Exhibit 10.22
AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment"), dated March 2, 1999, is entered into between SONIC AUTOMOTIVE,
INC., a Delaware corporation ("Borrower"), whose address is 5401 East
Independence Boulevard, P.O. Box 18747, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, and
FORD MOTOR CREDIT COMPANY, a Delaware corporation ("Lender"), whose address is
0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000.
WHEREAS, pursuant to the terms of a certain Credit Agreement dated as of
October 15, 1997, as amended by that certain Credit Agreement Amendment dated
November 12, 1997, as amended by that certain Amended and Restated Credit
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 further amended by that certain Letter Agreement dated
October 15, 1998 (collectively, the "Agreement") Lender extended to Borrower a
revolving credit facility in an amount not to exceed $75,000,000.00 (the
"Original Loan Facility"); and
WHEREAS, the Original Loan Facility is evidenced by a certain Promissory
Note dated as of October 15, 1997, made by Borrower to the order of Lender in
the original principal amount of $26,000,000.00, as amended by that certain
Amended and Restated Promissory Note dated December 15, 1997, made by Borrower
to the order of Lender in the original principal amount of $75,000,000.00 (the
"Original Note"); and
WHEREAS, Borrower has requested that Lender amend certain provisions of
the Original Loan Facility and increase in the principal balance of the Original
Note to $100,000,000.00 to purchase dealership assets, pursuant to the terms of
a certain Amended and Restated Promissory Note in the principal amount of
$100,000,000.00 dated as of even date herewith and made by Borrower to the order
of Lender (the "Amended Note" and with the Original Note collectively referred
to as the "Note"); and
WHEREAS, Lender is willing to amend and increase the Original Loan
Facility if and only if (a) Borrower executes this Amendment and the Amended
Note, (b) Sonic Automotive of Nevada, Inc., a Nevada corporation, Sonic
Automotive of Georgia, Inc., a Georgia corporation, Sonic Automotive of
Tennessee, Inc., a Tennessee corporation, and Sonic Peachtree Industrial Blvd.,
L.P., a Georgia limited partnership, each execute a guaranty guaranteeing the
obligations of the Borrower and each Dealership Guarantor under the Original
Loan Facility, as increased, and the Wholesale Lines and (c) Sonic of Texas,
Inc., a Texas corporation, and each of the Dealership Guarantors execute a
guaranty and reaffirmation of guaranty reaffirming their guaranty of the
obligations of the Borrower and each other Dealership Guarantor under the
Original Loan Facility, as increased and the Wholesale Lines;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, Borrower and Lender
agree as follows:
1. Incorporation by Reference and Defined Terms. The parties hereby
incorporate the foregoing recitals in this Amendment as though fully set forth
herein, agreeing that such
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recitals are material, true and correct. Except as modified herein, all
capitalized terms shall have the meanings set forth in the Agreement and the
Note.
2. Loan Facility. The term "Loan Facility" shall mean the Original Loan
Facility, as amended by this Amendment.
3. Amendment of Agreement. The Agreement is hereby amended to provide as
follows:
(a) The definition of "Applicable Prime Rate" set forth in
Article I, Section 1.1 of the Agreement, entitled Certain Defined Terms is
hereby deleted in its entirety and the following shall be substituted therefor:
"APPLICABLE COMMERCIAL PAPER RATE" means as of any Payment Date,
the Commercial Paper Rate plus two and seventy-five hundredths percent
(2.75%) per annum."
(b) The definition of "Average Applicable Interest Rate" set
forth in Article I, Section 1.1 of the Agreement, entitled Certain Defined Terms
is hereby deleted in its entirety.
(c) The definition of "Commitment" set forth in Article I,
Section 1.1 of the Agreement, entitled Certain Defined Terms is hereby deleted
in its entirety and the following shall be substituted therefor:
"COMMITMENT" means $100,000,000.00 minus the amount of any
Decision Reserve, if any, in effect from time to time."
(d) The definition of "Commitment Letter" set forth in Article I,
Section 1.1 of the Agreement, entitled Certain Defined Terms is hereby deleted
in its entirety and the following shall be substituted therefor:
"COMMITMENT LETTER" means that certain Commitment Letter dated
October 3, 1997 between the Borrower and the Lender, as amended by the
Letter Agreement dated October 20, 1997, as further modified by the
Commitment Letter dated December 17, 1998."
(e) The definition of "Contribution Agreement" set forth in
Article I, Section 1.1 of the Agreement, entitled Certain Defined Terms is
hereby deleted in its entirety and the following shall be substituted therefor:
"CONTRIBUTION AGREEMENT" means that certain Amended and Restated
Contribution Agreement, dated as of October 20, 1997, as amended by the
Second Amended and Restated Contribution Agreement, dated as of December
15, 1997, as amended by the Third Amended and Restated Contribution
Agreement, dated as of March 24, 1998, as amended and restated by the
Fourth Amended and Restated Contribution Agreement, dated as of December
1, 1998, as amended and restated by the Fifth Amended and Restated
Contribution Agreement dated March 2, 1999, as such agreement may be
further amended, restated or otherwise modified and in effect from
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time to time."
(f) The definition of "Current Liabilities" set forth in Article
I, Section 1.1 of the Agreement, entitled Certain Defined Terms is hereby
deleted in its entirety and the following shall be substituted therefor:
"CURRENT LIABILITIES" means, at a particular date, all amount
which would, in conformity with Agreement Accounting Principles, be
included under current liabilities on a balance sheet as at such date."
(g) The definition of "Extension Notice" set forth in Article I,
Section 1.1 of the Agreement, entitled Certain Defined Terms is hereby deleted
in its entirety.
(h) The definition of "Note" as set forth in Article I, Section
1.1 of the Agreement, entitled, Certain Defined Terms is hereby deleted in its
entirety and the following shall be substituted therefor:
"NOTE" means that Promissory Note dated October 15, 1997 duly
executed by the Borrower and payable to the order of the Lender in the
original principal amount of $26,000,000.00, as amended and restated by
that certain Amended and Restated Promissory Note dated December 15,
1997 duly executed by the Borrower and payable to the order of Lender in
the principal amount of $75,000,000.00, as further amended and restated
by that certain Second Amended and Restated Promissory Note dated March
2, 1999 duly executed by the Borrower and payable to the order of lender
in the original principal amount of $100,000,000.00, including any
amendment, restatement, modification, renewal or replacement of such
Note."
(i) The definition of "Prime Rate" as set forth in Article I,
Section 1.1 of the Agreement, entitled Certain Defined Terms is hereby deleted
in its entirety and the following shall be substituted therefor:
"COMMERCIAL PAPER RATE" means a fluctuating per annum rate of
interest equal to the interest rate for commercial paper with a 30-day
term, as specified under the column entitled "Week Ending" for "1-Month
Finance Paper Placed Directly" as set forth in the Federal Reserve
Statistical Release No. H.15 (519) issued by the Federal Reserve Board
on the last Monday of a calendar month. In the event such Release is
discontinued or modified to eliminate the reporting of a 30-day
commercial paper rate, then Lender will substitute, in its sole
discretion, a comparable report or release of the 30-day commercial
paper rate published by a comparable source."
(j) The definition of "Quarterly Payment Date" as set forth in
Article I, Section 1.1 of the Agreement, entitled Certain Defined Terms is
hereby deleted in its entirety.
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(k) Subsection (E) of the definition of "Scaled Assets" as set
forth in Article I, Section 1.1 of the Agreement, entitled Certain Defined Terms
is hereby deleted in its entirety and the following shall be substituted
therefor:
"(E) an amount equal to 80% of 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"
(l) The definition of "Scaled Assets Adjustment Amount" as set
forth in Article I, Section 1.1 of the Agreement, entitled Certain Defined Terms
is hereby deleted in its entirety.
(m) The definition of "Subsidiary Holding Companies" as set forth
in Article I, Section 1.1 of the Agreement, entitled Certain Defined Terms is
hereby deleted in its entirety and the following shall be substituted therefor:
"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,
and Sonic of Texas, Inc., a corporation organized under the laws of the
State of Texas, in each case together with its successors and assigns.
(n) The definition of "Subsidiary Holding Company Pledges" as set
forth in Article I, Section 1.1 of the Agreement, entitled Certain Defined Terms
is hereby deleted in its entirety and the following shall be substituted
therefor:
"SUBSIDIARY HOLDING COMPANY PLEDGES" means each Pledge Agreement
delivered by the Subsidiary Holding Companies to the Lender pursuant to
which such Persons pledge their ownership interests of certain
corporate, limited liability company and/or limited partnership
Subsidiaries, as such agreements may be amended, restated or otherwise
modified and in effect from time to time."
(o) The definition of "Termination Date" as set forth in Article
I, Section 1.1 of the Agreement, entitled Certain Defined Terms is hereby
deleted in its entirety and the following shall be substituted therefor:
"TERMINATION DATE" means the earlier of (a) March 2, 2001 and (b)
the date of termination of the Commitment pursuant to either of Section
2.3 or Section 7.1 hereof."
(p) The definition of "Total Adjusted Debt" as set forth in
Article I, Section 1.1 of the Agreement, entitled Certain Defined Terms is
hereby deleted in its entirety and the following shall be substituted therefor:
"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 outstanding principal balance
of the Subordinated Promissory Note, less the outstanding principal
balance of the Debt Offering Notes, and less the amount of any
Additional Subordinate Debt.
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(q) The definition of "Additional Subordinated Debt" is hereby
added to Article I, Section 1.1 of the Agreement, entitled Certain Defined Terms
to state as follows:
"ADDITIONAL SUBORDINATED DEBT" means indebtedness of the Borrower
which (i) Lender has determined to be sufficiently subordinate to the
payment of the Obligations, (ii) Lender has consented to in writing, and
(iii) Lender has agreed to deduct from the calculation of Total Adjusted
Debt (as defined herein)."
(r) Section 2.4 of the Agreement entitled "Method of Borrowing"
is hereby deleted in its entirety and the following shall be substituted
therefor:
"Method of Borrowing. The Borrower shall give the Lender
irrevocable notice in substantially the form of Exhibit B hereto (a
"Borrowing Notice") not later than 10:00 a.m. (Eastern Standard Time) on
the Business Day preceding the Borrowing Date of each Advance,
specifying: (i) the Borrowing Date (which shall 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. Not later than 2:00 p.m. (Eastern
Standard Time) on each Borrowing Date, the Lender shall make available
its Advance, in funds immediately available to the Borrower at such
account or accounts as shall have been notified to the Lender. 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 Commercial Paper Rate, changing when and as the underlying
Commercial Paper Rate changes, which such interest shall be payable in
accordance with Section 2.9(B)."
(s) Section 2.6 of the Agreement, entitled "Default Rate: Late
Payment Fee" is hereby deleted in its entirety and the following shall be
substituted therefor:
"Default Rate: Late Payment Fee. After the occurrence and during
the continuation of an Event of Default, at the option of the Lender,
the interest rate(s) applicable to the Advances shall be equal to the
Applicable Commercial Paper 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 Lender and at any rate no later than
the next succeeding Payment Date."
(t) Section 2.9 (B)(i) of the Agreement, entitled "Interest
payable on Advances" is hereby deleted in its entirety and the following shall
be substituted therefor:
"Interest Payable on Advances. Interest accrued on each Advance
shall be payable on each Payment Date, commencing with the first such
date to occur after the date hereof and at maturity (whether by
acceleration or otherwise). On each Payment Date from and after November
15, 1998 to maturity, the Borrower shall pay interest at the Applicable
Commercial Paper Rate on each Advance outstanding on such date."
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(u) Section 2.10 of the Agreement, entitled "Termination Date" is
hereby deleted in its entirety and the following shall be substituted therefor:
"Termination Date. This Agreement shall be effective until the
Termination Date. 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) shall have been fully and indefeasibly paid and satisfied
and all financing arrangements between the Borrower and the 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 the
Lender shall be entitled to retain its security interest in and to all
existing and future Collateral."
(v) Section 5.4(B) of the Agreement, entitled "Total Adjusted
Debt to Tangible Base Capital Ratio" is hereby deleted in its entirety and the
following shall be substituted therefor:
"Total Adjusted Debt to Tangible Base Capital Ratio. The Borrower
shall not, any time, permit the ratio ("ADJUSTED TBC RATIO") of Total
Adjusted Debt of the Sonic Group on a consolidated basis to Tangible
Base Capital of the Sonic Group on a consolidated basis to be greater
than 15:1."
4. Warranties and Representations of Borrower. Borrower represents and
warrants to Lender that Borrower is not in default under the Original Note, the
Agreement or any other loan document delivered to lender in connection
therewith, nor is there a circumstance which, upon the giving of notice or the
passage of time or both, would constitute an default under any provision
thereof. Borrower stipulates and declares to Lender that Borrower has no charge,
claim, demand, plea or set-off upon, for or against the Original Note, the
Agreement or any other loan documents delivered in connection therewith.
5. Rights Granted Lender. All rights granted to Lender under this
Amendment shall be in addition to any rights granted to Lender under the Note,
the Agreement or any other loan document delivered in connection therewith.
6. Amendment. The terms and conditions of the Agreement shall apply
equally to the indebtedness evidenced by the Note, and the covenants of the
Agreement, as amended by this Amendment shall remain in full force and effect
until the Principal Balance of the Note and interest thereon is paid in full and
all of the obligations of Borrower to Lender under the Agreement, as amended,
and the Note are fully performed and observed. Except as otherwise amended in
this Amendment, the terms and conditions of the Agreement shall remain in full
force and effect in accordance with the provisions thereof. The Loan Facility
may be further renewed or extended only upon such terms and conditions and at
such rate of interest as the parties hereby may agree upon in writing.
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IN WITNESS WHEREOF, Borrower and Lender have executed this Amendment
under seal as of the date set forth above intending to be legally bound hereby.
Signed, sealed and delivered in the presence of:
FORD MOTOR CREDIT COMPANY,
a Delaware corporation
/s/ Xxxxxxx X. Xxxxx By: /s/ X. X. Xxxxxxxxx (SEAL)
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Name: X.X. Xxxxxxxxx
Title: Branch Operations Manager
SONIC AUTOMOTIVE, INC.,
a Delaware corporation
/s/ Gates Grainger By: /s/ B. Xxxxx Xxxxx (SEAL)
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Name: B. Xxxxx Xxxxx
Title: President
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