SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO 13D-2(A)
(AMENDMENT NO. ____________________)
Sonic Automotive, Inc.
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(Name of Issuer)
Class A Common Stock, Par Value $.01 Per Share
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(Title of Class of Securities)
83545G 10 2
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(CUSIP Number)
Peter J. Shea, Esq.; Parker, Poe, Adams & Bernstein, L.L.P.;
2500 Charlotte Plaza, Charlotte, NC 28244;
Telephone (704) 372-9000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 10, 1997
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
[ ].
NOTE. Six copies of this statement, including all exhibits, should be
filed with the Commission. SEE Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Continued on following pages)
Page 1 of 19 Pages
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CUSIP NO. 83545G 10 2 13D Page 2 of 19 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
O. Bruton Smith
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO. See Item 3.
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
5,476,250. See Item 1.
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8 SHARES VOTING POWER
NUMBER OF SHARES -0-
BENEFICIALLY OWNED BY --------------------------------------------------------
EACH REPORTING PERSON 9 SOLE DISPOSITIVE POWER
WITH 5,476,250. See Item 1.
-------------------------------------------------------
10 SHARES DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,476,250 shares. See Item 1.
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.7%. See Item 1.
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP NO. 83545G 10 2 13D Page 3 of 19 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Sonic Financial Corporation; T.I.N. 74-1725259
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC and OO. See Item 3.
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
North Carolina
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NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY 4,440,625. See Item 1.
EACH REPORTING PERSON
WITH
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8 SHARES VOTING POWER
-0-
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9 SOLE DISPOSITIVE POWER
4,440,625. See Item 1.
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10 SHARES DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,440,625 shares. See Item 1.
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
39.5%. See Item 1.
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Schedule is filed with respect to the Class A common
stock, par value $.01 per share (the "Class A Common Stock"),
of Sonic Automotive, Inc., a Delaware corporation (the
"Company"). The persons reporting on this Schedule are the
owners of only Class B common stock, par value $.01 per share
(the "Class B Common Stock" and, together with the Class A
Common Stock, the "Common Stock"), of the Company. Shares of
Class B Common Stock are convertible into an identical number
of shares of Class A Common Stock either at the option of the
holder or upon the happening of certain events. Each share of
Class A Common Stock entitles the holder to one vote per
share. Each share of Class B Common Stock entitles the holder
to ten votes per share, except in certain limited
circumstances. For a discussion of the convertibility, voting
rights and other attributes of the Class B Common Stock, see
the discussion under the caption "Description of Capital
Stock--Common Stock" in the Company's Registration Statement
on Form S-1 (Registration No. 333-33295) (the "Registration
Statement") on file with the Securities and Exchange
Commission, which is incorporated into this Schedule by this
reference. See Exhibit No. 1. The principal executive offices
of the Company are located at 5401 East Independence
Boulevard, Charlotte, North Carolina. The preferred mailing
address of the Company is P.O. Box 18747, Charlotte, North
Carolina 28218.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule is filed on behalf of a group consisting of O.
Bruton Smith, hereinafter referred to as "Mr. Smith," and
Sonic Financial Corporation, hereinafter referred to as "Sonic
Financial." Mr. Smith, a United States citizen, is Chairman
and Chief Executive Officer of the Company, an operator of
multiple automobile dealership franchises whose principal
business address is 5401 East Independence Boulevard,
Charlotte, North Carolina, and the Chairman and Chief
Executive Officer of Speedway Motorsports, Inc., an operator
of several motor speedways and promotor of motor racing events
whose principal business address is U.S. Highway 29 North,
Concord, North Carolina. The address of the principal business
and executive office of Sonic Financial, a North Carolina
corporation, is 5401 East Independence Boulevard, Charlotte,
North Carolina 28218. Sonic Financial maintains a portfolio of
certain real estate and securities investments and is a
holding company for an insurance company.
During the last five years, neither Mr. Smith nor Sonic
Financial has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or been
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction that resulted in a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to
such laws.
Page 4 of 19 Pages
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The 5,476,250 shares of Common Stock reported by this Schedule
as beneficially owned by Mr. Smith (the "Shares") include
7,105 shares (the "Sonic Financial Reorganization Shares")
acquired by Sonic Financial on June 30, 1997 in exchange for
all of the outstanding capital stock and limited liability
company interests, as the case may be, owned by Sonic
Financial of Town & Country Ford, Inc., Fort Mill Ford, LLC,
Lone Star Ford, Inc. and Frontier Oldsmobile-Cadillac, Inc.
and 100 shares of the Company's original common stock, par
value $.01 per share, that had been acquired by Sonic
Financial at the original organization of the Company for
$100.00 on January 30, 1997 (see Exhibit No. 2); and (b)
4,433,520 shares (the "Sonic Financial Dividend Shares" and,
together with the Sonic Financial Reorganization Shares, the
"Sonic Financial Shares") acquired by Sonic Financial as part
of a Class B Common Stock dividend declared by the Company's
Board of Directors on October 16, 1997 (the "Class B
Dividend"). Of the remaining 1,035,625 shares of Common Stock,
1,657 shares (the "Smith Reorganization Shares") were acquired
by Mr. Smith on June 30, 1997 in exchange for all of the
outstanding capital stock owned by Mr. Smith of Marcus David
Corporation (d/b/a Town & Country Toyota) and Fort Mill Ford,
LLC (see Exhibit No. 3) and 1,033,968 shares (the "Smith
Dividend Shares" and together with the Smith Reorganization
Shares, the "Smith Shares") were acquired as part of the Class
B Dividend.
ITEM 4. PURPOSE OF TRANSACTION.
Mr. Smith acquired the Shares in a reorganization and capital
restructuring of the Company incident to the Company's initial
public offering of its Class A Common Stock (the "IPO"). His
purpose in acquiring the Shares was to continue his control of
the Company. Except as indicated below (and as described in
the Registration Statement), Mr. Smith and Sonic Financial
have no present plans or proposals that relate to or would
result in:
(a) the acquisition by any person of additional securities of
the Company, or the disposition of securities of the Company,
except as may be negotiated by the Company in connection with
future acquisitions by the Company;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of
its subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries;
(d) any change in the present Board of Directors or management
of the Company, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies
on the board, except to increase the board from its present
four directors and thereafter appoint outside directors and
the Company's Executive Vice President as a director;
Page 5 of 19 Pages
<PAGE>
(e) any material change in the present capitalization or
dividend policy of the Company;
(f) any other material change in the Company's business or
corporate structure;
(g) changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Company by any person;
(h) causing a class of securities of the Company to be
delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of
a registered national securities association;
(i) a class of equity securities of the Company becoming
eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, as amended;
or
(j) any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The 5,476,250 Shares constitute approximately 48.7% of the
Common Stock outstanding at the date of filing of this
Schedule and represent approximately 81.1% of the combined
voting power of the Common Stock (in those circumstances in
which the Class B Common Stock has ten votes per share). The
4,440,625 Sonic Financial Shares constitute approximately
39.5% of the Common Stock outstanding at the date of filing of
this Schedule and represent approximately 65.8% of the
combined voting power of the Common Stock (in those
circumstances in which the Class B Common Stock has ten votes
per share).
Mr. Smith and Sonic Financial have effected no transactions in
the Common Stock during the past 60 days, except as explained
in Item 3.
Mr. Smith has sole voting and dispositive power over the
Shares. Sonic Financial has sole voting and dispositive power
over the Sonic Financial Shares. But see Item 6.
ITEM 6. CONTRACTS, ARRANGEMENTS. UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
Mr. Smith owns, of record and beneficially, the substantial
majority of Sonic Financial's outstanding capital stock.
Mr. Smith and Sonic Financial have entered into a Registration
Rights Agreement dated as of June 30, 1997 (the "Registration
Rights Agreement") with the Company, B. Scott Smith and Egan
Group LLC. Subject to certain limitations, the Registration
Rights Agreement provides Mr. Smith, Sonic Financial, B. Scott
Smith and Egan
Page 6 of 19 Pages
<PAGE>
Group LLC with certain piggyback registration rights that
permit them to have their shares of Common Stock, as selling
security holders, included in any registration statement
pertaining to the registration of Class A Common Stock for
issuance by the Company or resale by other selling security
holders, with the exception of registration statements on
Forms S-4 and S-8 relating to exchange offers (and certain
other transactions) and employee stock compensation plans,
respectively. These registration rights will be limited or
restricted to the extent an underwriter of an offering, if an
underwritten offering, or the Company's Board of Directors, if
not an underwritten offering, determines that the amount to be
registered by Sonic Financial, Mr. Smith, B. Scott Smith and
Egan Group, LLC would not permit the sale of Class A Common
Stock in the quantity and at the price originally sought by
the Company or the original selling security holders, as the
case may be. The Registration Rights Agreement expires on the
tenth anniversary of the closing of the IPO, which occurred on
November 17, 1997.
Mr. Smith and Sonic Financial have each signed letter
agreements dated as of November 10, 1997 (the "Lock Up
Agreements") with Merrill Lynch & Co., Merrill Lynch, Pierce
Fenner & Smith Incorporated, NationsBanc Montgomery
Securities, Inc. and Wheat, First Securities, Inc., as the
U.S. representatives of the U.S. underwriters of the Company's
IPO and Merrill Lynch International, NationsBanc Montgomery
Securities, Inc. and Wheat, First Securities, Inc., as the
lead managers of the international managers of the Company's
IPO. Under the Lock Up Agreements, Mr. Smith and Sonic
Financial have agreed, for a period of 180 days from November
10, 1997, not to, without the consent of the IPO underwriters,
(i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of Common Stock or
any securities convertible into or exchangeable or exercisable
for Common Stock, whether now owned or hereafter acquired by
the undersigned or with respect to which the undersigned has
or hereafter acquires the power of disposition, or file any
registration statement under the Securities Act of 1933, as
amended, with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of
Common Stock or other securities, in cash or otherwise.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No. Description
1 "Description of Capital Stock--
Common Stock" excerpted from the
Registration Statement on Form S-1
of Sonic Automotive, Inc.
(Registration No. 333-33295)
2 Subscription Agreement between
Sonic Financial and the Company
dated June 30, 1997
Page 7 of 19 Pages
<PAGE>
3 Subscription Agreement between Mr.
Smith and the Company dated June
30, 1997
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true, complete
and correct.
Date: November 18, 1997
/s/ O. Bruton Smith
--------------------
O. Bruton Smith
SONIC FINANCIAL CORPORATION
By:/s/ William R. Brooks
----------------------
William R. Brooks
Vice President
Page 8 of 19 Pages
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ---------- ----------- --------
1 "Description of Capital Stock--Common Stock" excerpted 10
from the Registration Statement on Form S-1 of Sonic
Automotive, Inc. (Registration No. 333-33295)
2 Subscription Agreement between Sonic Financial and the 12
Company dated June 30, 1997
3 Subscription Agreement between Mr. Smith and the Company 16
dated June 30, 1997
Page 9 of 19 Pages
<PAGE>
<PAGE> EXHIBIT 1
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of (i) 50,000,000 shares of
Class A Common Stock, $.01 par value, (ii) 15,000,000 shares of Class B Common
Stock, $.01 par value, and (iii) 3,000,000 shares of Preferred Stock, $.10 par
value. Upon completion of this Offering, the Company will have 5,000,000
outstanding shares of Class A Common Stock and 6,250,000 outstanding shares of
Class B Common Stock and no outstanding shares of preferred stock (assuming the
Underwriters' over-allotment option is not exercised).
The following summary description of the Company's capital stock does not
purport to be complete and is qualified in its entirety by reference to the
Company's Certificate, which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and Delaware Law. Reference is
made to such exhibit and Delaware Law for a detailed description of the
provisions thereof summarized below.
Common Stock
The Company's Class A Common Stock and Class B Common Stock are equal in
all respects except for voting rights, conversion rights of the Class B Common
Stock and as required by law, as discussed more fully below.
Voting Rights; Conversion of Class B Common Stock to Class A Common Stock
The voting powers, preferences and relative rights of the Class A Common
Stock and the Class B Common Stock are subject to the following provisions.
Holders of Class A Common Stock have one vote per share on all matters submitted
to a vote of the stockholders of the Company. Holders of Class B Common Stock
are entitled to ten votes per share except as described below. Holders of all
classes of Common Stock entitled to vote will vote together as a single class on
all matters presented to the stockholders for their vote or approval except as
otherwise required by Delaware Law. There is no cumulative voting with respect
to the election of directors. In the event any shares of Class B Common Stock
held by a member of the Smith Group (as defined below) are transferred outside
of the Smith Group, such shares will automatically be converted into shares of
Class A Common Stock. In addition, if the total number of shares of Common Stock
held by members of the Smith Group is less than 15% of the total number of
shares of Common Stock outstanding, all of the outstanding shares of Class B
Common Stock automatically will be reclassified as Class A Common Stock. In any
merger, consolidation or business combination, the consideration to be received
per share by holders of Class A Common Stock must be identical to that received
by holders of Class B Common Stock, except that in any such transaction in which
shares of common stock are distributed, such shares may differ as to voting
rights to the extent that voting rights now differ between the classes of Common
Stock.
Notwithstanding the foregoing, the holders of Class A Common Stock and
Class B Common Stock vote as a single class, with each share of each class
entitled to one vote per share, with respect to any transaction proposed or
approved by the Board of Directors of the Company or proposed by or on behalf of
holders of the Class B Common Stock or as to which any member of the Smith Group
or any affiliate thereof has a material financial interest other than as a then
existing stockholder of the Company constituting a (a) "going private"
transaction, (b) sale or other disposition of all or substantially all of the
Company's assets, (c) sale or transfer which would cause the nature of the
Company's business to be no longer primarily oriented toward automobile
dealership operations and related activities or (d) merger or consolidation of
the Company in which the holders of the Common Stock will own less than 50% of
the Common Stock following such transaction. A "going private" transaction is
defined as any "Rule 13e-3 Transaction," as such term is defined in Rule 13e-3
promulgated under the Securities Exchange Act of 1934. An "affiliate" is defined
as (i) any individual or entity who or that, directly or indirectly, controls,
is controlled by, or is under common control with any member of the Smith Group,
(ii) any corporation or organization (other than the Company or a majority-owned
subsidiary of the Company) of which any member of the Smith Group is an officer
partner or is, directly or indirectly, the beneficial owner of 10% or more of
any class of voting securities, or in which any member of the Smith Group has a
substantial beneficial interest, (iii) a voting trust or similar arrangement
pursuant to which any member of the Smith Group generally controls the vote of
the shares of Common Stock held by or subject to such trust or arrangement, (iv)
any other trust or estate in which any member of the Smith Group has a
substantial beneficial interest or as to which any member of the Smith Group
serves as trustee or in a similar fiduciary capacity, or (v) any relative or
spouse of any member of the Smith Group or any relative of such spouse, who has
the same residence as any member of the Smith Group.
As used in this Prospectus, the term the "Smith Group" consists of the
following persons: (i) Mr. Smith and his guardian, conservator, committee, or
attorney-in-fact; (ii) William S. Egan and his guardian, conservator, committee,
or attorney-in-fact; (iii) each lineal descendant of Messrs. Smith and Egan (a
"Descendant") and their respective guardians, conservators,
10 of 19 Pages
<PAGE>
committees or attorneys-in-fact; and (iv) each "Family Controlled Entity" (as
defined below). The term "Family Controlled Entity" means (i) any not-for-profit
corporation if at least 80% of its board of directors is composed of Mr. Smith,
Mr. Egan and/or Descendants; (ii) any other corporation if at least 80% of the
value of its outstanding equity is owned by members of the Smith Group; (iii)
any partnership if at least 80% of the value of the partnership interests are
owned by members of the Smith Group; and (iv) any limited liability or similar
company if at least 80% of the value of the company is owned by members of the
Smith Group. For a discussion of the effects of the disproportionate voting
rights of the Common Stock, see "Risk Factors -- Concentration of Voting Power
and Antitakeover Provisions."
Under the Company's Certificate and Delaware Law, the holders of Class A
Common Stock and/or Class B Common Stock are each entitled to vote as a separate
class, as applicable, with respect to any amendment to the Company's Certificate
that would increase or decrease the aggregate number of authorized shares of
such class, increase or decrease the par value of the shares of such class, or
modify or change the powers, preferences or special rights of the shares of such
class so as to affect such class adversely.
Dividends
Holders of the Class A Common Stock and the Class B Common Stock are
entitled to receive ratably such dividends, if any, as are declared by the
Company's Board of Directors out of funds legally available for that purpose,
provided, that dividends paid in shares of Class A Common Stock or Class B
Common Stock shall be paid only as follows: shares of Class A Common Stock shall
be paid only to holders of Class A Common Stock and shares of Class B Common
Stock shall be paid only to holders of Class B Common Stock. The Company's
Certificate provides that if there is any dividend, subdivision, combination or
reclassification of either class of Common Stock, a proportionate dividend,
subdivision, combination or reclassification of the other class of Common Stock
shall simultaneously be made.
Other Rights
Stockholders of the Company have no preemptive or other rights to subscribe
for additional shares. In the event of the liquidation, dissolution or winding
up of the Company, holders of Class A Common Stock and Class B Common Stock are
entitled to share ratably in all assets available for distribution to holders of
Common Stock after payment in full of creditors. No shares of any class of
Common Stock are subject to a redemption or a sinking fund. All outstanding
shares of Common Stock are, and all shares offered by this Prospectus will be,
when sold, validly issued, fully paid and nonassessable.
Transfer Agent and Registrar
The Company has appointed First Union National Bank as the transfer agent
and registrar for the Class A Common Stock. The Company has not appointed a
transfer agent for the Class B Common Stock.
Preferred Stock
No shares of preferred stock are outstanding. The Company's Certificate
authorizes the Board of Directors to issue up to 3,000,000 shares of preferred
stock in one or more series and to establish such designations and such relative
voting, dividend, liquidation, conversion and other rights, preferences and
limitations as the Board of Directors may determine without further approval of
the stockholders of the Company. The issuance of preferred stock by the Board of
Directors could, among other things, adversely affect the voting power of the
holders of Class A Common Stock and, under certain circumstances, make it more
difficult for a person or group to gain control of the Company. See "Risk
Factors -- Concentration of Voting Power and Anti-takeover Provisions."
The issuance of any series of preferred stock, and the relative
designations, rights, preferences and limitations of such series, if and when
established, will depend upon, among other things, the future capital needs of
the Company, the then-existing market conditions and other factors that, in the
judgment of the Board of Directors, might warrant the issuance of preferred
stock. At the date of this Prospectus, there are no plans, agreements or
understandings for the issuance of any shares of preferred stock.
Delaware Law, Certain Charter and Bylaw Provisions and Certain Franchise
Agreement Provisions
Certain provisions of Delaware Law and of the Company's Certificate and
Bylaws, summarized in the following paragraphs, may be considered to have an
antitakeover effect and may delay, deter or prevent a tender offer, proxy
contest or other takeover attempt that a stockholder might consider to be in
such stockholder's best interest, including such an attempt as might result in
payment of a premium over the market price for shares held by stockholders.
Page 11 of 19 Pages
<PAGE>
EXHIBIT 2
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement"), dated as of June 30,
1997, by and between SONIC AUTO WORLD, INC., a Delaware corporation (the
"Corporation"), and SONIC FINANCIAL CORPORATION, a North Carolina corporation
("SFC"), sets forth the terms and conditions of SFC's subscription for the
capital stock of the Corporation.
WHEREAS, subject to the filing of a Certificate of Amendment (the
"Certificate") to the Certificate of Incorporation of the Corporation, such
Certificate to be substantially in the form attached hereto as Exhibit A, with
and by the Secretary of State of the State of Delaware in accordance with
applicable law, the authorized capital stock of the Corporation consists of (i)
50,000,000 shares of Class A Common Stock with par value of $.01 per share, (ii)
15,000,000 shares of Class B Common Stock with par value of $.01 per share, (the
"Class B Common Stock"), and (iii) 3,000,000 shares of preferred stock with par
value of $.10 per share;
WHEREAS, SFC is the owner of (i) certain shares of the common stock
(the "SAW Shares") of the Corporation, (ii) certain shares of the common stock
(the "TCF Shares") of Town and Country Ford, Inc., a North Carolina corporation
("TCF"), (iii) certain shares of the common stock (the "Lone Star Shares") of
Lone Star Ford, Inc., a Texas Corporation ("Lone Star"), (iv) certain shares of
the common stock (the "Frontier Shares") of Frontier Oldsmobile-Cadillac, Inc.,
a North Carolina corporation ("Frontier"), and (v) certain shares of the common
stock (the "FMF Management Shares") of FMF Management, Inc., a South Carolina
corporation ("FMF Management") (the SAW Shares, TCF Shares, Lone Star Shares,
Frontier Shares and FMF Management Shares, collectively, the "SFC Shares");
WHEREAS, in connection with a proposed reorganization of the operations
of the Corporation and various automobile dealerships and the entities having
interests therein substantially as outlined on Exhibit B hereto (the
"Reorganization"), the parties hereto propose to effect an exchange of the SFC
Shares for Class B Common Stock as described herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties to this Agreement
hereby agree as follows:
1. SUBSCRIPTION FOR SHARES. SFC hereby subscribes to and agrees to
purchase 7,105 shares of the Class B Common Stock in consideration for the
transfer to the Corporation of all of the SFC Shares (the "SFC Transfer"). SFC
hereby agrees to take all actions necessary to effect the SFC Transfer. The
Corporation hereby accepts the subscription by SFC for 7,105 shares of the Class
B Common Stock and agrees that, upon consummation of the SFC Transfer, the
Corporation will issue SFC a stock certificate representing 7,105 shares of the
Class B Common Stock and that upon issuance such shares will be validly issued,
fully paid and non-assessable.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SFC. SFC hereby
represents, warrants and covenants that:
Page 12 of 19 Pages
<PAGE>
(a) It has good and valid title to all of the SFC Shares, free
and clear of all liens, pledges, encumbrances, claims, security
interests, charges, voting trusts, voting agreements, other agreements,
rights, options, warrants or restrictions or claims of any kind, nature
or description and that all such SFC Shares, in respect of each of the
Corporation, TCF, Lone Star, Frontier and FMF Management, as
applicable, are validly issued, fully paid and non-assessable;
(b) It is purchasing the Class B Common Stock hereby
subscribed for investment only, for its own account, and not with a
view to the distribution thereof;
(c) It understands that the Class B Common Stock hereby
subscribed will be issued without registration with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as
amended (the "Act"), and will be issued under one or more exemptions
from registration in the Act and state securities laws that depend upon
the intent hereby represented and that the Corporation will rely on
such representation in issuing such Class B Common Stock without
registration;
(d) It will make no transfer of its securities acquired
hereunder in violation of the Act, any rules of the SEC, any state
securities law or statute or this Agreement, and will not offer, sell,
mortgage, pledge or otherwise dispose of the securities it acquires
hereunder, unless, in the opinion of counsel satisfactory to the
Corporation, registration under applicable federal or state securities
laws is not required; and
(e) It agrees that the stock certificate issued pursuant to
this Agreement, and any replacements thereof, may be marked with a
legend to the effect that such Class B Common Stock cannot be sold or
transferred without either (i) registration under federal and state
securities laws, or (ii) an opinion of counsel satisfactory to the
Corporation that neither the sale nor the proposed transfer constitutes
a violation of any federal or state securities law.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE CORPORATION. The Corporation hereby represents,
warrants and covenants that:
(a) It is purchasing the stock of the Corporation, TCF, Lone
Star, Frontier and FMF Management hereby for investment only, for its
own account, and not with a view to the distribution thereof;
(b) It understands that the stock of the Corporation, TCF,
Lone Star, Frontier and FMF Management will be transferred without
registration with the SEC under the Act, and will be transferred under
one or more exemptions from registration in the Act and state
securities laws that depend upon the intent hereby represented and that
SFC will rely on such representation in transferring such stock without
registration;
(c) It will make no transfer of the securities acquired by it
hereunder in violation of the Act, any rules of the SEC, any state
securities law or statute or this Agreement, and will not offer, sell,
mortgage, pledge or otherwise dispose of the securities it acquired
hereunder, unless, in the opinion of counsel satisfactory to SFC,
registration under applicable federal or state securities laws is not
required;
Page 13 of 19 Pages
<PAGE>
(d) Subject to final approval of the Certificate by the
Corporation's sole shareholder and the filing of the Certificate with
the Secretary of State of Delaware, the execution and delivery of this
Agreement and the issuance of the Class B Common Stock by the
Corporation have been duly and validly authorized by the Corporation
and no other action or proceeding on the part of the Corporation is
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby; and
(e) The stock certificates issued to it pursuant to this
Agreement, and any replacements thereof, may be marked with a legend to
the effect that such securities cannot be sold or transferred without
either (i) registration under federal and state securities laws, or
(ii) an opinion of counsel satisfactory to SFC that neither the sale
nor the proposed transfer constitutes a violation of any federal or
state securities law.
4. DETERMINATION OF THE VALUE OF THE SFC SHARES. The parties
acknowledge that the Board of Directors of the Corporation has determined in the
exercise of its reasonable business judgment as of the date hereof the values of
the consideration provided SFC hereunder in relation to the consideration
provided by other subscribers for the Class B Common Stock as of the date hereof
and giving effect to the Reorganization. Therefore, it is understood and agreed
that, after the SFC Transfer and giving effect to the Reorganization, SFC will
own 71.05% of the Class B Common Stock of the Corporation.
5. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to SFC's subscription for Class B Common
Stock of the Corporation and with respect to the SFC Transfer.
6. MODIFICATION. No modification of or
amendment to this Agreement shall be binding unless executed
in writing by both parties.
7. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware.
8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument, and this Agreement
shall be effective when at least one counterpart hereof has been executed by
each of the parties hereto.
Page 14 of 19 Pages
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
SONIC AUTO WORLD, INC.
By:/s/ Theodore M. Wright
-----------------------
Theodore M. Wright, Vice President
SONIC FINANCIAL CORPORATION
By:/s/ William R. Brooks
----------------------
William R. Brooks, Vice President
Page 15 of 19 Pages
<PAGE>
EXHIBIT 3
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement"), dated as of June 30,
1997, by and between SONIC AUTO WORLD, INC., a Delaware corporation (the
"Corporation"), and O. BRUTON SMITH, a resident of the State of North Carolina
("Smith"), sets forth the terms and conditions of Smith's subscription for the
capital stock of the Corporation.
WHEREAS, subject to the filing of a Certificate of Amendment (the
"Certificate") to the Certificate of Incorporation of the Corporation, such
Certificate to be substantially in the form attached hereto as Exhibit A, with
and by the Secretary of State of the State of Delaware in accordance with
applicable law, the authorized capital stock of the Corporation consists of (i)
50,000,000 shares of Class A Common Stock with par value of $.01 per share, (ii)
15,000,000 shares of Class B Common Stock with par value of $.01 per share, (the
"Class B Common Stock"), and (iii) 3,000,000 shares of preferred stock with par
value of $.10 per share;
WHEREAS, Smith is the owner of (i) certain shares of the common stock
(the "MDC Shares") of Marcus David Corporation, a North Carolina corporation
("MDC"), and (ii) certain shares of the common stock (the "FMF Management
Shares") of FMF Management, Inc., a South Carolina corporation ("FMF
Management") (the MDC Shares and FMF Management Shares, collectively, the "Smith
Shares");
WHEREAS, in connection with a proposed reorganization of the operations
of the Corporation and various automobile dealerships and the entities having
interests therein substantially as outlined on Exhibit B hereto (the
"Reorganization"), the parties hereto propose to effect an exchange of the Smith
Shares for Class B Common Stock as described herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties to this Agreement
hereby agree as follows:
1. SUBSCRIPTION FOR SHARES. Smith hereby subscribes to and agrees to
purchase 1,657 shares of the Class B Common Stock in consideration for the
transfer to the Corporation of all of the Smith Shares (the "Smith Transfer").
Smith hereby agrees to take all actions necessary to effect the Smith Transfer.
The Corporation hereby accepts the subscription by Smith for 1,657 shares of the
Class B Common Stock and agrees that, upon consummation of the Smith Transfer,
the Corporation will issue Smith a stock certificate representing 1,657 shares
of the Class B Common Stock and that upon issuance such shares will be validly
issued, fully paid and non-assessable.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS
OF SMITH. Smith hereby represents, warrants and covenants
that:
(a) Smith has good and valid title to all of the Smith Shares,
free and clear of all liens, pledges, encumbrances, claims, security
interests, charges, voting trusts, voting agreements, other agreements,
rights, options, warrants or restrictions or claims of any kind, nature
or description (except for any of the foregoing to be released or
otherwise terminated
Page 16 of 19 Pages
<PAGE>
pursuant to the Reorganization), and that all such Smith Shares, in
respect of each of MDC and FMF Management, as applicable, are validly
issued, fully paid and non-assessable;
(b) He is purchasing the Class B Common Stock hereby
subscribed for investment only, for his own account, and not with a
view to the distribution thereof;
(c) He understands that the Class B Common Stock hereby
subscribed will be issued without registration with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as
amended (the "Act"), and will be issued under one or more exemptions
from registration in the Act and state securities laws that depend upon
the intent hereby represented and that the Corporation will rely on
such representation in issuing such Class B Common Stock without
registration;
(d) He will make no transfer of his securities acquired
hereunder in violation of the Act, any rules of the SEC, any state
securities law or statute or this Agreement, and will not offer, sell,
mortgage, pledge or otherwise dispose of the securities he acquires
hereunder, unless, in the opinion of counsel satisfactory to the
Corporation, registration under applicable federal or state securities
laws is not required; and
(e) He agrees that the stock certificate issued pursuant to
this Agreement, and any replacements thereof, may be marked with a
legend to the effect that such Class B Common Stock cannot be sold or
transferred without either (i) registration under federal and state
securities laws, or (ii) an opinion of counsel satisfactory to the
Corporation that neither the sale nor the proposed transfer constitutes
a violation of any federal or state securities law.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE CORPORATION. The Corporation hereby represents,
warrants and covenants that:
(a) It is purchasing the stock of MDC and FMF Management
hereby for investment only, for its own account, and not with a view to
the distribution thereof;
(b) It understands that the stock of MDC and FMF Management
will be transferred without registration with the SEC under the Act,
and will be transferred under one or more exemptions from registration
in the Act and state securities laws that depend upon the intent hereby
represented and that Smith will rely on such representation in
transferring such stock without registration;
(c) It will make no transfer of the securities acquired by it
hereunder in violation of the Act, any rules of the SEC, any state
securities law or statute or this Agreement, and will not offer, sell,
mortgage, pledge or otherwise dispose of the securities it acquired
hereunder, unless, in the opinion of counsel satisfactory to Smith,
registration under applicable federal or state securities laws is not
required;
(d) Subject to final approval of the Certificate by the
Corporation's sole shareholder and the filing of the Certificate with
the Secretary of State of Delaware, the execution and delivery of this
Agreement and the issuance of the Class B Common Stock by the
Corporation have been duly and validly authorized by the Corporation
and no other
Page 17 of 19 Pages
<PAGE>
action or proceeding on the part of the Corporation is necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby; and
(e) The stock certificates issued to it pursuant to this
Agreement, and any replacements thereof, may be marked with a legend to
the effect that such securities cannot be sold or transferred without
either (i) registration under federal and state securities laws, or
(ii) an opinion of counsel satisfactory to Smith that neither the sale
nor the proposed transfer constitutes a violation of any federal or
state securities law.
4. DETERMINATION OF THE VALUE OF THE SMITH SHARES. The parties
acknowledge that the Board of Directors of the Corporation has determined in the
exercise of its reasonable business judgment as of the date hereof the values of
the consideration provided Smith hereunder in relation to the consideration
provided by other subscribers for the Class B Common Stock as of the date hereof
and giving effect to the Reorganization. Therefore, it is understood and agreed
that, after the Smith Transfer and giving effect to the Reorganization, Smith
will own 16.57% of the Class B Common Stock of the Corporation.
5. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to Smith's subscription for Class B
Common Stock of the Corporation and with respect to the Smith Transfer.
6. MODIFICATION. No modification of or
amendment to this Agreement shall be binding unless executed
in writing by both parties.
7. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware.
8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument, and this Agreement
shall be effective when at least one counterpart hereof has been executed by
each of the parties hereto.
Page 18 of 19 Pages
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
SONIC AUTO WORLD, INC.
By: /s/ Theodore M. Wright
-----------------------
Theodore M. Wright, Vice President
/s/ O. Bruton Smith
--------------------
O.Bruton Smith
Page 19 of 19 Pages
<PAGE>
