Document:

Promissory Note (Revolving Line of Credit Permanent Loan)

  EXHIBIT 10.12
 PROMISSORY
NOTE
(Revolving Line of Credit Permanent Loan)
  

	 $100,000,000.00
 	  
 	 December 31, 2002
 

 

	 Borrower:
 	  
 	 The Entities executing this Note in the signatures below
 
	  
 	  
 	  
 
	 Borrower’s Address for Notice:
 	  
 	 5401 East Independence Boulevard
 Charlotte, North Carolina 28212
 
	  
 	  
 	  
 
	 Lender:
 	  
 	 Toyota Motor Credit Corporation
 
	  
 	  
 	  
 
	 Lender’s Address for Payment:
 	  
 	 19001 South Western Avenue
 Torrance, California 90509-2958
 
	  
 	  
 	  
 
	 Promise to Pay:
 	  
 	  
 

 
 For value received, the undersigned Borrower promises to pay to the order of Lender the sum of One Hundred Million and No/100 Dollars ($100,000,000.00), to the extent advanced by Lender, together with interest on the unpaid balance of such
amount, in lawful money of the United States of America, in accordance with all the terms conditions and covenants set forth below. For purposes of this Note, “Borrower” shall include all the entities executing this Note as set forth
below.
 Definitions:  Capitalized terms used in this Note and not defined herein shall have the meanings assigned to such
terms in the Loan Agreement (defined below). In addition, the following terms shall have the meanings set forth below:
 Advance
– Each disbursement of loan proceeds under this Note pursuant to the Loan Agreement (defined as a “Permanent Advance” in Section 5.2(b) of the Loan Agreement).
 Advance Termination Date – December 31, 2007.
 Applicable Rate –
A varying or fluctuating rate per annum that is equal to LIBOR plus two percent (2.00%). LIBOR is initially determined on the date of the applicable Advance. LIBOR shall be adjusted, as necessary, on the first calendar day of each month, based on
the LIBOR rate in effect as of the last Business Day of the preceding month.
 Construction Note - The Promissory Note dated of even
date herewith executed by Borrower and payable to Lender in the principal amount of $50,000,000.00.
 Default Interest Rate –
The Maximum Lawful Rate, or if no such Maximum Lawful Rate is established by applicable law, then the Applicable Rate plus three percent (3%) per annum.
  
 
 

  LIBOR - The London Interbank Offered Rate for one (1) month deposits, as published by The Wall Street Journal in its “Money Rates” section. Should the method of establishing LIBOR, or the publication of the London Interbank Offered Rates for one (1) month deposits in The
Wall Street Journal cease or be abolished, then LIBOR shall be based on a comparable index selected by Lender.
 Loan Agreement -
Master Loan Agreement dated as of even date herewith among Borrower, Lender and Sonic Automotive, Inc. This Note is issued pursuant to the terms of the Loan Agreement.
 Loan Documents – This Note, the Loan Agreement, the Security Documents, and any other instruments evidencing this Note or otherwise governing, guaranteeing or
pertaining to the loan evidenced by this Note.
 Loan Maturity Date – December 31, 2012.
 Maximum Lawful Amount - The maximum, nonusurious and lawful contractual amount of interest, that may collected or received by Lender under applicable
state or federal law.
 Maximum Lawful Rate - The maximum, nonusurious and lawful contractual rate of interest that may be charged by
Lender under applicable state or federal law.
 Principal Balance - The aggregate unpaid principal balance of all Advances,
outstanding from time to time.
 Security Documents – All deeds of trust, mortgages, security agreements, guaranties, pledges,
assignments, or any other instruments securing this Note.
 TERMS OF NOTE
 Interest and Principal Provisions:
 (a)       Interest
Accrual:  The Principal Balance of this Note advanced but from time to time remaining unpaid prior to maturity shall bear interest at the Applicable Rate, but never greater than the Maximum Lawful Rate. The
Applicable Rate will automatically fluctuate upward or downward with changes to LIBOR in accordance with the provisions herein, without notice to Borrower or any other person. The (i) past due installments of principal and interest on this Note,
(ii) Principal Balance of an Advance after the Loan Maturity Date, and (iii) entire Principal Balance after acceleration of the Principal Balance, shall bear interest at a per annum rate equal to the Default Interest Rate.
 (b)      Payment Terms:  From the date hereof to and including the Loan
Maturity Date, each Advance under this Note shall be due and payable as follows:
 (i)        Principal – Principal is due and payable in equal monthly installments in
  
 
 

  an amount, determined on the date such Advance is made, sufficient to amortize such Advance over a 300-month period. On the Loan Maturity
Date, a final installment of the entire unpaid Principal Balance shall be due and payable.
 (ii)       Interest - Accrued interest on the unpaid Principal Balance outstanding shall be due and payable monthly on the same date as, and in addition to, the monthly principal payments. On
the Loan Maturity Date, all accrued but unpaid interest shall be due and payable.
 (iii)     Due Dates and Application of Payments – The monthly payments of principal and interest shall commence on the first day of the first month following funding of the first Advance hereunder,
and shall continue regularly and monthly thereafter on the first day of each succeeding month. The amount of each of such payments in respect of the outstanding Advances shall be aggregated each month and shall be due as one monthly installment.
Each installment shall be applied first to accrued but unpaid interest and the balance to reduction of the Principal Balance.
 Advances and Prepayments:
 (a)       Revolving Line of Credit:  This Note shall
evidence Borrower’s indebtedness for Advances from time to time made under a revolving credit line pursuant to the Loan Agreement, which indebtedness may from time to time be decreased, increased, paid in full and then reborrowed. Interest will
accrue only from the date that Advances are made pursuant to the Loan Agreement, and the liability of the undersigned is limited to the Principal Balance from time to time actually disbursed pursuant to such Loan Agreement, plus unpaid interest
actually accrued on such principal, plus any expenses or other charges as more fully provided in this Note, the Loan Agreement and any other Loan Documents. This Note shall evidence all such indebtedness and this Note and all Security Documents and
the liens and security interests thereunder shall remain in effect until this Note is formally terminated in writing, and this Note and such Security Documents shall not otherwise be terminated by payment of all or any part of the indebtedness
hereby represented. Lender shall, and is hereby authorized by Borrower to, endorse on Schedule A attached hereto and made a part hereof (or on a continuation of such schedule) an appropriate notation
evidencing the date and amount of each Advance, the Property being funded with the Advance, and any payments made thereon; provided, however, that the failure of Lender to make such a notation on this Note shall not affect any obligation of Borrower
under this Note. Any such notation shall be prima facie evidence as to the date, amount, and monthly payment of such Advance or payment.
 (b)      Prepayment:  Borrower may prepay the Principal Balance in whole or from time to time in part, at any time, upon payment of interest accrued on the
Principal Balance outstanding through the day of prepayment and all other charges due hereunder and under the Security Documents, without premium. All payments and prepayments received by Lender prior to an Event of Default, including, without
limitation, any condemnation awards or insurance proceeds received under the Security Documents which Lender is permitted to apply on the indebtedness evidenced hereby will be applied first to accrued unpaid interest on the Principal Balance at the
Applicable Rate, and then:
  
 
 

  (i)        in the case where such
prepayment is not made in connection with the release of a Property pursuant to Section 5.11 of the Loan Agreement, but such prepayment is attributable to a condemnation awards or to insurance proceeds
relating to a specific Property, to the outstanding balance of Advances attributable to that Property, in the order in which such Advances were made,
 (ii)       in the case where such prepayment is not made in connection with the release of a Property pursuant to Section 5.11 of the Loan
Agreement, but such prepayment is not attributable to a condemnation awards or to insurance proceeds relating to a specific Property, to the outstanding principal balance of all Advances then remaining
unpaid in the order in which the Advances were made, and
 (iii)     in the
case where such prepayment is made in connection with the release of a Property pursuant to Section 5.11 of the Agreement, to the outstanding principal balance of the Advance attributable to the Property being released.
 Any prepayments made in connection with the release of any Property shall be noted on Schedule B attached hereto and made a part
hereof. Lender shall, and is hereby authorized by Borrowers to, endorse on Schedule B an appropriate notation evidencing the date and amount of each such prepayment.
 (c)       Limitations on Advances:  The Loan Agreement contains
limitations on the amount of Advances which may be made hereunder, which includes a limitation on the combined amount of unpaid principal under this Note and the Construction Note.
 (d)      Advance Termination Date:  No Advances shall be made after the Advance Termination Date.
 Default and Waiver Provisions:
 (a)       Events of Default and Acceleration of Maturity:  Lender may, subject to any notice requirements in the Loan Agreement, declare the entire
unpaid Principal Balance and all accrued and earned but unpaid interest at once due and payable upon the occurrence of an Event of Default. 
 (b)      Waiver by Borrower:  Except as expressly set forth in the Loan Agreement, Borrower and all other parties liable for this Note waive demand, notice of
presentment, presentment for payment, notice of nonpayment, protest, notice of protest, grace, notice of dishonor, notice of intent to accelerate, notice of acceleration, and diligence in collection.
 (c)       Non-Waiver by Lender:  Any previous extension of time, forbearance, failure
to pursue some remedy, or acceptance of partial payment by Lender, before or after maturity, does not constitute a waiver by Lender of the existence of any event of default nor of its right to strictly enforce the collection of this Note according
to its terms. Lender shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless
  
 
 

  such waiver is in writing and signed by Lender and, then, only to the extent specifically set forth in the writing. A waiver with reference to one event
shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event.
 (d)      Other Remedies Not Required:  Lender shall not be required to first file suit, exhaust all remedies, or enforce its rights against any security in
order to enforce payment of this Note.
 (e)       Joint and Several
Liability:  Each Borrower who signs this Note, and all of the other parties liable for the payment of this Note, such as guarantors, endorsers, and sureties, are jointly and severally liable for the payment of this
Note.
 (f)       Attorney’s Fees:  If
Lender requires the services of an attorney to enforce the payment of this Note or the performance of the other Loan Documents, or if this Note is collected through any lawsuit, probate, bankruptcy, or other judicial proceeding, Borrower agrees to
pay Lender an amount equal to its reasonable attorney’s fees and other collection costs. This provision shall be limited by any applicable statutory restrictions relating to the collection of attorney’s fees.
 Miscellaneous Provisions:
 (a)       Usury Disclaimer:  All agreements between Lender and Borrower, whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency, whether by reason of demand for payment or acceleration of the maturity hereof or any other circumstance whatsoever, shall the interest contracted for, charged or received by Lender exceed the Maximum Lawful
Amount. If, from any circumstance whatsoever, interest would otherwise be payable to Lender in excess of the Maximum Lawful Amount, the interest payable to Lender shall be reduced to the Maximum Lawful Amount; and if from any circumstance Lender
shall ever receive any interest in excess of the Maximum Lawful Amount, an amount equal to any excessive interest shall be applied to the reduction of the Principal Amount and not to the payment of interest, or if such excessive interest exceeds the
unpaid Principal Amount such excess shall be refunded to Borrower. All interest paid or agreed to be paid to Lender shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full period until
payment in full of the Principal Amount (including the period of any renewal or extension hereof) so that the interest hereon for such full period shall not exceed the Maximum Lawful Amount. For purposes of this paragraph, the term interest shall
include all considerations and amounts that constitute interest under applicable usury law. This paragraph shall control all agreements between Borrower and Lender.
 (b)      Application of Payments:  Except as otherwise expressly set forth herein or in the Loan Agreement, all payments on the
indebtedness evidenced by this Note and by Security Documents, other than regularly scheduled payments, shall be applied to such indebtedness in such order and manner as Lender may from time to time determine in its absolute discretion.

(c)       Subsequent Holder:  All references to Lender in
this Note shall also refer to any subsequent owner or holder of this Note by transfer, assignment, endorsement or otherwise.
  
 
 

  (d)      Successors and Assigns:  The provisions of this Note shall be binding upon and for the benefit of the successors, assigns, heirs, executors and administrators of Lender and Borrower.
 (e)       Other Parties Liable:  All promises, waivers, agreements and conditions applicable to Borrower
shall likewise be applicable to and binding upon any other parties primarily or secondarily liable for the payment of this Note, including all guarantors, endorsers and sureties.
 (f)       Modifications:  Any modifications agreed to by Lender relating to the release of liability of any
of the parties primarily or secondarily liable for the payment of this Note, or relating to the release, substitution, or subordination of all or part of the security for this Note, shall in no way constitute a release of liability with respect to
the other parties or security not covered by such modification.
 (g)      Borrower’s Address for Notice:  All notices required to be sent by Lender to Borrower shall be sent by United States Mail, postage prepaid, to Borrower’s Address for Notice stated on the first page
of this Note, until Lender shall receive written notification from Borrower of a new address for notice.
 (h)      Lender’s Address for Payment:  All sums payable by Borrower to Lender shall be paid at Lender’s Address for Payment stated on the first
page of this Note, until Lender shall notify Borrower of a new address for payment.
 (i)       Applicable Law:  This Note has been executed and delivered, and shall be construed, in accordance with the applicable laws of the State of
California and the United States of America.
 (j)       Time of
Essence:  Time is of the essence in Borrower’s performance of all duties and obligations imposed by this Note.
 (k)      Partial Invalidity:  In the event any one or more of the provisions hereof shall be invalid, illegal or unenforceable in any
respect, the validity of the remaining provisions hereof shall be in no way affected, prejudiced or disturbed thereby.
 (l)       Gender:  Whenever used, the singular shall include the plural, the plural shall include the singular, and the words “Lender”,
“Borrowers” and “Borrower” shall be deemed to include their respective heirs, administrators, executors, successors and assigns.
  
 
 

   

	 Borrower’s Signature:
 	  
 	 SRE Holding, LLC,
 a North Carolina limited liability company
 SRE Alabama - 2,
LLC,
 an Alabama limited liability company
 SRE Alabama - 3, LLC,
 an Alabama limited liability company
 SRE Alabama - 4, LLC,
 an
Alabama limited liability company
 SRealEstate Arizona -1, LLC,
 an Arizona limited liability company
 SRealEstate Arizona - 2, LLC,
 an Arizona limited
liability company
 SRealEstate Arizona - 3, LLC,
 an Arizona limited liability company
 SRealEstate Arizona - 4, LLC,
 an Arizona limited liability
company
 SRealEstate Arizona - 5, LLC,
 an Arizona limited liability company
 SRealEstate Arizona - 6, LLC,
 an Arizona limited liability company

SRealEstate Arizona - 7, LLC,
 an Arizona limited liability company
 SRE California - 1, LLC,
 a California limited liability company
 SRE
California - 2, LLC,
 a California limited liability company
 SRE California - 3, LLC,
 a California limited liability company
 SRE California - 4,
LLC,
 a California limited liability company
 SRE California - 5, LLC,
 a California limited liability company
 SRE California - 6, LLC,
 a California limited liability company
 SRE Colorado - 1, LLC,
 a Colorado limited liability company
 SRE Colorado - 2, LLC,
 a Colorado limited
liability company
 SRE Colorado - 3, LLC,
 a Colorado limited liability company
 SRE Florida - 1, LLC,
 a Florida limited liability company
 SRE Florida - 2, LLC,
 a Florida limited liability company
 SRE Florida - 3, LLC,
 a Florida limited liability company
 SRE Michigan - 1,
LLC,
 a Michigan limited liability company
 

  
 
 

   

	  
 	  
 	  
 	 SRE Michigan - 2, LLC,
 a Michigan limited liability company
 SRE Michigan - 3,
LLC,
 a Michigan limited liability company
 SRE Nevada - 1, LLC,
 a Nevada limited liability company
 SRE Nevada - 2, LLC,
 a Nevada
limited liability company
 SRE Nevada - 3, LLC,
 a Nevada limited liability company
 SRE Nevada - 4, LLC,
 a
Nevada limited liability company
 SRE Nevada - 5, LLC,
 a Nevada limited liability company
 SRE Oklahoma – 1, LLC,
 an Oklahoma limited liability
company
 SRE Oklahoma – 2, LLC,
 an Oklahoma limited liability company
 SRE Oklahoma – 3, LLC,
 an Oklahoma limited liability company

SRE Oklahoma – 4, LLC,
 an Oklahoma limited liability company
 SRE Oklahoma – 5, LLC,
 an Oklahoma limited liability company
 SRE
South Carolina - 2, LLC,
 a South Carolina limited liability company
 SRE South Carolina - 3, LLC,
 a South Carolina limited liability company
 SRE South
Carolina - 4, LLC,
 a South Carolina limited liability company
 SRE Tennessee - 1, LLC,
 a Tennessee limited liability company
 SRE Tennessee - 2,
LLC,
 a Tennessee limited liability company
 SRE Tennessee - 3, LLC,
 a Tennessee limited liability company
 SRE Virginia - 1, LLC,
 a
Virginia limited liability company
 
	  
 	  
 	 
 
 
 	  
 	 By: 
 	 
 /s/ THEODORE M. WRIGHT
 
	  
 	  
 	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	  
 	  
 	 Name: Theodore M. Wright
 
	  
 	  
 	  
 	  
 	  
 	 Title: Vice President and Treasurer of each of
             the above Companies
 

  

	  
 	  
 	  
 	  
 
	  
 	  
 	 
 
 
 	  
 	 Attest: 
 	 
 /s/ STEPHEN K. COSS
 
	  
 	  
 	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	  
 	  
 	 Stephen K. Coss, Secretary
 of each of the Companies
 

  
 
 

   

	  
 	  
 	  
 	 SRE Georgia - 1, L.P.,
 a Georgia limited partnership
 SRE Georgia - 2,
L.P.,
 a Georgia limited partnership
 SRE Georgia - 3, L.P.,
 a Georgia limited partnership
 
	  
 	  
 	 
 
 
 	  
 	 
 By: 
 	 
 Sonic Automotive of Georgia, Inc.,
 a Georgia corporation, the General Partner of each of

the above Partnerships
 
	  
 	  
 	  
 	  
 	  
 	  
 

  

	  
 	  
 	  
 	  
 
	  
 	  
 	 
 
 
 	  
 	 By: 
 	 
 /s/ THEODORE M. WRIGHT
 
	  
 	  
 	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	  
 	  
 	 Name: Theodore M. Wright
 
	  
 	  
 	  
 	  
 	  
 	 Title: Vice President and Treasurer
 

  

	  
 	  
 	  
 
	 
 
 
 	  
 	 Attest: 
 	 /s/ STEPHEN K. COSS

	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	 Stephen K. Coss, Secretary
 

  
 
 

   

	  
 	  
 	  
 	 SRE Texas -1, L.P.,
 a Texas limited partnership
 SRE Texas - 2, L.P.,

a Texas limited partnership
 SRE Texas - 3, L.P.,
 a Texas limited partnership
 SRE Texas - 4, L.P.,
 a Texas limited partnership

SRE Texas - 5, L.P.,
 a Texas limited partnership
 SRE Texas - 6, L.P.,
 a Texas limited partnership
 SRE Texas - 7, L.P.,
 a Texas limited partnership
 SRE Texas - 8, L.P.,
 a Texas limited partnership
 
 
 
 
	  
 	  
 	 
 
 
 	  
 	 By: 
 	 Sonic of Texas, Inc.,
 a Texas corporation, the
 General Partner of each of
the
 above Partnerships
 
	  
 	  
 	  
 	  
 	  
 	  
 

  

	  
 	  
 	  
 	  
 
	  
 	  
 	 
 
 
 	  
 	 By: 
 	 /s/ THEODORE M. WRIGHT
 
	  
 	  
 	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	  
 	  
 	 Name: Theodore M. Wright
 
	  
 	  
 	  
 	  
 	  
 	 Title: Vice President and Treasurer
 

  

	  
 	  
 	  
 
	 
 
 
 	  
 	 Attest: 
 	 /s/ STEPHEN K. COSS

	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	 Stephen K. Coss, Secretary
 

  
  
 
 

  SCHEDULE A
 Schedule A attached to
and forming a part of the Promissory Note dated December       , 2002 in the principal amount of $100,000,000.00 from the named subsidiaries of Sonic Automotive, Inc. to
Toyota Motor Credit Corporation.
  

	 Date
 	  
 	 Advance
 Amount
 	  
 	 Monthly 
 Principal
 Payment
 	  
 	 Property
 
	 
 	  
 	 
 	  
 	 
 	  
 	 
 
	  
 	  
 	  
 	  
 	  
 	  
 	  
 
	  
 	  
 	 $
 	  
 	  
 	 $
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	 $
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	 $
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	 $
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	 $
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	 $
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	 $
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	 $
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	 $
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	  
 	 
 	  
 	 
 

 
  
 
 

  SCHEDULE B
 Schedule B attached to
and forming a part of the Promissory Note dated December        , 2002 in the principal amount of $100,000,000.00 from the named subsidiaries of Sonic Automotive, Inc.
to Toyota Motor Credit Corporation.
  

	 Date
 	  
 	 Amount of 
 Prepayment
 	  
 	 Advance No.
 	  
 	 Property
 
	 
 	  
 	 
 	  
 	 
 	  
 	 
 
	  
 	  
 	  
 	  
 	  
 	  
 	  
 
	  
 	  
 	 $
 	  
 	  
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $
 	  
 	  
 	  
 	  
 	  
 
	 
 	  
 	  
 	 
 	  
 	 
 	  
 	 
 
	  
 	  
 	 $Continuing and Irrevocable Guaranty

  Exhibit 10.13
 CONTINUING AND IRREVOCABLE
GUARANTY
 This CONTINUING AND IRREVOCABLE GUARANTY (this “Guaranty”) is made and entered into as of December 31, 2002 by SONIC AUTOMOTIVE, INC.,
a Delaware corporation (“Guarantor”), and delivered to Toyota Motor Credit Corporation, a California corporation (“TMCC”), with respect to the following facts:
 A.       TMCC has agreed to make a loan in the original principal amount of One Hundred Million Dollars ($100,000,000.00) (the “Loan”)
to certain subsidiaries of Guarantor (collectively “Borrower”). The Loan is evidenced by, among other agreements, that certain master loan agreement of even date herewith among TMCC, Borrower and Guarantor (as at any time amended,
supplemented or restated, the “Loan Agreement”) and that certain Construction Loan Promissory Note and Permanent Loan Promissory Note of even date herewith in the original principal amount of the Loan (together with any and all renewals,
substitutions, modifications, and replacements thereof, the “Notes”). The Notes are or will be secured by one or more Deeds of Trust or mortgages encumbering real property located in various states (collectively, the “Deed of
Trust”). The Master Loan Agreement, Notes and Deed of Trust, together with each and every other document or instrument relating to, evidencing or securing the Loan, are collectively referred to as the “Loan Documents.” Capitalized
terms used herein without definition have the meanings given to them in the Loan Agreement.
 B.        Guarantor is directly and materially interested in the financial success of Borrower, is the direct or indirect owner of all of the outstanding interests in Borrower, and
maintains directly or indirectly significant business relationships with Borrower. TMCC is not willing to make the Loan unless Guarantor guarantees Borrower’s obligations under the Loan Documents.
 Intending to be legally bound and to be primarily liable therefor, and to induce TMCC to make the Loan to or for the benefit of Borrower, or in respect of which Borrower may be or become liable to
TMCC in any capacity, Guarantor hereby agrees as follows:
 1.        Guaranty.  Guarantor unconditionally and irrevocably guaranties to TMCC the timely (whether as scheduled or upon acceleration) payment and performance by Borrower of the following (the “Guarantied
Obligations”):
 a.        The principal, interest and other charges or
amounts due under the Notes and the other Loan Documents;
 b.        The other
obligations set forth in or arising out of the Notes and the other Loan Documents;
 c.        Any liabilities, costs or expenses, including reasonable attorneys’ fees, incurred by TMCC in connection with enforcing its rights under the Notes and the other Loan
Documents;
 d.        Any of the forgoing arising out of, in connection with or
following any renewals, extensions, modifications, alterations and rearrangements of the Notes or any of the other Loan Documents.
  
 

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  e.        Any of the foregoing arising after Borrower has
commenced or become subject to any case under the Bankruptcy Code, including any advances made to Borrower, any interest that accrues after the filing of the bankruptcy petition (even if the interest cannot be collected in the proceeding under the
Bankruptcy Code), and attorneys’ fees.
 If Borrower fails to pay or perform any of the Guarantied Obligations, Guarantor will immediately pay or perform such obligation,
without deduction in respect of any purported right of setoff or recoupment, counterclaim, claim or defense (whether legal or equitable) of any nature whatsoever, each of which Guarantor waives to the maximum extent permitted by law.
 2.        TMCC’s Direct Rights.
 a.         Guaranty of Payment.  This is a guaranty of payment
and performance and is not a guaranty of collection.
 b.        Direct
Rights Against Guarantor.  In the event that Borrower fails timely to pay or perform any of the Guarantied Obligations, TMCC may enforce its rights under this Guaranty without first seeking to obtain payment or
performance from Borrower, any other guarantor, any collateral TMCC may hold for the Notes or any of the other Loan Documents, any guaranty of the Notes or any of the other Loan Documents, including this one, or exercise of any other remedy or right
that TMCC may have.
 c.        Borrower’s Bankruptcy.  In the event Borrower becomes subject to a voluntary or involuntary case under the Bankruptcy Code, TMCC may immediately pursue its rights under this Guaranty, even though TMCC may be stayed from accelerating or collecting the
Guarantied Obligations from Borrower.
 d.         Waiver
of Priority of Collection.  Guarantor waives any rights it may have under California Civil Code §§ 2845 or 2849 to require TMCC first to take any of the actions referred to above in this Section. If TMCC
decides to proceed first to exercise any other remedy or right, or to proceed against another person or any collateral, TMCC retains all of its rights under this Guaranty.
 3.        Continuing Guaranty.
 a.        Future Obligations.  This Guaranty guaranties Borrower’s existing obligations under the
Loan Documents, including future advances, if any, required by or otherwise made pursuant to the Loan Documents. This Guaranty also guaranties Borrower’s future liability under successive transactions which either continue Borrower’s
liability or from time to time renew it after it has been satisfied and to that extent is a continuing guaranty of the Guarantied Obligations.
 b.        Waiver of Termination.  Guarantor may not terminate or revoke this Guaranty. Guarantor waives any right it has, including any rights
under California Civil Code § 2815, to terminate or revoke the continuing nature of this Guaranty and its application to any Guarantied Obligations arising after any attempt to terminate this Guaranty.
 

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  4.        No Notice Required.  TMCC does not have to notify Guarantor of any of the following events. Guarantor will not be released or exonerated from its obligations under this Guaranty if it is not notified of these events:
 a.        Borrower’s failure to pay timely any of the Guarantied Obligations;
 b.        Any adverse change in Borrower’s financial condition or business (and
Guarantor represents and warrants to TMCC that Guarantor has arranged adequate means of keeping itself informed of Borrower’s financial condition and business);
 c.        Any sale or other disposition of any collateral for the Notes, for the other Guarantied Obligations, or for any guaranty of the Notes or any of the
Guarantied Obligations;
 d.        TMCC’s acceptance of this
Guaranty;
 e.        Any renewal, extension, alteration, rearrangement or other
modification of the Notes, any other Loan Document, or any of the other Guarantied Obligations; or
 g.        Notice of any other event to which it might be entitled.
 5.        No Release of Guarantor.  TMCC may do or suffer any of the following, by action or inaction, without releasing or exonerating Guarantor
from any of its obligations under this Guaranty (including any release or exoneration that might occur under California Civil Code §§ 2819, 2845, 2848, 2849, or 2850):
 a.        Renew, extend, rearrange, alter or otherwise modify the Notes, the Loan Agreement, the Deed of Trust, any other Loan Document or
any of the other Guarantied Obligations;
 b.        Release Borrower from any
of the Guarantied Obligations;
 c          Sell, release,
subordinate, impair, waive or otherwise fail to obtain or perfect (or continue the perfection of) a security interest in any collateral for the Notes (including the collateral provided under the Deed of Trust), any of the other Guarantied
Obligations, or any other guaranty of the Notes;
 d.        Fail to realize
upon any collateral for the Notes (including the collateral provided under the Deeds of Trust), any of the other Guarantied Obligations, or any other guaranty of the Notes;
 e.        Advance additional funds to or for the benefit of Borrower;
 f.         Pay any amounts required to be paid to cure any default caused by failure to pay those costs described in Section 1(c) of
this Guaranty;
 g.        Foreclose on any collateral for the Notes (including
the collateral provided under any Deed of Trust) or a guaranty of the Notes in a manner that diminishes, impairs or precludes the
 

3

  right of Guarantor to enjoy any rights of subrogation against Borrower or any other guarantor, or to obtain reimbursement, performance, or indemnification
for payment or performance under this Guaranty (including any of the foregoing that results from the direct or indirect application of California Code of Civil Procedure §§ 580a, 580b, 580c, 580d, and 726, and Commercial Code §§
1103 and 9501 et seq.); and Guarantor waives all rights and defenses arising out of an election of remedies by TMCC, even though that election of remedies, such as a non-judicial foreclosure with
respect to security for the Guarantied Obligations, has destroyed Guarantor’s rights of subrogation and reimbursement against Borrower, by the operation of California Code of Civil Procedure § 580d or otherwise.
 h.        Permit or suffer the impairment of any of the Guarantied Obligations in a case under the
Bankruptcy Code by or against Borrower;
 i.         Make an election under
Bankruptcy Code § 1111(b)(2) in a case by or against Borrower or Guarantor;
 j.         Permit or suffer the creation of secured or unsecured credit or debt under Bankruptcy Code § 364 in a case by or against Borrower;
 k.        Permit or suffer the disallowance, avoidance or subordination of any of the Guarantied
Obligations or collateral for any of the Guarantied Obligations;
 l.         Fail to exercise any right or remedy it may have with respect to the payment or performance of the Notes, any of the other Loan Documents or any of the other Guarantied Obligations; or
 m.       Fail to obtain a guaranty, other assurance of payment, or credit enhancement from any other person.
 6.        Guarantor’s Additional Waivers. 
 a.        Guarantor waives any right it may have to require any of the following acts: (i)
demand; (ii) presentment; (iii) diligence; (iv) protest; (v) notice of dishonor; and (vi) any other notice to which it may be entitled except as specifically provided in this Guaranty or under any of the Loan Documents. 
 b.        Guarantor waives all rights and defenses that Guarantor may have because the
Borrower’s debt is secured by real property. This means, among other things, that: (1) TMCC may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by the Borrower; (2) if TMCC forecloses on any
real property collateral pledged by the Borrower: (A) the amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; (B) TMCC may collect
from Guarantor even if TMCC, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from the Borrower. This is an unconditional and irrevocable waiver of any rights and defenses Guarantor may have
because the Borrower’s debt is secured by
 

4

  real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the Code of
Civil Procedure. 
 c.        Statutory Waivers.  Without limiting the generality of any other waiver or other provision set forth in this Guaranty, Guarantor hereby waives, to the maximum any and all benefits rights, or defenses arising directly or indirectly under any one or
more of California Civil Code sections 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2848, 2849, and 2850, and California Code of Civil Procedure sections 580a, 580b, 580c, 580d and 726, and Chapter 2 of Title 14 of the
California Civil Code.
 7.        Waiver of Subrogation, Reimbursement and
Indemnification.  Until such time as the Guarantied Obligations have been indefeasibly paid and performed in full, Guarantor waives and shall not seek to exercise any of the following rights that it may have against
Borrower, any other guarantor, or any collateral provided by Borrower or any other guarantor, for any amounts paid by it, or acts performed by it, under this Guaranty:
 a.        Subrogation (including any rights arising under Bankruptcy Code § 509 or California Civil Code §§ 2848 and
2849);
 b.        Reimbursement (including any rights arising under California
Civil Code § 2847);
 c.        Performance (including any rights arising
under California Civil Code § 2846); 
 d.        Indemnification;
or
 e.        Contribution.
 8.        Subordination of Guarantor.
 a.        Subordination of Claims.  All principal and interest on all existing and
future indebtedness, liabilities, and obligations of Borrower to Guarantor, whether fixed or contingent, matured or unmatured, and liquidated or unliquidated (the “Subordinated Debt”) shall at all times be subordinated in right of payment
to the payment and performance of the Guarantied Obligations.
 b.        Payments.
 Upon the occurrence and during the continuance of any default, event of default or Event of Default under any of the
Loan Documents, Guarantor will not accept any payments on any of the Subordinated Debt.
 c.        Attorney-in-Fact.  Guarantor appoints TMCC Guarantor’s attorney-in-fact to file claims, and receive payments, on behalf of Guarantor
with respect to any of the Subordinated Debt in any case by or against Borrower under the Bankruptcy Code (including Chapters 7 or 11), any assignment for the benefit of creditors made by Borrower, or in any other reorganization or insolvency
proceeding.
 

5

  9.        Revival of Debt.  Guarantor’s obligations under this Guaranty shall again include amounts returned by TMCC in the event that TMCC must return any amount paid by Borrower or any other guarantor of the Notes or of any of the other Guarantied
Obligations because of the application of: (a) the Bankruptcy Code; (b) any fraudulent transfer law; or (c) any law respecting preferences.
 10.      Representations, Warranties and Covenants.  Guarantor represents and warrants: 
 a.        that the actions contemplated by this Guaranty constitute valid and legally binding obligations of Guarantor; 
 b.        Guarantor shall maintain and preserve Guarantor’s existence and assets and
all rights and other authority necessary for the conduct of Guarantor’s business; 
 c.        Guarantor shall not change its name without thirty (30) days’ prior written notice to TMCC; 
 d.        Guarantor shall provide TMCC, within ninety (90) days after the close of each fiscal year, its financial statements prepared in
accordance with generally accepted accounting principles; and 
 e.        Guarantor shall give prompt written notice to TMCC of all events of material default under the terms or provisions of this or any other material agreement, material changes in ownership, material litigation (not covered by insurance) and any
other matter which has a Materially Adverse Effect on Guarantor’s financial condition;
 11.      Miscellaneous.
 a.        Review of Documents.  Guarantor acknowledges that Guarantor has copies of and is fully familiar with each and every Loan
Document.
 b.        Informed.  Guarantor
represents and warrants to TMCC that Guarantor is fully informed, and shall continue to keep informed, of the business and financial condition of Borrower and of all other circumstances which a diligent inquiry would reveal and which bear upon the
risk of nonpayment of the Guarantied Obligations. 
 c.        No
Marshaling.  TMCC has no obligation to marshal any assets in favor of Guarantor, or against or in payment of (i) the Notes, (ii) any of the other Guarantied Obligations, or (iii) any other obligation owed to TMCC by
Guarantor, Borrower, or any other person.
 d.        Fees and
Costs.  Guarantor will pay all of TMCC’s fees and costs, including TMCC’s reasonable attorneys’ fees, incurred in enforcing this Guaranty and in any bankruptcy or insolvency proceedings related
hereto.
 e.        Assignment.  Guarantor
may not assign Guarantor’s obligations or liabilities under this Guaranty. Subject to the preceding sentence, this Guaranty shall be binding upon the
 

6

  parties hereto and their respective heirs, executors, successors, representatives and assigns and shall inure to the benefit of the parties hereto and their
respective successors and assigns. TMCC may assign its rights under this Guaranty.
 f.         Applicable Law.  The law of the State of California will apply to the interpretation and enforcement of this Guaranty.

g.        Integration; Modifications.  This Guaranty
is the entire agreement of TMCC and Guarantor with respect to the subject matter of this Guaranty. Neither this Guaranty nor any term hereof may be changed, waived, discharged, or terminated without the prior written consent of TMCC.
 h.        Rights Cumulative; No Waivers.  All of
TMCC’s rights under this Guaranty are cumulative. The exercise of any one right does not exclude the exercise of any other right given in this Guaranty or any other right of TMCC not set forth in this Guaranty. No delay or omission by TMCC to
exercise any right under this Guaranty shall impair any such right or be construed to be a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other
right.
 i.         Effect of Compliance.  Guarantor’s compliance with any of the provisions of this Guaranty will not reduce or affect in any manner the liability of Guarantor under any of the other provisions of this Guaranty.
 j.         Severability.  If any provision of this
Guaranty is unenforceable, or otherwise invalid, the remaining provisions of this Guaranty shall be enforced to the fullest possible extent.
 k.        Notices.  All notices to be provided under this Guaranty shall be given in the manner and addressed to Guarantor or TMCC as provided in
the Loan Agreement.
 l.         Headings; Number;
Construction.  Section headings used in this Guaranty are for convenience only. They are not a part of this Guaranty and shall not be used in construing it. Wherever appropriate in this Guaranty, the singular shall
be deemed to also refer to the plural, and the plural to the singular, and pronouns of certain genders shall be deemed to include either or both of the other genders. In interpreting the meaning of this Guaranty: (i) “includes” and
“including” are not limiting; (ii) “or” is not exclusive; and (iii) “all” includes “any” and “any” includes “all.”
 12.      Acknowledgment of Waivers and Loss of Defenses.
 a.        Guarantor acknowledges that certain provisions of this Guaranty operate as waivers of rights that Guarantor would otherwise have under applicable law.
Other provisions permit TMCC (i) to take actions that TMCC would otherwise not have a right to take, (ii) to fail to take actions that it would otherwise have an obligation to take, or (iii) to take actions that may prejudice Guarantor’s rights
and obligations under this Guaranty and against the Borrower. In the absence of these provisions Guarantor might have defenses against its obligations under this Guaranty. These defenses might permit Guarantor to avoid some or all of its obligations
under this Guaranty.
 

7

  b.        Guarantor intends by the waivers and other
provisions of this Guaranty, including the acknowledgment set forth in this section, to be liable to the greatest extent permitted by law for all of the Guarantied Obligations. Guarantor intends to have this liability even if the terms of the Loan
Documents change or if Guarantor does not have any rights against Borrower.
 c.        Guarantor acknowledges that (i) it understands the seriousness of the provisions of this Guaranty; (ii) it has had a full opportunity to consult with counsel of its
choice; and (iii) it has consulted with counsel of its choice or has decided not to avail itself of that opportunity.
 14.      WAIVER OF JURY TRIAL.  GUARANTOR AND TMCC MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR TMCC TO MAKE THE LOAN.
 15.      PREJUDGMENT REMEDIES.  GUARANTOR ACKNOWLEDGES THAT THE LOAN IS A COMMERCIAL TRANSACTION AND HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHTS TO
NOTICE AND HEARING UNDER STATUTES AFFECTING PREJUDGMENT REMEDIES AND AUTHORIZES TMCC’S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.
 

8

  IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed as of the date first set forth above.
 “GUARANTOR”:
  

	  
 	  
 	  
 	 SONIC AUTOMOTIVE, INC.,
 a Delaware corporation
 
	  
 	  
 	  
 	  
 	 By: 
 	 
 /s/ THEODORE M. WRIGHT
 
	  
 	  
 	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	  
 	 Name: 
 	 Theodore M. Wright
 
	  
 	  
 	  
 	  
 	 Title: 
 	 President

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