Exhibit 10.35
AMENDMENT NO. 1 TO CREDIT
AGREEMENT AND SECURITY AGREEMENT
This Amendment No. 1 to Credit
Agreement and Security Agreement (this “
Agreement ”) dated as of May 25, 2006 (the
“ Agreement Date ”), and effective as of
February 17, 2006 (the “ Effective Date
”), is made by and among SONIC AUTOMOTIVE, INC., a Delaware
corporation (the “ Company ”), CERTAIN
SUBSIDIARIES OF THE COMPANY party to the Credit Agreement (as
defined below) pursuant to Section 2.24 of the Credit
Agreement (each a “ New Vehicle Borrower
” and together with the Company, the “
Borrowers ” and each individually a “
Borrower ”), BANK OF AMERICA, N.A., a national
banking association organized and existing under the laws of the
United States (“ Bank of America ”), in
its capacity as administrative agent for the Lenders (as defined in
the Credit Agreement (as defined below)) (in such capacity, the
“ Administrative Agent ”), and as
Revolving Swing Line Lender, New Vehicle Swing Line Lender, Used
Vehicle Swing Line Lender and L/C Issuer, and each of the Lenders
signatory hereto, and each of the Guarantors (as defined in the
Credit Agreement) signatory hereto.
W I T N E S S E T
H:
WHEREAS , the Company, the New Vehicle Borrowers, Bank
of America, as Administrative Agent, Revolving Swing Line Lender,
New Vehicle Swing Line Lender, Used Vehicle Swing Line Lender and
L/C Issuer, and the Lenders have entered into that certain Credit
Agreement dated as of February 17, 2006 (as hereby amended and
as from time to time hereafter further amended, modified,
supplemented, restated, or amended and restated, the “
Credit Agreement ”; capitalized terms used in
this Agreement not otherwise defined herein shall have the
respective meanings given thereto in the Credit Agreement),
pursuant to which the Lenders (a) have made available to the
Company (i) the Revolving Credit Facility, including a letter
of credit facility and a revolving swing line facility, and
(ii) the Used Vehicle Floorplan Facility, including a used
vehicle floorplan swing line facility, and (b) have made
available to the Borrowers the New Vehicle Floorplan Facility,
including a new vehicle floorplan swing line facility;
and
WHEREAS , the Company has entered into the Company
Guaranty pursuant to which it has guaranteed the payment and
performance of the obligations of the New Vehicle Borrowers under
the Credit Agreement and the other Loan Documents; and
WHEREAS , each of the other Guarantors has entered into
a Subsidiary Guaranty pursuant to which it has guaranteed (subject
to certain limitations set forth therein with respect to the
Guarantors that are Silo Subsidiaries) the payment and performance
of the obligations of each Borrower under the Credit Agreement and
the other Loan Documents; and
WHEREAS , the Company and the respective Loan Parties
that are parties thereto have entered into the Security Agreement,
the Pledge Agreement and other Security Instruments, securing the
Obligations under the Credit Agreement and other Loan Documents;
and
WHEREAS , the Borrowers have advised the Administrative
Agent and the Lenders that the Borrowers desire to amend certain
provisions of the Credit Agreement and the Security Agreement as
set forth below, and the Administrative Agent and the Lenders
signatory hereto are willing to effect such amendment on the terms
and conditions contained in this Agreement;
NOW, THEREFORE
, in consideration of the premises
and further valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
1. Amendments to Credit
Agreement . Subject to the terms and conditions set forth
herein, the Credit Agreement is hereby amended as
follows:
(a) The definition of “
Vehicle ” in Section 1.01 of the Credit
Agreement is amended, so that, as amended, the definition shall
read as follows:
“ Vehicle ” means
an automobile or truck with a gross vehicle weight of less than
16,000 pounds which satisfies the following requirements:
(a) the vehicle is owned by a Grantor free of any title
defects or any liens or interests of others except the security
interest in favor of the Administrative Agent for the benefit of
the Secured Parties and other Liens to which the Administrative
Agent consents in writing in its sole discretion; (b) except
as set forth in Section 6.13 , the vehicle is located
at one of the locations identified in Schedule 6.13 ; and
(c) the vehicle is held for sale in the ordinary course of a
Grantor’s business and is of good and merchantable quality;
provided that , in the case of vehicles financed under the
New Vehicle Floorplan Facility, “Vehicle” shall include
(i) any Vehicle described above or (ii) any truck with a
gross vehicle weight of 16,000 pounds or more (each, a “
Heavy Truck ”) so long as (A) such truck
satisfies the requirements of clauses (a) through
(c) above and (B) the aggregate Outstanding Amount of New
Vehicle Floorplan Committed Loans and New Vehicle Floorplan Swing
Line Loans used to finance Heavy Trucks does not exceed $35,000,000
at any time.
(b) The fourth sentence of
Section 2.12(a) of the Credit Agreement is amended, so
that, as amended, the sentence shall read as follows:
“Each Borrowing of or
conversion to Eurodollar Rate Loans shall be in a principal amount
of $1,000,000 or a whole multiple of $100,000 in excess
thereof.”
(c) Schedule 2A.03(a) of the
Credit Agreement is amended, so that, as amended, such schedule
shall be Schedule 2A.03(a) as attached to this
Agreement.
(d) Section 6.13 of the
Credit Agreement is amended, so that, as amended, the section shall
read as follows:
“Keep the Vehicles only at the
locations set forth on Schedule 6.13 , as such schedule may
be revised from time to time as set forth in the Compliance
Certificate delivered pursuant to Section 6.02(a) ,
except that Vehicles may, in the ordinary course of business,
(i) be temporarily in transit to or between such locations or
(ii) be temporarily removed from such locations (a) for
repair, (b)
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when being test driven by potential
customers or (c) in the case of Heavy Trucks, for conversion
of any such Heavy Truck at a conversion facility, provided
that, (1) if requested by the New Vehicle Swing Line Lender in
its sole discretion during a floorplan audit, the Company or the
applicable New Vehicle Borrower shall provide the New Vehicle Swing
Line Lender with the name, location and contact information of the
conversion facility or other information reasonably requested by
the New Vehicle Swing Line Lender with respect to such Heavy Truck,
and (2) if the applicable customer has purchased the
applicable Heavy Truck, the conversion facility may transport such
Heavy Truck directly to such customer.”
(e) Schedule 6.13 of the
Credit Agreement is amended, so that, as amended, such schedule
shall be Schedule 6.13 as attached to this
Agreement.
(f) Section 6.14(iv) and
6.14(v) of the Credit Agreement are amended, so that, as
amended, such sections shall read as follows:
“(iv) unless the Required
Lenders expressly waive such requirement in accordance with
Section 10.01 , in the case of any single Acquisition
or any related series of Acquisitions with an aggregate Cost of
Acquisition of $25,000,000 or more, an opinion or opinions of
counsel to such Restricted Subsidiary dated as of the date of
delivery of such Joinder Agreements (and other Loan Documents)
provided for in this Section 6.14 and addressed to the
Administrative Agent, in form and substance acceptable to the
Administrative Agent;
(v) the documents described in
Sections 4.01(a)(iii), (iv), (vii), (xiii), (xiv),
(xxv) and (xxvi) with respect to such Restricted
Subsidiary; and”.
(g) Section 7.04(b) of
the Credit Agreement is amended by deleting the word
“and” at the end of such section,
Section 7.04(c) of the Credit Agreement is re-numbered
as Section 7.04(d) and a new
Section 7.04(c) is added, so that, as amended, such
Sections 7.04(c) and (d) shall read as
follows:
“(c) any Subsidiary may
Dispose of all or substantially all of its assets to or in favor of
any Person in one transaction or in a series of transactions,
provided that such Disposition or Dispositions satisfy the
requirements of Section 7.05(i) ; and
(d) any Subsidiary which has
Disposed of all or substantially all of its assets in accordance
with the terms of this Agreement may be dissolved or have its
entity status terminated.”
2. Amendment to Schedule 7(f) of
the Security Agreement . Subject to the terms and conditions
set forth herein, Schedule 7(f) of the Security Agreement is
amended so that, as amended, such schedule shall be Schedule
7(f) as attached to this Agreement.
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3. Effectiveness; Conditions
Precedent . This Agreement and the amendments to the Credit
Agreement and Security Agreement herein provided shall become
effective as of February 17, 2006, upon satisfaction of the
following conditions precedent:
(a) the Administrative Agent shall
have received eighteen (18) original counterparts of this
Agreement, duly executed by each Borrower, Bank of America, as
Administrative Agent, Revolving Swing Line Lender, New Vehicle
Swing Line Lender, Used Vehicle Swing Line Lender and L/C Issuer,
each Guarantor and the Required Lenders; and
(b) all fees and expenses payable to
the Administrative Agent and the Lenders (including the fees and
expenses of counsel to the Administrative Agent) to the extent
invoiced on or prior to the Amendment Date shall have been paid in
full (without prejudice to final settling of accounts for such fees
and expenses).
4. Consent of the Guarantors
. Each Guarantor hereby consents, acknowledges and agrees to the
amendments set forth herein and hereby confirms and ratifies in all
respects the Guaranty to which such Guarantor is a party (including
without limitation the continuation of such Guarantor’s
payment and performance obligations thereunder upon and after the
effectiveness of this Agreement and the amendments contemplated
hereby) and the enforceability of such Guaranty against such
Guarantor in accordance with its terms.
5. Representations and
Warranties . In order to induce the Administrative Agent and
the Lenders to enter into this Agreement, each Borrower represents
and warrants to the Administrative Agent and the Lenders as
follows:
(a) The representations and
warranties made by each Loan Party in Article V of the
Credit Agreement and in each of the other Loan Documents to which
such Loan Party is a party are true and correct in all material
respects on and as of the date hereof, except to the extent that
such representations and warranties expressly relate to an earlier
date;
(b) The Persons appearing as
Guarantors on the signature pages to this Agreement constitute all
Persons who are required to be Guarantors pursuant to the terms of
the Credit Agreement and the other Loan Documents, including
without limitation all Persons who became Subsidiaries or were
otherwise required to become Guarantors after the Closing Date, and
each of such Persons has become and remains a party to a Guaranty
as a Guarantor;
(c) This Agreement has been duly
authorized, executed and delivered by the Borrowers and Guarantors
party hereto and constitutes a legal, valid and binding obligation
of such parties, except as may be limited by general principles of
equity or by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting
creditors’ rights generally; and
(d) No Default or Event of Default
has occurred and is continuing.
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6. Entire Agreement . This
Agreement, together with all the Loan Documents (collectively, the
“ Relevant Documents ”), sets forth the
entire understanding and agreement of the parties hereto in
relation to the subject matter hereof and supersedes any prior
negotiations and agreements among the parties relating to such
subject matter. No promise, condition, representation or warranty,
express or implied, not set forth in the Relevant Documents shall
bind any party hereto, and no such party has relied on any such
promise, condition, representation or warranty. Each of the parties
hereto acknowledges that, except as otherwise expressly stated in
the Relevant Documents, no representations, warranties or
commitments, express or implied, have been made by any party to the
other in relation to the subject matter hereof or thereof. None of
the terms or conditions of this Agreement may be changed, modified,
waived or canceled orally or otherwise, except in writing and in
accordance with Section 10.01 of the Credit
Agreement.
7. Full Force and Effect of
Agreement . Except as hereby specifically amended, modified or
supplemented, the Credit Agreement and all other Loan Documents are
hereby confirmed and ratified in all respects and shall be and
remain in full force and effect according to their respective
terms.
8. Counterparts . This
Agreement may be executed in any number of counterparts, each of
which shall be deemed an original as against any party whose
signature appears thereon, and all of which shall together
constitute one and the same instrument. Delivery of an executed
counterpart of a signature page of this Agreement by
