarantor, any endorser or
any other guarantor of all or any part of the Obligations, or against any of its
properties, including, without limitation, pursuant to the any intercompany
Indebtedness permitted under Section 5.3(A)(vi), shall be subordinate and
subject in right of payment to the prior payment, in full and in cash, of all
Obligations. Notwithstanding any right of the Borrower to ask, demand, ▇▇▇ for,
take or receive any payment from any Guarantor, all rights, liens and security
interests of the Borrower, whether now or hereafter arising and howsoever
existing, in any assets of any Guarantor shall be and are subordinated to the
rights, if any, of the Lender in those assets. The Borrower shall have no right
to possession of any such asset or to foreclose upon any such asset, whether by
judicial action or otherwise, unless and until all of the Obligations shall have
been paid in full in cash and satisfied and all financing arrangements under
this Agreement and the other Loan Documents between the Borrower and each Lender
have been terminated. If, during the continuance of an Event of Default, all or
any part of the assets of any Guarantor, or the proceeds thereof, are subject to
any distribution, division or application to the creditors of any Guarantor,
whether partial or complete, voluntary or involuntary, and whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the benefit
of creditors or any other action or proceeding, then, and in any such event, any
payment or distribution of any kind or character, either in cash, securities or
other property, which shall be payable or deliverable upon or with respect to
any indebtedness of any Guarantor to the Borrower, including, without
limitation, pursuant to the any intercompany Indebtedness permitted under
Section 5.3(A)(vi) ("Intercompany Indebtedness") shall be paid or delivered
directly to Agent (for the benefit of the Lenders) for application on any of the
Obligations, due or to become due, until such Obligations shall have first been
paid in full in cash and satisfied; provided, however, ordinary course payments
or distributions made by any Guarantor to the Borrower shall be required to be
paid or delivered to Agent (for the benefit of the Lenders) only upon Agent's
request. The Borrower irrevocably authorizes and empowers Agent (if directed to
do so by the Required Lenders) to demand, ▇▇▇ for, collect and receive every
such payment or distribution and give acquittance therefor and to make and
present for and on behalf of the Borrower such proofs of claim and take such
other action, in Agent's own name or in the name of the Borrower or otherwise,
as Required Lenders may deem necessary or advisable for the enforcement of this
Section 9.13. Agent may vote such proofs of claim in any such proceeding,
receive and collect any and all dividends or other payments or disbursements
made thereon in whatever form the same may be paid or issued and apply the same
on account of any of the Obligations. Should any payment, distribution, security
or instrument or proceeds thereof be received by the Borrower upon or with
respect to the Intercompany Indebtedness during the continuance of an Event of
Default and prior to the satisfaction of all of the Obligations and the
termination of all financing arrangements under this Agreement and the other
Loan Documents between the Borrower and the Lenders, the Borrower shall receive
and hold the same in trust, as trustee, for the benefit of each Lender and shall
forthwith deliver the same to Agent (for the benefit of the Lenders), in
precisely the form received (except for the endorsement or assignment of the
Borrower where necessary), for application to any of the Obligations, due or not
due, and, until so delivered, the same shall be held in trust by the Borrower as
the property of each Lender; provided, however, ordinary course payments or
distributions made to or by any Guarantor to the Borrower shall be required to
be paid or delivered to Agent (for the benefit of the Lenders) only upon Initial
Lender's request after the occurrence and Continuance of an Event of Default. If
the Borrower fails to make any such endorsement or assignment to Agent (for the
benefit of the Lenders), Agent or any of its officers or employees are
irrevocably authorized to make the same. The Borrower agrees that until the
Obligations have been paid in full in cash and
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satisfied and all financing arrangements under this Agreement and the other Loan
Documents between the Borrower and the Lender have been terminated, the Borrower
will not assign or transfer to any Person (other than Agent (for the benefit of
the Lenders)) any claim the Borrower has or may have against any Guarantor.
9.14 Usury Not Intended. It is the intent of the Borrower and each
Lender in the execution and performance of this Agreement and the other Loan
Documents to contract in strict compliance with applicable usury laws, including
conflicts of law concepts, governing the Advances of each Lender including such
applicable laws of the State of North Carolina and the United States of America
from time-to-time in effect. In furtherance thereof, each Lender and the
Borrower stipulate and agree that none of the terms and provisions contained in
this Agreement or the other Loan Documents shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the Maximum Rate and that for purposes
hereof "interest" shall include the aggregate of all charges which constitute
interest under such laws that are contracted for, charged or received under this
Agreement; and in the event that, notwithstanding the foregoing, under any
circumstances the aggregate amounts taken, reserved, charged, received or paid
on the Advances, include amounts which by applicable law are deemed interest
which would exceed the Maximum Rate, then such excess shall be deemed to be a
mistake and each Lender receiving same shall credit the same on the principal of
the Notes (or if the Notes shall have been paid in full, refund said excess to
the Borrower). In the event that the maturity of the Notes is accelerated by
reason of any election of the holder thereof resulting from any Event of Default
under this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the Maximum Rate and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited on the
applicable Notes (or, if the Notes shall have been paid in full, refunded to the
Borrower of such interest). In determining whether or not the interest paid or
payable under any specific contingencies exceeds the Maximum Rate, the Borrower
and each Lender shall to the maximum extent permitted under applicable law
amortize, prorate, allocate and spread in equal parts during the period of the
full stated term of the Notes all amounts considered to be interest under
applicable law at any time contracted for, charged, received or reserved in
connection with the Obligations. The provisions of this Section shall control
over all other provisions of this Agreement or the other Loan Documents which
may be in apparent conflict herewith.
ARTICLE X: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
10.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower, each
Lender and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights or obligations under the Loan
Documents.
10.2 Participations.
(A) Permitted Participants; Effect. Subject to the terms set forth in
this Section 10.2, any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
financial institutions ("Participants") participating interests in any Advance
owing to such Lender, the Notes, the Commitment or any other interest of such
Lender under the Loan Documents on a pro rata or non-pro rata basis. Notice
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of such participation to the other Lenders and to the Borrower shall be required
prior to any participation becoming effective. In the event of any such sale by
any Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the holder of the Note for all
purposes under the Loan Documents, all amounts payable by the Borrower under
this Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower shall continue to deal solely and
directly with Agent in connection with each Lender's rights and obligations
under the Loan Documents.
(B) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Advance or Commitment in which such Participant has
an interest.
10.3 Assignments. (a) Each Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time assign to one or
more banks or other financial institutions approved by the Borrower and each
other Lender (each referred to as an "Eligible Assignee") within 10 days of
notice to the Borrower by such Lender of such assignment (which such approval
shall not be unreasonably withheld) all or a portion of its rights and
obligations under this Agreement (including, without limitation, its Commitment
and all Advances owing to it) pursuant to an assignment and acceptance agreement
in form and substance satisfactory to each Initial Lender (each referred to as
an "Assignment and Acceptance") . Notwithstanding the foregoing, the Borrower
shall not have any right to approve an assignee under this Section 10.3, after
the occurrence and continuance of an Event of Default or to the extent such
assignee is an Affiliate of either Lender, provided, however, that to the extent
either Lender assigns its obligations hereunder, such Affiliate shall be a
United States Person and the Lender shall have provided such financial
statements as the Borrower shall have reasonably requested.
(b) Upon such execution, delivery and acceptance of, and from and after
the effective date specified in such Assignment and Acceptance, (i) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (ii) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (other than its rights under Sections 2.11 and 9.6 to the
extend any claim thereunder relates to an event arising prior to such
assignment) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all of the remaining portion
of an assigning Lender's rights and obligation ▇▇▇▇▇▇ this Agreement, such
Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, each
Lender assignor thereunder and each assignee thereunder confirm to and agree
with each other and the other parties thereto and hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any Loan
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest
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created or purported to be created under or in connection with, any Loan
Document or any other instrument or document furnished pursuant thereto; (ii)
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower, any
Guarantor or any other party to the Loan, or the performance or observance by
Borrower, any Guarantor or any other party to the Loan of any of its obligations
under any Loan Document or any other instrument or document furnished pursuant
thereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 4.4 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such
assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Loan Documents as
are delegated to such Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Lender.
(d) The Agent, acting for this purpose (but only for this purpose) as
the agent of the Borrower, shall maintain at its address a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lender and the Commitment of, and
principal amount of the Advances owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or Agent or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an assignment and acceptance agreement executed
pursuant to the preceding subsection (a), together with any Note or Notes
subject to such assignment, the Agent will (i) accept such assignment and
acceptance agreement executed pursuant to the preceding subsection (a), (ii)
record the information contained therein in the Register, and (iii) give prompt
notice thereof to Borrower. In the case of any assignment by a Lender, within
five (5) Business Days after its receipt of such notice, the Borrower, at its
own expense, shall execute and deliver to the Agent in exchange for the
surrendered Note or Notes a new Note to the order of such Eligible Assignee in
an amount equal to the Lender's Commitment assumed by it pursuant to such
assignment and acceptance agreement and, if any assigning Lender has retained a
commitment hereunder, a new Note to the order of such assigning Lender in an
amount equal to such assigning Lender's Commitment retained by it hereunder.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such assignment and acceptance agreement and shall be in
substantially the form of Exhibit A hereto.
Any Lender may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 10.3, disclose to the
assignee or participant or proposed assignee or participant any information
relating to the Borrower furnished to such Lender by or
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on behalf of the Borrower; provided, however, that, prior to any such
disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender.
10.4 Confidentiality. Subject to Sections 10.3 and 10.5, each Lender
shall hold all nonpublic information obtained pursuant to the requirements of
this Agreement and identified as such by the Borrower in accordance with each
respective Lender's customary procedures for handling confidential information
of this nature and in any event may make disclosure reasonably required by a
prospective Transferee in connection with the contemplated participation or as
required or requested by any Governmental Authority or representative thereof or
pursuant to legal process and shall require any such Transferee to agree (and
require any of its Transferees to agree) to comply with this Section 10.4. In no
event shall either Lender be obligated or required to return any materials
furnished by the Borrower; provided, however, each prospective Transferee shall
be required to agree that if it does not become a participant it shall return
all materials furnished to it by or on behalf of the Borrower in connection with
this Agreement.
10.5 Dissemination of Information. The Borrower authorizes each Lender
to disclose to any Participant or Eligible Assignee or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in the
Lender's possession concerning the Borrower and its Subsidiaries; provided that
prior to any such disclosure, such prospective Transferee shall agree to
preserve in accordance with Section 10.4 the confidentiality of any confidential
information described therein.
ARTICLE XI: NOTICES
11.1 Giving Notice. Except as otherwise permitted by Section 2.8 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Documents shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted (answerback confirmed in the case of telexes).
11.2 Change of Address. The Borrower, the Agent and each Lender may
each change the address for service of notice upon it by a notice in writing to
the other parties hereto.
ARTICLE XII: COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower and each
Lender.
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IN WITNESS WHEREOF, the Borrower, the Agent and each Lender have
executed this Agreement as of the date first above written.
SONIC AUTOMOTIVE, INC.,
as the Borrower
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
FORD MOTOR CREDIT COMPANY,
as Lender, and as Agent
By: /s/ ▇. ▇. ▇▇▇▇ ▇▇
----------------------
Name: ▇. ▇. ▇▇▇▇, ▇▇
Title: National Account Manager
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
CHRYSLER FINANCIAL COMPANY, LLC,
as Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Address:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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