SUBORDINATION AGREEMENT
This Subordination Agreement (as the same may from time to time be
amended, modified or restated, the "Agreement") is entered into by and between
O. XXXXXX XXXXX (the "Noteholder") and FORD MOTOR CREDIT COMPANY (the "Lender")
and is dated as of December 15, 1997.
W I T N E S S E T H:
WHEREAS, the Noteholder is financially interested in the "Borrower" (as
defined below), in that Borrower is now indebted to the Noteholder, pursuant to
that certain Subordinate Promissory Note (the "Subordinated Note") dated as of
December 15, 1997, in the total amount of FIVE MILLION AND FIVE HUNDRED THOUSAND
and no/100 Dollars ($5,500,000)] (which Subordinated Note, together with any
instrument which may hereafter be substituted therefor under the terms of any
agreement between Borrower and the Noteholder is hereinafter referred to as the
"Note");
WHEREAS, the Borrower has entered into that certain Amended and
Restated Credit Agreement dated as of December 15, 1997, (as the same may from
time to time be amended, modified, supplemented or restated, in whole or in part
and without limitation as to amount, terms, conditions or covenants, the "Credit
Agreement") with the Lender;
WHEREAS, Borrower is presently indebted to the Lender as a result of
the advance of monies and other extensions of credit by the Lender to Borrower
pursuant to the Credit Agreement; and
WHEREAS, the Noteholder acknowledges that the loan or advance of monies
or other extensions of any financial accommodation or credit to Borrower by the
Lender is of value to the Noteholder;
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged by the Noteholder, and in order to induce the Lender to
make loans or extend credit or any other financial accommodation to or for the
benefit of Borrower; or to grant such renewals, increases or extensions thereof
as it may deem advisable; and to better secure the Lender in respect of the
foregoing, the Noteholder hereby agrees with the Lender as hereinafter set
forth.
1. CERTAIN DEFINED TERMS. In addition to the terms defined above and
elsewhere in this Agreement, 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:
"BORROWER" shall mean Sonic Automotive, Inc., a Delaware corporation or
any successor assign or assign of Sonic Automotive, Inc., including, without
limitation, a receiver, trustee or debtor-in-possession.
"SENIOR DEBT" shall mean (a) (i) the outstanding principal balance of
all loans made under and pursuant to the Credit Agreement, any Wholesale Line
(as defined in the Credit Agreement) or any agreement providing for the
refunding or refinancing of the "Obligations" (as defined in the Credit
Agreement) ("Refinancing Agreement") and (ii) all other obligations,
liabilities, and indebtedness, including, without limitation reimbursement
obligations under letters of credit issued pursuant to the Credit Agreement, any
Wholesale Line or Refinancing Agreement, obligations with respect to acceptances
issued pursuant to the Credit Agreement, any Wholesale Line or a Refinancing
Agreement and obligations under interest rate or foreign currency hedging, swap,
cap, collar or similar agreements of Borrower to the Lender, in each case
whether now existing or hereafter arising (and whether such indebtedness arises
or accrues before or after the commencement of any bankruptcy, insolvency or
receivership proceedings) directly between Borrower and/or its Subsidiaries and
the Lender, or acquired outright, conditionally or as collateral security from
another by the Lender, including, without limitation, interest and fees accruing
pre-petition or post-petition at the rate or rates prescribed in the Credit
Agreement, any Wholesale Line or Refinancing Agreement and costs, expenses, and
attorneys' and paralegals' fees, whenever incurred (and whether or not such
claims, interest, costs, expenses or fees are allowed or allowable in any such
proceeding); and (b) amounts disbursed or advanced (including, without
limitation in connection with the provision of any financing or other financial
accommodations pursuant to Section 364 of the Bankruptcy Code) by the Lender
which the Lender, in its good faith discretion, deems necessary or desirable to
preserve or protect any "Collateral" (as defined in the Credit Agreement) or to
enhance the likelihood or maximize the amount of repayment of the Senior Debt,
including, but not limited to, all protective advances, costs, expenses, and
attorneys' and paralegals' fees, whensoever made, advanced or incurred by the
Lender in connection with the Senior Debt or the collateral therefor
("Preservation Debt"). Senior Debt shall include, without limitation, all
"Obligations" (as defined in the Credit Agreement) and all indebtedness,
obligations and liabilities under and pursuant to any agreement providing for
the refunding or refinancing of the Obligations under the Credit Agreement or
obligations under any Wholesale Line. Senior Debt shall be considered to be
outstanding whenever the Lender has an outstanding commitment therefor.
"SUBORDINATED DEBT" shall mean all (a) all principal of, and premium,
if any, and interest on, the Note and (b) all other indebtedness, fees,
expenses, obligations and liabilities of the Borrower (or any other person,
firm, partnership or corporation for the benefit of Borrower) to the Noteholder,
whether now existing or hereafter incurred or created, under or with respect to
the Note, in each case, whether such amounts are due or not due, direct or
indirect, absolute or contingent.
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2. STANDBY; SUBORDINATION; SUBROGATION. The payment and performance of
the Subordinated Debt is hereby subordinated to the Senior Debt and, except as
set forth in Section 3 below, the Noteholder will not accelerate, ask, demand,
xxx for, take or receive from Borrower, by setoff or in any other manner, the
whole or any part of the Subordinated Debt, including, without limitation, the
taking of any negotiable instruments evidencing such amounts, nor any security
for any of the Subordinated Debt, unless and until all of the Senior Debt shall
have been fully and indefeasibly paid and satisfied in cash and all financing
arrangements between the Borrower and the Lender have been terminated. The
Noteholder also hereby agrees that, regardless of whether the Senior Debt is
secured or unsecured, the Lender shall be subrogated for the Noteholder with
respect to the Noteholder's claims against Borrower and the Noteholder's rights,
liens and security interests, if any, in any of Borrower's assets or any other
assets securing the Senior Debt and the proceeds thereof until all of the Senior
Debt has been fully and indefeasibly paid and satisfied in cash and all
financing arrangements between the Borrower and the Lender have been terminated.
3. PERMITTED PAYMENTS. Notwithstanding the provisions of Section 2 of
this Agreement, until the occurrence of an "Event of Default" (as defined in the
Credit Agreement), and provided that (i) there shall not then exist any breach
of this Agreement by the Noteholder which has not been waived, in writing, by
the Lender, and (ii) the payment described below, if made, would not give rise
to the occurrence of an Event of Default or the Lender's making an advance to
Borrower in excess of amounts otherwise then available to Borrower under the
terms of the Credit Agreement, Borrower may pay to the Noteholder, and the
Noteholder may accept from Borrower, regularly scheduled payments of interest,
when due, on an unaccelerated basis, pursuant to the Note provided the maximum
interest rate at which such payments shall be permitted shall not exceed the
"Prime Rate" announced from time to time by NationsBank, N.A., plus 0.5% per
annum ("Permitted Payments"), it being understood and agreed by the Noteholder
that the Note may not be modified or amended without the prior written consent
of the Lender. It is further expressly understood and agreed by the Noteholder
that: (i) payments or prepayments (whether optional or mandatory, by setoff or
otherwise) of principal with respect to the Subordinated Debt; (ii) any whole or
partial prepayments (whether optional or mandatory, by setoff or otherwise) of
interest; and (iii) any payments (whether optional or mandatory, by setoff or
otherwise) of interest any rate greater than the Prime Rate plus 0.5% per annum
shall not be Permitted Payments.
4. ENFORCEMENT RIGHTS. Prior to the indefeasible payment in full in
cash of the Senior Debt and the termination of all financing arrangements
between the Borrower and its Subsidiaries (collectively, the "Debtor Parties")
and the Lender, the Noteholder shall not have any right to enforce any claim
with respect to the Subordinated Debt, including, without limitation, any
Permitted Payment, or otherwise to take any action against the Debtor Parties or
the Debtor Parties' property without the Lender's prior written consent.
5. LIENS; PERMITTED TRANSFERS. The Noteholder hereby represents as of
the date hereof that he has not been granted or obtained any liens or security
interests in any assets of
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the Debtor Parties or any other assets securing the Senior Debt. The Noteholder
agrees that, without the prior written consent of the Lender, he shall not take
any liens on or security interests in any assets of the Debtor Parties or any
other assets securing the Senior Debt. In the event that any Debtor Party
proposes to sell, assign, transfer, lease, convey or otherwise dispose of any if
its property (a "Transfer") and such Transfer is either permitted pursuant to
the Credit Agreement or pursuant to a separate consent executed by the Lender,
then such Transfer shall be deemed to be permitted and consented to by the
Noteholder and shall not constitute a violation or breach of any terms contained
in the Note. The Noteholder acknowledges and agrees that, to the extent the
terms and provisions of this Agreement are inconsistent with the Note, the Note
shall be deemed to be subject to this Agreement.
6. SUBORDINATED DEBT OWED ONLY TO THE NOTEHOLDER. The Noteholder
warrants and represents that (a) the Noteholder has not previously assigned any
interest in the Subordinated Debt or any security interest in connection
therewith, if any; (b) no other party owns an interest in the Subordinated Debt
or security therefor other than the Noteholder (whether as joint holders of the
Subordinated Debt, participants or otherwise); and that the entire Subordinated
Debt is owing only to the Noteholder. The Noteholder covenants that the entire
Subordinated Debt shall continue to be owing only to the Noteholder and all
security therefor, if any, shall continue to be held solely for the benefit of
the Noteholder.
7. LENDER PRIORITY. In the event of any distribution, division, or
application, partial or complete, voluntary or involuntary, by operation of law
or otherwise, of all or any part of the assets of Borrower or any of its
Subsidiaries or the proceeds thereof to the creditors of the Borrower or its
Subsidiaries or readjustment of the obligations and Subordinated Debt of
Borrower, whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding involving the readjustment of all or any part of the Senior Debt or
the Subordinated Debt, or the application of the assets of Borrower or any of
its Subsidiaries to the payment or liquidation thereof, or upon the dissolution
or other winding up of Borrower's or any of its Subsidiary's business, or upon
the sale of all or substantially all of Borrower's or any of its Subsidiaries'
assets (an "Insolvency or Liquidation Proceeding"), then, and in any such event,
(i) the Lender shall be entitled to receive indefeasible payment in full in cash
of any and all of the Senior Debt prior to the payment of all or any part of the
Subordinated Debt, and (ii) any payment or distribution of any kind or
character, whether in cash, securities or other property, which shall be payable
or deliverable upon or with respect to any or all of the Subordinated Debt shall
be paid or delivered directly to the Lender for application on any of the Senior
Debt, due or not due, until the Senior Debt shall have first been fully and
indefeasibly paid and satisfied in cash.
8. GRANT OF AUTHORITY TO THE LENDER. In the event of the occurrence of
any Insolvency or Liquidation Proceeding, and in order to enable the Lender to
enforce its rights hereunder in any of the aforesaid actions or proceedings,
Lender is hereby irrevocably authorized and empowered, in the Lender's
discretion, to file, make and present for and on behalf of the Noteholder such
proofs of claims against Borrower on account of the Subordinated Debt or other
motions or pleadings as the Lender may deem expedient or proper
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and to vote such proofs of claims in any such proceeding and to 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 to apply the same on account of
any portion of the Senior Debt. In voting such proofs of claim in any
proceeding, the Lender may act in a manner consistent with its sole interest and
shall have no duty to take any action to optimize or maximize the Noteholder's
recovery with respect to its claim. The Noteholder irrevocably authorizes and
empowers the Lender to demand, xxx for, collect and receive each of the
aforesaid payments and distributions described in Section 7 above and give
acquittance therefor and to file claims and take such other actions, in the
Lender's own name or in the name of the Noteholder or otherwise, as the Lender
may deem necessary or advisable. To the extent that payments or distributions
are made in property other than cash, the Noteholder authorizes the Lender to
sell such property to such buyers and on such terms as the Lender, in its sole
discretion, shall determine. The Noteholder will execute and deliver to the
Lender such powers of attorney, assignments and other instruments or documents,
including notes and stock certificates (together with such assignments or
endorsements as the Lender shall deem necessary), as may be requested by the
Lender in order to enable the Lender and to enforce any and all claims of the
Lender upon or with respect to any or all of the Subordinated Debt and to
collect and receive any and all payments and distributions which may be payable
or deliverable at any time upon or with respect to the Subordinated Debt, all
for the Lender's own benefit. Following the indefeasible payment in full in cash
of the Senior Debt, the Lender will remit to the Noteholder, all dividends or
other payments or distributions paid to and held by the Lender in excess of the
Senior Debt. Each of the powers and authorizations granted to the Lender in this
Section 8, being coupled with an interest, is irrevocable.
9. PAYMENTS RECEIVED BY THE NOTEHOLDER. Except for Permitted Payments
received by the Noteholder prior to the occurrence of an Event of Default as
provided in Section 3 above, should any payment or distribution or security or
instrument or proceeds thereof be received by the Noteholder upon or with
respect to the Subordinated Debt or any other obligations of Borrower to the
Noteholder prior to the indefeasible payment in full in cash of all of the
Senior Debt and termination of all financing arrangements between the Borrower
and the Lender, the Noteholder shall receive and hold the same in a segregated
account in trust, as trustee, for the benefit of the Lender, and shall forthwith
deliver the same to the Lender, in precisely the form received (except for the
endorsement or assignment of the Noteholder where necessary), for application on
any of Senior Debt, due or not due, and, until so delivered, the same shall be
held in trust by the Noteholder as the property of the Lender. In the event of
the failure of the Noteholder to make any such endorsement or assignment to the
Lender, the Lender, or any of its officers or employees, is hereby irrevocably
authorized to make the same (which authorization, being coupled with an
interest, is irrevocable).
10. INSTRUMENT LEGEND. Any instrument evidencing any of the
Subordinated Debt (including, without limitation, the Note), or any portion
thereof, will, on the date hereof, be inscribed with a legend conspicuously
indicating that payment thereof is subordinated to the claims of the Lender
pursuant to the terms of this Agreement, and (i) a copy thereof will be
delivered to the Lender on the date hereof, and (ii) the original of any such
instrument will be
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immediately delivered to the Lender upon request therefor by the Lender after
the declaration by the Lender of an Event of Default under the Credit Agreement
if an original thereof is necessary for the Lender to enforce its rights
hereunder. Any instrument evidencing any of the Subordinated Debt, or any
portion thereof, which is hereafter executed by Borrower, will, on the date
thereof, be inscribed with the aforesaid legend and a copy thereof will be
delivered to the Lender on the date of its execution or within five (5) business
days thereafter and the original thereof will be delivered as and when described
hereinabove.
11. REIMBURSEMENTS FOR EXPENSES AND BORROWINGS FROM BORROWER;
RESTRICTION ON ASSIGNMENT OF CLAIMS. Except as permitted in Section 3 hereof,
the Noteholder agrees that until the Senior Debt has been indefeasibly paid in
full in cash and satisfied and all financing arrangements between the Debtor
Parties and the Lender have been terminated, the Noteholder will not, directly
or indirectly, accept or receive the benefit of any remuneration or
reimbursement for expenses on account of the Subordinated Debt from or on behalf
of any Debtor Party and will not assign or transfer to others any claim the
Noteholder has or may have against Borrower, unless such assignment or transfer
is made expressly subject to this Agreement.
12. CONTINUING NATURE OF SUBORDINATION. This Agreement shall be
effective and may not be terminated or otherwise revoked by the Noteholder until
the Senior Debt shall have been indefeasibly paid in full in cash and satisfied
and all financing arrangements among Debtor Parties and the Lender have been
terminated. The Noteholder hereby waives to the fullest extent permitted by
applicable law any right it may have to terminate or revoke this Agreement or
any of the provisions of this Agreement. In the event the Noteholder shall have
any right under applicable law otherwise to terminate or revoke this Agreement
which right cannot be waived, such termination or revocation shall not be
effective until written notice of such termination or revocation, signed by the
Noteholder, is actually received by the Lender's officer responsible for such
matters. In the absence of the circumstances described in the immediately
preceding sentence, this is a continuing agreement of subordination and the
Lender may continue, at any time and without notice to the Noteholder, to extend
credit or other financial accommodations and loan monies to or for the benefit
of a Debtor Party on the faith hereof. Any termination or revocation described
hereinabove shall not affect this Agreement in relation to (a) any of the Senior
Debt which arose or was committed to prior to receipt thereof, (b) any of the
Senior Debt created after receipt thereof, if such Senior Debt was incurred
either through readvances by the Lender pursuant to the Lender's financing
arrangements with a Debtor Party, including, without limitation, advances or
readvances, in an aggregate outstanding amount not to exceed the "Commitment"
(as defined in the Credit Agreement as in effect on the date of receipt of any
such notice); or (c) any of the Senior Debt created after receipt thereof if
such Senior Debt is Preservation Debt. If, in reliance on this Agreement, the
Lender makes loans or other advances to or for the benefit of Borrower or takes
other action under the Credit Agreement after such aforesaid termination or
revocation by the Noteholder but prior to the receipt by the Lender of said
written notice as set forth above, the rights of the Lender shall be the same as
if such termination or revocation had not occurred.
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13. ADDITIONAL AGREEMENTS BETWEEN THE LENDER AND DEBTOR PARTIES. The
Lender at any time and from time to time, either before or after any such
aforesaid notice of termination or revocation, may enter into such agreement or
agreements with a Debtor Party as the Lender may deem proper, extending the time
of payment of or renewing or otherwise altering the terms, including, without
limitation increasing the principal amount thereof, of all or any portion of the
Senior Debt or affecting the security underlying any or all of the Senior Debt,
and may exchange, sell, release, surrender or otherwise deal with any such
security, without in any way thereby impairing or affecting this Agreement.
14. NOTEHOLDER'S WAIVERS. All of the Senior Debt shall be deemed to
have been made or incurred in reliance upon this Agreement. The Noteholder
expressly waives all notice of the acceptance by the Lender of the subordination
and other provisions of this Agreement and all other notices not specifically
required pursuant to the terms of this Agreement whatsoever, and the Noteholder
expressly waives reliance by the Lender upon the subordination and other
agreements as herein provided. In the event that the Noteholder has or at any
time acquires any lien upon or security interest in the assets securing the
Senior Debt, or any part thereof, to the fullest extent permitted by applicable
law, the Noteholder hereby waives any right that the Noteholder may have whether
such right arises under Sections 9-504 or 9-505 of the Uniform Commercial Code
or other applicable law, to receive notice of the Lender's intended disposition
of such assets (or a portion thereof) or of the Lender's proposed retention of
such assets in satisfaction of the Senior Debt (or a portion thereof). The
Noteholder further agrees that in the event Borrower consents or fails to object
to a proposed retention of such assets (or a portion thereof) by the Lender in
satisfaction of the Senior Debt (or a portion thereof), the Noteholder hereby
consents to such proposed retention regardless of whether the Noteholder is
provided with notice of such proposed retention. The Noteholder agrees that the
Noteholder will not interfere with or in any manner oppose a disposition of any
assets securing the Senior Debt by the Lender. The Noteholder agrees that the
Lender has not made any warranties or representations with respect to the due
execution, legality, validity, completeness or enforceability of the Credit
Agreement, or the collectibility of the Senior Debt, that the Lender shall be
entitled to manage and supervise its loans to Borrower in accordance with
applicable law and its usual practices, modified from time to time as deemed
appropriate under the circumstances, without regard to the existence of any
rights that the Noteholder may now or hereafter have in or to any of the assets
of Borrower, and that Lender shall have no liability to the Noteholder for, and
waive any claim which the Noteholder may now or hereafter have against, the
Lender arising out of any and all actions which the Lender, in good faith, takes
or omits to take (including, without limitation, actions with respect to the
creation, perfection or continuation of liens or security interests in the
Collateral and other security for the Senior Debt, actions with respect to the
occurrence of an Event of Default, actions with respect to the foreclosure upon,
sale, release, or depreciation of, or failure to realize upon, any of the
Collateral and actions with respect to the collection of any claim for all or
any part of the Senior Debt from any account debtor, guarantor or any other
party) with respect to the Credit Agreement or any other agreement related
thereto or to the collection of the Senior Debt or the valuation, use,
protection or release of the Collateral and/or other security for the Senior
Debt.
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15. INVALIDATED PAYMENTS. To the extent that the Lender receives
payments on, or proceeds of collateral for, the Senior Debt which are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
avoided and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law, or equitable cause,
then, to the extent of such payment or proceeds received, the Senior Debt, or
part thereof, intended to be satisfied shall be revived and continue in full
force and effect as if such payments or proceeds had not been received by the
Lender.
16. BANKRUPTCY ISSUES. The Noteholder agrees that the Lender may
consent to the use of cash collateral or provide financing to a Debtor Party
(under Section 363 or Section 364 of the Bankruptcy Code or otherwise) on such
terms and conditions and in such amounts as the Lender, in its sole discretion,
may decide and that, in connection with such cash collateral usage or such
financing, the Debtor Party (or a trustee appointed for the estate of the Debtor
Party) may grant to the Lender liens and security interests upon all assets of
the Debtor Party, which liens and security interests (i) shall secure payment of
all Senior Debt (whether such Senior Debt arose prior to the filing of the
petition for relief or arise thereafter); and (ii) shall be superior in priority
to the liens and security interests, if any, held by the Noteholder on the
assets of the Debtor Parties. All allocations of payments between the Lender and
the Noteholder shall, subject to any court order, continue to be made after the
filing or other commencement of any Insolvency or Liquidation Proceeding on the
same basis that the payments were to be allocated prior to the date of such
filing or commencement. The Noteholder agrees that it will not object to or
oppose a sale or other disposition of any assets securing the Senior Debt (or
any portion thereof) free and clear of security interests, liens or other claims
of the Noteholder, if any, under Section 363 of the Bankruptcy Code or any other
provision of the Bankruptcy Code if the Lender has consented to such sale or
disposition of such assets. In the event that the Noteholder has or at any time
acquires any security for the Subordinated Debt, the Noteholder agrees not to
assert any right it may have to "adequate protection" of its interest in such
security in any Insolvency or Liquidation Proceeding and agrees that it will not
seek to have the automatic stay lifted with respect to such security, without
the prior written consent of the Lender. The Noteholder waives any claim it may
now or hereafter have arising out of the Lender's election, in any proceeding
instituted under Chapter 11 of the Bankruptcy Code, of the application of
Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing or grant of a
security interest under Section 364 of the Bankruptcy Code by a Debtor Party, as
debtor in possession. The Noteholder agrees not to initiate or prosecute or
encourage any other person to initiate or prosecute any claim, action or other
proceeding (i) challenging the enforceability of the Lender's claim, (ii)
challenging the enforceability of any liens or security interests in assets
securing the Senior Debt or (iii) asserting any claims which the A Debtor Party
may hold with respect to the Lender. The Noteholder agrees that he will not seek
participation or participate on any creditors' committee without the Lender's
prior written consent. In the event that the Lender consents to such
participation, at the request of the Lender, the Noteholder will resign from his
position on such committee. To the extent that the Lender receives payments on,
or proceeds of collateral for, the Senior Debt which are subsequently
invalidated, declared to be fraudulent or preferential,
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set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law, or equitable cause,
then, to the extent of such payment or proceeds received, the Senior Debt, or
part thereof, intended to be satisfied shall be revived and continue in full
force and effect as if such payments or proceeds had not been received by the
Lender.
17. LENDER'S WAIVERS. No right of the Lender to enforce the
subordination or other terms as provided in this Agreement shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of a
Debtor Party or by any act or failure to act by the Lender, or by any
noncompliance by a Debtor Party with the terms, provisions and covenants of this
Agreement, or the Note, regardless of any knowledge thereof which the Lender may
have or be otherwise charged with. No waiver shall be deemed to be made by the
Lender of any of the Lender's rights hereunder, unless the same shall be in
writing signed on behalf of the Lender, and each waiver, if any, shall be a
waiver only with respect to the specific instance involved and shall in no way
impair the rights of the Lender or the obligations of the Noteholder to the
Lender in any other respect at any other time. The failure of the Lender to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provisions, nor in any way to affect the validity of this
Agreement or any part hereof or the right of the Lender thereafter to enforce
each and every such provision. No waiver by the Lender of any breach of this
Agreement shall be held to constitute a waiver of any other or subsequent
breach.
18. INFORMATION CONCERNING FINANCIAL CONDITION OF BORROWER. The
Noteholder hereby assumes responsibility for keeping informed of the financial
condition of Borrower, any and all endorsers and any and all guarantors of the
Senior Debt and of all other circumstances bearing upon the risk of nonpayment
of the Senior Debt and/or Subordinated Debt that diligent inquiry would reveal,
and the Noteholder hereby agrees that the Lender shall not have any duty to
advise the Noteholder of information known to the Lender regarding such
condition or any such circumstances. In the event the Lender, in its sole
discretion, undertakes, at any time or from time to time, to provide any such
information to the Noteholder, the Lender shall be under no obligation (i) to
provide any such information to the Noteholder on any subsequent occasion, or
(ii) to undertake any investigation not a part of Lender's regular business
routine and shall be under no obligation to disclose any information which,
pursuant to accepted or reasonable commercial finance practices, the Lender
wishes to maintain confidential. The Noteholder hereby agrees that all payments
received by the Lender may be applied, reversed, and reapplied, in whole or in
part, to any portion of the Senior Debt, as the Lender, in its sole discretion,
deem appropriate and assent to any extension or postponement of the time of
payment of the Senior Debt or to any other indulgence with respect thereto, to
any substitution, exchange or release of collateral which may at any time secure
the Senior Debt and to the addition or release of any other party or person
primarily or secondarily liable therefor.
Without in any way limiting the generality of the foregoing
paragraph, the Lender, may, at any time and from time to time, without the
consent of, or notice to, the Noteholder without incurring any liabilities to
the Noteholder and without impairing or releasing the subordination and other
benefits provided in this Agreement (even if any right of
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subrogation or other right or remedy of the Noteholder is affected, impaired or
extinguished thereby) do any one or more of the following:
(i) change the manner, place or terms of payment or change or
extent the time of payment of, or renew, exchange, amend, increase or
alter, the terms of any of the Senior Debt or any lien in any of the
Collateral or guaranty thereof or any liability of a Debtor Party or
any guarantor, or any liability incurred directly or indirectly in
respect thereof (including, without limitation, any extension of the
Senior Debt, without any restriction as to the tenor or terms of any
such extension), or otherwise amend, renew, exchange, extend, modify,
supplement in any manner the Senior Debt, the Credit Agreement or any
of the other Loan Documents.
(ii) sell, exchange, release, surrender, realize upon, enforce
or otherwise deal with in any manner and in any order any part of the
Collateral or other property securing the Senior Debt or any liability
of a Debtor Party or any guarantor to such holder, or any liability
incurred directly or indirectly in respect thereof;
(iii) settle or compromise any Senior Debt or any other
liability of a Debtor Party or any guarantor or any security therefor
or any liability incurred directly or indirectly in respect thereof and
apply any sums by whomsoever paid and however realized to any liability
(including, without limitation, the Senior Debt) in any manner or
order; and
(iv) exercise or delay in or refrain from exercising any right
or remedy against a Debtor Party or any security or any guarantor or
any other Person, elect any remedy and otherwise deal freely with a
Debtor Party and the Collateral and any security and any guarantor or
any liability of a Debtor Party or any guarantor to such holder or any
liability incurred directly or indirectly in respect thereof.
The Lender shall have no duty to the Noteholder with respect
to the preservation or maintenance of the Collateral or the manner in which
Lender enforces its rights in such Collateral or to preserve or maintain the
rights of any Person in the Collateral, and the Noteholder hereby waive any and
all claims which the Noteholder may now or hereafter have against the Lender
which relate to such preservation, maintenance or enforcement. The Noteholder
agrees not to assert and hereby waives, to the fullest extent permitted by law:
any right to demand, request, plead or otherwise assert or otherwise claim the
benefit of, any marshalling, appraisement, valuation or other similar right that
may otherwise be available under applicable law or any other similar rights a
junior creditor may have under applicable law.
19. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) THE NOTEHOLDER CONSENTS TO THE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED WITHIN NORTH CAROLINA AND WAIVES
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PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE NOTEHOLDER AT THE
ADDRESS STATED BELOW AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED THREE
(3) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED AS AFORESAID. THE NOTEHOLDER
WAIVES ANY OBJECTION BASED UPON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE
OF ANY ACTION INSTITUTED HEREUNDER. NOTHING IN THIS SECTION 19 SHALL AFFECT THE
RIGHT OF THE LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR AFFECT THE RIGHT OF THE LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE
NOTEHOLDER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
(B) WAIVER OF JURY TRIAL. 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.
(C) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH
OTHER PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF SECTIONS 19, 20, 21 AND 23, WITH COUNSEL OF ITS CHOICE AND IS
FULLY AWARE OF THE LEGAL CONSEQUENCES AND EFFECTS OF AND HAS KNOWINGLY AGREED TO
THE PROVISIONS HEREOF.
20. ARM'S LENGTH AGREEMENT. EACH OF THE PARTIES TO THIS AGREEMENT
AGREES AND ACKNOWLEDGES THAT THIS AGREEMENT HAS BEEN NEGOTIATED IN GOOD FAITH,
AT ARM'S LENGTH, AND NOT BY ANY MEANS FORBIDDEN BY LAW.
21. INJUNCTIVE RELIEF. THE NOTEHOLDER ACKNOWLEDGES AND AGREES THAT ITS
COVENANTS AND OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER DOCUMENTS,
INSTRUMENTS AND AGREEMENTS EXECUTED IN CONNECTION HEREWITH ARE INTEGRAL TO THE
LENDER'S REALIZATION OF ITS RIGHTS AGAINST, AND THE VALUE OF ITS INTEREST IN,
THE ASSETS OF A DEBTOR PARTY AND ITS AFFILIATES, THAT A BREACH OF ANY OF THE
COVENANTS AND OBLIGATIONS OF THE NOTEHOLDER HEREUNDER OR UNDER THE OTHER
DOCUMENTS, INSTRUMENTS AND AGREEMENTS EXECUTED IN CONNECTION
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HEREWITH SHALL ENTITLE The LENDER TO INJUNCTIVE RELIEF AND SPECIFIC PERFORMANCE
WITHOUT THE NECESSITY OF PROVING IRREPARABLE INJURY TO The LENDER OR THAT The
LENDER DO NOT HAVE AN ADEQUATE REMEDY AT LAW IN RESPECT OF SUCH BREACH (EACH OF
WHICH ELEMENTS THE NOTEHOLDER ADMITS EXIST) AND, AS A CONSEQUENCE, THE
NOTEHOLDER AGREES THAT EACH AND EVERY COVENANT AND OBLIGATION APPLICABLE TO IT
AND CONTAINED IN THIS AGREEMENT OR THE OTHER DOCUMENTS INSTRUMENTS AND
AGREEMENTS EXECUTED IN CONNECTION HEREWITH SHALL BE SPECIFICALLY ENFORCEABLE
AGAINST IT. THE NOTEHOLDER HEREBY WAIVES AND AGREES NOT TO ASSERT ANY DEFENSES
AGAINST AN ACTION FOR SPECIFIC PERFORMANCE OF ITS RESPECTIVE COVENANTS AND
OBLIGATIONS HEREUNDER AND/OR UNDER THE OTHER DOCUMENTS, INSTRUMENTS AND
AGREEMENTS EXECUTED IN CONNECTION HEREWITH.
22. NOTICES. Except as otherwise provided for herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon either of the
parties by the other, or whenever either of the parties desires to give or serve
upon the other communication with respect to this Agreement, such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing (including, but not limited to, facsimile communication), and shall
either be delivered in person, telecopied, telegraphed, sent by reputable
overnight courier or mailed by first class mail, or registered or certified
mail, return receipt requested, postage prepaid or provided for, addressed as
follows:
(i) If to the Lender at:
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx
(ii) If to the Noteholder at:
O. Xxxxxx Xxxxx
0000 Xxxx Xxxxxxxxxxxx Xxxxxxxxx
P.O. Box 18747
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
or to such other address as any party designates to the other parties in the
manner herein prescribed.
23. GOVERNING LAW. ANY DISPUTE BETWEEN ANY OF THE NOTEHOLDER AND THE
LENDER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN
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CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS, INSTRUMENTS OR
AGREEMENTS EXECUTED IN CONNECTION HEREWITH AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS
(WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF NORTH
CAROLINA.
24. COUNTERPARTS; FACSIMILE EFFECTIVENESS. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original counterpart, and shall become a binding agreement when the Lender and
the Noteholder and the Borrower have each executed one counterpart. Each of the
parties hereto agrees that a signature transmitted to the Lender or its counsel
by facsimile transmission shall be effective to bind the party so transmitting
its signature.
25. COMPLETE AGREEMENT; MERGER. This Agreement, including the schedules
and exhibits hereto, contain the entire understanding of the parties hereto with
regard to the subject matter contained herein. This Agreement supersedes all
prior or contemporaneous negotiations, promises, covenants, agreements and
representations of every nature whatsoever with respect to the matters referred
to in this Agreement, all of which have become merged and finally integrated
into this Agreement. Each of the parties understands that in the event of any
subsequent litigation, controversy or dispute concerning any of the terms,
conditions or provisions of this Agreement, no party shall be entitled to offer
or introduce into evidence any oral promises or oral agreements between the
parties relating to the subject matter of this Agreement not included or
referred to herein and not reflected by a writing included or referred to
herein.
26. NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the Lender and its respective successors and assigns and the
Noteholder and its successors and is not intended to confer upon the Borrower or
any other third party any rights or benefits.
27. SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
28. SECTION TITLES. The section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.
29. NO STRICT CONSTRUCTION. The parties (directly and through their
counsel) 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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IN WITNESS WHEREOF, this Subordination Agreement has been signed as of
this 15th day of December, 1997.
/s/ O. Xxxxxx Xxxxx (SEAL)
___________________________
O. XXXXXX XXXXX
Acknowledged and accepted
as of this 15th day of December, 1997
FORD MOTOR CREDIT COMPANY,
as Lender
By: /s/ X. X. Xxxxx
_______________________________
Its Branch Operations Manager
_________________________
Without in any way establishing any rights with respect to the terms thereof on
behalf of any of the undersigned, the undersigned acknowledges receipt of a copy
of the foregoing Subordination Agreement this 15th day of December, 1997 and
agrees to take no action or refrain from taking action inconsistent with the
terms thereof.
SONIC AUTOMOTIVE, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
_____________________________
Its Vice President
_______________________
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