Second Amendment to Five-Year Credit Agreement among AutoNation, Inc., Lenders, and Agents (July 18, 2007)

Summary

This amendment updates the terms of a five-year credit agreement originally dated July 14, 2005, between AutoNation, Inc., various lenders, and financial agents including JPMorgan and Bank of America. The amendment revises the pricing grid, extends the termination date to July 18, 2012, modifies certain lender replacement and leverage ratio provisions, and allows new lenders to join. It also sets conditions for effectiveness, including payment of fees and execution by all parties. The agreement ensures AutoNation's continued access to credit under updated terms and conditions.

EX-4.1 2 g10076exv4w1.htm EX-4.1 SECOND AMENDMENT TO FIVE-YEAR CREDIT AGREEMENT Ex-4.1 Second Amendment to Five-Year Credit Agreem

Exhibit 4.1

SECOND AMENDMENT

SECOND AMENDMENT, dated as of July 18, 2007 (this “Amendment”), to the FIVE-YEAR CREDIT AGREEMENT, dated as of July 14, 2005, as amended by the First Amendment thereto dated as of April 12, 2006, among AUTONATION, INC., a Delaware corporation (the “Borrower”), the Lenders (as defined below), J.P. MORGAN SECURITIES INC. (“JPMorgan”) and BANC OF AMERICA SECURITIES LLC, as co-lead arrangers and joint bookrunners, BANK OF AMERICA, N.A., as syndication agent, JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”), and the other agents party thereto (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”).

W I T N E S S E T H:

WHEREAS, the Borrower has requested certain amendments to the Credit Agreement as more fully set forth herein; and

WHEREAS, the lenders party hereto (including New Lenders (as defined below)) (the “Lenders”) have agreed to such amendments but only on the terms and conditions contained in this Amendment.

NOW, THEREFORE, the parties hereto hereby agree as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

SECTION 2. Amendments. Effective as of the date on which all the conditions precedent set forth in Section 4 hereof shall be satisfied (such date, the “Effective Date”), the Credit Agreement shall be amended as follows:

(a) The table set forth in the definition of “Pricing Grid” is hereby replaced with the following table:


			Applicable		Applicable
			Eurodollar		Base Rate				Applicable
			Margin		Margin		Applicable		Base Rate
			(Revolving and		(Revolving		Eurodollar		Margin
	Applicable		Swing Line		and Swing		Margin (Term		(Term
Ratings	Facility Fee		Loans)		Line Loans)		Loans)		Loans)
Baa1/BBB+ or higher		8.0		42.0		0		50.0		0
Baa2/BBB		10.0		52.5		0		62.5		0
Baa3/BBB-		12.5		62.5		0		75.0		0
Ba1/BB+		15.0		72.5		0		87.5		0
Ba2/BB		20.0		92.5		0		112.5		12.5
Ba3/BB- or lower		25.0		125.0		25.0		150.0		50.0

(b) The definition of “Stated Termination Date” is hereby changed to July 18, 2012.

(d) Section 4.7 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“4.7 Replacement Lenders. The Borrower may, in its sole discretion, on ten (10) Business Days’ prior written notice to the Administrative Agent and a Lender, cause a Lender that (a) is or may become entitled to receive any indemnification payment, additional amount or other compensation under this Article IV or that fails to make Loans for the reasons provided in this Article IV or (b) does not consent to any proposed amendment, supplement, modification, consent or waiver of any provision of this Agreement or any other Loan Document that requires the consent of each of the Lenders or each of the Lenders affected thereby (so long as the consent of the Required Lenders has been obtained), to (and such Lender shall) assign pursuant to Section 11.1 hereof (with such Lender being deemed to have executed an Assignment and Assumption for the purpose of effecting such assignment), all of its rights and obligations under this Agreement to another Lender, an Affiliate of another Lender or a Person reasonably acceptable to the Administrative Agent and designated by the Borrower which is willing to become a Lender for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender, together with any accrued but unpaid interest on such Loans, any accrued but unpaid fees with respect to such Lender’s Revolving Credit Commitment and any other amounts payable to such Lender under this Agreement; provided, that any expenses or other amounts which would be owing to such Lender pursuant to any indemnification provision hereunder shall be payable by the Borrower to such Lender. The replacement Lender under this Section shall pay the applicable processing fee under Section 11.1.”

(e) Section 8.1(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as at the last day of any Four-Quarter Period ending prior to December 31, 2009 to be greater than 3.00 to 1.00 and for any Four-Quarter Period ending on or after December 31, 2009 to be greater than 2.75 to 1.00.”

SECTION 3. New Lenders; Prepayment and Funding on Effective Date.

(a) By executing this Amendment on or prior to the Effective Date, each institution not a party to the Credit Agreement prior to the Effective Date (each, a “New Lender”) agrees to and shall, as of the Effective Date, join the Credit Agreement (as amended pursuant to this Amendment) as a Lender.

(b) Exhibit A to the Credit Agreement is hereby updated as provided in Annex I to this Amendment. To facilitate the effectiveness of this Amendment, on the Effective Date, the Borrower will (i) prepay all then outstanding Loans, (ii) reborrow Term Loans from the relevant Lenders in the respective amounts set forth on Annex I hereto and (iii) reborrow Revolving Credit Loans, in such amount as is determined by the Borrower, from the relevant Lenders ratably in accordance with the adjusted Revolving Credit Commitments reflected on Annex I hereto. Such borrowings shall be made in accordance with the applicable provisions of the Credit Agreement, with appropriate adjustments as agreed by the Administrative Agent and the Borrower in the case of the Term Loans.

SECTION 4. Conditions to Effectiveness. This Amendment shall become effective upon the date on which each of the following conditions shall have been satisfied:

(a) the Administrative Agent shall have received this Amendment, executed and delivered by a duly authorized officer of (i) the Borrower, (ii) the Administrative Agent and (iii) each Lender;

(b) the Administrative Agent shall have received, on behalf of each Lender, a consent fee equal to 0.125% of such Lender’s Revolving Commitment and/or Term Loan under the Credit Agreement as amended by this Amendment (the “Amended Credit Agreement”); and

(c) the Administrative Agent shall have received evidence that all fees payable by the Borrower on the Effective Date to the Administrative Agent required pursuant to Section 6 hereof have been paid in full.

SECTION 5. Representations and Warranties. The Borrower hereby represents and warrants to the Administrative Agent and each Lender that:

(a) The Borrower has the power and authority to execute, deliver and perform this Amendment and to borrow under the Amended Credit Agreement. The Borrower has taken all necessary corporate or other action to authorize the execution, delivery and performance of this Amendment and to authorize the borrowings under the Amended Credit Agreement. No material consent, approval or authorization of or filing, registration or qualification with, any Governmental Authority or other authority or any other Person on the part of the Borrower or any Subsidiary is required as a condition to the execution, delivery, performance or consummation of the transactions contemplated by this Amendment, except consents, approvals, filings, registrations or qualifications which have been obtained or effected, as the case may be and are in full force and effect. This Amendment has been duly executed and delivered on behalf of the Borrower. This Amendment constitutes a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

(b) The execution, delivery and performance of this Amendment will not violate any applicable law, rule or regulation or conflict with any material indenture, agreement or other instrument to which the Borrower is a party, or by which the properties or assets of the Borrower is bound and will not result in the creation or imposition of any Lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Borrower pursuant to any such agreement.

(c) Each of the representations and warranties made by any Loan Party herein or in the Loan Documents as amended by this Amendment is true and correct on and as of the Effective Date, as if made on and as of such date (except that any representation or warranty which by its terms is made as of an earlier date shall be true and correct as of such earlier date).

(d) There does not exist any Default or Event of Default.

SECTION 6. Payment of Expenses. The Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable and documented out-of-pocket costs and expenses incurred in connection with this Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including the reasonable fees and expenses of counsel to the Administrative Agent to the extent invoiced three Business Days prior to or on the Effective Date (which may include amounts constituting reasonable estimates of such fees and expenses incurred or to be incurred in connection with this Amendment; provided that no such estimate shall thereafter preclude the final settling of accounts as to such fees and expenses).

SECTION 7. No Other Amendment or Waivers; Confirmation. Except as expressly provided hereby, all of the terms and provisions of the Credit Agreement and the other Loan Documents are and shall remain in full force and effect. The amendments contained herein shall not be construed as an amendment of any other provision of the Credit Agreement or the other Loan Documents or for any purpose except as expressly set forth herein or a consent to any further or future action on the part of the Borrower that would require the waiver or consent of the Administrative Agent or the Lenders.

SECTION 8. GOVERNING LAW; MISCELLANEOUS. (a) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(b) On and after the Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof”, or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Credit Agreement.

(c) This Amendment may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with the Borrower and the Administrative Agent. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof.

(d) The Administrative Agent shall give notice to the Borrower promptly upon the occurrence of the “Effective Date.”

(e) The execution and delivery of this Amendment by any Lender shall be binding upon each of its successors and assigns (including assignees of its Loans or Revolving Credit Commitments in whole or in part prior to effectiveness hereof).

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written.


AUTONATION, INC.
By:	/s/ James J. Teufel
	Name:	James J. Teufel
	Title:	Vice President and Treasurer


JPMORGAN CHASE BANK, N.A., as Administrative Agent and as Lender
By:	/s/ Robert P. Kellas
	Name:	Robert P. Kellas
	Title:	Executive Director