Exhibit 10.8

SECOND AMENDED AND RESTATED
SECURITY AGREEMENT

SECOND AMENDED AND RESTATED SECURITY AGREEMENT (the “Agreement”) dated as of
February 5, 2003 made by SONIC AUTOMOTIVE, INC., a Delaware corporation (the
“Borrower”), to FORD MOTOR CREDIT COMPANY, a Delaware corporation, as agent (the
“Agent”) for the lenders (the “Lenders”) under the Credit Agreement defined
below. Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings given to such terms in the Credit Agreement defined
below.

PRELIMINARY STATEMENTS:

On August 10, 2000, Ford Credit and Chrysler Financial made a loan (the “Loan”)
to Borrower in the principal amount of $500,000,000.00, pursuant to the terms of
the Credit Agreement dated as of August 10, 2000. Thereafter, the parties agreed
to increase the principal amount of such loan to $600,000,000.00 and to add
Toyota Credit as a Lender pursuant to the Amended and Restated Credit Agreement
dated as of June 20, 2001 (Ford Credit, Chrysler Financial and Toyota Credit
referred to as the “Original Lender”). Further, the parties entered into an
Amendment to Credit Agreement dated August 15, 2001 that provided for converting
the interest rate on a portion of the principal balance on the Loan to a fixed
rate and an Amendment to Credit Agreement dated April 11, 2002 that eliminated
the fixed rate conversion and allowed a certain portion of the Loan available
for Letters of Credit (collectively, the “Original Credit Agreement”);

Now the parties wish to decrease the principal balance of the Loan to
$500,000,000.00, add Bank of America as a Lender under the Credit Agreement and
incorporate the terms of the foregoing Amendments, all as set forth in the
Second Amended and Restated Credit Agreement dated as of even date herewith (the
“Credit Agreement”);

As a condition to entering into the Original Credit Agreement, Original Lender
required that the Borrower execute and deliver the Amended and Restated Security
Agreement dated June 20, 2001 (the “Original Security Agreement”);

As a condition of the decrease of the Loan and the addition of Bank of America
as a Lender, the Lenders have required that Borrower execute the Credit
Agreement, and the Notes (as defined in the Credit Agreement;

It is a condition precedent to the making Advances under the Credit Agreement,
that Borrower reaffirms its obligations under the Original Security Agreement
and agrees that the security interests granted pursuant to the Original Security
Agreement secure the Loan; and

NOW, THEREFORE, for and in consideration of the foregoing and of any financial
accommodations or extensions of credit (including, without limitation, any loan
or advance by renewal, refinancing or extension of the agreements described
hereinabove or otherwise) heretofore, now or hereafter made to or for the
benefit of the Borrower pursuant to the Credit Agreement any other agreement,
instrument or document executed pursuant to or in connection therewith, and for
other good and valuable consideration, the receipt and sufficiency

 

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of which are hereby acknowledged, the Borrower and the Agent hereby agree, for
the benefit of the Lenders, that Borrower’s obligations under the Original
Security Agreement are hereby reaffirmed and the Original Security Agreement is
hereby amended and restated in its entirety as follows:

SECTION 1. Grant of Security. The Borrower hereby assigns and pledges to Agent,
for the benefit of the Lenders, and hereby grants to Agent, for the benefit of
the Lenders, a security interest in, all of its respective right, title and
interest in and to the following, whether now owned or hereafter acquired (the
“Collateral”):

(A)   all equipment in all of its forms, including furniture, machinery, service
vehicles, supplies and other equipment (the “Equipment”);

(B)   all inventory in all of its forms, including motor vehicles, tractors,
trailers, service parts and accessories and other inventory (“Inventory”);

(C)   all accounts, contract rights, chattel paper, instruments, notes, letters
of credit, documents, documents of title, investment property, deposit accounts,
other bank accounts, general intangibles, tax refunds and other obligations of
third persons of any kind, now or hereafter existing, whether or not arising out
of or in connection with the sale or lease of goods, the rendering of services
or otherwise, and all rights now or hereafter existing in and to all security
agreements, leases, and other contracts securing or otherwise relating to any
such accounts, contract rights, chattel paper, instruments, notes, letters of
credit, documents, documents of title, investment property, deposit accounts,
other bank accounts, general intangibles, tax refunds or obligations of third
persons (any and all such accounts, contract rights, chattel paper, instruments,
notes, letters of credit, documents, documents of title, investment property,
deposit accounts, other bank accounts, general intangibles, tax refunds and
obligations of third persons being the “Receivables”, and any and all such
leases, security agreements and other contracts being the “Related Contracts”);

(D)   all of the Borrower’s governmental approvals and authorizations to the
maximum extent permitted by applicable law;

(E)    all property and interests in property of the Borrower now or hereafter
coming into the actual possession, custody or control of the Agent or a Lender
in any way or for any purpose (whether for safekeeping, deposit, custody,
pledge, transmission, collection or otherwise);

(F)    leasehold interests in and fixtures located on any real property from
which the Borrower conducts business;

(G)   all security entitlements;

(H)   all intellectual property;

(I)     all goods; and all c omputer hardware and software;

(J)     all present and future Commercial Tort Claims;

 

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(K)   Electronic Chattel Paper, Letter-of-Credit Rights, Payment Intangibles,
Supporting Obligations and Tangible Chattel Paper;

(L)    records and other books and records relating to the foregoing; and

(M)  all accessions and additions to, substitutions for, and replacements,
products and proceeds of any of the foregoing (including, without limitation,
proceeds which constitute property of the types described in clauses (A) through
(L) of this Section 1 and, to the extent not otherwise included, all (i)
payments under insurance (whether or not the Agent or the Lenders are the loss
payee thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing Collateral
and (ii) cash.

Provided that the term “Collateral” shall exclude (i) any contract rights (other
than any contract rights pursuant to a franchise agreement between Borrower and
an automobile manufacturer), equity interests or general intangibles of the
Borrower or owned by the Borrower to the extent the Borrower may not grant a
security interest in the same without breach of the terms thereof and (ii)
unless the relevant automobile manufacturer grants its consent thereto, any
contract rights, equity interests or general intangibles related to a franchise
agreement, framework agreement or other agreement with an automobile
manufacturer if the granting of the foregoing security interest would permit
such automobile manufacturer to terminate or materially alter or exercise other
remedial rights in respect of such franchise agreement, framework agreement or
other agreement with the Borrower, provided that Borrower shall use its
commercially reasonable efforts to obtain agreements from the relevant
manufacturers (a) permitting the grant of a security interest described in
Subsection (i) above and (b) granting the consent described in Subsection (ii)
above (“Excluded Collateral”).

It is hereby acknowledged that certain of the franchise agreements, framework
agreements and/or other agreements between the various automobile manufacturers
and the Borrower may contain (i) restrictions on the ability of Borrower to
transfer its ownership interest in any Sonic Dealership without the consent of
the relevant automobile manufacturer, (ii) provisions giving the automobile
manufacturer a right of first refusal over any proposed sale or transfer of the
ownership interests in any Sonic Dealership or any portion of the assets of any
Sonic Dealership (provided, however, that for the purposes of this
acknowledgment, the interpretation of the Agent and the Lenders is that
“transfer” does not include the granting of a security interest in assets other
than ownership interests in a Sonic Dealership and contract rights under
franchise agreements), and (iii) requirements that under certain circumstances
(including, without limitation, upon termination of the relevant franchise
agreement) the Borrower must sell certain property (consisting primarily of a
particular manufacturer’s vehicles, parts, accessories, signs, tools and other
similar items) to the manufacturer free and clear of any liens and encumbrances.
It is understood and agreed that the existence or occurrence of any of the
foregoing shall not result in a breach of or default under this Agreement,
provided, however, that it is understood that for purposes of this
acknowledgment, the interpretation of the Agent and the Lenders is that nothing
contained in clause (iii) of the preceding sentence may be construed as
invalidating the Liens in the Collateral.

Notwithstanding anything contained in the two immediately preceding paragraphs,
any proceeds (whether in the form of cash, property, debt or other tangible or
intangible rights or assets) that Borrower or any direct or indirect Subsidiary
of Borrower receives from, under or in connection with any contract rights,
equity interests, general intangibles, franchise agreements,

 

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framework agreements or other agreements with any automobile manufacturer that
Agent and the Lenders have agreed to exclude from the definition of Collateral
under the two immediately preceding sentences shall be included in the
definition of Collateral.

To the extent that the Agent or the Lenders has obtained a Lien on any of the
Excluded Collateral such Lien is hereby null and void.

Unless otherwise defined in this Section 1 or in the Credit Agreement, terms
used in this Section 1 and within this Agreement that are also defined in
Article 9 of the UCC have the same meaning as set forth in the UCC.

SECTION 2. Security for Obligations. This Agreement secures the payment of (i)
all obligations of the Borrower now or hereafter existing under the Credit
Agreement (including, without limitation, the Revolving Credit Obligations) and
(ii) all obligations of the Borrower hereafter existing under this Agreement
(all such obligations of the Borrower being the “Obligations”). Without limiting
the generality of the foregoing, this Agreement secures the payment of all
amounts which constitute part of the Obligations and would be owed by Borrower
to the Agent or any Lender under the Loan but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower.

SECTION 3. Borrower Remains Liable. Anything herein to the contrary
notwithstanding, (i) the Borrower shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its respective duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (ii) the exercise by the Agent of any of
the rights hereunder shall not release the Borrower from any of its respective
duties or obligations under the contracts and agreements included in the
Collateral, and (iii) neither the Agent nor the Lenders shall have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Agent or the Lenders be
obligated to perform any of the obligations or duties of the Borrower thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.

SECTION 4. Representations and Warranties. The Borrower represents and warrants
as follows:

(A)   All of its Equipment and Inventory is located at the places specified on
Exhibit A hereto. The chief place of business and chief executive office of the
Borrower and the office where the Borrower keeps its records concerning the
Receivables, and the originals of all chattel paper that evidence Receivables,
are located at its address specified in Section 16. Except for the Receivables
constituting BHPH Collateral (as defined in the Credit Agreement) none of the
Receivables is evidenced by a promissory note or other instrument.

(B)   The Borrower is the legal and beneficial owner of the Collateral free and
clear of any lien, security interest, option or other charge or encumbrance
except for (i) the security interest created by this Agreement, and (ii) any
security interests consented to by the Required Lenders (as defined in the
Credit Agreement) (collectively, the “Permitted Liens”). Except for financing
statements with respect to Permitted Liens, no effective financing statement or
other document similar in effect covering all or any part of the Collateral is
on file

 

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in any recording office, except such as may have been filed in favor of the
Lender relating to this Agreement. The Borrower does not have a trade name.

(C)   The Borrower has exclusive possession and control of its Equipment and
Inventory.

(D)   Subject to the Permitted Liens, this Agreement creates a valid and
perfected first priority security interest in the Collateral, securing the
payment of the Obligations, and all filings and other actions necessary or
desirable to perfect and protect such security interest have been duly taken or
are being taken substantially contemporaneously with the execution and delivery
of this Agreement.

(E)    No consent of any other person or entity and no authorization, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is required (i) for the grant by the Borrower of the security
interest granted hereby or for the execution, delivery or performance of this
Agreement by the Borrower, (ii) for the perfection or maintenance of the
security interest created hereby (including the first priority nature of such
security interest) or (iii) for the exercise by Agent (for the benefit of the
Lenders) of its rights and remedies hereunder, in each case, except for (a)
filings made or to be made with respect to Agent’s security interest in the
Collateral, and (b) those that have been made, obtained or given.

(F)    There are no conditions precedent to the effectiveness of this Agreement
that have not been satisfied or waived.

(G)   The Borrower has, independently and without reliance upon any Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.

SECTION 5. Further Assurances. (A)   The Borrower agrees that from time to time,
at its expense, it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Agent may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Agent (acting for the benefit of the Lenders) to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Borrower hereby
irrevocably authorizes Agent at any time, and from time to time, to file in any
jurisdiction any initial financing statements and amendments thereto that (i)
indicate the Collateral (a) as all assets of Borrower, or words of similar
effect, or (b) as being of an equal or lesser scope or within greater detail,
and (ii) contain any other information required by Part 5 of Article 9 of the
UCC of the jurisdiction wherein such financing statement or amendment is filed
regarding the sufficiency or filing office acceptance of any financing statement
or amendment, including the type of organization and the organizational
identification number issued to Borrower. Without limiting the generality of the
foregoing, the Borrower will upon such request: (1) mark conspicuously each
chattel paper included in the Receivables and each Related Contract and, at the
request of the Agent, each of its records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Agent, indicating that such
document, chattel paper, Related Contract or Collateral is subject to the
security interest granted hereby; (2) if any Receivable shall be evidenced by a
promissory note or other instrument or chattel paper, deliver and pledge to the
Agent (for the benefit of the Lenders) hereunder such note or instrument or
chattel paper duly endorsed and accompanied by duly executed instruments of
transfer or

 

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assignment, all in form and substance satisfactory to the Agent; and (3) execute
and file such financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary or desirable, or as the
Agent may request, in order to perfect and preserve the security interest
granted or purported to be granted hereby.

(B)   The Borrower hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto, relating to all or any part of
the Collateral without its signature where permitted by law. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.

(C)   The Borrower will furnish to the Agent from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Agent may reasonably request,
all in reasonable detail.

(D)   Borrower shall promptly (i) notify Agent, in writing, of the existence of
any Collateral consisting of deposit accounts, investment property,
Letter-of-Credit Rights, which in the aggregate exceed $15,000,000.00, or
Electronic Chattel Paper and shall, upon the reasonable request of Agent,
promptly execute such other documents, and do such other acts or things deemed
appropriate by Agent to deliver to Agent control with respect to such
Collateral; provided, however, that the Borrower is only obligated to take
action pursuant to this Section 5(d)(i) with respect to Letter-of-Credit Rights
that exceed $15,000,000.00, in aggregate, (ii) with respect to Collateral in the
possession of a third party, other than certificated securities and goods
covered by a document, an acknowledgment from the third party that it is holding
the Collateral for benefit of the Agent; and (iii) promptly notify Agent, in
writing, upon incurring or otherwise obtaining a Commercial Tort Claim in excess
of One Million Dollars ($1,000,000.00) after the date hereof against any third
party, and upon the request of Agent, will promptly enter into an amendment to
this Agreement, and do such other acts or things deemed appropriate by Agent to
give Agent a security interest in such Commercial Tort Claim.

SECTION 6. As to Equipment and Inventory. (A)  The Borrower shall keep its
Equipment and Inventory at the location referred to in Section 4(a) or, upon 30
days’ prior written notice to the Agent, at such other places in jurisdictions
where all action required by Section 5 shall have been taken with respect to its
Equipment and Inventory.

(B)   The Borrower shall cause the Equipment owned by it to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with any manufacturer’s manual, and
shall forthwith, or in the case of any loss or damage to any of the Equipment as
quickly as practicable after the occurrence thereof, make or cause to be made
all repairs, replacements, and other improvements in connection therewith which
are necessary or desirable to such end. The Borrower shall promptly furnish to
the Agent a statement respecting any material loss or damage to any of its
Equipment or Inventory.

(C)   The Borrower shall pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
against, its Equipment or Inventory.

 

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SECTION 7. Insurance. (A)     The Borrower shall, at its own expense, maintain
insurance with respect to its Equipment and Inventory in such amounts, against
such risks, in such form and with such insurers, as shall be satisfactory to the
Agent from time to time. Each policy for liability insurance shall provide for
all losses to be paid on behalf of the Agent (for the benefit of the Lenders)
and the Borrower as their respective interests may appear and each policy for
property damage insurance shall provide for all losses to be paid directly to
the Agent (for the benefit of the Lenders). Each such policy shall in addition
(i) name the Borrower and the Agent (for the benefit of the Lenders) as insured
parties thereunder (without any representation or warranty by or obligation upon
the Agent) as their interests may appear, (ii) contain the agreement by the
insurer that any loss thereunder shall be payable to the Agent (for the benefit
of the Lenders) notwithstanding any action, inaction or breach of representation
or warranty by the Borrower, (iii) provide that there shall be no recourse
against Agent or the Lenders for payment of premiums or other amounts with
respect thereto and (iv) provide that at least ten days’ prior written notice of
cancellation or of lapse shall be given to the Agent by the insurer. The
Borrower shall, if so requested by the Agent, deliver to the Agent original or
duplicate policies of such insurance and, as often as the Agent may reasonably
request, a report of a reputable insurance broker with respect to such
insurance. Further the Borrower shall, at the request of the Agent, duly execute
and deliver instruments of assignment of such insurance policies to comply with
the requirements of Section 5 and cause the insurers to acknowledge notice of
such assignment.

(B)   Upon the occurrence and during the continuance of an Event of Default, all
insurance payments in respect of such Equipment or Inventory shall be paid to
and applied by the Agent as specified in Section 13(b).

SECTION 8. As to Receivables. (A)       The Borrower shall keep its chief place
of business and chief executive office and the office where it keeps its records
concerning the Receivables, and the originals of all chattel paper that evidence
Receivables, if any, at the location therefor referred to in Section 4(a) or,
upon 30 days’ prior written notice to the Lender, at any other locations in the
United States of America in a jurisdiction where all action required by Section
5 shall have been taken with respect to the Receivables. The Borrower will hold
and preserve such records and chattel paper and will permit representatives of
the Agent or a Lender at any time during normal business hours to inspect and
make abstracts from such records and chattel paper. The Borrower shall not
change its name, identity or corporate structure to such an extent that any
financing statement filed in connection with this Agreement would become
seriously misleading, unless the Borrower shall have given the Agent at least 30
days prior written notice thereof and prior to effecting any such change, taken
such steps, at Borrower’s expense, as the Agent may deem necessary or desirable
to continue the perfecting and priority of the liens in favor of the Lender
granted in connection herewith.

(B)   Except as otherwise provided in this Subsection (B), the Borrower shall
continue to collect, at its own expense, all amounts due or to become due the
Borrower under the Receivables. In connection with such collections, the
Borrower may take (and, at the Agent’s direction, shall take) such action as the
Borrower or the Agent may reasonably deem necessary or advisable to enforce
collection of the Receivables; provided, however, that the Agent shall have the
right at any time, upon the occurrence and during the continuance of an Event of
Default or an Unmatured Default and upon written notice to the Borrower or its
intention to do so, to notify the account debtors or obligors under any
Receivables of the assignment of such Receivables to the Agent and to direct
such account debtors or obligors to make payment of all amounts due or to become
due to the Borrower thereunder directly to the

 

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Agent and, upon such notification and at the expense of the Borrower, to enforce
collection of any such Receivables, and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as the
Borrower might have done. After receipt by the Borrower of the notice from the
Agent referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including instruments) received by the Borrower in respect of the
Receivables shall be received in trust for the benefit of the Agent hereunder,
shall be segregated from other funds of the Borrower and shall be forthwith paid
over to the Agent in the same form as so received (with any necessary
endorsement) to be held as cash collateral and either (a) released to the
Borrower so long as no Event of Default shall have occurred and be continuing or
(b) if any Event of Default shall have occurred and be continuing, applied as
provided by Section 13(B), and (ii) the Borrower shall not adjust, settle or
compromise the amount or payment of any Receivable, release wholly or partly any
account debtor or obligor thereof, or allow any credit or discount thereon,
except in the ordinary course of business consistent with past practice.

SECTION 9. Transfers and Other Liens. The Borrower shall not (i) sell, assign
(by operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, any of the Collateral, or (ii) create or permit to exist any
lien, security interest, option or other charge or encumbrance upon or with
respect to any of the Collateral, except for the security interest under this
Agreement and Liens permitted under the Credit Agreement.

SECTION 10. Agent Appointed Attorney-in-Fact. The Borrower hereby irrevocably
appoints the Agent such Borrower’s attorney-in-fact, with full authority in the
place and stead of the Borrower and in the name of the Borrower, the Lenders or
otherwise, from time to time in the Lender’s discretion, to take any action and
to execute any instrument which the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:

(A)   to obtain and adjust insurance required to be paid to the Agent pursuant
to Section 7,

(B)   to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in connection
with the Collateral,

(C)   to receive, indorse, and collect any drafts or other instruments,
documents and chattel paper, in connection therewith, and

(D)   to file any claims or take any action or institute any proceedings which
the Agent may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the Agent or the Lenders with
respect to any of the Collateral.

SECTION 11. Agent May Perform. If the Borrower fails to perform any agreement
contained herein, the Agent may itself perform, or cause performance of, such
agreement, and the expenses of the Agent or the Lenders incurred in connection
therewith shall be payable by the Borrower under Section 14(B).

SECTION 12. Agent’s Duties. The powers conferred on the Agent hereunder are
solely to protect its interest (in its capacity as agent on behalf of the
Lenders) in the Collateral and

 

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shall not impose any duty upon it to exercise any such powers. Except for the
safe custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. The Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Agent accords its own property.

SECTION 13. Remedies. If any Event of Default shall have occurred and be
continuing:

(A)   The Agent may exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to it, all the
rights and remedies of a secured party on default under the Uniform Commercial
Code, and all amendments, restatements, modifications and supplements thereto,
in effect in the State of North Carolina at that time (the “UCC”) (whether or
not the UCC applies to the affected Collateral), and also may (i) require the
Borrower to, and the Borrower hereby agrees that it will at its expense and upon
request of the Agent forthwith, assemble all or part of the Collateral as
directed by the Agent and make it available to the Agent at a place to be
designated by the Agent which is reasonably convenient to both parties and (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Agent’s
or Lenders’ offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Agent may deem commercially reasonable. The
Borrower agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days’ notice to the Borrower of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

(B)   Any cash held by the Lender as Collateral and all cash proceeds received
by the Lender in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral may, in the discretion of the Lender, be
held by the Lender as collateral for, and/or then or at any time thereafter be
applied (after payment of any amounts payable to the Lender pursuant to Section
14) in whole or in part by the Lender against, all or any part of the
Obligations in such order as the Lender shall elect. Any surplus of such cash or
cash proceeds held by the Lender and remaining after payment in full in cash of
all the Obligations shall be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive such surplus.

SECTION 14. Indemnity and Expenses. (A)         The Borrower agrees to indemnify
the Agent and the Lenders from and against any and all claims, losses and
liabilities (including reasonable attorneys’ fees) growing out of or resulting
from this Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting from the Lender’s
gross negligence or willful misconduct.

(B)   The Borrower shall be liable to the Lender for the amount of any and all
reasonable expenses, including the reasonable fees and expenses of its in-house
and external

 

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counsel and of any experts and agents, which the Agent or the Lenders may incur
in connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Agent or the Lenders hereunder or (iv) the failure by
the Borrower to perform or observe any of the provisions hereof.

(C)   Notwithstanding anything else in this Agreement to the contrary, no party
shall have any obligation to reimburse any person for attorneys’ fees and
expenses unless such fees and expenses are (i) reasonable in amount, (ii)
determined without reference to any statutory presumption and (iii) calculated
using the actual time expended and the standard hourly rate for the attorneys
and paralegals performing the tasks in question and the actual out-of-pocket
expenses incurred.

SECTION 15. Amendments, Etc. Except as otherwise provided in Section 7.1 (B) of
the Credit Agreement, no amendment or waiver of any provision of this Agreement,
and no consent to any departure by the Borrower herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

SECTION 16. Addresses for Notices. All notices and other communications provided
for hereunder shall be in writing (including telecopier, telegraphic, telex or
cable communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Borrower, at its address at 6415 Idlewild Road, Suite 109,
Charlotte, North Carolina 28212, if to the Agent, at its address specified in
the Credit Agreement; or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and communications shall be effective, upon receipt, or in the case of
(i) notice by mail, five days after being deposited in the United States mails,
first class postage prepaid, (ii) notice by overnight courier, one business day
after being deposited with a national overnight courier service, (iii) notice by
telex, when telexed against receipt of answer back or (iv) notice by facsimile
copy, when transmitted against mechanical confirmation of successful
transmission.

SECTION 17. Continuing Security Interest; Assignments under Credit Agreement.
This Agreement shall create a continuing assignment of and security interest in
the Collateral and shall (i) remain in full force and effect until the payment
in full in cash of the Obligations and all other amounts payable under this
Agreement (such date, the “Security Termination Date”), (ii) be binding upon the
Borrower, and such Borrower’s successors and assigns and (iii) inure to the
benefit of, and be enforceable by, the Agent, the Lenders and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), any Lender may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Lender herein or
otherwise subject, however, to the provisions of Article VII of the Credit
Agreement. On the Security Termination Date, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
Borrower. Upon any such termination, the Agent will, at the Borrower’s expense,
execute and deliver to the Borrower such documents as it shall reasonably
request to evidence such termination.

SECTION 18. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO

 

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CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF NORTH CAROLINA.

SECTION 19. Waiver of Jury Trial. To the maximum extent of applicable law, each
of the Borrower, the Agent and the Lenders waives any right to trial by jury in
any dispute, whether sounding in contract, tort, or otherwise, between the
Agent, the Lenders and the Borrower arising out of or related to the
transactions contemplated by this Agreement or any other instrument, document or
agreement executed or delivered in connection herewith. Either the Borrower, the
Agent or the Lenders 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.

SECTION 20. Consent to Jurisdiction; Counterclaims; Forum Non Conveniens.

(A)   Exclusive Jurisdiction. Except as provided in Subsection (B) of this
Section 20, the Lender and the Borrower agree that all disputes between them
arising out of or related to the relationship established between them in
connection with this Agreement, whether arising in contract, tort, equity, or
otherwise, shall be resolved only by state or federal courts located in North
Carolina, but the parties acknowledge that any appeals from those courts may
have to be heard by a court located outside of North Carolina.

(B)   Other Jurisdictions. The Agent and each Lender shall have the right to
proceed against the Borrower or its real or personal property in a court in any
location to enable the Agent or the Lenders to obtain personal jurisdiction over
the Borrower, to realize on the Collateral or any other security for the
Obligations or to enforce a judgment or other court order entered in favor of
the Agent or the Lenders. The Borrower shall not assert any permissive
counterclaims in any proceeding brought by the Agent or the Lenders under this
Section 20(B).

(C)   Venue; Forum Non Conveniens. The Agent, Borrower and each Lender waives
any objection that it may have (including, without limitation, any objection to
the laying of venue or based on forum non conveniens) to the location of the
court in which any proceeding is commenced in accordance with this Section 20.

21. Service of Process. The Borrower waives personal service of any process upon
it and, as security for the Obligations, irrevocably appoints Theodore M. Wright
as its registered agent for the purpose of accepting service of process issued
by any court in connection with any dispute between the Borrower, the Agent and
the Lender arising out of or related to the relationship established between
them in connection with this Agreement or any other document to which the
Borrower is a party.

22. Security Interest Absolute. All rights of Agent (for the benefit of the
Lenders), and security interests hereunder, and all obligations of the Borrower
hereunder, shall be absolute and unconditional irrespective of:

(A)   Any lack of validity or enforceability of the Credit Agreement or any
other agreement or instrument relating thereto;

(B)   Any change in the time, manner or place of payment of, or in any other
term of, all or any part of the Liabilities, or any other amendment or waiver of
or any consent to any departure from the Credit Agreement;

 

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(C)   Any exchange, release or non-perfection of any other collateral, or any
release or amendment or waiver of or consent to departure from any guaranty, for
all or any part of the Liabilities; or

(D)   any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Borrower in respect of the Liabilities.

23. Amendment and Restatement. This Agreement amends and restates with respect
to Borrower that certain Amended and Restated Security Agreement dated as of
June 15, 2001, by Borrower in favor of Agent.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF, the Borrower has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.

 

 

 

 

SONIC AUTOMOTIVE, INC.

 

 

 

 

By: 

/s/ THEODORE M. WRIGHT

 

 

 

 

 

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Name: 

Theodore M. Wright

 

 

 

 

Title: 

President

[SIGNATURE PAGE TO BORROWER SECURITY AGREEMENT]

 

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Agreed and Accepted
this 5th day of February, 2003

 

FORD MOTOR CREDIT COMPANY,
a Delaware corporation, as Agent

 

 

By: 

/s/ STEVE GRACZ

 

 

 

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Name: 

Steve Gracz

 

 

 

Title: 

National Account Manager

 

 

 

[SIGNATURE PGE TO BORROWER SECURITY AGREEMENT]

 

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EXHIBIT A

LOCATION OF EQUIPMENT AND INVENTORY

 

Facility

Physical Location

 

 

Sonic Automotive, Inc.

6415 Idlewild Road, Suite 109
Charlotte, NC 28212

5401 East Independence
Charlotte, NC 28212

 

 

Sonic Facilities Group -Bay Area

722 Arguello Blvd.
San Francisco, CA 94118-4013

 

 

Sonic Facilities Group

6425 Idlewild Road
Suite 205
Charlottte, NC 28212