Exhibit 10.19
SUBSIDIARY GUARANTY
AGREEMENT
THIS SUBSIDIARY GUARANTY
AGREEMENT (this “
Guaranty Agreement ”), dated as of February 17,
2006, is made by EACH OF THE UNDERSIGNED AND EACH OTHER PERSON
WHO SHALL BECOME A PARTY HERETO BY EXECUTION OF A JOINDER
AGREEMENT (each a “ Guarantor ” and
collectively the “ Guarantors ”) to BANK OF
AMERICA, N.A ., a national banking association organized and
existing under the laws of the United States, as administrative
agent (in such capacity, the “ Administrative Agent
”) for each of the lenders (the “ Lenders
” now or hereafter party to the Credit Agreement defined
below (collectively with the Administrative Agent, and certain
other Persons parties to Related Swap Contracts as more
particularly described in Section 19 hereof, the
“ Secured Parties ”). All capitalized terms used
but not otherwise defined herein shall have the meanings ascribed
to such terms in the Credit Agreement.
W I T N E S S E T H
:
WHEREAS , the Secured Parties have agreed to provide
(i) Sonic Automotive, Inc. (the “ Company ”
and the “ Borrower ”) with certain credit
facilities, including a revolving credit facility with letter of
credit and swing line sublimits and a used vehicle floorplan
facility with a swing line sublimit, and (ii) certain
Subsidiaries of the Company (each a “ New Vehicle
Borrower ” and collectively with the Company, the “
Borrowers ” and each a “ Borrower
”) with a new vehicle floorplan facility with a swing line
sublimit, in each case pursuant to the terms of that certain Credit
Agreement dated as of the date hereof among the Borrowers, the
Administrative Agent and the Lenders (as from time to time amended,
restated, supplemented or otherwise modified, the “ Credit
Agreement ”); and
WHEREAS , each Guarantor is, directly or indirectly, a
Subsidiary of the Company; and
WHEREAS , each Guarantor will materially benefit from
the Loans to be made, and the Letters of Credit to be issued, under
the Credit Agreement; and
WHEREAS , the Persons set forth on Schedule 1 are
collectively referred to as the “ Silo Subsidiaries
”, and each individually as a “ Silo Subsidiary
”); and
WHEREAS , each Guarantor is required to enter into this
Guaranty Agreement pursuant to the terms of the Credit Agreement;
and
WHEREAS , a material part of the consideration given in
connection with and as an inducement to the execution and delivery
of the Credit Agreement by the Secured Parties was the obligation
of the Company to cause each Guarantor to enter into this Guaranty
Agreement, and the Secured Parties are unwilling to extend and
maintain the credit facilities provided under the Loan Documents
unless the Guarantors enter into this Guaranty
Agreement;
NOW, THEREFORE
, in consideration of the premises
and mutual covenants contained herein, the parties hereto agree as
follows:
1. Guaranty
. Each Guarantor hereby jointly and
severally, unconditionally, absolutely, continually and irrevocably
guarantees to the Administrative Agent for the benefit of the
Secured Parties the payment and performance in full of the
Guaranteed Liabilities (as defined below); provided ,
however , that the Silo Subsidiaries do not guarantee any
Obligations arising under the New Vehicle Floorplan Facility. For
all purposes of this Guaranty Agreement, “ Guaranteed
Liabilities ” means: (a) each Borrower’s
prompt payment in full, when due or declared due and at all such
times, of all Obligations and all other amounts pursuant to the
terms of the Credit Agreement, the Notes, and all other Loan
Documents heretofore, now or at any time or times hereafter owing,
arising, due or payable from any Borrower to any one or more of the
Secured Parties, including principal, interest, premiums and fees
(including, but not limited to, loan fees and reasonable fees,
charges and disbursements of counsel (“ Attorney Costs
”)); (b) each Borrower’s prompt, full and faithful
performance, observance and discharge of each and every agreement,
undertaking, covenant and provision to be performed, observed or
discharged by such Borrower under the Credit Agreement, the Notes
and all other Loan Documents; and (c) the prompt payment in
full by each Loan Party, when due or declared due and at all such
times, of obligations and liabilities now or hereafter arising
under Related Swap Contracts. The Guarantors’ obligations to
the Secured Parties under this Guaranty Agreement are hereinafter
collectively referred to as the “ Guarantors’
Obligations ” and, with respect to each Guarantor
individually, the “ Guarantor’s Obligations
”. Notwithstanding the foregoing, the liability of each
Guarantor individually with respect to its Guarantor’s
Obligations shall be limited to an aggregate amount equal to the
largest amount that would not render its obligations hereunder
subject to avoidance under Section 548 of the United States
Bankruptcy Code or any comparable provisions of any applicable
state law.
Each Guarantor agrees that it is
jointly and severally, directly and primarily liable (subject to
the limitation in the immediately preceding sentence) for the
Guaranteed Liabilities.
The Guarantors’ Obligations
are secured by various Security Instruments referred to in the
Credit Agreement, including without limitation, the Security
Agreement and the Pledge Agreement.
2. Payment .
If any Borrower shall default in
payment or performance of any of the Guaranteed Liabilities,
whether principal, interest, premium, fee (including, but not
limited to, loan fees and Attorney Costs), or otherwise, when and
as the same shall become due, and after expiration of any
applicable grace period, whether according to the terms of the
Credit Agreement, by acceleration, or otherwise, or upon the
occurrence and during the continuance of any Event of Default under
the Credit Agreement, then any or all of the Guarantors will, upon
demand thereof by the Administrative Agent, fully pay to the
Administrative Agent, for the benefit of the Secured Parties,
subject to any restriction on each Guarantor’s Obligations
set forth in Section 1 hereof, an amount equal to all
the Guaranteed Liabilities then due and owing.
3. Absolute Rights and
Obligations . This is
a guaranty of payment and not of collection. The Guarantors’
Obligations under this Guaranty Agreement shall be joint and
several, absolute and unconditional irrespective of, and each
Guarantor hereby expressly waives, to the extent permitted by law,
any defense to its obligations under this Guaranty Agreement and
all Security Instruments to which it is a party by reason
of:
(a) any lack of legality, validity
or enforceability of the Credit Agreement, of any of the Notes, of
any other Loan Document, or of any other agreement or instrument
creating, providing security for, or otherwise relating to any of
the Guarantors’ Obligations, any of the Guaranteed
Liabilities, or any other guaranty of any of the Guaranteed
Liabilities (the Loan Documents and all such other agreements and
instruments being collectively referred to as the “
Related Agreements ”);
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(b) any action taken under any of
the Related Agreements, any exercise of any right or power therein
conferred, any failure or omission to enforce any right conferred
thereby, or any waiver of any covenant or condition therein
provided;
(c) any acceleration of the maturity
of any of the Guaranteed Liabilities, of the Guarantor’s
Obligations of any other Guarantor, or of any other obligations or
liabilities of any Person under any of the Related
Agreements;
(d) any release, exchange,
non-perfection, lapse in perfection, disposal, deterioration in
value, or impairment of any security for any of the Guaranteed
Liabilities, for any of the Guarantor’s Obligations of any
Guarantor, or for any other obligations or liabilities of any
Person under any of the Related Agreements;
(e) any dissolution of any Borrower
or any Guarantor or any other party to a Related Agreement, or the
combination or consolidation of any Borrower or any Guarantor or
any other party to a Related Agreement into or with another entity
or any transfer or disposition of any assets of any Borrower or any
Guarantor or any other party to a Related Agreement;
(f) any extension (including without
limitation extensions of time for payment), renewal, amendment,
restructuring or restatement of, any acceptance of late or partial
payments under, or any change in the amount of any borrowings or
any credit facilities available under, the Credit Agreement, any of
the Notes or any other Loan Document or any other Related
Agreement, in whole or in part;
(g) the existence, addition,
modification, termination, reduction or impairment of value, or
release of any other guaranty (or security therefor) of the
Guaranteed Liabilities (including without limitation the
Guarantor’s Obligations of any other Guarantor and
obligations arising under any other Guaranty now or hereafter in
effect);
(h) any waiver of, forbearance or
indulgence under, or other consent to any change in or departure
from any term or provision contained in the Credit Agreement, any
other Loan Document or any other Related Agreement, including
without limitation any term pertaining to the payment or
performance of any of the Guaranteed Liabilities, any of the
Guarantor’s Obligations of any other Guarantor, or any of the
obligations or liabilities of any party to any other Related
Agreement;
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(i) any other circumstance
whatsoever (with or without notice to or knowledge of any
Guarantor) which may or might in any manner or to any extent vary
the risks of such Guarantor, or might otherwise constitute a legal
or equitable defense available to, or discharge of, a surety or a
guarantor, including without limitation any right to require or
claim that resort be had to any Borrower or any other Loan Party or
to any collateral in respect of the Guaranteed Liabilities or
Guarantors’ Obligations, whether arising under North Carolina
General Statutes Sections 26-7 and 26-9 or otherwise.
It is the express purpose and intent
of the parties hereto that this Guaranty Agreement and the
Guarantors’ Obligations hereunder and under each Joinder
Agreement shall be absolute and unconditional under any and all
circumstances and shall not be discharged except by payment as
herein provided.
4. Currency and Funds of
Payment . All
Guarantors’ Obligations will be paid in lawful currency of
the United States of America and in immediately available funds,
regardless of any law, regulation or decree now or hereafter in
effect that might in any manner affect the Guaranteed Liabilities,
or the rights of any Secured Party with respect thereto as against
any Borrower, or cause or permit to be invoked any alteration in
the time, amount or manner of payment by any Borrower of any or all
of the Guaranteed Liabilities.
5. Events of
Default . Without
limiting the provisions of Section 2 hereof, in the
event that there shall occur and be continuing an Event of Default,
then notwithstanding any collateral or other security or credit
support for the Guaranteed Liabilities, at the Administrative
Agent’s election and without notice thereof or demand
therefor, the Guarantors’ Obligations shall immediately be
and become due and payable.
6.
Subordination .
Until this Guaranty Agreement is terminated in accordance with
Section 22 hereof, each Guarantor hereby
unconditionally subordinates all present and future debts,
liabilities or obligations now or hereafter owing to such Guarantor
(i) of any Borrower, to the payment in full of the Guaranteed
Liabilities, (ii) of every other Guarantor (an
“obligated guarantor”), to the payment in full of the
Guarantors’ Obligations of such obligated guarantor, and
(iii) of each other Person now or hereafter constituting a
Loan Party, to the payment in full of the obligations of such Loan
Party owing to any Secured Party and arising under the Loan
Documents or the Related Swap Contracts. All amounts due under such
subordinated debts, liabilities, or obligations shall, upon the
occurrence and during the continuance of an Event of Default, be
collected and, upon request by the Administrative Agent, paid over
forthwith to the Administrative Agent for the benefit of the
Secured Parties on account of the Guaranteed Liabilities, the
Guarantors’ Obligations, or such other obligations, as
applicable, and, after such request and pending such payment, shall
be held by such Guarantor as agent and bailee of the Secured
Parties separate and apart from all other funds, property and
accounts of such Guarantor.
7. Suits
. Each Guarantor from time to time
shall pay to the Administrative Agent for the benefit of the
Secured Parties, on demand, at the Administrative Agent’s
Office or such other address as the Administrative Agent shall give
notice of to such Guarantor, the Guarantors’ Obligations as
they become or are declared due, and in the event such payment is
not made forthwith, the Administrative Agent may proceed to suit
against any one or more or all of the
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Guarantors. At the Administrative Agent’s
election, one or more and successive or concurrent suits may be
brought hereon by the Administrative Agent against any one or more
or all of the Guarantors, whether or not suit has been commenced
against any Borrower, any other Guarantor, or any other Person and
whether or not the Secured Parties have taken or failed to take any
other action to collect all or any portion of the Guaranteed
Liabilities or have taken or failed to take any actions against any
collateral securing payment or performance of all or any portion of
the Guaranteed Liabilities, and irrespective of any event,
occurrence, or condition described in Section 3
hereof.
8. Set-Off and
Waiver . Each
Guarantor waives any right to assert against any Secured Party as a
defense, counterclaim, set-off, recoupment or cross claim in
respect of its Guarantor’s Obligations, any defense (legal or
equitable) or other claim which such Guarantor may now or at any
time hereafter have against any Borrower or any or all of the
Secured Parties without waiving any additional defenses, set-offs,
counterclaims or other claims otherwise available to such
Guarantor. Each Guarantor agrees that each Secured Party shall have
a lien for all the Guarantor’s Obligations upon all deposits
or deposit accounts, of any kind, or any interest in any deposits
or deposit accounts, now or hereafter pledged, mortgaged,
transferred or assigned to such Secured Party or otherwise in the
possession or control of such Secured Party for any purpose (other
than solely for safekeeping) for the account or benefit of such
Guarantor, including any balance of any deposit account or of any
credit of such Guarantor with the Secured Party, whether now
existing or hereafter established, and hereby authorizes each
Secured Party from and after the occurrence of an Event of Default
at any time or times with or without prior notice to apply such
balances or any part thereof to such of the Guarantor’s
Obligations to the Secured Parties then due and in such amounts as
provided for in the Credit Agreement or otherwise as they may
elect. For the purposes of this Section 8 , all
remittances and property shall be deemed to be in the possession of
a Secured Party as soon as the same may be put in transit to it by
mail or carrier or by other bailee.
9. Waiver of Notice;
Subrogation .
(a) Each Guarantor hereby waives to
the extent permitted by law notice of the following events or
occurrences: (i) acceptance of this Guaranty Agreement;
(ii) the Lenders’ heretofore, now or from time to time
hereafter making Loans and issuing Letters of Credit and otherwise
loaning monies or giving or extending credit to or for the benefit
of any Borrower or any other Loan Party, or otherwise entering into
arrangements with any Loan Party giving rise to Guaranteed
Liabilities, whether pursuant to the Credit Agreement or the Notes
or any other Loan Document or Related Agreement or any amendments,
modifications, or supplements thereto, or replacements or
extensions thereof; (iii) presentment, demand, default,
non-payment, partial payment and protest; and (iv) any other
event, condition, or occurrence described in Section 3
hereof. Each Guarantor agrees that each Secured Party may
heretofore, now or at any time hereafter do any or all of the
foregoing in such manner, upon such terms and at such times as each
Secured Party, in its sole and absolute discretion, deems
advisable, without in any way or respect impairing, affecting,
reducing or releasing such Guarantor from its Guarantor’s
Obligations, and each Guarantor hereby consents to each and all of
the foregoing events or occurrences.
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(b) Each Guarantor hereby agrees
that payment or performance by such Guarantor of its
Guarantor’s Obligations under this Guaranty Agreement may be
enforced by the Administrative Agent on behalf of the Secured
Parties upon demand by the Administrative Agent to such Guarantor
without the Administrative Agent being required, such Guarantor
expressly waiving to the extent permitted by law any right it may
have to require the Administrative Agent, to (i)
