EXHIBIT 10.11
PROMISSORY NOTE
(Revolving Line of Credit Construction Loan)
$50,000,000.00 |
| December 31, 2002 |
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Borrower: |
| The Entities executing this Note in the signatures below |
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Borrower’s Address for Notice: |
| 5401 East Independence Boulevard |
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Lender: |
| Toyota Motor Credit Corporation |
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Lender’s Address for Payment: |
| 19001 South Western Avenue |
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Promise to Pay: |
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For value received, the undersigned Borrower promises to pay to the order of Lender the sum of Fifty Million and No/100 Dollars ($50,000,000.00), 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:
Acquisition Advance Termination Date – September 30, 2006.
Advance – Each disbursement of loan proceeds under this Note pursuant to the Loan Agreement (unless otherwise noted herein, an “Advance” shall be deemed to include (i) an Acquisition Advance for the purchase of Property under Section 3.1 of the Loan Agreement, (ii) a “Draw” under Section 4.3(s) of the Loan Agreement, and (iii) a disbursement for Budgeted Interest under Section 4.9(e) of the Loan Agreement and as set forth below).
Applicable Rate – A varying or fluctuating rate per annum that is equal to LIBOR plus two and one-quarter percent (2.25%). LIBOR is initially determined on the date of the applicable Advance. LIBOR shall be adjusted, as necessary, as of first calendar day of each month, based on the LIBOR rate in effect as of the last Business Day of the preceding month.
Construction Project Loan Maturity Date - As to each Construction Project Loan Amount, the date being the earlier of (i) 15 months from the date of the Acquisition Advance for
such Construction Project, (ii) the date of Substantial Completion, or (iii) the Loan Maturity Date.
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.
Draw Termination Date – November 30, 2007.
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, 2007.
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.
Permanent Note - The Promissory Note dated of even date herewith executed by Borrower and payable to Lender in the principal amount of $100,000,000.00.
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, and (ii) 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, this Note shall be due and payable as follows:
(i) Interest - Accrued interest on the unpaid Principal Balance outstanding shall be due and payable monthly. On the Loan Maturity Date, all accrued but unpaid interest shall be due and payable. Budgeted Interest may be paid as provided in (ii) below.
(ii) Budgeted Interest – Unless paid by Borrower from other funds, Lender may disburse to itself to pay interest monthly as it accrues on this Note, the amount allocated for Budgeted Interest for each Construction Project as being available only for payment of that interest on that Construction Project. Disbursements will be made on behalf of Borrower to Lender on the payment dates when interest is due and owing in accordance with the terms of this Note and will be made by a bookkeeping entry on Lender’s records reflecting, as an additional disbursement hereunder, an amount equal to the accrued interest due on the relevant payment date. If, after making a disbursement for Budgeted Interest as set forth above, Borrower shall pay the interest with other funds, Lender will, at Borrower’s request, reimburse Borrower to the extent of the payment, but (i) only to the extent available from funds allocated for Budgeted Interest for that Construction Project, and (ii) only if all interest owing on other Construction Projects is paid in full. The exhaustion of the amount of Draws available for Budgeted Interest shall not impair the obligation of Borrower to pay interest on the Construction Loan.
(iii) Principal – On each Construction Project Loan Maturity Date, a principal installment equal to the aggregate amount of all outstanding Advances made for such Construction Project shall be due and payable.
(iv) Loan Maturity Date – On the Loan Maturity Date, a final installment, which shall include all unpaid amounts of the Principal Balance and interest accrued thereon, and any and all other payments due under this Note, shall be due and payable.
(v) Due Dates and Application of Payments – The monthly payments of 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 renewed. 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 the 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 lien instruments securing it and the liens and security interests thereunder shall remain in effect until this Note is formally terminated in writing, and this Note and such lien instruments, liens and security interests 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 4.21 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 4.21 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 4.21 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 Permanent Note.
(d) Acquisition Advance Termination Date: No Advances for an Acquisition Advance for the purchase of Property shall be made after the Acquisition Advance Termination Date.
(e) Draw Termination Date: No Advances for Draws shall be made after the Draw 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 the other Loan 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, |
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| a Michigan limited liability company | |
| By: | | |
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| Name: | Theodore M. Wright |
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| Title: | Vice President and Treasurer each of |
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| Stephen K. Coss, Secretary |
| SRE Georgia - 1, L.P., | |
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| Name: | Theodore M. Wright |
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| Title: | Vice President and Treasurer |
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| Stephen K. Coss, Secretary |
| SRE Texas -1, L.P., | |
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| By: | |
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| Name: | Theodore M. Wright |
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| Title: | Vice President and Treasurer |
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| 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 $50,000,000.00 from the named subsidiaries of Sonic Automotive, Inc. to Toyota Motor Credit Corporation.
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SCHEDULE B
Schedule B attached to and forming a part of the Promissory Note dated December , 2002 in the principal amount of $50,000,000.00 from the named subsidiaries of Sonic Automotive, Inc. to Toyota Motor Credit Corporation.
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