As filed with the Securities and Exchange Commission on December 12, 2000
Registration No. 333-50430 and
Registration Nos. 333-50430-01 through 333-50430-G7.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Sonic Automotive, Inc.
(Exact name of registrant as specified in its charter)
See "Table of Additional Registration" on the following page for information
relating to the subsidiaries of Sonic Automotive, Inc. ("Sonic") that may
guarantee obligations of Sonic on the debt securities registered hereunder.
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Delaware 56-2010790
<S> <C>
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
5401 East Independence Boulevard, P. O. Box 18747 Stephen K. Coss, Vice President and General Counsel
Charlotte, North Carolina 28212 5401 East Independence Boulevard, P. O. Box 18747
Telephone (704) 532-3320 Charlotte, North Carolina 28212
Telephone: (704) 532-3320
(Address, including zip code, and telephone number, (Name, address, including zip code, and telephone
including area code, of registrant's principal executive offices) number, including area code, of agent for service)
</TABLE>
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Copies to:
Gary C. Ivey, Esq.
Parker, Poe, Adams & Bernstein L.L.P.
401 South Tryon Street, Suite 3000
Charlotte, North Carolina 28202
Telephone: (704) 372-9000
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Approximate date of commencement of proposed sale to the public: From time to
time after the registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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The Registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
TABLE OF ADDITIONAL REGISTRANTS
UNDER REGISTRATION STATEMENT ON FORM S-3
The following subsidiaries of Sonic are co-registrants under this
registration statement for the purpose of providing guarantees, if any, of
payments on debt securities registered hereunder:
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Subsidiary State of Organization IRS Employer ID No.
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Autobahn, Inc.................................................. California 94-3124481
Capitol Chevrolet and Imports, Inc............................. Alabama 63-1204447
Cobb Pontiac Cadillac, Inc..................................... Alabama 63-1012553
FA Service Corporation......................................... California 94-3285891
FAA Auto Factory, Inc.......................................... California 94-3285893
FAA Beverly Hills, Inc......................................... California 95-4673054
FAA Capitol N, Inc............................................. California 64-3279958
FAA Concord H, Inc............................................. California 94-3264558
FAA Concord N, Inc............................................. California 94-3266151
FAA Concord T, Inc............................................. California 94-1730939
FAA Dublin N, Inc.............................................. California 94-3267515
FAA Dublin VWD, Inc............................................ California 94-3267514
FAA Holding Corp............................................... California 94-3338764
FAA Las Vegas H, Inc........................................... Nevada 94-3330754
FAA Marin D, Inc............................................... California 94-3320521
FAA Marin F, Inc............................................... California 95-4746388
FAA Marin LR, Inc.............................................. California 94-3345068
FAA Poway D, Inc............................................... California 94-3264557
FAA Poway G, Inc............................................... California 33-0792049
FAA Poway H, Inc............................................... California 94-3265895
FAA Poway T, Inc............................................... California 94-3266152
FAA San Bruno, Inc............................................. California 94-3264556
FAA Santa Monica V, Inc........................................ California 95-4746387
FAA Serramonte H, Inc.......................................... California 94-3293588
FAA Serramonte L, Inc.......................................... California 94-3264555
FAA Serramonte, Inc............................................ California 94-3264554
FAA Stevens Creek, Inc......................................... California 94-3264553
FAA Torrance CPJ, Inc.......................................... California 98-4746385
FAA Woodland Hills VW, Inc..................................... California 95-4711579
FirstAmerica Automotive, Inc................................... Delaware 88-0206732
Fort Mill Chrysler-Plymouth-Dodge Inc.......................... South Carolina 58-2285505
Fort Mill Ford, Inc............................................ South Carolina 62-1289609
Franciscan Motors, Inc......................................... California 77-0112132
Freedom Ford, Inc.............................................. Florida 59-2214873
Frontier Oldsmobile-Cadillac, Inc.............................. North Carolina 56-1621461
HMC Finance Alabama, Inc. ..................................... Alabama 56-2198417
Kramer Motors Incorporated..................................... California 95-2092777
L Dealership Group, Inc........................................ Texas 94-1719069
Marcus David Corporation....................................... North Carolina 56-1708384
Riverside Nissan, Inc.......................................... Oklahoma 73-1079837
Royal Motor Company, Inc....................................... Alabama 63-1012554
Santa Clara Imported Cars, Inc................................. California 94-1705756
Smart Nissan, Inc.............................................. California 94-3256136
Sonic Automotive-Bondesen, Inc................................. Florida 59-3552436
Sonic Automotive of Chattanooga, LLC........................... Tennessee 62-1708471
Sonic Automotive-Clearwater, Inc............................... Florida 59-3501017
Sonic Automotive Collision Center of Clearwater, Inc........... Florida 59-3501024
Sonic Automotive F&I, LLC...................................... Nevada 88-0444271
Sonic Automotive of Georgia, Inc............................... Georgia 58-2399219
Sonic Automotive of Nashville, LLC............................. Tennessee 62-1708481
Sonic Automotive of Nevada, Inc................................ Nevada 88-0378636
Sonic Automotive Servicing Company, LLC........................ Nevada 88-0443690
Sonic Automotive of Tennessee, Inc............................. Tennessee 62-1710960
Sonic Automotive of Texas, L.P................................. Texas 78-0586658
Sonic Automotive West, LLC..................................... Nevada 88-0444344
Sonic Automotive-1307 N. Dixie Hwy., NSB, Inc.................. Florida 59-3523302
Sonic Automotive-1400 Automall Drive, Columbus, Inc............ Ohio 31-1604259
Sonic Automotive-1455 Automall Drive, Columbus, Inc............ Ohio 31-1604276
Sonic Automotive-1495 Automall Drive, Columbus, Inc............ Ohio 31-1604281
Sonic Automotive-1500 Automall Drive, Columbus, Inc............ Ohio 31-1604285
Sonic Automotive-1720 Mason Ave., DB, Inc...................... Florida 59-3523303
Sonic Automotive-1720 Mason Ave., DB, LLC...................... Florida 57-1072509
Sonic Automotive-1919 N. Dixie Hwy., NSB, Inc.................. Florida 59-3523301
Sonic Automotive-21699 U.S. Hwy 19 N., Inc..................... Florida 59-3501021
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Sonic Automotive-241 Ridgewood Ave., HH, Inc................... Florida 59-3523304
Sonic Automotive 2424 Laurens Rd., Greenville, Inc............. South Carolina 58-2384994
Sonic Automotive-2490 South Lee Highway, LLC................... Tennessee 62-1708486
Sonic Automotive 2752 Laurens Rd., Greenville, Inc............. South Carolina 58-2384996
Sonic Automotive-3401 N. Main, TX, L.P......................... Texas 76-0586794
Sonic Automotive-3700 West Broad Street, Columbus, Inc......... Ohio 31-1604296
Sonic Automotive-3741 S. Nova Rd., PO, Inc..................... Florida 59-3532504
Sonic Automotive-4000 West Broad Street, Columbus, Inc......... Ohio 31-1604301
Sonic Automotive-4701 I-10 East, TX, L.P....................... Texas 76-0586659
Sonic Automotive-5221 I-10 East, TX, L.P....................... Texas 76-0586795
Sonic Automotive 5260 Peachtree Industrial Blvd., LLC.......... Georgia 62-1716095
Sonic Automotive-5585 Peachtree Industrial Blvd., LLC.......... Georgia 58-2459799
Sonic Automotive-6008 N. Dale Mabry, FL, Inc................... Florida 59-3535965
Sonic Automotive-6025 International Drive, LLC................. Tennessee 62-1708490
Sonic Automotive-9103 E. Independence, NC, LLC................. North Carolina 56-2103562
Sonic-2185 Chapman Rd., Chattanooga, LLC....................... Tennessee 56-2126660
Sonic-Camp Ford, L.P........................................... Texas 76-0613472
Sonic-Carrollton V, L.P........................................ Texas 75-2896744
Sonic Chrysler-Plymouth-Jeep, LLC.............................. North Carolina 56-2044997
Sonic-Classic Dodge, Inc....................................... Alabama 56-2139902
Sonic Dodge, LLC............................................... North Carolina 56-2044965
Sonic-Fitzgerald Chevrolet, LLC................................ North Carolina 56-2140030
Sonic-FM Automotive, LLC....................................... Florida 59-3535971
Sonic-FM , Inc................................................. Florida 65-0938819
Sonic-FM Nissan, Inc........................................... Florida 65-0938818
Sonic-FM VW, Inc............................................... Florida 65-0938821
Sonic-Fort Worth T, L.P........................................ Texas 75-2897202
Sonic-Freeland, Inc............................................ Florida 65-0938812
Sonic-Global Imports, L.P...................................... Georgia 58-2436174
Sonic-Glover, Inc.............................................. Oklahoma 74-2936323
Sonic-Integrity Dodge LV, LLC.................................. Nevada 88-0430677
Sonic-Las Vegas C East, LLC.................................... Nevada 88-0470273
Sonic-Las Vegas C West, LLC.................................... Nevada 88-0470284
Sonic-Lloyd Nissan, Inc........................................ Florida 59-3560057
Sonic-Lloyd Pontiac-Cadillac, Inc.............................. Florida 59-3560058
Sonic-Lute Riley, L. P......................................... Texas 75-2812871
Sonic-Manhattan Fairfax, Inc................................... Virginia 52-2173072
Sonic-Manhattan Waldorf, Inc................................... Maryland 52-2172032
Sonic-Montgomery FLM, Inc...................................... Alabama 56-2169250
Sonic-Newsome Chevrolet World, Inc............................. South Carolina 57-1077344
Sonic-Newsome of Florence, Inc................................. South Carolina 57-1077343
Sonic-North Charleston, Inc.................................... South Carolina 58-2460639
Sonic-North Charleston Dodge, Inc.............................. South Carolina 58-2479700
Sonic Peachtree Industrial Blvd., L.P.......................... Georgia 56-2089761
Sonic-Reading, L.P............................................. Texas 76-0605765
Sonic-Richardson F, L.P........................................ Texas 75-2901775
Sonic-Riverside, Inc........................................... Oklahoma 73-1574888
Sonic-Riverside Auto Factory, Inc.............................. Oklahoma 73-1591124
Sonic-Rockville Imports, Inc................................... Maryland 52-2172034
Sonic-Rockville Motors, Inc.................................... Maryland 52-2172033
Sonic-Sam White Nissan, L.P.................................... Texas 76-0597722
Sonic-Sam White Oldsmobile, L.P................................ Texas 76-0597723
Sonic-Shottenkirk, Inc......................................... Florida 56-3575773
Sonic-Stevens Creek B, Inc..................................... California 94-2261540
Sonic-Superior Oldsmobile, LLC................................. Tennessee 56-2122487
Sonic of Texas, Inc............................................ Texas 78-0586661
Sonic-Volvo LV, LLC............................................ Nevada 88-0437180
Sonic-Williams Buick, Inc...................................... Alabama 63-1213085
Sonic-Williams Cadillac, Inc................................... Alabama 63-1213084
Sonic-Williams Imports, Inc.................................... Alabama 63-1213083
Sonic-Williams Motors, LLC..................................... Alabama 63-1213161
Speedway Chevrolet, Inc........................................ Oklahoma 73-1590233
SRE Alabama-2, LLC............................................. Alabama 56-2202484
SRE Alabama-3, LLC............................................. Alabama 56-2206042
SRealEstate Arizona-1, LLC..................................... Arizona 86-0996112
SRealEstate Arizona-2, LLC..................................... Arizona 88-0468215
SRealEstate Arizona-3, LLC..................................... Arizona 88-0468217
SRealEstate Arizona-4, LLC..................................... Arizona 88-0468213
SRE Florida-1, LLC............................................. Florida 58-2560889
SRE Florida-2, LLC............................................. Florida 58-2560900
SRE Florida-3, LLC............................................. Florida 58-2560868
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SRE Georgia-1, L.P............................................. Georgia 58-2560891
SRE Georgia-2, L.P............................................. Georgia 58-2555514
SRE Georgia-3, L.P............................................. Georgia 58-2554985
SRE Holding, LLC............................................... North Carolina 56-2198745
SRE Nevada-1, LLC.............................................. Nevada 88-0468209
SRE Nevada-2, LLC.............................................. Nevada 88-0465280
SRE Nevada-3, LLC.............................................. Nevada 88-0465279
SRE South Carolina-1, LLC...................................... South Carolina 58-2552061
SRE South Carolina-2, LLC...................................... South Carolina 58-2560892
SRE Tennessee-1, LLC........................................... Tennessee 56-2200186
SRE Tennessee-2, LLC........................................... Tennessee 56-2202429
SRE Tennessee-3, LLC........................................... Tennessee 56-2202479
SRE Texas-1, L.P............................................... Texas 74-2962385
SRE Texas-2, L.P............................................... Texas 74-2963860
SRE Texas-3, L.P............................................... Texas 74-2963859
SRE Virginia-1, LLC............................................ Virginia 52-2252370
Stevens Creek Cadillac, Inc.................................... California 77-0093380
Town and Country Chrysler-Plymouth-Jeep, LLC................... Tennessee 62-1708483
Town and Country Chrysler-Plymouth-Jeep of Rock Hill, Inc...... South Carolina 56-2044964
Town and Country Dodge of Chattanooga, LLC..................... Tennessee 62-1708487
Town and Country Ford, Incorporated............................ North Carolina 56-0887416
Town and Country Ford of Cleveland, LLC........................ Tennessee 62-1708484
Town and Country Jaguar, LLC................................... Tennessee 62-1708491
Transcar Leasing, Inc.......................................... California 94-2713550
Village Imported Cars, Inc..................................... Maryland 52-0896186
Windward, Inc.................................................. Hawaii 94-2659042
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<PAGE>
PROSPECTUS
SONIC AUTOMOTIVE, INC.
DEBT SECURITIES, PREFERRED STOCK,
CLASS A COMMON STOCK, WARRANTS TO
PURCHASE CLASS A COMMON STOCK,
GUARANTEES OF DEBT SECURITIES
Through this prospectus, we may periodically offer and sell:
o our debt securities;
o shares of our preferred stock;
o shares of our Class A common stock;
o warrants to purchase our Class A common stock; and
o guarantees by our subsidiaries of our debt securities.
The offering price of all securities we issue under this prospectus may
not exceed $300,000,000. We will provide the specific terms of these securities
in supplements to this prospectus. This prospectus may be used to offer and sell
securities only if accompanied by the prospectus supplement for those
securities. You should read this prospectus and any prospectus supplement
carefully before you invest in any of these securities.
In addition, the selling stockholders who are identified in this
prospectus may offer and sell all of the shares of Class A common stock offered
by them under this prospectus from time to time. We previously issued these
shares in connection with our acquisitions of the selling stockholders'
businesses. We are registering the offer and sale of the selling stockholders'
shares to satisfy our contractual obligations to provide the selling
stockholders with freely tradable shares. We will not receive any of the
proceeds from the sale of the selling stockholders' shares. We do not know when
the proposed sale of the shares by the selling stockholders will occur.
Our Class A common stock trades on the New York Stock Exchange under the
symbol "SAH." We will list any shares of our Class A common stock we sell under
this prospectus on the New York Stock Exchange. If we decide to list or seek a
quotation for any other securities, the prospectus supplement will disclose the
exchange or market on which such securities will be listed or quoted. The last
sale price of our Class A common stock on the New York Stock Exchange on
December 8, 2000 was $7.75 per share. You are urged to obtain current market
data.
Investing in our securities involves risks that are described in the
"Risk Factors" section beginning on page 5 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectus is dated December 11, 2000.
<PAGE>
TABLE OF CONTENTS
Page
About This Prospectus............................................ 2
Where You Can Find More Information About Sonic.................. 3
Cautionary Notice Regarding Forward-Looking Statements........... 4
The Company...................................................... 5
Risk Factors..................................................... 5
Use of Proceeds.................................................. 20
Ratios of Earnings to Fixed Charges.............................. 20
Description of Debt Securities................................... 20
Description of Capital Stock..................................... 28
Description of Warrants.......................................... 32
Certain Manufacturers Restrictions............................... 34
Selling Stockholders............................................. 35
Plan of Distribution............................................. 35
Legal Matters.................................................... 36
Experts.......................................................... 36
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf registration process, we may sell any combination of the
securities described in this prospectus in one or more offerings up to a total
dollar amount of $300,000,000 and the selling stockholders may collectively sell
up to 57,976 shares of Class A common stock in one or more offerings. This
prospectus provides you with a general description of the securities we may
offer. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of the offering and the
securities. The prospectus supplement may also add, update or change information
contained in this prospectus. Any statement that we make in this prospectus will
be modified or superseded by any inconsistent statement made by us in a
prospectus supplement. You should read both this prospectus and any prospectus
supplement together with additional information described under the heading
"Where You Can Find More Information About Sonic."
--------------
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We will not make an offer
to sell these securities (1) in any jurisdiction where the offer or sale is not
permitted, (2) where the person making the offer is not qualified to do so, or
(3) to any person who cannot legally be offered the securities. You should
assume that the information appearing in this prospectus is accurate only as of
the date on the front cover of this prospectus. Our business, financial
condition, results of operations and prospects may have changed since that date.
This prospectus is based on information provided by us and other sources
that we believe are reliable. However, we cannot assure you that the information
is accurate or complete. For example, in preparing estimates of market share and
industry data, we utilized third party sources when possible, but cannot verify
some of the estimates through independent sources.
You should not consider any information in this prospectus to be legal,
business or tax advice. You should consult your own attorney, business advisor
and tax advisor for legal, business and tax advice regarding an investment in
the Company's securities.
You should base your decision to invest in the Company's securities
solely on information contained in this prospectus, related prospectus
supplement and information incorporated by reference herein and therein
No representation or warranty, express or implied, is made as to the
accuracy or completeness of the information set forth herein, and nothing
contained in this prospectus is, or shall be relied upon as, a promise or
representation, whether as to the past or the future.
2
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WHERE YOU CAN FIND MORE INFORMATION ABOUT SONIC
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. These reports and
information relate to our business, financial condition and other matters. You
may read and copy these reports, proxy statements and other information at the
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. You may obtain information on the operation
of the Commission's Public Reference Room in Washington, D.C. by calling the
Commission at 1-800-SEC-0330. Copies may be obtained from the Commission by
paying the required fees. The Commission maintains an internet web site that
contains reports, proxy and information statements and other information
regarding us and other registrants that file electronically with the Commission.
The Commission's web site is http://www.sec.gov. Information that we file with
the Commission may also be read and copied at the offices of the New York Stock
Exchange at 20 Broad Street, New York, New York 10005.
The Commission allows us to "incorporate by reference" the information
we file with them, which means that we can disclose important information to you
by referring to documents we have previously filed with the Commission. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the Commission will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), until we decide or terminate this offering
earlier:
(1) Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999 (File No. 1-13395);
(2) Our Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2000;
(3) Our Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2000;
(4) Our Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2000;
(5) Our Current Report on Form 8-K/A filed January 18, 2000 (Manhattan
and Freeland acquisitions);
(6) Our Current Report on Form 8-K/A filed January 27, 2000 (FirstAmerica
acquisition);
(7) Our Current Report on Form 8-K filed September 15, 2000;
(8) The combined financial statements of Williams Automotive Group,
the financial statements of Economy Cars, Inc., the financial statements of
Global Imports, Inc., the combined financial statements of Newsome Automotive
Group, the combined financial statements of Lloyd Automotive Group and the
financial statements of Lute Riley Motors, Inc., included in our Amendment No. 1
to our Registration Statement on Form S-3 (Registration No. 333-71803) filed
April 9, 1999;
(9) Our Definitive Proxy Statement dated May 1, 2000; and
(10) The description of our Class A common stock contained in our
registration statement on Form 8-A, as amended, filed with the Commission
pursuant to Section 12 of the Exchange Act.
We will provide upon request a free copy of any or all of the documents
incorporated by reference in this prospectus (excluding exhibits to such
documents unless such exhibits are specifically incorporated by reference) to
anyone who receives this prospectus. Written or telephone requests should be
directed to Mr. Todd Atenhan, Director of Investor Relations, P.O. Box 18747,
Charlotte, North Carolina 28218, Telephone (888) 766-4218.
This prospectus is a part of our registration statement on Form S-3 filed
with the Commission. This prospectus does not contain all of the information set
forth in the registration statement and the exhibits to the registration
statement. Statements about the contents of contracts or other documents
contained in this prospectus or in any other filing to which we refer you are
not necessarily complete. You should review the actual copy of these documents
filed as an exhibit to the registration statement or such other filing. You may
obtain a copy of the registration statement and the exhibits filed with it from
the Commission at any of the locations listed above.
3
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CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are not historical facts, but only predictions and generally can be
identified by use of statements that include words such as "believe," "expect,"
"anticipate," "intend," "plan," "foresee" or other words or phrases of similar
import. Similarly, statements that describe our objectives, plans or goals are
also forward-looking statements. We intend such forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements contained
in the Private Litigation Securities Reform Act of 1995, and we are including
this statement for purposes of complying with these safe harbor provisions.
These statements appear in a number of places in this prospectus and include
statements regarding our intent, belief or current expectations, or those of our
directors or officers, with respect to, among other things:
o our potential acquisitions;
o trends in our industry;
o our financing plans;
o the effect of the Internet on our business and our ability to implement
our Internet business strategy;
o trends affecting our financial condition or results of operations; and
o our business and growth strategies.
You are cautioned that these forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those projected in the forward-looking
statements as a result of various factors. Among others, factors that could
materially adversely affect actual results and performance include:
o local and regional economic conditions in the areas we serve;
o the level of consumer spending;
o our relationships with manufacturers;
o high competition;
o site selection and related traffic and demographic patterns;
o inventory management and turnover levels;
o the effect of the Internet on our business;
o realization of cost savings; and
o our success in integrating recent and potential future acquisitions,
including integration of acquired information systems.
4
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THE COMPANY
Sonic is the second largest automotive retailer in the United States, as
measured by total revenue, operating dealerships and collision repair centers in
several metropolitan areas of the southeastern, midwestern, mid-Atlantic,
western and southwestern United States. We sell new and used cars, light trucks
and replacement parts and provide vehicle maintenance, warranty, paint and
repair services. We also arrange related extended warranty and financing and
insurance for our automotive customers.
Our Class A common stock is traded on the New York Stock Exchange under
the trading symbol "SAH." Our principal executive offices are located at 5401
East Independence Blvd., Charlotte, North Carolina 28212, Telephone (704)
532-3320. We were incorporated in Delaware in 1997.
RISK FACTORS
The risk factors described below are not necessarily exhaustive, and
you are encouraged to perform your own investigation with respect to the
securities being offered and our company.
Our significant indebtedness could materially adversely affect our financial
health and prevent us from fulfilling our obligations.
As of September 30, 2000, our total outstanding indebtedness was
approximately $1,039.9 million, including the following:
o $341.6 million under a revolving credit agreement dated August 10,
2000 with Ford Motor Credit Company ("Ford Motor Credit") and
Chrysler Financial Company, LLC ("Chrysler Financial") (the "2000
Revolving Facility" and together with any of our predecessor revolving
credit arrangements with Ford Motor Credit, as in effect from time to
time, the "Revolving Facility") with a borrowing limit of $500 million,
subject to a borrowing base calculated on the basis of our receivables,
inventory and equipment and a pledge of certain additional collateral
by an affiliate of Sonic;
o $384.4 million under a standardized secured inventory floor plan
facility (the "Ford Floor Plan Facility") with Ford Motor Credit;
o $131.4 million under a standardized secured floor plan facility (the
"Chrysler Floor Plan Facility") with Chrysler Financial;
o $25.1 million under a standardized secured floor plan facility (the
"GMAC Floor Plan Facility" and together with the Ford Floor Plan
Facility and the Chrysler Floor Plan Facility, the "Floor Plan
Facilities") with General Motors Acceptance Corporation ("GMAC");
o $121.2 million in 11% Senior Subordinated Notes due 2008 representing
$125.0 million in aggregate principal amount less unamortized discount
of approximately $3.8 million; and
o $30.2 million of other secured debt, including $21.5 million under a
revolving real estate acquisition and new dealership construction line
of credit (the "Construction Loan") and a related mortgage refinancing
facility (the "Permanent Loan" and together with the Construction Loan,
the "Mortgage Facility") with Ford Motor Credit.
As of September 30, 2000, we had approximately $78.5 million available
for additional borrowings under the Mortgage Facility for real estate
acquisitions and new dealership construction. We also have significant
additional capacity under our Floor Plan Facilities. In addition, the indentures
relating to our senior subordinated notes and other debt instruments allow us to
incur additional indebtedness, including secured indebtedness.
The degree to which we are leveraged after the offering could have
important consequences to the holders of our securities, including the
following:
o our ability to obtain additional financing for acquisitions, capital
expenditures, working capital or general corporate purposes may be
impaired in the future;
o a substantial portion of our current cash flow from operations must be
dedicated to the payment of principal and interest on our senior
subordinated notes, borrowings under the Revolving Facility and the
Floor Plan Facilities and other indebtedness, thereby reducing the
funds available to us for our operations and other purposes;
5
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o some of our borrowings are and will continue to be at variable rates of
interest, which exposes us to the risk of increased interest rates;
o the indebtedness outstanding under our credit facilities is secured
by a pledge of substantially all the assets of our dealerships; and
o we may be substantially more leveraged than some of our competitors,
which may place us at a relative competitive disadvantage and make us
more vulnerable to changing market conditions and regulations.
In addition, our debt agreements contain numerous covenants that limit
our discretion with respect to business matters, including mergers or
acquisitions, paying dividends, incurring additional debt, making capital
expenditures or disposing of assets.
Your right to receive payments on Debt Securities may be junior to significant
amounts of our existing indebtedness, including borrowings currently outstanding
under the Revolving Facility, the Floor Plan Facilities and the Mortgage
Facility. Further, the subsidiary guarantees of any Debt Securities will be
junior to our subsidiary guarantors' existing indebtedness and possibly to all
their future borrowings.
All Debt Securities will be subordinated in right of payment to all of
our existing and future senior indebtedness, including borrowings currently
under the Revolving Facility, the Floor Plan Facilities and the Mortgage
Facility. Our senior indebtedness includes all debt allowed under the indenture
governing any Debt Securities, except for trade payables, tax obligations and
any future debt that is expressly equal with, or subordinated in right of
payment to, Debt Securities. The holders of our senior debt will be entitled to
be paid in full before any payment may be made on Debt Securities in any
bankruptcy, liquidation, reorganization or similar proceeding. In the event of
such a proceeding, holders of any Debt Securities will participate with holders
of our other subordinated indebtedness in the distribution of assets remaining
after all of our senior debt has been paid in full. We may not have sufficient
funds to pay all of our creditors, and holders of Debt Securities may receive
less, ratably, than the holders of senior debt or holders of trade payables. We
may not pay principal of, or premium, if any, or interest on, any other amounts
owing on any Debt Securities, make any deposit pursuant to defeasance provisions
or purchase, redeem or otherwise retire any Debt Securities, if any senior
indebtedness is not paid when due or any other default on senior indebtedness
occurs and the maturity of such indebtedness is accelerated in accordance with
its terms. However, those restrictions would be lifted if, in either case, the
default is cured or waived, the acceleration is rescinded or the indebtedness is
repaid in full.
In addition, all payments on Debt Securities will be blocked in the
event of a payment default on senior debt and may be blocked for a period of
time under the governing indenture in the event of a non-payment default, unless
the default has been cured or waived, any acceleration of the indebtedness has
been rescinded or such indebtedness has been repaid in full.
As of September 30, 2000, we had:
o $540.9 million of floor plan indebtedness and $372.3 million of
other indebtedness, including under the Revolving Facility, that would
have ranked senior in right of payment to any Debt Securities, all of
which is secured; and
o $125.0 million of indebtedness under our existing senior subordinated
notes, which may be either equal or senior in right of payment to the
Debt Securities.
Substantially all of our outstanding indebtedness is secured; Debt Securities
may not be secured.
Debt Securities may not be secured by any of our assets. The
indebtedness under the Revolving Facility, the Floor Plan Facilities and the
Mortgage Facility is secured variously by (1) a pledge of all the equity we own
in our subsidiaries and that our subsidiary holding companies own in the
subsidiaries, (2) guarantees by all of our subsidiaries that are, in turn,
secured by a lien on all of the assets of the subsidiaries, (3) a lien on
substantially all of our other assets and (4) direct liens on the real estate
and other assets of our subsidiaries that own or acquire real estate. In the
event of a default on any Debt Securities or our bankruptcy, liquidation or
reorganization, those assets will be available to satisfy the secured
obligations prior to being available to repay any Debt Securities. Accordingly,
there may not be sufficient funds or other assets remaining to pay amounts due
on any Debt Securities. The indenture for any Debt Securities may permit, and
the indenture for our senior subordinated notes does permit, us to incur
additional indebtedness, which may also be secured.
Our future operating results depend on our ability to integrate our operations
with recent acquisitions.
Our future operating results depend on our ability to integrate the
operations of our recently acquired dealerships, as well as dealerships we
acquire in the future, with our existing operations. In particular, we need to
integrate our systems, procedures and structures, which can be difficult. Our
growth strategy has focused on the pursuit of strategic acquisitions that either
expand or complement our business. We acquired 19 dealerships in 1998, 72 during
1999 and 10 to date in 2000.
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We cannot assure you that we will effectively and profitably integrate
the operations of these dealerships without substantial costs, delays or
operational or financial problems, including as a result of:
o the difficulties of managing operations located in geographic areas
where we have not previously operated;
o the management time and attention required to integrate and manage
newly acquired dealerships;
o the difficulties of assimilating and retaining employees; and
o the challenges of keeping customers.
These factors could have a material adverse effect on our financial
condition and results of operations.
Risks associated with acquisitions may hinder our ability to increase revenues
and earnings.
The automobile retailing industry is considered a mature industry in
which minimal growth is expected in industry unit sales. Accordingly, our future
growth depends in large part on our ability to acquire additional dealerships,
as well as on our ability to manage expansion, control costs in our operations
and consolidate both completed and anticipated dealership acquisitions, into
existing operations. In pursuing a strategy of acquiring other dealerships, we
face risks commonly encountered with growth through acquisitions. These risks
include, but are not limited to:
o incurring significantly higher capital expenditures and operating
expenses;
o failing to assimilate the operations and personnel of the acquired
dealerships;
o entering new markets with which we are unfamiliar;
o potential undiscovered liabilities at acquired dealerships;
o disrupting our ongoing business;
o diverting our limited management resources;
o failing to maintain uniform standards, controls and policies;
o impairing relationships with employees, manufacturers and customers
as a result of changes in management;
o causing increased expenses for accounting and computer systems, as well
as integration difficulties; and
o failure to obtain a manufacturer's consent to the acquisition of one or
more of its dealership franchises.
We may not adequately anticipate all of the demands that our growth
will impose on our systems, procedures and structures, including our financial
and reporting control systems, data processing systems and management structure.
If we cannot adequately anticipate and respond to these demands, our business
could be materially harmed.
Failure to retain qualified management personnel at any acquired
dealership may increase the risk associated with integrating the acquired
dealership. Installing new computer systems has disrupted existing operations in
the past as management and salespersons adjust to new technologies. We cannot
assure you that we will overcome these risks or any other problems encountered
with our acquisitions, including our 1998, 1999 and 2000 acquisitions.
Automobile manufacturers exercise significant control over our operations, and
we are dependent on them to operate our business.
Each of our dealerships operates pursuant to a franchise agreement with
the applicable automobile manufacturer or manufacturer authorized distributor.
We are significantly dependent on our relationships with these manufacturers.
Without a franchise agreement, we cannot obtain new vehicles from a
manufacturer.
Vehicles manufactured by the following manufacturers accounted for the
indicated approximate percentage of our new vehicle revenue for the nine months
ended September 30, 2000:
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Percentage of Historical
New Vehicle Revenues for
the Nine Months ended
Manufacturer September 30, 2000
Honda 14.6%
Ford 13.8%
Chrysler 12.3%
General Motors 10.9%
BMW 10.1%
Toyota 8.5%
Nissan 6.4%
Lexus 5.0%
No other manufacturer accounted for more than 5% of our new vehicle
sales during the first nine months of 2000. A significant decline in the sale of
Honda, Ford, Chrysler, General Motors ("GM"), BMW, Toyota, Nissan or Lexus new
vehicles could have a material adverse effect on our revenue and profitability.
Manufacturers exercise a great degree of control over the operations of
our dealerships. Each of our franchise agreements provides for termination or
non-renewal for a variety of causes, including any unapproved change of
ownership or management and other material breaches of the franchise agreements.
Manufacturers may also have a right of first refusal if we seek to sell
dealerships. We believe that we will be able to renew at expiration all of our
existing franchise agreements.
o We cannot assure you that any of our existing franchise agreements will
be renewed or that the terms and conditions of such renewals will be
favorable to us.
o If a manufacturer is allowed under state franchise laws to terminate or
decline to renew one or more of our significant franchise agreements,
this action could have a material adverse effect on our results of
operations.
o Actions taken by manufacturers to exploit their superior bargaining
position in negotiating the terms of renewals of franchise agreements
or otherwise could also have a material adverse effect on our results
of operations.
o Manufacturers allocate their vehicles among dealerships generally
based on the sales history of each dealership. Consequently, we also
depend on the manufacturers to provide us with a desirable mix of
popular new vehicles. These popular vehicles produce the highest profit
margins and tend to be the most difficult to obtain from the
manufacturers.
o Our dealerships depend on the manufacturers for certain sales
incentives, warranties and other programs that are intended to promote
and support dealership new vehicle sales. Manufacturers have
historically made many changes to their incentive programs during each
year. A reduction or discontinuation of a manufacturer's incentive
programs may materially adversely affect our profitability. Some of
these programs include:
o customer rebates on new vehicles;
o dealer incentives on new vehicles;
o special financing or leasing terms;
o warranties on new and used vehicles; and
o sponsorship of used vehicle sales by authorized new vehicle dealers.
Adverse conditions affecting one or more manufacturers may negatively impact our
profitability.
The success of each of our dealerships depends to a great extent on the
manufacturers':
o financial condition;
o marketing;
o vehicle design;
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o production capabilities;
o management; and
o labor relations.
Nissan, Dodge (a Chrysler brand) and Volvo have had significant
difficulty in the U.S. market in the recent past. If any of our manufacturers,
particularly Honda, Ford, Chrysler, GM, BMW, Toyota, Nissan, or Lexus were
unable to successfully design, manufacture, deliver and market their vehicles,
the manufacturer's reputation and our ability to sell the manufacturer's
vehicles could be adversely affected.
Events such as strikes and other labor actions by unions, or negative
publicity concerning a particular manufacturer or vehicle model, may materially
and adversely affect our results of operations. Similarly, the delivery of
vehicles from manufacturers later than scheduled, which may occur particularly
during periods when new products are being introduced, can reduce our sales.
Although, we have attempted to lessen our dependence on any one manufacturer by
establishing dealer relationships with a number of different domestic and
foreign automobile manufacturers, adverse conditions affecting manufacturers,
Honda, Ford, Chrysler, GM, BMW, Toyota, Nissan or Lexus in particular, could
have a material adverse effect on our results of operations. For example, in
June 1998, the United Auto Workers went on strike at two GM facilities in Flint,
Michigan. The strike lasted 53 days, causing 27 GM manufacturing facilities to
shut down during the strike and severely affecting production of GM vehicles
during the strike. In the event of another strike, we may need to purchase
inventory from other automobile dealers at prices higher than we would be
required to pay to the affected manufacturer in order to carry an adequate level
and mix of inventory. Consequently, strikes or other adverse labor actions could
materially adversely affect our profitability.
Manufacturer stock ownership/issuance restrictions limit our ability to issue
additional equity to meet our financing needs.
Standard automobile franchise agreements prohibit transfers of any
ownership interests of a dealership and its parent and, therefore, often do not
by their terms accommodate public trading of the capital stock of a dealership
or its parent. Our manufacturers have agreed to permit trading in Sonic's Class
A common stock. A number of manufacturers impose restrictions on the
transferability of the Class A common stock.
o Honda may force the sale of our Honda or Acura franchises if (1) an
automobile manufacturer or distributor acquires securities having 5% or
more of the voting power of Sonic's securities, (2) an individual or
entity that has either a felony criminal record or a criminal record
relating solely to dealings with an automobile manufacturer,
distributor or dealership acquires securities having 5% or more of the
voting power of Sonic's securities or (3) any individual or entity
acquires securities having 20% or more of the voting power of Sonic's
securities and Honda reasonably deems such acquisition to be
detrimental to Honda's interests in any material respect.
o Ford may cause us to sell or resign from one or more of our Ford,
Lincoln or Mercury franchises if any person or entity (other than O.
Bruton Smith and any entity controlled by him) acquires or has a
binding agreement to acquire securities having 50% or more of the
voting power of Sonic's securities.
o GM, Toyota and Nissan Motor Corporation In U.S.A. may force the sale of
their respective franchises if 20% of more of Sonic's voting securities
are similarly acquired.
o Chrysler requires prior approval of any future sales that would result
in a change in voting or managerial control of Sonic.
o Mercedes requires 60 days advance notice to approve any acquisition of
20% or more of Sonic's voting securities.
o Volkswagen has approved the sale of no more than 25% of the voting
control of Sonic, and any future changes in ownership or transfers
among Sonic's current stockholders that could affect the voting or
managerial control of Sonic's Volkswagen franchise subsidiaries
requires the prior approval of Volkswagen.
Other manufacturers may impose similar or more limiting restrictions.
Our lending arrangements also require that holders of Sonic's Class B
common stock maintain voting control over Sonic. We are unable to prevent our
stockholders from transferring shares of our common stock, including transfers
by holders of the Class B common stock. If such transfer results in a change in
control of Sonic, it could result in the termination or non-renewal of one or
more of our franchise agreements and a default under our credit arrangements.
Moreover, these issuance limitations may impede our ability to raise capital
through additional equity offerings or to issue our stock as consideration for
future acquisitions.
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Manufacturers' restrictions on acquisitions could limit our future growth.
We are required to obtain the consent of the applicable manufacturer
before the acquisition of any additional dealership franchises. We cannot assure
you that manufacturers will grant such approvals, although the denial of such
approval may be subject to certain state franchise laws. Jaguar declined to
consent to our proposed 1997 acquisitions of franchises associated with
dealerships in Chattanooga, Tennessee and Greenville, South Carolina, and we
subsequently agreed with Jaguar not to acquire any Jaguar franchise until August
3, 2001.
Obtaining manufacturer consent for acquisitions could also take a
significant amount of time. Obtaining manufacturer approval for each of our
completed acquisitions has taken approximately three to five months. We believe
that manufacturer approvals of subsequent acquisitions from manufacturers with
which we have previously completed applications and agreements may take less
time, although we cannot provide you with assurances to that effect. In
addition, under an applicable franchise agreement or under state law, a
manufacturer may have a right of first refusal to acquire a dealership in the
event we seek to acquire that dealership franchise.
If we experience delays in obtaining, or fail to obtain, manufacturer
approvals for dealership acquisitions, our growth strategy could be materially
adversely affected. In determining whether to approve an acquisition, the
manufacturers may consider many factors, including:
o our management's moral character;
o the business experience of the post-acquisition dealership management;
o our financial condition;
o our ownership structure; and
o manufacturer-determined consumer satisfaction index (CSI) scores.
In addition, a manufacturer may seek to limit the number of its
dealerships that we may own, our national market share of that manufacturer's
products or the number of dealerships we may own in a particular geographic
area. These restrictions may not be enforceable under state franchise laws.
o In September 1999, Ford and Sonic signed a new framework agreement. The
agreement places the following restrictions on our ability to acquire
Ford or Lincoln Mercury dealerships:
o We may not acquire additional Ford or Lincoln Mercury dealerships
unless we continue to satisfy Ford's requirement that 80% of our
Ford dealerships meet Ford's performance criteria. Beyond that, we
may not make an acquisition that would result in our owning Ford
or Lincoln Mercury dealerships with sales exceeding 5% of the
total Ford or total Lincoln Mercury retail sales of new vehicles
in the United States for the preceding calendar year.
o We may not acquire additional Ford or Lincoln Mercury dealerships
in a particular state if such an acquisition would result in our
owning Ford or Lincoln Mercury dealerships with sales exceeding 5%
of the total Ford or total Lincoln Mercury retail sales of new
vehicles in that state for the preceding calendar year.
o We may not acquire additional Ford dealerships in a Ford-defined
market area if such an acquisition would result in our owning more
than one Ford dealership in a market having a total of three or
less Ford dealerships or owning more than 25% of the Ford
dealerships in a market having a total of four or more Ford
dealerships. An identical market area restriction applies for
Lincoln Mercury dealerships.
o In September 1999, Honda and Sonic signed a new framework
agreement. This framework agreement limits the number of Honda and
Acura dealerships that we may own on a national level, in each
Honda and Acura-defined geographic zone, and in each Honda-defined
metropolitan market. Nationally, the limitations on Honda
dealerships owned by us are based on specified percentages of
total Honda unit sales in the United States. In Honda-defined
geographic zones, the limitations on Honda dealerships owned by us
are based on specified percentages of total Honda unit sales in
each of 10 Honda-defined geographic zones. In Honda-defined
metropolitan markets, the limitations on Honda dealerships owned
by us are specified numbers of dealerships in each market, which
numerical limits vary based mainly on the total number of Honda
dealerships in a particular market. For Acura, we may own no more
than (1) two Acura dealerships in a Honda-defined metropolitan
market, (2) three Acura dealerships in any one of six
Honda-defined geographic zones and (3) five Acura dealerships
nationally.
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o Toyota currently restricts the number of dealerships that may be owned
by any one group to seven Toyota and three Lexus dealerships nationally
and restricts the number of dealerships that may be owned to (1) the
greater of one dealership, or 20% of the Toyota dealer count in a
Toyota-defined "Metro" market, (2) the lesser of five dealerships or 5%
of the Toyota dealerships in any Toyota region (currently 12 geographic
regions) and (3) two Lexus dealerships in any one of the four Lexus
geographic areas. Toyota further requires that at least nine months
elapse between acquisitions.
o Mercedes restricts any company from owning Mercedes dealerships with
sales of more than 3% of total sales of Mercedes vehicles in the U.S.
during the previous calendar year.
o GM currently limits the maximum number of GM dealerships that we may
acquire to 50% of the GM dealerships, by brand line, in a GM-defined
geographic market area having multiple GM dealers.
o Subaru limits us to no more than two Subaru dealerships within certain
designated market areas, four Subaru dealerships within its Mid-America
region and 12 dealerships within Subaru's entire area of distribution.
o BMW prohibits publicly held companies from owning BMW dealerships
representing more than 5% of all BMW sales in the U.S. or more than 50%
of BMW dealerships in a given metropolitan market. We believe we are
currently at BMW's national sales limitation.
o Toyota, Honda and Mercedes also prohibit the coupling of a franchise
with any other brand without their consent.
o Honda also prohibits ownership of contiguous dealerships.
As a condition to granting their consent to our acquisitions, a number
of manufacturers required additional restrictions. These agreements principally
restrict:
o material changes in our company or extraordinary corporate transactions
such as a merger, sale of a material amount of assets or change in our
board of directors or management that could have a material adverse
effect on the manufacturer's image or reputation or could be materially
incompatible with the manufacturer's interests;
o the removal of a dealership general manager without the consent of the
manufacturer; and
o the use of dealership facilities to sell or service new vehicles of
other manufacturers.
In addition, manufacturer consent to our acquisitions may impose conditions,
such as requiring facilities improvements by us at the acquired dealership.
If we are unable to comply with these restrictions, we generally:
o must sell the assets of the dealerships to the manufacturer or to a
third party acceptable to the manufacturer; or
o terminate the dealership agreements with the manufacturer.
Other manufacturers may impose other and more stringent restrictions in
connection with future acquisitions.
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We currently own the following number of franchises for the following
manufacturers:
Manufacturer Number of Franchises Manufacturer Number of Franchises
Dodge 12 Lincoln 4
Honda 11 Mercedes 4
BMW 10 Mitsubishi 3
Ford 10 GMC 3
Nissan 10 Hyundai 3
Chevrolet 10 Isuzu 3
Cadillac 10 KIA 3
Volvo 9 Pontiac 3
Oldsmobile 7 Audi 2
Chrysler 7 Infiniti 2
Jeep 7 Range Rover 2
Plymouth 7 Porsche 2
Toyota 7 Acura 1
Volkswagen 6 Buick 1
Mercury 5 Subaru 1
Lexus 4 ---
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Our failure to meet a manufacturer's consumer satisfaction requirements may
adversely affect our ability to acquire new dealerships and our profitability.
Many manufacturers attempt to measure customers' satisfaction with
their sales and warranty service experiences through systems which vary from
manufacturer to manufacturer, but which are generally known as "CSI." These
manufacturers may use a dealership's CSI scores as a factor in evaluating
applications for additional dealership acquisitions. The components of CSI have
been modified by various manufacturers from time to time in the past, and we
cannot assure you that these components will not be further modified or replaced
by different systems in the future. To date, we have not been materially
adversely affected by these standards and have not been denied approval of any
acquisition based on low CSI scores, except for Jaguar's refusal to approve our
acquisition of a Chattanooga Jaguar franchise in 1997. However, we cannot assure
you that we will be able to comply with these standards in the future. A
manufacturer may refuse to consent to an acquisition of one of its franchises if
it determines our dealerships do not comply with the manufacturer's CSI
standards. This could materially adversely affect our acquisition strategy. In
addition, we receive payments from the manufacturers based, in part, on CSI
scores, which could be materially adversely affected if our CSI scores decline.
There are limitations on our financial resources available for acquisitions.
We intend to finance our acquisitions with cash generated from
operations, through issuances of our stock or debt securities and through
borrowings under credit arrangements.
o We cannot assure you that we will be able to obtain additional
financing by issuing stock or debt securities.
o Using cash to complete acquisitions could substantially limit our
operating or financial flexibility.
o If we are unable to obtain financing on acceptable terms, we may be
required to reduce the scope of our presently anticipated expansion,
which could materially adversely affect our growth strategy.
We estimate that we have approximately $97.5 million available for
additional borrowings under the 2000 Revolving Facility, based on a borrowing
base calculated on the basis of our receivables, inventory and equipment and a
pledge of certain additional collateral by an affiliate of Sonic (which
borrowing base was $431.7 million of the $500.0 million facility at September
30, 2000).
In addition, we are dependent to a significant extent on our ability to
finance our inventory. Automotive retail inventory financing involves
significant sums of money in the form of "floor plan financing." Floor plan
financing is how a dealership finances its purchase of new vehicles from a
manufacturer. The dealership borrows money to buy a particular vehicle from the
manufacturer and pays off the loan when it sells that particular vehicle, paying
interest during this period. We must obtain new floor plan financing or obtain
consents to assume such financing in connection with our acquisition of
dealerships. As of September 30, 2000, we had approximately $540.9 million of
floor plan indebtedness outstanding, of which $384.4 million was under the Ford
Floor Plan Facility, $131.4 million was under the Chrysler Floor Plan Facility
and $25.1 million was under the GMAC Floor Plan Facility.
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Substantially all the assets of our dealerships are pledged to secure
this floor plan indebtedness. In addition, substantially all the real property
and assets of our subsidiaries that are constructing new dealerships are pledged
under our newly obtained Mortgage Facility. These pledges may impede our ability
to borrow from other sources.
Finally, because Ford Motor Credit is associated with Ford, any
deterioration of our relationship with one could adversely affect our
relationship with the other. The same is true of our relationships with Chrysler
and Chrysler Financial, as well as GM and GMAC.
Although our officers and directors have previously facilitated our acquisition
financing, we cannot assure you that these individuals will be willing or able
to assist in our financing needs in the future.
O. Bruton Smith, our Chief Executive Officer and Chairman of the Board,
previously guaranteed our credit facilities and other financing arrangements to
facilitate our acquisitions. Mr. Smith may be unwilling to make any such
commitments in the future if such commitments are needed.
Mr. Smith initially guaranteed obligations under the Revolving
Facility. Such obligations were further secured with a pledge of shares of
common stock of Speedway Motorsports, Inc. owned by Sonic Financial Corporation,
a corporation controlled by Mr. Smith ("SFC"), having an estimated value at the
time of pledge of approximately $50.0 million (the "Revolving Pledge"). When the
Revolving Facility's borrowing limit was increased to $75.0 million in 1997, Mr.
Smith's personal guarantee of Sonic's obligations under the Revolving Facility
was released, although the Revolving Pledge remained in place. Mr. Smith was
also required by Ford Motor Credit to lend $5.5 million (the "Subordinated Smith
Loan") to Sonic to increase our capitalization because the net proceeds from our
November 1997 initial public offering were significantly less than expected. In
August 1998, Ford Motor Credit released the Revolving Pledge. In November 1999,
Ford Motor Credit further increased the borrowing limit under the 1999 Revolving
Facility to $350.0 million subject to a borrowing base calculated on the basis
of our receivables, inventory and equipment and a pledge by SFC of five million
shares of Speedway Motorsports, Inc. common stock. The 2000 Revolving Facility
is subject to a similar borrowing base, including SFC's continuing pledge of
Speedway Motorsports, Inc. stock.
Before our acquisition of FirstAmerica, Mr. Smith guaranteed the
obligations of FirstAmerica under FirstAmerica's new acquisition line of credit
with Ford Motor Credit. FirstAmerica obtained this new financing to enable it to
complete its then pending acquisitions. The borrowing limit on this credit
facility was approximately $138 million. Mr. Smith had guaranteed approximately
$107 million of this amount, which guarantee was secured by a pledge of 5.0
million shares of Speedway Motorsports, Inc. common stock owned by SFC. We
assumed FirstAmerica's obligations to Ford Motor Credit under our 1999 Revolving
Facility when we acquired FirstAmerica. Mr. Smith's secured guarantee in favor
of Ford Motor Credit guaranteed a portion of our obligations under the 1999
Revolving Facility. Under the 2000 Revolving Facility, Mr. Smith did not provide
a guarantee in favor of the lenders, but SFC continues to pledge Speedway
Motorsports, Inc. stock as collateral. We cannot assure you that Mr. Smith will
be willing or able to provide similar guarantees or credit support in the future
to facilitate Sonic's future acquisitions.
Automobile retailing is a mature industry with limited growth potential
in new vehicle sales, and our acquisition strategy will affect our revenues and
earnings.
The United States automobile dealership industry is considered a mature
industry in which minimal growth is expected in unit sales of new vehicles. As a
consequence, growth in our revenues and earnings is likely to be significantly
affected by our success in acquiring and integrating dealerships and the pace
and size of such acquisitions.
High competition in automobile retailing reduces our profit margins on
vehicle sales. Further, the use of the Internet in the car purchasing process
could materially adversely affect us.
Automobile retailing is a highly competitive business with
approximately 22,400 franchised automobile dealerships in the United States at
the end of 1999. Our competition includes:
o Franchised automobile dealerships selling the same or similar makes of
new and used vehicles that we offer in our markets and sometimes at
lower prices than we offer. Some of these dealer competitors may be
larger and have greater financial and marketing resources than we do;
o Other franchised dealers;
o Private market buyers and sellers of used vehicles;
o Used vehicle dealers;
o Internet-based vehicle brokers that sell vehicles obtained from
franchised dealers directly to consumers;
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o Service center chain stores; and
o Independent service and repair shops.
Our financing and insurance business and other related businesses,
which provide higher contributions to our earnings than sales of new and used
vehicles, are subject to strong competition from various financial institutions
and other third parties. This competition is increasing as these products are
now being marketed and sold over the Internet.
Gross profit margins on sales of new vehicles have been generally
declining since 1986. We do not have any cost advantage in purchasing new
vehicles from manufacturers, due to economies of scale or otherwise. We
typically rely on advertising, merchandising, sales expertise, service
reputation and dealership location to sell new vehicles. The following factors
could have a significant impact on our business:
o The Internet has become a significant part of the sales process in our
industry. Customers are using the Internet to compare pricing for cars
and related financing and insurance services, which may further reduce
margins for new and used cars and profits for related financing and
insurance services. In addition, CarsDirect.com and others are selling
vehicles over the Internet without the benefit of having a dealership
franchise, although they must currently source their vehicles from a
franchised dealer. CarsDirect.com has entered into an alliance with
United Auto Group to facilitate their sourcing of vehicles. Also,
AutoNation is selling vehicles for its new car dealerships through its
AutoNationDirect.com web site. If Internet new vehicle sales are
allowed to be conducted without the involvement of franchised dealers,
our business could be materially adversely affected. In addition, other
franchise groups have aligned themselves with Internet car sellers or
are spending significant sums on developing their own Internet
capabilities, which could materially adversely affect our business.
o Ford has entered into joint ventures to acquire dealerships in various
cities in the United States, and Saturn has acquired some of its
dealerships. GM, which previously announced similar intentions, has
cancelled its initiative in this area. Other manufacturers may directly
enter the retail market in the future. Our revenues and profitability
could be materially adversely affected by manufacturers' direct
retailing efforts.
o The increased popularity of short-term vehicle leasing also has
resulted, as these leases expire, in a large increase in the number of
late model vehicles available in the market, which puts added pressure
on new and used vehicle margins.
o Some of our competitors may be capable of operating on smaller gross
margins than we are, and the on-line auto brokers have been operating
at a loss.
o As we seek to acquire dealerships in new markets, we may face
increasingly significant competition as we strive to gain market share
through acquisitions or otherwise. This competition includes other
large dealer groups and dealer groups that have publicly traded equity.
Our franchise agreements do not grant us the exclusive right to sell a
manufacturer's product within a given geographic area. Our revenues or
profitability could be materially adversely affected if any of our manufacturers
award franchises to others in the same markets where we operate, although
certain state franchise laws may limit such activities by the manufacturers. A
similar adverse effect could occur if existing competing franchised dealers
increase their market share in our markets. Our gross margins may decline over
time as we expand into markets where we do not have a leading position. These
and other competitive pressures could materially adversely affect our results of
operations.
The cyclical and local nature of automobile sales may adversely affect our
profitability.
The automobile industry is cyclical and historically has experienced
periodic downturns characterized by oversupply and weak demand. Many factors
affect the industry, including general economic conditions and consumer
confidence, the level of discretionary personal income, interest rates and
credit availability. For example, recent interest rate increases and other
factors have impacted the market and have reduced the seasonally adjusted
annualized selling rate of new cars since the beginning of the year.
Future recessions may have a material adverse effect on our business.
In addition, significant changes in interest rates may significantly impact our
car sales since many car buyers finance their purchases. Furthermore, higher
gasoline prices may lead to a reduction in automobile purchases or a shift in
buying patterns from luxury/SUV models (which typically provide high profit
margins to retailers) to smaller, more economical vehicles (which typically have
lower margins).
Local economic, competitive and other conditions also affect the
performance of dealerships. Our dealerships currently are located in the
Atlanta, Baltimore, Birmingham, Charleston, Charlotte, Chattanooga, Columbia,
Columbus, Dallas, Daytona Beach, Fort Myers, Greenville/Spartanburg, Houston,
Las Vegas, Los Angeles, Mobile/Pensacola, Montgomery, Nashville, San Diego, San
Francisco, San Jose/Silicon Valley, Tampa/Clearwater, Tulsa and Washington, D.C.
markets. We intend to pursue acquisitions outside of these markets, but
14
<PAGE>
our operational focus is on our current markets. As a result, our results of
operations depend substantially on general economic conditions and consumer
spending habits in the Southeast and Northern California and, to a lesser
extent, the Houston and Columbus markets. Sales in our Northern California
market represented 15.7% of our sales for the nine months ended September 30,
2000. Our results of operations also depend on other factors, such as tax rates
and state and local regulations specific to Alabama, California, Florida,
Georgia, Maryland, Nevada, North Carolina, Ohio, Oklahoma, South Carolina,
Tennessee, Texas and Virginia. Sonic may not be able to expand geographically
and any such expansion may not adequately insulate it from the adverse effects
of local or regional economic conditions.
We can offer you no assurances that we will be able to continue executing our
acquisition strategy without the costs of future acquisitions escalating.
Although there are many potential acquisition candidates that fit our
acquisition criteria, we cannot assure you that we will be able to consummate
any such transactions in the future or identify those candidates that would
result in the most successful combinations, or that future acquisitions will be
able to be consummated at acceptable prices and terms. In addition, increased
competition for acquisition candidates could result in fewer acquisition
opportunities for us and higher acquisition prices. The magnitude, timing,
pricing and nature of future acquisitions will depend upon various factors,
including:
o the availability of suitable acquisition candidates;
o competition with other dealer groups for suitable acquisitions;
o the negotiation of acceptable terms;
o our financial capabilities;
o our stock price;
o the availability of skilled employees to manage the acquired companies;
and
o general economic and business conditions.
We may be required to file applications and obtain clearances under
applicable federal antitrust laws before completing an acquisition. These
regulatory requirements may restrict or delay our acquisitions, and may increase
the cost of completing acquisitions.
The operating condition of acquired businesses cannot be determined accurately
until we assume control.
Although we conduct what we believe to be a prudent level of
investigation regarding the operating condition of the businesses we purchase,
in light of the circumstances of each transaction, an unavoidable level of risk
remains regarding the actual operating condition of these businesses. Until we
actually assume operating control of such assets, we may not be able to
ascertain the actual value of the acquired entity.
Additional shares eligible for future sale could have an adverse effect on the
market price of our Class A common stock.
The market price of our Class A common stock could be adversely affected
by the availability for public sale of up to 23,534,990 shares held or issuable
on November 16, 2000, including:
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<PAGE>
<TABLE>
<CAPTION>
Number of Shares of Manner of Holding and/or Issuance
Class A Common Stock
<S> <C>
12,250,000 (1) Issuable on conversion of 12,250,000 shares of our Class B common
stock owned by existing stockholders of Sonic. These shares of
Class A common stock are subject to certain piggyback
registration rights.
242,782 (1) Issuable on exercise of warrants issued in our business
acquisitions.
29,384 (1)(2) Issuable on conversion of outstanding shares of our Class A
convertible preferred stock that were issued in our business
acquisitions.
5,500,699 Issued in our business acquisitions and currently registered
for sale under the Securities Act pursuant to shelf
registrations.
4,834,635 Issuable on exercise of options granted under our 1997 Stock
Option Plan. All such shares are registered for sale under the
Securities Act.
232,458 Issuable on exercise of options granted under our employee stock
purchase plans. All such shares are registered for sale under
the Securities Act.
335,032 Issuable on exercise of options granted under our Amended and
Restated FirstAmerica Automotive 1997 Stock Option Plan. All
such shares are registered for sale under the Securities Act.
110,000 Issuable on exercise of options granted under our Directors
Formula Stock Option Plan. All such shares are registered for
sale under the Securities Act.
</TABLE>
(1) All such shares are "restricted securities" as defined in Rule 144 under
the Securities Act and may be resold in compliance with Rule 144.
(2) The number of shares of Class A common stock issuable upon conversion
of outstanding shares of our preferred stock is an estimate based on the
assumption that the average of the daily closing prices for the Class A
common stock on the New York Stock Exchange for the 20 consecutive trading
days ending one trading day before such conversion was $8.525 per share.
This number is subject to adjustment based on the common stock price on the
date of conversion and could be materially more or less than this estimated
amount depending on factors that we cannot presently determine. These
factors include the future market price of the Class A common stock and the
decisions of the holders of the preferred stock as to when to convert their
shares of preferred stock. Generally, such issuances of Class A common
stock will vary inversely with the market price of the Class A common
stock.
In connection with pending acquisitions, we have agreed to issue
approximately $2.0 million in Class A common stock and approximately $4.6
million in liquidation value of preferred stock. Approximately $4.6 million in
value of these securities will have registration rights, all of which shares
will be subject to prohibitions on resales for the six months after their
issuance. We intend in our business acquisitions to issue additional shares of
equity securities that may have registration rights as well as be eligible for
resale under Rule 144. The resale of substantial amounts of Class A common
stock, or the perception that such resales may occur, could materially and
adversely affect the prevailing market prices for the Class A common stock and
our ability to raise equity capital in the future.
Potential conflicts of interest between Sonic and its officers could adversely
affect our future performance.
O. Bruton Smith serves as the chairman and chief executive officer of
Speedway Motorsports Inc. Accordingly, Sonic competes with Speedway Motorsports
Inc. for the management time of Mr. Smith. Under his employment agreement with
Sonic, Mr. Smith is required to devote approximately 50% of his business time to
our business. The remainder of his business time may be devoted to other
entities, including Speedway Motorsports Inc.
Sonic has in the past and will likely in the future enter into
transactions with Mr. Smith, entities controlled by Mr. Smith or other
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<PAGE>
affiliates of Sonic. For example, Sonic previously entered into property
transactions with MMR Holdings, L.L.C. and its subsidiaries (the "MMR Group").
The MMR Group was owned, directly and indirectly, and controlled by Mr. Smith.
On August 13, 1999, Mr. Smith and SFC sold the ownership of the MMR Group to CAR
MMR L.L.C. ("CAR MMR"), an affiliate of Capital Automotive REIT, which is
unaffiliated with Sonic or Mr. Smith. The MMR Group owned 50 properties leased
to 42 Sonic dealerships at the time of the MMR Group sale. As a part of the sale
of the MMR Group, Mr. Smith and SFC signed agreements with Sonic to induce Sonic
to sign its agreement with CAR MMR. Mr. Smith and SFC, under these agreements,
agreed to pay approximately $2.5 million to Sonic, which amount represented Mr.
Smith's and SFC's profits on the sale of the MMR Group less their expenses in
selling the MMR Group and a 14% annual return on their initial investment in the
MMR Group, net of any advances previously made by Sonic to the MMR Group.
We believe that all of our existing arrangements with affiliates are as
favorable to us as if the arrangements were negotiated between unaffiliated
parties, although such transactions have neither been independently verified in
that regard nor are likely to be so verified in the future. Potential conflicts
of interest could arise in the future between Sonic and its officers or
directors in the enforcement, amendment or termination of arrangements existing
between them.
Under Delaware law generally, a corporate insider is precluded from
acting on a business opportunity in his individual capacity if that opportunity
is
(1) one which the corporation is financially able to undertake,
(2) is in the line of the corporation's business,
(3) is of practical advantage to the corporation, and
(4) is one in which the corporation has an interest or reasonable
expectancy.
Accordingly, our corporate insiders are generally prohibited from engaging in
new dealership-related business opportunities outside of Sonic unless a majority
of Sonic's disinterested directors decide that such opportunities are not in our
best interest.
Sonic's charter contains provisions providing that transactions between
Sonic and its affiliates must be no less favorable to Sonic than would be
available in similar transactions with an unrelated third party. Moreover, any
such transactions involving aggregate payments in excess of $500,000 must be
approved by a majority of Sonic's directors and a majority of its independent
directors. Otherwise, Sonic must obtain an opinion as to the financial fairness
of the transaction to be issued by an investment banking or appraisal firm of
national standing. In addition, the terms of the Revolving Facility, the Notes
offered by this offering memorandum and Sonic's existing senior subordinated
notes restrict transactions with affiliates in a manner similar to Sonic's
charter restrictions.
Lack of majority of independent directors could result in conflicts between us
and our management and majority stockholders that may reduce our future
performance.
Independent directors do not constitute a majority of our board, and
our board may not have a majority of independent directors in the future.
Without a majority of independent directors, Sonic's executive officers,
principal stockholders and directors could establish policies and enter into
transactions without independent review and approval, subject to certain
restrictions under our charter. These policies and transactions could present
the potential for a conflict of interest between Sonic and its minority
stockholders and the controlling officers, stockholders or directors.
The loss of key personnel and limited management and personnel resources could
adversely affect our operations and growth.
Our success depends to a significant degree upon the continued
contributions of Sonic's management team, particularly its senior management,
and service and sales personnel. The loss of any of these executives may have a
material adverse effect on our operations. Additionally, manufacturer franchise
agreements may require the prior approval of the applicable manufacturer before
any change is made in franchise general managers. We do not have employment
agreements with most of our dealership managers and other key dealership
personnel. Consequently, the loss of the services of one or more of these key
employees could have a material adverse effect on our results of operations.
In addition, we may need to hire additional managers as we expand. The
market for qualified employees in the industry and in the regions in which we
operate, particularly for general managers and sales and service personnel, is
highly competitive and may subject us to increased labor costs during periods of
low unemployment. The loss of the services of key employees or the inability to
attract additional qualified managers could have a material adverse effect on
our results of operations. In addition, the lack of qualified management or
employees employed by potential acquisition candidates may limit our ability to
consummate future acquisitions.
Seasonality of the automotive retail business adversely affects first quarter
revenues.
Our business is seasonal, with a disproportionate amount of revenues
received generally in the second, third and fourth fiscal quarters.
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<PAGE>
Import product restrictions and foreign trade risks may impair our ability to
sell foreign vehicles profitably.
Some of the vehicles and major components of vehicles we sell are
manufactured in foreign countries. Accordingly, we are subject to the import and
export restrictions of various jurisdictions and are dependent to some extent
upon general economic conditions in, and political relations with, a number of
foreign countries, particularly Germany, Japan and Sweden. Fluctuations in
currency exchange rates may also adversely affect our sales of vehicles produced
by foreign manufacturers. Imports into the United States may also be adversely
affected by increased transportation costs and tariffs, quotas or duties.
Governmental regulation and environmental regulation compliance costs may
adversely affect our profitability.
We are subject to a wide range of federal, state and local laws and
regulations, such as local licensing requirements and consumer protection laws.
The violation of these laws and regulations can result in civil and criminal
penalties against us or in a cease and desist order against our operations if we
are not in compliance. Our future acquisitions may also be subject to
regulation, including antitrust reviews. We believe that we comply in all
material respects with all laws and regulations applicable to our business, but
future regulations may be more stringent and require us to incur significant
additional costs.
Our facilities and operations are also subject to federal, state and
local laws and regulations relating to environmental protection and human health
and safety, including those governing wastewater discharges, air emissions, the
operation and removal of underground and aboveground storage tanks, the use,
storage, treatment, transportation, release, recycling and disposal of solid and
hazardous materials and wastes and the cleanup of contaminated property or
water. We may be required by these laws to pay the full amount of the costs of
investigation and/or remediation of contaminated properties, even if we are not
at fault for disposal of the materials or if such disposal was legal at the
time. People who may be found liable under these laws and regulations include
the present or former owner or operator of a contaminated property and companies
that generated, transported, disposed of or arranged for the transportation or
disposal of hazardous substances found at the property.
Our past and present business operations are subject to environmental
laws and regulations governing the use, storage, handling, recycling and
disposal of hazardous or toxic substances such as new and waste motor oil, oil
filters, transmission fluid, antifreeze, freon, new and waste paint and lacquer
thinner, batteries, solvents, lubricants, degreasing agents, gasoline and diesel
fuels. We are also subject to laws and regulations relating to underground
storage tanks that exist or used to exist at many of our properties. Like many
of our competitors, we have incurred, and will continue to incur, capital and
operating expenditures and other costs in complying with such laws and
regulations. In addition, soil and groundwater contamination exists at certain
of our properties. We cannot assure you that our other properties have not been
or will not become similarly contaminated. In addition, we could become subject
to potentially material new or unforeseen environmental costs or liabilities
because of our acquisitions.
Environmental laws and regulations, including those governing air
emissions and underground storage tanks, could require compliance with new or
more stringent standards that are imposed in the future. We cannot predict what
other environmental legislation or regulations will be enacted in the future,
how existing or future laws or regulations will be administered or interpreted
or what environmental conditions may be found to exist in the future.
Consequently, we may be required to make substantial expenditures in the future.
Concentration of voting power and antitakeover provisions of our charter,
Delaware law and our dealer agreements may reduce the likelihood of any
potential change of control of Sonic.
Sonic's common stock is divided into two classes with different voting
rights. This dual class stock ownership allows the present holders of the Class
B common stock to control Sonic. Holders of Class A common stock have one vote
per share on all matters. Holders of Class B common stock have 10 votes per
share on all matters, except that they have only one vote per share on any
transaction proposed by the Board of Directors or a Class B common stock holder
or otherwise benefiting the Class B common stock holders constituting a:
(1) "going private" transaction;
(2) disposition of substantially all of our assets;
(3) transfer resulting in a change in the nature of our business; or
(4) merger or consolidation in which current holders of common stock
would own less than 50% of the common stock following such
transaction.
The holders of Class B common stock currently hold less than a majority
of Sonic's outstanding common stock, but a majority of Sonic's voting power.
This may prevent or discourage a change of control of Sonic even if such action
were favored by holders of Class A common stock.
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<PAGE>
Sonic's charter and bylaws make it more difficult for its stockholders
to take corporate actions at stockholders' meetings. In addition, options under
our 1997 Stock Option Plan become immediately exercisable on a change in
control. Also, Delaware law makes it difficult for stockholders who have
recently acquired a large interest in a company to consummate a business
transaction with the company against its directors' wishes. Finally,
restrictions imposed by our dealer agreements may impede or prevent any
potential takeover bid. Generally, our franchise agreements allow the
manufacturers the right to terminate the agreements upon a change of control of
our company and impose restrictions upon the transferability of any significant
percentage of our stock to any one person or entity who may be unqualified, as
defined by the manufacturer, to own one of its dealerships. The inability of a
person or entity to qualify with one or more of our manufacturers may prevent or
seriously impede a potential takeover bid. These agreements, corporate documents
and laws, as well as provisions of our lending arrangements creating an event of
default on a change in control, may have the effect of delaying or preventing a
change in control or preventing stockholders from realizing a premium on the
sale of their shares upon an acquisition of Sonic.
Amortization of goodwill from acquisitions could change, resulting in
significant reduction in earnings for future periods.
Goodwill, net of accumulated amortization, represented approximately
39.5% of our total assets and 147.2% of our stockholders' equity as of December
31, 1999, and represented approximately 38.4% of our total assets and 143.3% of
our stockholders' equity as of September 30, 2000. Goodwill arises when an
acquiror pays more for a business than the fair value of the tangible and
separately measurable intangible net assets. Accounting principles generally
accepted in the United States of America require that this and all other
intangible assets be amortized over the period benefited. We determined that the
period benefited by all of the goodwill will be no less than 40 years.
Accordingly, we amortize goodwill over a 40 year period. Earnings reported in
periods immediately following the acquisition would be overstated if we
attributed a 40 year benefit period to an intangible asset that should have had
a shorter benefit period. In later years, we would be burdened by a continuing
charge against earnings without the associated benefit to income valued by
management in arriving at the price paid for the businesses. Earnings in later
years also could be significantly affected if management determined then that
the remaining balance of goodwill was impaired. We periodically compare the
carrying value of goodwill with anticipated undiscounted future cash flows from
operations of the businesses we have acquired to evaluate the recoverability of
goodwill. We have concluded that the anticipated future cash flows associated
with intangible assets recognized in the acquisitions will continue
indefinitely, and there is no persuasive evidence that any material portion will
dissipate over a period shorter than 40 years. We will incur additional goodwill
in our future acquisitions.
The Financial Accounting Standards Board recently proposed new rules
relating to the accounting for business combinations and intangible assets. One
aspect of the proposal would not permit goodwill to be amortized over a period
in excess of 20 years; however, we cannot assure you that such a rule will be
adopted and, if adopted, as to the final provisions of any such rules. If such a
rule is adopted, we have been advised that it would likely only affect the
period over which we amortize goodwill on our future acquisitions.
Federal and state statutes allow courts, under specific circumstances, to void
guarantees and requires Debt Security holders to return payments received from
guarantors.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a guarantee could be voided, or claims in respect of a
guarantee could be subordinated to all other debts of that guarantor if, among
other things, the guarantor, at the time it incurred the indebtedness evidenced
by its guarantee received less than reasonably equivalent value or fair
consideration for the incurrence of such guarantee; and
o was insolvent or rendered insolvent by reason of such incurrence; or
o was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
o intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by that guarantor pursuant to its guarantee could be
voided and required to be returned to the guarantor, or to a fund for the
benefit of the creditors of the guarantor.
The measures of insolvency for purposes of these fraudulent transfer
laws will vary depending upon the law applied in any proceeding to determine
whether a fraudulent transfer has occurred. Generally, however, a guarantor
would be considered insolvent if:
o the sum of its debts, including contingent liabilities, were greater
than the fair saleable value of all of its assets, or
o if the present fair saleable value of its assets were less than the
amount that would be required to pay its probable liability on its
existing debts, including contingent liabilities, as they become
absolute and mature, or
o it could not pay its debts as they became due.
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<PAGE>
We can give you no assurance as to what standard a court would apply in
making such a determination or that a court would agree with our conclusions
that, after giving effect to a guarantee of Debt Securities, each guarantor will
not be insolvent.
USE OF PROCEEDS
Unless otherwise provided in a prospectus supplement, we will use the net
proceeds from the sale of the securities offered by this prospectus and any
prospectus supplement for our general corporate purposes, which may include
repayment of indebtedness, the acquisition of additional automobile dealerships,
additions to our working capital, and capital expenditures.
We will not receive any proceeds from the sale of Class A common stock by
the selling stockholders.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table contains our consolidated ratios of earnings to fixed
charges and earnings to fixed charges for the periods indicated.
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
------------------------ ------------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.............. 8.1 7.3 4.1 3.3 3.4 3.2
</TABLE>
For purposes of computing the ratios of earnings to fixed charges and
earnings to fixed charges: (1) earnings consist of income before provision for
income taxes plus fixed charges (excluding capitalized interest) and (2) fixed
charges consist of interest expensed and capitalized, amortization of debt
discount and expense relating to indebtedness and the portion of rental expense
representative of the interest factor attributable to leases for rental
property. There were no dividends paid or accrued during the periods presented
above.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued from time to time in one or more
series. The particular terms of each series that are offered by a prospectus
supplement will be described in the prospectus supplement.
The Debt Securities will be either our senior debt securities ("Senior
Debt Securities") or our subordinated debt securities ("Subordinated Debt
Securities"). The Senior Debt Securities and the Subordinated Debt Securities
will be issued under separate Indentures among us, our subsidiaries, if our
subsidiaries are guarantors of the Debt Securities, and a U.S. banking
institution (a "Trustee"). Senior Debt Securities will be issued under a "Senior
Indenture" and Subordinated Debt Securities will be issued under a "Subordinated
Indenture." Together, the Senior Indenture and the Subordinated Indenture are
called "Indentures."
We will describe the particular terms of any Debt Securities that we
offer and the extent to which the general provisions below will apply to those
Debt Securities in a prospectus supplement relating to those Debt Securities.
The terms of the Debt Securities will include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended. The Debt Securities will be subject to all those terms, and we
refer the holders of the Debt Securities to the Indenture and the Trust
Indenture Act for a statement of those terms. Unless we indicate otherwise,
capitalized terms have the meanings given in the applicable Indenture.
We have summarized selected provisions of the Indenture below. The
summary is not complete. The forms of the Indenture have been filed as exhibits
to the registration statement and you should read the Indentures for provisions
that may be important to you. In the summary below we have included references
to section numbers of the applicable Indentures so that you can easily locate
these provisions. Whenever we refer in this prospectus or in the prospectus
supplement to particular sections or defined terms of the Indenture, such
sections or defined terms are incorporated by reference herein or therein, as
applicable.
General
The Indentures provide that Debt Securities in separate series may be
issued from time to time without limitation as to aggregate principal amount. We
may specify a maximum aggregate principal amount for the Debt Securities of any
series. (Section 301) We will determine the terms and conditions of the Debt
Securities, including the maturity, principal and interest, but those terms must
be consistent with the Indenture. The Debt Securities will be our unsecured
obligations.
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<PAGE>
The Subordinated Debt Securities will be subordinated in right of payment
to the prior payment in full of all of our Senior Indebtedness (as defined) as
described under "--Subordination of Subordinated Debt Securities" and in the
prospectus supplement applicable to any Subordinated Debt Securities.
If specified in the prospectus supplement, our subsidiaries (the
"Guarantors") will unconditionally guarantee (the "Subsidiary Guarantees") on a
joint and several basis the Debt Securities as described under "--Subsidiary
Guarantees" and in the prospectus supplement. The Subsidiary Guarantees will be
unsecured obligations of each Guarantor.
The applicable prospectus supplement will set forth the price or prices
at which the Debt Securities to be offered will be issued and will describe the
following additional terms:
o the title of the Debt Securities;
o whether the Debt Securities are Senior Debt Securities or Subordinated
Debt Securities and, if Subordinated Debt Securities, subordinated
terms relating thereto;
o whether the Guarantors will provide Subsidiary Guarantees of the Debt
Securities;
o the aggregate principal amount of the Debt Securities or any limit
thereon;
o the dates on which the principal of the Debt Securities will be
payable;
o the interest rate of the Debt Securities and the interest payment dates
for the Debt Securities;
o the places where payments on the Debt Securities will be payable;
o any terms upon which the Debt Securities may be redeemed at our option;
o any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem the Debt Securities;
o the portion of the principal amount, if less than all, of the Debt
Securities that will be payable upon declaration of acceleration of the
Maturity of the Debt Securities;
o if convertible into our common stock or any of our other securities,
the terms on which such Debt Securities are convertible;
o whether the Debt Securities are secured and the terms of such security;
o whether the Debt Securities are defeasible;
o any addition to or change in the Events of Default;
o any addition to or change in the covenants in the applicable Indenture;
and
o any other terms of the Debt Securities not inconsistent with the
provisions of the applicable Indenture. (Section 301)
Debt Securities, including Original Issue Discount Securities, may be
sold at a substantial discount below their principal amount. Special United
States federal income tax considerations applicable to Debt Securities sold at
an original issue discount may be described in the applicable prospectus
supplement. In addition, special United States federal income tax or other
considerations applicable to any Debt Securities that are denominated in a
currency other than United States dollars may be described in the applicable
prospectus supplement.
Subordination of Subordinated Debt Securities
The indebtedness evidenced by the Subordinated Debt Securities will, to
the extent set forth in the Subordinated Indenture with respect to each series
of Subordinated Debt Securities, be subordinate in right of payment to the prior
payment in full of all of our Senior Debt, including the Senior Debt Securities.
The prospectus supplement relating to any Subordinated Debt Securities will
summarize the subordination provisions of the Subordinated Indenture applicable
to that series including:
o the applicability and effect of such provisions upon any payment or
distribution of our assets to creditors upon any liquidation,
bankruptcy, insolvency or similar proceedings;
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<PAGE>
o the applicability and effect of such provisions in the event of
specified defaults with respect to any or certain Senior Debt,
including the circumstances under which and the periods in which we
will be prohibited from making payments on the Subordinated Debt
Securities; and
o the definition of Senior Indebtedness applicable to the Subordinated
Debt Securities of that series.
The prospectus supplement will also describe as of a recent date the
approximate amount of Senior Indebtedness to which the Subordinated Debt
Securities of that series will be subordinated.
The failure to make any payment on any of the Subordinated Debt
Securities due to the subordination provisions of the Subordinated Indenture
described in the prospectus supplement will not prevent the occurrence of an
Event of Default on the Subordinated Debt Securities arising from any such
failure to make payment.
The subordination provisions described above will not be
applicable to payments in respect of the Subordinated Debt Securities from a
defeasance trust established in connection with any defeasance or covenant
defeasance of the Subordinated Debt Securities as described under "--Defeasance
and Covenant Defeasance."
Conversion Rights
The Debt Securities may be converted into other securities of our
company, if at all, according to the terms and conditions of an applicable
prospectus supplement. Such terms will include the conversion price, the
conversion period, provisions as to whether conversion will be at the option of
the holders of such series of Debt Securities or at the option of our company,
the events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption of such series of Debt
Securities.
Subsidiary Guarantees
If specified in the prospectus supplement, the Guarantors will guarantee
the Debt Securities of a series. Unless otherwise indicated in the prospectus
supplement, the following provisions will apply to the Subsidiary Guarantees of
the Guarantors.
Subject to the limitations described below and in the prospectus
supplement, the Guarantors will, jointly and severally, unconditionally
guarantee the performance and punctual payment when due, whether at Stated
Maturity, by acceleration or otherwise, of all our obligations under the
Indentures and the Debt Securities of a series (the "Guaranteed Obligations").
The Guarantors will also pay, in addition to the amount stated above, any and
all expenses (including reasonable counsel fees and expenses) incurred by the
applicable Trustee in enforcing any rights under a Subsidiary Guarantee with
respect to a Guarantor.
In the case of Subordinated Debt Securities, a Guarantor's Subsidiary
Guarantee will be subordinated in right of payment to the Senior Indebtedness of
such Guarantor on the same basis as the Subordinated Debt Securities are
subordinated to our Senior Indebtedness. No payment will be made by any
Guarantor under its Subsidiary Guarantee during any period in which payments by
us on the Subordinated Debt Securities are suspended by the subordination
provisions of the Subordinated Indenture.
Each Subsidiary Guarantee will be limited in amount to an amount not to
exceed the maximum amount that can be guaranteed by the relevant Guarantor
without rendering such Subsidiary Guarantee voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
Each Subsidiary Guarantee will be a continuing guarantee and will:
o remain in full force and effect until either (a) payment in full of all
the Guaranteed Obligations (or the applicable Debt Securities are
defeased and discharged in accordance with the defeasance provisions of
the Indentures) or (b) released as described in the following
paragraph,
o be binding upon each Guarantor, and
o inure to the benefit of and be enforceable by the applicable Trustee,
the holders and their successors, transferees and assigns.
In the event that a Guarantor ceases to be a Significant Subsidiary,
whether as a result of a disposition of all of the assets or all of the capital
stock of such Guarantor, by way of sale, merger, consolidation or otherwise,
such Guarantor will be deemed released and relieved of its obligations under its
Subsidiary Guarantee without any further action required on the part of the
Trustee or any holder and no other person acquiring or owning the assets or
capital stock of such Guarantor (if not otherwise a Significant Subsidiary) will
be required to enter into a Subsidiary Guarantee; provided, in each case, that
the transaction or transactions resulting in such Guarantor's ceasing to be a
Significant Subsidiary are carried out pursuant to and in compliance with all of
the applicable covenants in the Indenture. In addition, the prospectus
supplement may specify additional circumstances under which a Guarantor can be
released from its Subsidiary Guarantee.
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Form, Exchange and Transfer
The Debt Securities of each series will be issuable only in fully
registered form, without coupons, and, unless otherwise specified in the
applicable prospectus supplement, only in denominations of $1,000 and integral
multiple thereof. (Section 302)
At the option of the Holder, subject to the terms of the applicable
Indenture and the limitations applicable to Global Securities, Debt Securities
of each series will be exchangeable for other Debt Securities of the same series
of any authorized denomination and of a like tenor and aggregate principal
amount. (Section 305)
Subject to the terms of the applicable Indenture and the limitations
applicable to Global Securities, Debt Securities may be presented for exchange
as provided above or for registration of transfer (duly endorsed or with the
form of transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by us for such
purpose. No service charge will be made for any registration of transfer or
exchange of Debt Securities, but we may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith. Such
transfer or exchange will be effected upon the Security Registrar or such
transfer agent, as the case may be, begin satisfied with the documents of title
and identity of the person making the request. The Security Registrar and any
other transfer agent initially designated by us for any Debt Securities will be
named in the applicable prospectus supplement. (Section 305) We may at any time
designate additional transfer agents or rescind the designation of any transfer
agent or approve a change in the office through which any transfer agent acts,
except that we will be required to maintain a transfer agent in each Place of
Payment for the Debt Securities of each series. (Section 1002).
If the Debt Securities of any series (or of any series and specified
terms) are to be redeemed in part, we will not be required to (i) issue,
register the transfer of or exchange any Debt Security of that series (or of
that series and specified tenor, as the case may be) during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption of any such Debt Security selected for redemption and ending at the
close of business on the day of such mailing or (ii) register the transfer of or
exchange any Debt Security so selected for redemption, in whole or in part,
except the unredeemed portion of any such Debt Security being redeemed in part.
(Section 305)
Global Securities
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more Global Securities which will have an aggregate
principal amount equal to that of the Debt Securities represented thereby. Each
Global Security will be registered in the name of a Depositary or a nominee
thereof identified in the applicable prospectus supplement, will be deposited
with such Depository or nominee or a custodian therefor and will bear a legend
regarding the restrictions on exchanges and registration of transfer thereof
referred to below and any such other matters as may be provided for pursuant to
the Indenture.
Notwithstanding any provision of the applicable Indenture or any Debt
Security described herein, no Global Security may be exchanged or transferred in
whole or in part for Debt Securities registered in the name of any person other
than the Depositary for such Global Security or any nominee of such Depositary
unless:
o the Depositary is unwilling or unable to continue as depositary;
o an Event of Default has occurred and is continuing under the Debt
Securities represented by the Global Security; or
o as otherwise provided in a prospectus supplement.
All Debt Securities issued in exchange for a Global Security or any portion
thereof will be registered in such names as the Depositary may direct. (Section
305)
As long as the Depositary, or its nominee, is the registered Holder of
a Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the applicable Indenture. Except in the limited circumstances referred to above,
owners of beneficial interests in a Global Security will not be entitled to have
such Global Security or any Debt Securities represented thereby registered in
their names, will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange therefor and will not be considered to
be the owners or Holders of such Global Security or any Debt Securities
represented thereby for any purpose under the Debt Securities or the applicable
Indenture. All payments of principal of and any premium and interest on a Global
Security will be made to the Depositary or its nominee, as the case may be, as
the Holder thereof. The laws of some jurisdictions require that certain
purchasers of Debt Securities take physical delivery of such Debt Securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited
to institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any
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Global Security, the Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of Debt Securities represented
by the Global Security to the accounts of its participants. Ownership of
beneficial interests in a Global Security will be shown only on, and the
transfer of those ownership interests will be effected only through, records
maintained by the Depositary (with respect to participants' interests) or any
such participant (with respect to interests of persons held by such participants
on their behalf). Payments, transfers, exchanges and other matters relating to
beneficial interests in a Global Security may be subject to various policies and
procedures adopted by the Depositary from time to time. None of us, the
Guarantors, the Trustees or our agents or the Trustees will have any
responsibility or liability for any aspect of the Depositary's or any
participant's records relating to, or for payments made on account of,
beneficial interests in a Global Security, or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
Payment and Paying Agent
Unless otherwise indicated in the applicable prospectus supplement,
payment of interest on a Debt Security on any Interest Payment Date will be made
to the person in whose name such Debt Security is registered at the close of
business on the regular record date for such interest. (Section 307)
Unless otherwise indicated in the applicable prospectus supplement,
principal of and any premium and interest on the Debt Securities of a particular
series will be payable at the office of such Paying Agent or Paying Agents as we
may designate for such purpose from time to time, except that at our option
payment of any interest may be made by check mailed to the address of the Person
entitled thereto as such address appears in the Security Register. Unless
otherwise indicated in the applicable prospectus supplement, the corporate trust
office of the trustee under the Senior Indenture (the "Senior Trustee") in The
City of New York will be designated as sole Paying Agent for payments with
respect to Senior Debt Securities of each series, and the corporate trust office
of the Subordinated Trustee in the City of New York will be designated as the
sole Paying Agent for payment with respect to Subordinated Debt Securities of
each series. Any other Paying Agents initially designated by us for the Debt
Securities of a particular series will be named in the applicable prospectus
supplement. We may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office through which
any Paying Agent acts, except that we will be required to maintain a Paying
Agent in each Place of Payment for the Debt Securities of a particular series.
(Section 1002)
All moneys paid by us to a Paying Agent for the payment of the principal
of or any premium or interest on any Debt Security which remain unclaimed at the
end of two years after such principal, premium or interest has become due and
payable will be repaid to us, and the Holder of such Debt Security thereafter
may look only to us for payment thereof. (Section 1003)
Consolidation, Merger and Sale of Assets
We may consolidate with or merge into, or sell or lease substantially all
of our properties to any person only if:
o the successor person (if any) is a corporation, partnership, trust or
other entity organized and validly existing under the laws of any
domestic jurisdiction and assumes our obligations on the Debt
Securities and under the Indentures;
o immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time or
both,would become an Event of Default, shall have occurred and be
continuing; and
o any other conditions specified in the applicable prospectus supplement
are met. (Section 801)
Events of Default
Unless otherwise specified in the prospectus supplement, each of the
following will constitute an Event of Default under the applicable Indenture
with respect to Debt Securities of any series:
o failure to pay principal or premium on any Debt Security of that
series when due;
o failure to pay any interest on any Debt Security of that series when
due, continued for 30 days;
o failure to deposit any sinking fund payment, when due, on any Debt
Security of that series;
o failure to perform or comply with the provisions described under " --
Consolidation, Merger and Sale of Assets";
o failure to perform any of our other covenants in the Indenture (other
than a covenant included in such Indenture solely for the benefit of a
series other than that series) for 60 days after being given written
notice by the Trustee or holders of at least 25% in principal amount
of the Outstanding Debt Securities of that series;
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o default under the terms of any instrument evidencing or securing any
of our Debt or any Significant Subsidiary having an outstanding
principal amount of $20 million individually or in the aggregate which
default results in the acceleration of the payment of all or any
portion of such Debt (which acceleration is not rescinded within a
period of 10 days from the occurrence of such acceleration) or
constitutes the failure to pay all or any portion of the principal
amount of such Debt when due;
o the rendering of a final judgment or judgments against us or any
Significant Subsidiary in an amount in excess of $20 million that
remains undischarged or unstayed for a period of 60 days after the
date on which the right to appeal has expired;
o certain events of bankruptcy, insolvency or reorganization affecting
us, any Significant Subsidiary Guarantor or any group of Significant
Subsidiaries that together would constitute a Significant Subsidiary
Guarantor; and
o in the case of Debt Securities guaranteed by any Guarantor, the
Subsidiary Guarantee of any Guarantor is held by a final
non-appealable order or judgment of a court of competent jurisdiction
to be unenforceable or invalid or ceases for any reason to be in full
force and effect (other than in accordance with the terms of the
applicable Indenture) or any Guarantor or any person acting on behalf
of any Guarantor denies or disaffirms such Guarantor's obligations
under its Subsidiary Guarantee (other than by reason of a release of
such Guarantor from its Subsidiary Guarantee in accordance with the
terms of the applicable Indenture). (Section 501)
If an Event of Default (other than as a result of bankruptcy, insolvency
or reorganization) for any series of Debt Securities occurs and continues, the
applicable Trustee or the holders of at least 25% in aggregate principal amount
of the outstanding Debt Securities of that series may declare the principal
amount of the Debt Securities of that series (or, such portion of the principal
amount of such Debt Securities as may be specified in a prospectus supplement)
to be due and payable immediately. If an Event of Default results from
bankruptcy, insolvency or reorganization, the principal amount of all the Debt
Securities of a series (or, such portion of the principal amount of such Debt
Securities as may be specified in a prospectus supplement) will automatically
become immediately due and payable. If an acceleration occurs, subject to
specified conditions, the holders of a majority of the aggregate principal
amount of the outstanding Debt Securities of that series may rescind and annul
such acceleration. (Section 502)
Other than its duties in case of an Event of Default, a Trustee is not
obligated to exercise any of its rights or powers under the applicable Indenture
at the request or direction of any of the Holders, unless the Holders offer the
Trustee reasonable indemnity. (Section 603) Subject to the indemnification of
the Trustees, the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the Debt
Securities of that series. (Section 512)
The Holders of Debt Securities of any series will not have any right to
institute any proceeding with respect to the applicable Indenture unless:
o the Holder previously gave written notice to the Trustee of an Event
of Default;
o the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of that series have made a written
request, and such Holder or Holders have offered reasonable indemnity,
to the Trustee to institute such proceeding as trustee; and
o the Trustee fails to institute such proceeding, and has not received
from the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of that series a direction inconsistent
with such request, within 15 days after such notice, request and
offer. (Section 507)
However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for the enforcement of payment of the principal, interest or
premium on such Debt Security on or after the applicable due date specified in
such Debt Security (Section 508).
We will be required to furnish to each Trustee annually a statement by
certain of our officers as to whether or not we are in default in the
performance of any of the terms of the applicable Indenture. (Section 1004)
Amendment and Waiver
Modifications and amendments of the Indentures may be made by us, the
Guarantors and the applicable Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series affected by such modification or amendment; provided, however, that
no such modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby:
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Debt Security,
(2) reduce the principal amount of, or any premium or interest on,
any Debt Security,
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(3) reduce the amount of principal of an Original Issue Discount
Security or any other Debt Security payable upon acceleration of
the Maturity thereof,
(4) change the place or currency of payment of principal of, or any
premium or interest on, any Debt Security,
(5) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security,
(6) in the case of Subordinated Debt Securities, modify the
subordination provisions in a manner adverse to the Holders of
the Subordinated Debt Securities,
(7) except as provided in the applicable Indenture, release the
Subsidiary Guarantee of a Guarantor,
(8) reduce the percentage in principal amount of Outstanding Debt
Securities of any series, the consent of whose Holders is
required for modification or amendment of the Indenture,
(9) reduce the percentage in principal amount of Outstanding Debt
Securities of any series necessary for waiver of compliance with
certain provisions of the Indenture or for waiver of certain
defaults or
(10) modify such provisions with respect to modification and waiver.
(Section 902)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may waive compliance by us with certain restrictive
provisions of the applicable Indenture. The Holders of a majority in principal
amount of the Outstanding Debt Securities of any series may waive any past
default under the applicable Indenture, except a default in the payment of
principal, premium or interest and certain covenants and provisions of the
Indenture which cannot be amended without the consent of the Holder of each
Outstanding Debt Security of such series affected. (Section 513)
The Indentures provide that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver or other action under such
Indenture as of any date, (A) the principal amount of an Original Issue Discount
Security that will be deemed to be Outstanding will be the amount of the
principal thereof that would be due and payable as of such date upon
acceleration of the Maturity thereof to such date, (B) if, as of such date, the
principal amount payable at the Stated Maturity of a Debt Security is not
determinable (for example, because it is based on an index), the principal
amount of such Debt Security deemed to be Outstanding as of such date will be an
amount determined in the manner prescribed for such Debt Security and (C) the
principal amount of a Debt Security denominated in one or more foreign
currencies or currency units that will be deemed to be Outstanding will be the
U.S. dollar equivalent, determined as of such date in the manner prescribed for
such Debt Security, of the principal amount of such Debt Security (or, in the
case of a Debt Security described in clause (A) or (B) above, of the amount
described in such clause). Certain Debt Securities, including those for whose
payment or redemption money has been deposited or set aside in trust for the
Holders and those that have been fully defeased pursuant to Section 1502, will
not be deemed to be Outstanding. (Section 101)
Except in certain limited circumstances, we will be entitled to set any
day as a record date for the purpose of determining the Holders of Outstanding
Debt Securities of any series entitled to give or take any direction, notice,
consent, waiver or other action under the applicable Indenture, in the manner
and subject to the limitations provided in the Indenture. In certain limited
circumstances, the Trustee will be entitled to set a record date for action by
Holders. If a record date is set for any action to be taken by Holders of a
particular series, such action may be taken only by persons who are Holders of
Outstanding Debt Securities of that series on the record date. To be effective,
such action must be taken by Holders of the requisite principal amount of such
Debt Securities within a specified period following the record date. For any
particular record date, this period will be 180 days or such other period as may
be specified by us (or the Trustee, if it set the record date), and may be
shortened or lengthened (but not beyond 180 days) from time to time. (Section
104)
Defeasance And Covenant Defeasance
If and to the extent indicated in the applicable prospectus supplement,
we may elect, at our option at any time, to have the provisions of the
Indentures, relating to defeasance and discharge of indebtedness (Section 1502)
and to defeasance of certain restrictive covenants (Section 1503) applied to the
Debt Securities of any series, or to any specified part of a series.
Defeasance and Discharge. The Indentures provide that, upon our exercise
of our option (if any) we will be discharged from all our obligations, and have
the subordination provisions of any Subordinated Indenture (if any) cease to be
effective, with respect to the applicable Debt Securities upon the deposit in
trust for the benefit of the holders of such Debt Securities of money or U.S.
Government Obligations, or both, which, through the payment of principal and
interest in respect thereof in accordance with their terms, will provide money
in an amount sufficient to pay the principal of and any premium and interest on
such Debt Securities on the respective Stated Maturities in accordance with the
terms of the applicable Indenture and such Debt Securities.
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Such defeasance or discharge may occur only if, among other things,
(1) we have delivered to the applicable Trustee an Opinion of Counsel
to the effect that we have received from, or there has been
published by, the United States Internal Revenue Service a
ruling, or there has been a change in tax law, in either case to
the effect that Holders of such Debt Securities will not
recognize gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be
subject to federal income tax on the same amount, in the same
manner and at the same times as would have been the case if such
deposit, defeasance and discharge were not to occur;
(2) no Event of Default or event that with the passing of time or the
giving of notice, or both, shall constitute an Event of Default
shall have occurred and be continuing;
(3) such deposit, defeasance and discharge will not result in a
breach or violation of, or constitute a default under, any
agreement or instrument to which we or any Significant Subsidiary
is a party or by which we or any Significant Subsidiary is bound;
(4) in the case of Subordinated Debt Securities, at the time of such
deposit, no default in the payment of all or a portion of
principal of (or premium, if any) or interest on or other
obligations in respect of any of our Senior Indebtedness shall
have occurred and be continuing and no other event of default
with respect to any of our Senior Indebtedness shall have
occurred and be continuing permitting after notice or the lapse
of time, or both, the acceleration thereof; and
(5) we have delivered to the Trustee an Opinion of Counsel to the
effect that such deposit shall not cause the Trustee or the trust
so created to be subject to the Investment Company Act of 1940.
(Sections 1502 and 1504)
Any additional conditions to the discharge of our obligations with
respect to a series of Debt Securities will be described in an applicable
prospectus supplement.
Defeasance of Certain Covenants. The Indentures provide that, upon our
exercise of our option (if any), we may omit to comply with specified
restrictive covenants as described in an applicable prospectus supplement and
the occurrence of specified Events of Default in "--Events of Default" and any
Events of Default described in an applicable prospectus supplement, will not be
deemed to either be or result in an Event of Default and, if such Debt
Securities are Subordinated Debt Securities, the provisions of the Subordinated
Indenture relating to subordination will cease to be effective, in each case
with respect to such Debt Securities. In order to exercise such option, we must
deposit, in trust for the benefit of the Holders of such Debt Securities, money
or U.S. Government Obligations, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of and any premium and
interest on such Debt Securities on the respective Stated Maturities in
accordance with the terms of the applicable Indenture and such Debt Securities.
Such covenant defeasance may occur only if we have delivered to the applicable
Trustee an Opinion of Counsel that in effect says that Holders of such Debt
Securities will not recognize gain or loss for federal income tax purposes as a
result of such deposit and defeasance of certain obligations and will be subject
to federal income tax on the same amount, in the same manner and at the same
times as would have been the case if such deposit and defeasance were not to
occur and the requirements set forth in clauses (2), (3), (4) and (5) above are
satisfied. If we exercise this option with respect to any Debt Securities and
such Debt Securities were declared due a and payable because of the occurrence
of any Event of Default, the amount of money and U.S. Government Obligations so
deposited in trust would be sufficient to pay amounts due on such Debt
Securities at the time of their respective Stated Maturities but may not be
sufficient to pay amounts due on such Debt Securities upon any acceleration
resulting from such Event of Default. In such case, we would remain liable for
such payments. (Sections 1503 and 1504) Any additional conditions to exercising
this option with respect to a series of Debt Securities will be described in an
applicable prospectus supplement.
Notices
Notices to Holders of Debt Securities will be given by mail to the
addresses of such Holders as they may appear in the Security Register. (Sections
101 and 106)
Title
We, the Guarantors, the Trustees and any agent of ours may treat the
Person in whose name a Debt Security is registered as the absolute owner of the
Debt Security, whether or not such Debt Security may be overdue, for the purpose
of making payment and for all other purposes. (Section 309)
Governing Law
The Indentures and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State of New York. (Section 112)
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DESCRIPTION OF CAPITAL STOCK
Sonic's authorized capital stock consists of (a) 100,000,000 shares of
Class A common stock, $.01 par value, (b) 30,000,000 shares of Class B common
stock, $.01 par value and (c) 3,000,000 shares of preferred stock, $.10 par
value (of which 300,000 shares have been designated as Class A convertible
preferred stock). As of November 16, 2000, Sonic had 30,074,938 outstanding
shares of Class A common stock, 12,250,000 outstanding shares of Class B common
stock and 250.5 outstanding shares of Class A convertible preferred stock. In
pending acquisitions, Sonic has agreed to issue approximately $2.0 million in
Class A common stock and $4.6 million in Class A convertible preferred stock
convertible into Class A common stock.
The following summary description of Sonic's capital stock does not
purport to be complete and is qualified in its entirety by reference to Sonic's
Amended and Restated Certificate of Incorporation (which was filed as an exhibit
to Sonic's Registration Statement on Form S-1 (File No. 333-33295)), Sonic's
amendment to its Amended and Restated Certificate of Incorporation (which is
filed as an exhibit to the registration statement on Form S-3 (File No.
333-82615)), Sonic's Certificate of Designations relating to the Class A
convertible preferred stock (which was filed as an exhibit to Sonic's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998) and to Delaware law.
Reference is made to such exhibits and to Delaware law for a detailed
description of the provisions thereof summarized below.
Preferred Stock
Class A Convertible Preferred Stock
Dividends. The preferred stock has no preferential dividends. Rather,
holders of preferred stock are entitled to participate in dividends payable on
the Class A common stock on an "as-if-converted" basis.
Voting Rights. Each share of preferred stock entitles its holder to a
number of votes equal to that number of shares of Class A common stock into
which it could be converted as of the record date for the vote.
Liquidation Rights. The preferred stock has a liquidation preference of
$1,000 per share.
Conversion Rights. Each share of preferred stock is convertible into
shares of Class A common stock at the holder's option at specified conversion
rates. After the second anniversary of the date of issuance, any shares of
preferred stock that have not been converted are subject to mandatory conversion
to Class A common stock at the option of Sonic. No fractional shares of Class A
common stock will be issued upon conversion of any shares of preferred stock.
Instead, Sonic will pay cash equal to the value of such fractional share.
Generally, each share of preferred stock is convertible into that number
of shares of Class A common stock that has an aggregate Market Price at the time
of conversion equal to $1,000 (with certain adjustments for the Series II and
Series III preferred stock). Conversion of Series II preferred stock is subject
to certain adjustments that have the effect of limiting increases and decreases
in the value of the Class A common stock receivable upon conversion by 10% of
the original value of the shares of Series II preferred stock. Conversion of
Series III preferred stock is subject to certain adjustments that have the
effect of limiting increases in the value of Class A common stock receivable
upon conversion by 10% of the original value of the shares of Series III
preferred stock. "Market Price" is defined as the average closing price per
share of Class A common stock on the New York Stock Exchange for the 20 trading
days immediately preceding the date of conversion. If the Class A common stock
is no longer listed on the New York Stock Exchange, then the Market Price will
be determined on the basis of prices reported on the principal exchange on which
the Class A common stock is listed, or if not so listed, prices furnished by
NASDAQ. If the Class A common stock is not listed on an exchange or reported on
by NASDAQ, then the Market Price will be determined by Sonic's board of
directors.
Before the first anniversary of the date of issuance of preferred stock,
each holder of preferred stock is unable to convert without first giving Sonic
10 business days' notice and an opportunity to redeem such preferred stock at
the then applicable redemption price.
Redemption. The preferred stock is redeemable at Sonic's option at any
time after the date of issuance. The redemption price for the Series I preferred
stock is $1,000 per share. The redemption price for the Series II preferred
stock and the Series III preferred stock is as follows: (a) prior to the second
anniversary of the date of issuance, the redemption price is the greater of
$1,000 per share or the aggregate Market Price of the Class A common stock into
which it could be converted at the time of redemption, and (b) after the second
anniversary of the date of issuance, the redemption price is the aggregate
Market Price of the Class A common stock into which it could be converted at the
time of redemption. There is no restriction on Sonic's ability to redeem the
preferred stock while there is an arrearage in payment of dividends on such
preferred stock.
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Undesignated Preferred Stock
As of the date of this prospectus, no shares of preferred stock are
outstanding other than the Class A convertible preferred stock discussed above.
Our board of directors may authorize the issuance of preferred stock in one or
more series from our undesignated preferred stock or our Class A convertible
preferred stock and, with respect to presently undesignated preferred stock, may
determine, with respect to any series, the designations, powers, preferences and
rights of that series, and the qualifications, limitations and restrictions of
that series, including:
o the designation of the series;
o the number of shares of the series, which number may thereafter be
increased or decreased by our board of directors (but not below the
number of shares of that series then outstanding);
o whether dividends, if any, will be cumulative or noncumulative and the
dividend rate of the series;
o the conditions under which and the dates upon which dividends will be
payable, and the relation which those dividends will bear to the
dividends payable on any other class or classes of stock;
o the redemption rights and price or prices, if any, for shares of the
series;
o the terms and amounts of any sinking fund provided for the purchase or
redemption of shares of the series;
o the amounts payable on and the preferences of shares of the series, in
the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of our company;
o whether the shares of the series will be convertible into shares of
any other class or series, or any other security, of our company or
any other corporation, and, if so, the specification of that other
class or series or that other security, the conversion price or prices
or rate or rates, that adjustments to that price or those prices or
that rate or those rates, the date or dates as of which those shares
will be convertible and all other terms and conditions upon which the
conversion may be made;
o restrictions on the issuance of shares of the same series or of any
other class or series; and
o the voting rights, if any, of the holders of shares of that series.
The prospectus supplement will specify any terms of any series of
preferred stock offered by it. The description of the terms of the preferred
stock to be set forth in an applicable prospectus supplement will not be
complete and will be subject to and qualified in its entirety by reference to
the statement of resolution relating to the applicable series of preferred
stock. The registration statement of which this prospectus forms a part will
include the statement of resolution as an exhibit or incorporate it by
reference.
We believe that the ability of our board of directors to issue one or
more series of preferred stock from our undesignated preferred stock will
provide us with flexibility in structuring possible future financings and
acquisitions and in meeting other corporate needs that might arise. Our
authorized shares of preferred stock will be available for issuance without
further action by our stockholders, unless that action is required by applicable
law or the rules of any stock exchange or automated quotation system on which
our securities may be listed or traded. The New York Stock Exchange currently
requires stockholder approval as a prerequisite to listing shares in several
instances, including where the present or potential issuance of shares could
result in an increase in the number of shares of common stock outstanding, or in
the amount of voting securities outstanding, of at least 20%.
Although our board of directors has no intention at the present time of
doing so, it could issue a series of preferred stock that could, depending on
the terms of that series, impede the completion of a merger, tender offer or
other takeover attempt. Our board of directors may decide to issue those shares
based on its judgment as to the best interests of our company and our
stockholders. Our board of directors, in so acting, could issue preferred stock
having terms that could discourage a potential acquiror from making an
unsolicited and unwanted acquisition attempt through which that acquiror may be
able to change the composition of our board of directors, including a tender
offer or other transaction that some, or a majority, of our stockholders might
believe to be in their best interests or in which stockholders might receive a
premium for their stock over the then current market price of that stock.
Common Stock
Sonic'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.
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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 Sonic. Holders of Class B common stock are
entitled to 10 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 our 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 Sonic 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 Sonic constituting a
o "going private" transaction,
o sale or other disposition of all or substantially all of Sonic's
assets,
o sale or transfer that would cause the nature of Sonic's business to be
no longer primarily oriented toward automobile dealership operations
and related activities, or merger or consolidation of Sonic 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 (a) 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, (b) any corporation or organization
(other than Sonic or a majority-owned subsidiary of Sonic) 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, (c) 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, (d) 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 (e) 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:
o Mr. Smith and his guardian, conservator, committee, or
attorney-in-fact;
o William S. Egan and his guardian, conservator, committee, or
attorney-in-fact;
o each lineal descendant of Messrs. Smith and Egan (a "Descendant") and
their respective guardians, conservators, committees or
o attorneys-in-fact; and
o each "Family Controlled Entity."
The term "Family Controlled Entity" means (a) any not-for-profit
corporation if at least 80% of its board of directors is composed of Mr. Smith,
Mr. Egan and/or Descendants; (b) any other corporation if at least 80% of the
value of its outstanding equity is owned by members of the Smith Group; (c) any
partnership if at least 80% of the value of the partnership interests are owned
by members of the Smith Group; and (d) any limited liability or similar company
if at least 80% of the value of the company is owned by members of the Smith
Group.
Under Sonic's charter and Delaware law, the holders of Class A common
stock and/or Class B common stock are each entitled to vote
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as a separate class, as applicable, with respect to any amendment to Sonic'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 our Board
of Directors out of funds legally available for that purpose. An additional
requirement is that dividends paid in shares of Class A common stock shall be
paid only to holders of Class A common stock, and dividends paid in shares of
Class B common stock shall be paid only to holders of Class B common stock.
Sonic's charter 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
must be made at the same time.
Other Rights
Stockholders of Sonic have no preemptive or other rights to subscribe for
additional shares. In the event of the liquidation, dissolution or winding up of
Sonic, 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.
Delaware Law, Certain Charter and Bylaw Provisions
Certain provisions of Delaware Law and of Sonic's charter 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.
Delaware Antitakeover Law. Sonic is subject to the provisions of Delaware
law, including Section 203. In general, Section 203 prohibits a public Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which such person became an interested stockholder unless: (a) prior to such
date, the Board of Directors approved either the business combination or the
transaction, which resulted in the stockholder becoming an interested
stockholder; or (b) upon becoming an interested stockholder, the stockholder
then owned at least 85% of the voting stock, as defined in Section 203; or (c)
subsequent to such date, the business combination is approved by both the Board
of Directors and by holders of at least 66 2/3% of the corporation's outstanding
voting stock, excluding shares owned by the interested stockholder. For these
purposes, the term "business combination" includes mergers, asset sales and
other similar transactions with an "interested stockholder." An "interested
stockholder" is a person who, together with affiliates and associates, owns (or,
within the prior three years, did own) 15% or more of the corporation's voting
stock. Although Section 203 permits a corporation to elect not to be governed by
its provisions, Sonic to date has not made this election.
Classified Board of Directors. Sonic's bylaws provide for the Board of
Directors to be divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of the Board of Directors
will be elected each year. Classification of the Board of Directors expands the
time required to change the composition of a majority of directors and may tend
to discourage a takeover bid for Sonic. Moreover, under Delaware law, in the
case of a corporation having a classified board of directors, the stockholders
may remove a director only for cause. This provision, when coupled with the
provision of the bylaws authorizing only the board of directors to fill vacant
directorships, will preclude stockholders of Sonic from removing incumbent
directors without cause, simultaneously gaining control of the Board of
Directors by filing the vacancies with their own nominees.
Special Meetings of Stockholders. Sonic's bylaws provide that special
meetings of stockholders may be called only by the Chairman or by the Secretary
or any Assistant Secretary at the request in writing of a majority of Sonic's
Board of Directors. Sonic's bylaws also provide that no action required to be
taken or that may be taken at any annual or special meeting of stockholders may
be taken without a meeting; the powers of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied. These
provisions may make it more difficult for stockholders to take action opposed by
the Board of Directors.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. Sonic's bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for election
as directors at an annual or a special meeting of stockholders, must provide
timely notice thereof in writing. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive office of
Sonic, (a) in the case of an annual meeting that is called for a date that is
within 30 days before or after the anniversary date of the immediately preceding
annual meeting of stockholders, not less than 60 days nor more than 90 days
prior to such anniversary date, and, (b) in the case of an annual meeting that
is called for a date that is not within 30 days before or after the anniversary
date of the immediately preceding annual meeting, or in the case of a special
meeting of stockholders called for the purpose of electing directors, not later
than the close of business on the tenth day following the day on which notice of
the date of the meeting was mailed or public disclosure of the date of the
meeting was made, whichever occurs first. Our bylaws also specify certain
requirements for a
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stockholder's notice to be in proper written form. These provisions may
preclude some stockholders from bringing matters before the stockholders at an
annual or special meeting or from making nominations for directors at an annual
or special meeting.
Conflict of Interest Procedures. Sonic's charter contains provisions
providing that transactions between Sonic and its affiliates must be no less
favorable to Sonic than would be available in transactions involving arms'
length dealing with unrelated third parties. Moreover, any such transaction
involving aggregate payments in excess of $500,000 must be approved by a
majority of Sonic's directors and a majority of Sonic's independent directors.
Otherwise, Sonic must obtain an opinion as to the financial fairness of the
transactions to be issued by an investment banking or appraisal firm of national
standing.
Limitation of Liability of Officers and Directors
Delaware law authorizes corporations to limit or eliminate the personal
liability of officers and directors to corporations and their stockholders for
monetary damages for breach of officers' and directors' fiduciary duty of care.
The duty of care requires that, when acting on behalf of the corporation,
officers and directors must exercise an informed business judgment based on all
material information reasonably available to them. Absent the limitations
authorized by Delaware law, officers and directors are accountable to
corporations and their stockholders for monetary damages for conduct
constituting gross negligence in the exercise of their duty of care. Delaware
law enables corporations to limit available relief to equitable remedies such as
injunction or rescission.
Our certificate of incorporation limits the liability of our officers and
directors to us and our stockholders to the fullest extent permitted by Delaware
law. Specifically, our officers and directors will not be personally liable for
monetary damages for breach of an officer's or director's fiduciary duty in such
capacity, except for liability
o for any breach of the officer's or director's duty of loyalty to us or
our stockholders,
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
o for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation law, or
o for any transaction from which the officer or director derived an
improper personal benefit.
The inclusion of this provision in our certificate of incorporation may
reduce the likelihood of derivative litigation against our officers and
directors, and may discourage or deter stockholders or management from bringing
a lawsuit against our officers and directors for breach of their duty of care,
even though such an action, if successful, might have otherwise benefited us and
our stockholders.
Both our certificate of incorporation and bylaws provide indemnification
to our officers and directors and certain other persons with respect to certain
matters to the maximum extent allowed by Delaware law as it exists now or may
hereafter be amended. These provisions do not alter the liability of officers
and directors under federal securities laws and do not affect the right to sue
(nor to recover monetary damages) under federal securities laws for violations
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling Sonic
pursuant to the foregoing provisions, Sonic has been informed that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
Transfer Agent and Registrar
Our transfer agent and registrar of our common stock is First Union
National Bank.
DESCRIPTION OF WARRANTS
We may issue Class A common stock warrants for the purchase of our Class
A common stock. Class A common stock warrants are referred to in this prospectus
as "Warrants." Warrants may be issued independently or together with any Class A
common stock, preferred stock or Debt Securities offered by any prospectus
supplement and may be attached to or separate from the Class A common stock,
preferred stock or Debt Securities.
Each series of Warrants will be issued under a separate warrant agreement
to be entered into between us and a bank or trust company, as warrant agent. The
warrant agent will act solely as our agent in connection with warrant
certificates evidencing the Warrants. The warrant agent will not assume any
obligation or relationship of agency or trust for or with any holders of warrant
certificates or beneficial owners of Warrants.
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The following description summarizes the general terms of the form of
warrant agreements and warrant certificates, which have been filed as exhibits
to the registration statement of which this prospectus forms a part. You should
read the warrant agreement and warrant certificates for provisions summarized
below and others that may be important to you.
General
The prospectus supplement relating to a particular series of warrants
will include the specific forms of the series, including, where applicable, the
following:
o the title of the Warrants;
o the offering price;
o the currency or currency units in which the purchase price for offered
Warrants may be payable;
o the number of shares of Class A common stock purchasable upon the
exercise of a Warrant;
o the redemption or call provisions, if any, applicable to the Warrants:
o the date on and after which the Warrants and the related shares of
Class A common stock or preferred stock or the related Debt Securities
will be separately transferable;
o the price and currency or currency units at which the shares of Class
A common stock, as the case may be, may be purchased upon exercise;
o the date on which the right to exercise the Warrants begins and the
date on which the right to exercise expires (the "expiration date");
o the minimum and maximum amount of Warrants that may be exercised at
any one time;
o the antidilution provisions of the Warrants, if any;
o United States federal income tax consequences applicable to that
Warrant;
o whether the Warrants represented by the warrant certificates will be
issued in registered or bearer form;
o procedures for cashless exercise, if any, for the Warrants; and
o any other terms of the Warrants, including terms, procedures and
limitations relating to exchange and exercise of the Warrants.
Transfers and Exchange
Warrant certificates may be exchanged for new warrant certificates of
different denominations, may, if in registered form, be presented for
registration of transfer, and may be exercised at the corporate trust office of
the warrant agent. We may specify other offices where these activities may be
conducted in an applicable prospectus supplement. Before the exercise of any
Warrants, holders of the Warrants will not have any of the rights of holders of
Class A common stock, as applicable, purchasable upon exercise. This means
holders of Warrants will not have the right to receive payments of dividends, if
any, on the Class A common stock purchasable upon such exercise or to exercise
any applicable right to vote.
Exercise
Each Warrant will entitle its holder to purchase the number of shares of
Class A common stock at the exercise price that is set forth in, or calculable
from, the applicable prospectus supplement. Holders will be able to exercise
Warrants at any time up to the time on the expiration date set forth in the
applicable prospectus supplement. After that time, or a later date to which such
expiration date may be extended by us, unexercised Warrants will become void.
Holders will be able to exercise Warrants by delivering to the warrant
agent at its corporate trust office warrant certificates properly completed and
paying the exercise price. As soon as practicable after such delivery, we will
issue and deliver to the indicated holder the shares of Class A common stock
issuable upon that exercise. If fewer than all of the Warrants represented by a
warrant certificate are exercised, we will issue a new warrant certificate for
the remaining number of Warrants.
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CERTAIN MANUFACTURER RESTRICTIONS
Under agreements between Sonic and certain manufacturers, Sonic has
agreed to provide the statement provided below:
No automobile manufacturer or distributor has been involved,
directly or indirectly, in the preparation of this prospectus or in the
offering being made hereby. No automobile manufacturer or distributor has
been authorized to make any statements or representations in connection
with the offering, and no automobile manufacturer or distributor has any
responsibility for the accuracy or completeness of this prospectus or for
the offering.
Under Sonic's Dealer Agreement with General Motors ("GM"), Sonic has
agreed, among other things, to disclose the following provisions:
Sonic will deliver to GM copies of all Schedules 13D and 13G, and
all amendments thereto and terminations thereof, received by Sonic,
within five days of receipt of such Schedules. If Sonic is aware of any
ownership of its stock that should have been reported to it on Schedule
13D but that is not reported in a timely manner, it will promptly give GM
written notice of such ownership, with any relevant information about the
owner that Sonic possesses.
If Sonic, through its board of directors or through shareholder
action, proposes or if any person, entity or group sends Sonic a Schedule
13D, or any amendments thereto, disclosing (a) an agreement to acquire or
the acquisition of aggregate ownership of more than 20% of the voting
stock of Sonic and (b) Sonic, through its board of directors or through
shareholder action, proposes or if any plans or proposals which relate to
or would result in the following: (i) the acquisition by any person of
more than 20% of the voting stock of Sonic other than for the purposes of
ordinary passive investment; (ii) an extraordinary corporate transaction,
such as a material merger, reorganization or liquidation, involving Sonic
or a sale or transfer of a material amount of assets of Sonic and its
subsidiaries; (iii) any change which, together with any changes made to
the board of directors within the preceding year, would result in a
change in control of the then current board of Sonic; or (iv) in the case
of an entity that produces motor vehicles or controls or is controlled by
or is under common control with an entity that either produces motor
vehicles or is a motor vehicle franchiser, the acquisition by any person,
entity or group of more than 20% of the voting stock of Sonic and any
proposal by any such person, entity or group, through the Sonic board of
directors or shareholders action, to change the board of directors of
Sonic, then, if such actions in GM's business judgment could have a
material or adverse effect on its image or reputation in the GM
dealerships operated by Sonic or be materially incompatible with GM's
interests (and upon notice of GM's reasons for such judgment), Sonic has
agreed that it will take one of the remedial actions set forth in the
next paragraph within 90 days of receiving such Schedule 13D or such
amendment.
If Sonic is obligated under the previous paragraph to take
remedial action, it will (a) transfer to GM or its designee, and GM or
its designee will acquire the assets, properties or business associated
with any GM dealership operated by Sonic at fair market value as
determined in accordance with GM's dealership agreement with Sonic, or
(b) provide evidence to GM that such person, entity or group no longer
has such threshold level of ownership interest in Sonic or that the
actions described in clause (b) of the previous paragraph will not occur.
Should Sonic or its GM franchisee subsidiary enter into an
agreement to transfer the assets of the GM franchisee subsidiary to a
third party, the right of first refusal described in the GM dealer
agreement shall apply to any such transfer.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the shares to be offered hereby by the selling
stockholders as of November 16, 2000, and as adjusted to reflect the sale of the
securities offered hereby by the selling stockholders. Except as otherwise
indicated, to our knowledge, all persons listed below have sole voting and
investment power with respect to their securities, except to the extent that
authority is shared by spouses under applicable law or as otherwise noted below.
The information in the table concerning the selling stockholders who may offer
Class A common stock hereunder from time to time is based on information
provided to us by such stockholders. Information concerning such selling
stockholders may change from time to time and any changes of which we are
advised will be set forth in a prospectus supplement to the extent required. See
"Plan of Distribution." To our knowledge, none of the selling stockholders has
had within the past three years any material relationship with Sonic or any of
its predecessors or affiliates, except as set forth in the footnotes to the
following table.
<TABLE>
<CAPTION>
Shares Shares
Beneficially Shares Beneficially
Owned Prior to to be Sold Owned After
Name of Selling Stockholder the Offering In the Offering the Offering
--------------------------- ------------ --------------- ------------
<S> <C> <C> <C>
TCW Leveraged Income Trust, L.P. (1)............................. 177,864 7,247 170,617 *
TCW Shared Opportunity Fund II, L.P. (1)......................... 19,734 724 19,010 *
Crescent/Mach I Partners, L.P. (1)............................... 98,675 3,623 95,052 *
</TABLE>
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<TABLE>
<CAPTION>
Shares Shares
Beneficially Shares Beneficially
Owned Prior to to be Sold Owned After
Name of Selling Stockholder the Offering In the Offering the Offering
--------------------------- ------------ --------------- ------------
<S> <C> <C> <C>
T
TCW/Crescent Mezzanine Partners, L.P. (1)........................ 948,460 34,831 913,629 *
TCW/Crescent Mezzanine Trust (1)................................. 288,643 10,595 278,048 *
TCW/Crescent Mezzanine Investment Partners, L.P. (1)............. 25,956 956 25,000 *
</TABLE>
----------
* Represents less than 1% of the outstanding Class A common stock.
(1) Except as otherwise noted below, these selling stockholders agreed not
to offer, sell or otherwise dispose of, or contract to sell or dispose
of, all shares shown as beneficially owned, as follows: (A) as to 15%
of the shares indicated, until June 7, 2000 and (B) as to the remaining
shares indicated, until December 10, 2000. Beginning on March 9, 2000,
the TCW affiliated selling stockholders were entitled to sell as a
group, without accumulation of amounts previously unsold, up to 7,500
shares per day from 419,530 of the total shares held by such group. The
shares to be sold in the offering were issued to these stockholders and
are now being registered pursuant to a price protection provision in
the Agreement and Plan of Merger and Reorganization dated as of October
31, 1999, among Sonic Automotive, Inc., FAA Acquisition Corp.,
FirstAmerica Automotive, Inc. and certain of the stockholders of
FirstAmerica Automotive, Inc.
PLAN OF DISTRIBUTION
We may sell securities pursuant to this prospectus (a) through
underwriters or dealers; (b) through agents; or (c) directly to one or more
purchasers, including existing stockholders in a rights offering.
The selling stockholders may sell or distribute some or all of their
shares from time to time through dealers or brokers or other agents or directly
to one or more purchasers, including pledges, in a variety of ways, including:
o transactions, which may involve crosses and block transactions, on the
New York Stock Exchange or other exchanges on which the Class A common
stock may be listed for trading;
o privately negotiated transactions, including sales pursuant to
pledges;
o in the over-the-counter market;
o in brokerage transactions; or
o in a combination of these types of transactions.
These transactions may be effected by the selling stockholders at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices, or at fixed prices, which may be changed.
This prospectus also may be used, with Sonic's consent, by donees of the selling
stockholders, or by other persons, including pledgees, acquiring the shares from
the selling stockholders and who wish to offer and sell their shares under
circumstances requiring or making desirable its use. To the extent required,
Sonic will file, during any period in which offers or sales are being made, one
or more supplements to this prospectus to set forth the names of donees or
pledgees of selling stockholders and any other material information with respect
to the plan of distribution not previously disclosed.
By Underwriters
If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account. The underwriters may resell
the securities in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of
sale. The obligations of the underwriters to purchase the securities will be
subject to certain conditions. Unless indicated in the prospectus supplement the
underwriters must purchase all the securities of the series offered by a
prospectus supplement if any of the securities are purchased. Any initial public
offering price and any discounts or concessions allowed or re-allowed or paid to
dealers may be changed from time to time. The underwriters may, from time to
time, effect transactions that stabilize or maintain the market price of the
securities at a level above that which might otherwise prevail in the open
market, such stabilizing activities, if commenced, may be discontinued at any
time.
By Agents
Securities may also be sold through agents. Unless indicated in the
prospectus supplement, any such agent is acting on a best efforts basis for the
period of its appointment.
Direct Sales; Rights Offerings
Securities may also be sold directly by us or the selling stockholders.
In this case, no underwriters or agents would be involved. We or the selling
stockholders may sell offered securities upon the exercise of rights that may be
issued to our security holders.
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Delayed Delivery Arrangements
We or the selling stockholders may authorize agents, underwriters or
dealers to solicit offers by certain institutional investors to purchase offered
securities providing for payment and delivery on a future date specified in the
prospectus supplement. Institutional investors to which such offers may be made,
when authorized, include commercial and savings banks, insurance companies,
pension funds, investment companies, education and charitable institutions and
other institutions. The obligations of any such purchasers under such delayed
delivery and payment arrangements will be subject to the condition that the
purchase of the offered securities will not at the time of delivery be
prohibited under applicable law. The underwriters and such agents will not have
any responsibility with respect to the validity or performance of such
contracts.
General Information
Underwriters, brokers, dealers and agents that participate in the
distribution of offered securities may be underwriters as defined in the
Securities Act, and any discounts, concessions or commissions received by them
from us or the selling stockholders and any profit on the resale of the offered
securities by them may be treated as underwriting discounts and commissions
under the Securities Act. Any underwriters or agents will be identified and
their compensation described in a prospectus supplement. Neither Sonic nor the
selling stockholders can presently estimate the amount of such compensation.
Sonic knows of no existing arrangements between any selling stockholder and any
other selling stockholder, broker, dealer or other agent relating to the sale or
distribution of the shares.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of any of the selling stockholders' shares may
not simultaneously engage in market activities with respect to the Class A
common stock for the applicable period under Regulation M prior to the
commencement of such distribution. In addition and without limiting the
foregoing, the selling stockholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, including without
limitation Rule 10b-5 and Regulation M, which provisions may limit the timing of
purchases and sales of any of the shares by the selling stockholders. All of the
foregoing may affect the marketability of the Class A common stock.
Sonic will pay substantially all of the expenses incident to the
offering of the shares by the selling stockholders to the public other than
commissions, concessions and discounts of brokers, dealers or other agents. We
or the selling stockholders may have agreements with the underwriters, brokers,
dealers and agents to indemnify them against certain civil liabilities,
including liabilities under the Securities Act, or to contribute with respect to
payments that the underwriters, brokers, dealers or agents may be required to
make. Sonic may agree to indemnify the selling stockholders and any such
statutory "underwriters" and controlling persons of such "underwriters" against
certain liabilities, including certain liabilities under the Securities Act.
Underwriters, brokers, dealers and agents may engage in transactions
with, or perform services for, us or our subsidiaries in the ordinary course of
their businesses. In order to comply with certain states' securities laws, if
applicable, the shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers.
LEGAL MATTERS
The validity of the securities issuable under this prospectus will be
passed upon for Sonic by Parker, Poe, Adams & Bernstein L.L.P., Charlotte, North
Carolina.
EXPERTS
The consolidated financial statements of Sonic Automotive, Inc. and
Subsidiaries, the combined financial statements of Williams Automotive Group,
the financial statements of Economy Cars, Inc., the financial statements of
Global Imports, Inc., the combined financial statements of Newsome Automotive
Group, the combined financial statements of Lloyd Automotive Group, the
financial statements of Lute Riley Motors, Inc., the combined financial
statements of Certain Dealerships, Assets and Liabilities of Lucas Dealership
Group, Inc., the combined financial statements of Manhattan Automotive Group and
the financial statements of Freeland Automotive, incorporated by reference in
this prospectus and elsewhere in the registration statement, have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their reports,
which are incorporated by reference herein and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements of FirstAmerica Automotive, Inc.
and Subsidiaries incorporated by reference in this prospectus and elsewhere in
the registration statement, have been audited by KPMG LLP, independent auditors,
as stated in their reports, which are incorporated by reference herein and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
36
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Except for the SEC Registration Fee, the following table sets forth the
estimated expenses in connection with the distribution of the securities covered
by this Registration Statement. All of the expenses will be borne by Sonic
except as otherwise indicated.
SEC Registration fee........................................... $ 79,330
Fees and expenses of accountants............................... $175,000
Fees and expenses of legal counsel............................. $225,000
Fees and expenses of Trustee .................................. $ 25,000
Printing and engraving expenses................................ $ 80,000
Miscellaneous.................................................. $ 50,000
--------
Total.......................................................... $634,330
========
Item 15. Indemnification of Directors and Officers.
Sonic's Bylaws effectively provide that Sonic shall, to the full extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended from time to time ("Section 145"), indemnify all persons
whom it may indemnify pursuant thereto. In addition, Sonic's Certificate of
Incorporation eliminates personal liability of its directors to the full extent
permitted by Section 102(b)(7) of the General Corporation Law of the State of
Delaware, as amended from time to time ("Section 102(b)(7)").
Section 145 permits a corporation to indemnify its directors and officers
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlements actually and reasonably incurred by them in connection with any
actions, suit or proceeding brought by a third party if such directors or
officers acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, indemnification may be made only for expenses
actually and reasonably incurred by directors and officers in connection with
the defense or settlement of an action or suit and only with respect to a matter
as to which they shall have acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interest of the corporation, except
that no indemnification shall be made if such person shall have been adjudged
liable to the corporation, unless and only to the extent that the court in which
the action or suit was brought shall determine upon application that the
defendant officers or directors are reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
Section 102(b)(7) provides that a corporation may eliminate or limit the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for willful or negligent conduct
in paying dividends or repurchasing stock out of other than lawfully available
funds or (iv) for any transaction from which the director derived an improper
personal benefit. No such provision shall eliminate or limit the liability of a
director for any act or omission occurring prior to the date when such provision
becomes effective. Sonic maintains insurance against liabilities under the
Securities Act for the benefit of its officers and directors.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officer or persons controlling the registrant
pursuant to the foregoing provisions, the registrant has been informed that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
Item 16. Exhibits.
The following documents are filed as exhibits to this Registration
Statement, including those exhibits incorporated herein by reference to a prior
filing of Sonic under the Securities Act or the Exchange Act as indicated in
parenthesis:
Exhibit No. Description
----------- -----------
1.1* Form of Underwriting Agreement (for equity securities).
1.2* Form of Underwriting Agreement (for debt securities).
1.3* Form of Selling Agency Agreement.
4.1*** Amended and Restated Certificate of Incorporation of Sonic
(incorporated by reference to Exhibit 3.1 to Sonic's Registration
Statement on Form S-1 (Reg. No. 333-33295) (the "Form S-1").
II-1
<PAGE>
4.2*** Certificate of Amendment to Sonic's Amended and Restated
Certificate of Incorporation effective June 18, 1999
(incorporated by reference to Exhibit 3.2 to Sonic's December 31,
1999 Form 10-K).
4.3*** Certificate of Designation, Preferences and Rights of Class A
Convertible Preferred Stock (incorporated by reference to Exhibit
4.1 to Sonic's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998).
4.4*** Bylaws of Sonic (incorporated by reference to Exhibit 3.2 to the
Form S-1).
4.5*** Specimen Certificate representing Class A common stock
(incorporated by reference to Exhibit 4.1 to the Form S-1).
4.6**** Form of Senior Indenture.
4.7**** Form of Subordinated Indenture.
4.8**** Form of Senior Debt Securities (included in Exhibit 4.6).
4.9**** Form of Subordinated Debt Securities (included in Exhibit 4.7).
4.10*** Agreement and Plan of Merger and Reorganization dated as of
October 31, 1999 by and among Sonic, FAA Acquisition Corp.,
FirstAmerica Automotive, Inc. and certain stockholders of
FirstAmerica Automotive, Inc. listed on the signature pages
therein (incorporated by reference to Exhibit 10.8 to Sonic's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1999).
4.11*** Letter Agreement dated June 20, 2000 among Sonic, TCW Leveraged
Income Tract LP, TCW Shared Opportunity Fund II, LP,
Crescent/Mach I Partners, LP, TCW/Crescent Mezzanine Partners,
LP, TCW/Crescent Mezzanine Trust and TCW/Crescent Mezzanine
Investment Partners, LP.
5.1**** Opinion of Parker, Poe, Adams & Bernstein L.L.P. regarding the
legality of the securities being registered.
12.1*** Computation of Ratio of Earnings to Fixed Charges.
23.1**** Consent of Deloitte & Touche LLP.
23.2**** Consent of KPMG, LLP.
23.3**** Consent of Parker, Poe, Adams & Bernstein L.L.P. (included in
Exhibit 5.1).
24.1*** Powers of Attorney (included in Signature Pages of Registration
Statement).
25.1** Form T-1 Statement of Eligibility Under Trust Indenture Act of
1939 of Trustee.
* To be filed as an exhibit to a Current Report on Form 8-K filed by Sonic,
from time to time as an underwritten issuance of such securities is
contemplated.
** To be filed in accordance with the requirements of Section 305(b)(2) of
the Trust Indenture Act and Rule 5b-3 promulgated thereunder.
*** Filed previously.
**** Filed herewith.
Item 17. Undertakings
(a) The registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this registration statement.
Notwithstanding the foregoing, any increase or decrease in the
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration
statement or any material change to such information in the
registration statement;
provided, however, that the undertakings set forth in
paragraphs (a)(i) and (a)(ii) above do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Securities and
Exchange Commission by Sonic pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold
II-2
<PAGE>
at the termination of the offering.
(b) The registrants hereby undertake that, for purposes of determining any
liability under the Securities Act of 1933, each filing of Sonic's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrants pursuant to the foregoing
provisions, or otherwise, the registrants have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by a registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrants will, unless in the opinion
of their counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by them is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(d) The registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of a registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the
registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(e) The registrants hereby undertake to file an application for the
purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act ("TIA") in
accordance with the rules and regulations prescribed by the Commission
under Section 305(6)(2) of the TIA.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Sonic
Automotive, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC AUTOMOTIVE, INC.
By: /s/ Theodore M. Wright
--------------------------------------
Theodore M. Wright
Chief Financial Officer,
Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman, Chief Executive Officer December 11, 2000
-------------------------------------------------- (Principal Executive Officer) and
O. Bruton Smith Director
* Vice Chairman and Director December 11, 2000
----------------------------------------------------
Thomas A. Price
* President, Chief Operating Officer and December 11, 2000
----------------------------------------------------Director
B. Scott Smith
/s/ Theodore M. Wright Chief Financial Officer (Principal December 11, 2000
----------------------------------------------------Financial and Accounting Officer),
Theodore M. Wright Vice President, Treasurer and Director
* Executive Vice President of Retail December 11, 2000
----------------------------------------------------Operations and Director
Jeffrey C. Rachor
* Director December 11, 2000
----------------------------------------------------
William R. Brooks
* Director December 11, 2000
----------------------------------------------------
William P. Benton
* Director December 11, 2000
----------------------------------------------------
William I. Belk
* Director December 11, 2000
----------------------------------------------------
H. Robert Heller
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
AUTOBAHN, INC.
CAPITOL CHEVROLET AND IMPORTS, INC.
COBB PONTIAC CADILLAC, INC.
FA SERVICE CORPORATION
FAA AUTO FACTORY, INC.
FAA BEVERLY HILLS, INC.
FAA CAPITOL N, INC.
FAA CONCORD H, INC.
FAA CONCORD N, INC.
FAA DUBLIN N, INC.
FAA DUBLIN VWD, INC.
FAA HOLDING CORP.
FAA MARIN D, INC.
FAA MARIN F, INC.
FAA MARIN LR, INC.
FAA POWAY D, INC.
FAA POWAY G, INC.
FAA POWAY H, INC.
FAA SANTA MONICA V, INC.
FAA SERRAMONTE H, INC.
FAA SERRAMONTE, INC.
FAA STEVENS CREEK, INC.
FAA TORRANCE CPJ, INC.
FAA WOODLAND HILLS VW, INC.
FORT MILL CHRYSLER-PLYMOUTH-DODGE, INC.
FORT MILL FORD, INC.
FRANCISCAN MOTORS, INC.
FRONTIER OLDSMOBILE-CADILLAC, INC.
HMC FINANCE ALABAMA, INC.
KRAMER MOTORS INCORPORATED
L DEALERSHIP GROUP, INC.
MARCUS DAVID CORPORATION
RIVERSIDE NISSAN, INC.
ROYAL MOTOR COMPANY, INC.
SANTA CLARA IMPORTED CARS, INC.
SMART NISSAN, INC.
SONIC AUTOMOTIVE-1400 AUTOMALL DRIVE, COLUMBUS, INC.
SONIC AUTOMOTIVE-1455 AUTOMALL DRIVE, COLUMBUS, INC.
SONIC AUTOMOTIVE-1495 AUTOMALL DRIVE, COLUMBUS, INC.
SONIC AUTOMOTIVE-1500 AUTOMALL DRIVE, COLUMBUS, INC.
SONIC AUTOMOTIVE-2424 LAURENS RD., GREENVILLE, INC.
SONIC AUTOMOTIVE-2752 LAURENS RD., GREENVILLE, INC.
SONIC AUTOMOTIVE-3700 WEST BROAD STREET, COLUMBUS, INC.
SONIC AUTOMOTIVE-4000 WEST BROAD STREET, COLUMBUS, INC.
SONIC-CLASSIC DODGE, INC.
SONIC-GLOVER, INC.
SONIC-MANHATTAN FAIRFAX, INC.
SONIC-MANHATTAN WALDORF, INC.
SONIC-MONTGOMERY FLM, INC.
SONIC-NEWSOME CHEVROLET WORLD, INC.
SONIC-NEWSOME OF FLORENCE, INC.
SONIC-NORTH CHARLESTON, INC.
SONIC-NORTH CHARLESTON DODGE, INC.
SONIC-RIVERSIDE, INC.
II-5
<PAGE>
SONIC-RIVERSIDE AUTO FACTORY, INC.
SONIC-ROCKVILLE IMPORTS, INC.
SONIC-ROCKVILLE MOTORS, INC.
SONIC-STEVENS CREEK B, INC.
SONIC-WILLIAMS BUICK, INC.
SONIC-WILLIAMS CADILLAC, INC.
SONIC-WILLIAMS IMPORTS, INC.
SPEEDWAY CHEVROLET, INC.
STEVENS CREEK CADILLAC, INC.
TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP OF ROCK
HILL, INC.
TOWN AND COUNTRY FORD, INCORPORATED
TRANSCAR LEASING, INC.
VILLAGE IMPORTED CARS, INC.
WINDWARD, INC.
By *
------------------------------------------
B. Scott Smith
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President and Director (Principal December 11, 2000
------------------------------------------------------Executive Officer)
O. Bruton Smith
* Vice President and Director December 11, 2000
------------------------------------------------------
B. Scott Smith
/s/Theodore M. Wright Vice President and Treasurer and December 11, 2000
------------------------------------------------------Director (Principal Financial and
Theodore M. Wright Accounting Officer)
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
FAA CONCORD T, INC.
FAA POWAY T, INC.
FAA SAN BRUNO, INC.
FAA SERRAMONTE L, INC.
By: *
----------------------------------
B. Scott Smith
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President and Director (Principal December 11, 2000
------------------------------------------------------Executive Officer)
O. Bruton Smith
* Vice President and Director December 11, 2000
------------------------------------------------------
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
------------------------------------------------------Director (Principal Financial and
Theodore M. Wright Accounting Officer)
* Vice President and Director December 11, 2000
------------------------------------------------------
Thomas A. Price
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
FAA LAS VEGAS H, INC.
By: *
-----------------------------------------
B. Scott Smith
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman and Chief Executive Officer December 11, 2000
-----------------------------------------------------and Director (Principal Executive
O. Bruton Smith Officer)
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
----------------------------------------------------Director (Principal Financial and
Theodore M. Wright Accounting Officer)
* Director December 11, 2000
----------------------------------------------------
David Plummer
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
FIRSTAMERICA AUTOMOTIVE, INC.
By: *
-----------------------------------------
B. Scott Smith
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman and Chief Executive Officer December 11, 2000
-----------------------------------------------------and Director (Principal Executive
O. Bruton Smith Officer)
* Vice President and Director December 11, 2000
-----------------------------------------------------
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
-----------------------------------------------------Director (Principal Financial and
Theodore M. Wright Accounting Officer)
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
FREEDOM FORD, INC.
SONIC AUTOMOTIVE - BONDESEN, INC.
SONIC AUTOMOTIVE - CLEARWATER, INC.
SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER, INC.
SONIC AUTOMOTIVE - 1307 N. DIXIE HWY., NSB, INC.
SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC.
SONIC AUTOMOTIVE - 1919 N. DIXIE HWY., NSB, INC.
SONIC AUTOMOTIVE - 21699 U.S. HWY 19 N., INC.
SONIC AUTOMOTIVE - 241 RIDGEWOOD AVE., HH, INC.
SONIC AUTOMOTIVE - 6008 N. DALE MABRY, FL, INC.
SONIC - FM, INC.
SONIC - FM NISSAN, INC.
SONIC - FM VW, INC.
SONIC - FREELAND, INC.
SONIC - LLOYD NISSAN, INC.
SONIC - LLOYD PONTIAC-CADILLAC, INC.
SONIC - SHOTTENKIRK, INC.
By: *
-------------------------------------------
B. Scott Smith
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President and Director (Principal December 11, 2000
------------------------------------------------------Executive Officer)
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
------------------------------------------------------Director (Principal Financial and
Theodore M. Wright Accounting Officer)
* Director December 11, 2000
------------------------------------------------------
O. Bruton Smith
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC AUTOMOTIVE OF GEORGIA, INC.
By: *
-----------------------------------------
B. Scott Smith
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President (Principal Executive Officer) December 11, 2000
---------------------------------------------------
O. Bruton Smith
* Vice President and Director December 11, 2000
---------------------------------------------------
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
---------------------------------------------------Director (Principal Financial and
Theodore M. Wright Accounting Officer)
* Director December 11, 2000
---------------------------------------------------
Peggy McFarland
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC AUTOMOTIVE OF NEVADA, INC.
By *
----------------------------------
B. Scott Smith
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chief Executive Officer and Director December 11, 2000
-----------------------------------------------------(Principal Executive Officer)
O. Bruton Smith
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
-----------------------------------------------------Director (Principal Financial and
Theodore M. Wright Accounting Officer)
* Director December 11, 2000
-----------------------------------------------------
David Plummer
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC AUTOMOTIVE OF TENNESSEE, INC.
SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO, INC.
By *
-----------------------------------
B. Scott Smith
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President and Director (Principal December 11, 2000
------------------------------------------------------Executive Officer)
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
------------------------------------------------------Director (Principal Financial and
Theodore M. Wright Accounting Officer)
* Director December 11, 2000
------------------------------------------------------
Jeffrey C. Rachor
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC OF TEXAS, INC.
By *
-----------------------------------
B. Scott Smith
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President (Principal Executive Officer) December 11, 2000
---------------------------------------------------
O. Bruton Smith
* Vice President and Director December 11, 2000
---------------------------------------------------
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
---------------------------------------------------Director (Principal Financial and
Theodore M. Wright Accounting Officer)
* Director December 11, 2000
---------------------------------------------------
Brian D. Reicks
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC AUTOMOTIVE OF CHATTANOOGA, LLC
SONIC AUTOMOTIVE OF NASHVILLE, LLC
SONIC AUTOMOTIVE - 2490 SOUTH LEE HIGHWAY, LLC
SONIC AUTOMOTIVE - 6025 INTERNATIONAL DRIVE, LLC
SONIC - 2185 CHAPMAN RD., CHATTANOOGA, LLC
SONIC-SUPERIOR OLDSMOBILE, LLC
TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP, LLC
TOWN AND COUNTRY DODGE OF CHATTANOOGA, LLC
TOWN AND COUNTRY FORD OF CLEVELAND, LLC
TOWN AND COUNTRY JAGUAR, LLC
By: *
----------------------------------------------
B. Scott Smith
Vice President and Governor
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President (Principal Executive Officer) December 11, 2000
-----------------------------------------------------
O. Bruton Smith
* Vice President and Governor December 11, 2000
-----------------------------------------------------
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
-----------------------------------------------------Governor (Principal Financial and
Theodore M. Wright Accounting Officer)
* Governor December 11, 2000
-----------------------------------------------------
Jeffrey C. Rachor
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC AUTOMOTIVE - 1720 MASON AVE., DB, LLC
By: *
----------------------------------
B. Scott Smith
President and Manager
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President and Manager (Principal December 11, 2000
-----------------------------------------------------Executive Officer)
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
-----------------------------------------------------Manager (Principal Financial and
Theodore M. Wright Accounting Officer)
* Manager December 11, 2000
-----------------------------------------------------
O. Bruton Smith
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE, NC, LLC
SONIC CHRYSLER-PLYMOUTH-JEEP, LLC
SONIC DODGE, LLC
SONIC-FITZGERALD CHEVROLET, LLC
SONIC-WILLIAMS MOTORS, LLC
SRE HOLDING, LLC
SRE ALABAMA-2, LLC
SRE ALABAMA-3, LLC
SREALESTATE ARIZONA-1, LLC
SREALESTATE ARIZONA-2, LLC
SREALESTATE ARIZONA-3, LLC
SREALESTATE ARIZONA-4, LLC
SRE SOUTH CAROLINA-1, LLC
SRE SOUTH CAROLINA-2, LLC
SRE TENNESSEE-1, LLC
SRE TENNESSEE-2, LLC
SRE TENNESSEE-3, LLC
SRE VIRGINIA-1, LLC
By: *
----------------------------------------------
B. Scott Smith
Vice President and Manager
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* President and Manager (Principal December 11, 2000
-----------------------------------------------------Executive Officer)
O. Bruton Smith
* Vice President and Manager December 11, 2000
-----------------------------------------------------
B. Scott Smith
/s/ Theodore M. Wright President and Treasurer and Vice December 11, 2000
-----------------------------------------------------Manager (Principal Financial and
Theodore M. Wright Accounting Officer)
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements of filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC - LAS VEGAS C EAST, LLC
SONIC - LAS VEGAS C WEST, LLC
By: *
-------------------------------------------------
O. Bruton Smith
Principal Executive Officer and
Manager
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* Chief Executive Officer and Manager December 11, 2000
-----------------------------------------------------(Principal Executive Officer)
O. Bruton Smith
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
-----------------------------------------------------Manager (Principal Financial and
Theodore M. Wright Accounting Officer)
* Manager December 11, 2000
-----------------------------------------------------
Jeffrey C. Rachor
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements of filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC - FM AUTOMOTIVE, LLC
By: *
------------------------------------------------
B. Scott Smith
President and Manager
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* President and Manager December 11, 2000
-----------------------------------------------------(Principal Executive Officer)
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer December 11, 2000
-----------------------------------------------------and Manager (Principal Financial
Theodore M. Wright and Accounting Officer)
* Manager December 11, 2000
-----------------------------------------------------
O. Bruton Smith
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC AUTOMOTIVE
5260 PEACHTREE INDUSTRIAL BLVD., LLC
By: *
------------------------------------------------
B. Scott Smith
Vice President and Governor
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* President and Governor December 11, 2000
-----------------------------------------------------(Principal Executive Officer)
O. Bruton Smith
* Vice President and Governor December 11, 2000
-----------------------------------------------------
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer December 11, 2000
-----------------------------------------------------and Governor (Principal Financial and
Theodore M. Wright Accounting Officer)
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC AUTOMOTIVE --
5585 PEACHTREE INDUSTRIAL BLVD., LLC
By: *
------------------------------------------------
B. Scott Smith
Vice President and Governor
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* President (Principal Executive Officer) December 11, 2000
-----------------------------------------------------
O. Bruton Smith
* Vice President and Governor December 11, 2000
-----------------------------------------------------
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer December 11, 2000
-----------------------------------------------------and Governor (Principal Financial
Theodore M. Wright and Accounting Officer)
* Asst. Secretary and Asst. Treasurer December 11, 2000
-----------------------------------------------------and Governor
Peggy McFarland
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC AUTOMOTIVE F&I, LLC
SONIC AUTOMOTIVE SERVICING COMPANY, LLC
SONIC AUTOMOTIVE WEST, LLC
By: /s/ Theodore M. Wright
-----------------------------------------------
Theodore M. Wright
Vice President, Treasurer and Manager
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* Chairman and Chief Executive Officer December 11, 2000
-----------------------------------------------------(Principal Executive Officer)
O. Bruton Smith
/s/ Theodore M. Wright Vice President, Treasurer and December 11, 2000
-----------------------------------------------------Manager (Principal Financial and
Theodore M. Wright Accounting Officer)
* Manager December 11, 2000
-----------------------------------------------------
Steven S. Hallock
* Manager December 11, 2000
-----------------------------------------------------
Gail M. Syfert
* Manager December 11, 2000
-----------------------------------------------------
David Plummer
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC - INTEGRITY DODGE LV, LLC
SONIC - VOLVO LV, LLC
By /s/ Theodore M. Wright
-----------------------------------------------
Theodore M. Wright
Chief Executive Officer and Manager
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* Chief Executive Officer December 11, 2000
-----------------------------------------------------and Manager (Principal
O. Bruton Smith Executive Officer)
/s/ Theodore M. Wright Vice President and Treasurer December 11, 2000
-----------------------------------------------------and Manager (Principal Financial
Theodore M. Wright and Accounting Officer)
* Manager December 11, 2000
-----------------------------------------------------
Jeffrey C. Rachor
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements of filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SRE FLORIDA-1, LLC
SRE FLORIDA-2, LLC
SRE FLORIDA-3, LLC
By: *
------------------------------------------------
B. Scott Smith
President and Manager
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* President and Manager December 11, 2000
-----------------------------------------------------(Principal Executive Officer)
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer December 11, 2000
-----------------------------------------------------and Manager (Principal Financial
Theodore M. Wright and Accounting Officer)
* Manager December 11, 2000
-----------------------------------------------------
O. Bruton Smith
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements of filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SRE NEVADA-1, LLC
SRE NEVADA-2, LLC
SRE NEVADA-3, LLC
By: /s/ Theodore M. Wright
-----------------------------------------------
Theodore M. Wright
Vice President, Treasurer and Manager
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* President (Principal Executive Officer) December 11, 2000
-----------------------------------------------------
B. Scott Smith
/s/ Theodore M. Wright Vice President, Treasurer and December 11, 2000
-----------------------------------------------------Manager (Principal Financial and Accounting
Theodore M. Wright Officer)
* Manager December 11, 2000
-----------------------------------------------------
O. Bruton Smith
* Manager December 11, 2000
-----------------------------------------------------
Jeffrey C. Rachor
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC - GLOBAL IMPORTS, L.P.
SONIC PEACHTREE INDUSTRIAL BLVD., L.P.
SRE GEORGIA-1, L.P.
SRE GEORGIA-2, L.P.
SRE GEORGIA-3, L.P.
By: Sonic Automotive of Georgia, Inc., their
general partner
By: *
------------------------------------------------
B. Scott Smith
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* President (Principal Executive Officer) December 11, 2000
-----------------------------------------------------
O. Bruton Smith
* Vice President and Director December 11, 2000
-----------------------------------------------------
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer December 11, 2000
-----------------------------------------------------and Director (Principal Financial and
Theodore M. Wright Accounting Officer)
* Director December 11, 2000
-----------------------------------------------------
Peggy McFarland
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-26
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on December
11, 2000.
SONIC AUTOMOTIVE OF TEXAS, L.P.
SONIC AUTOMOTIVE - 3401 N. MAIN, TX, L.P.
SONIC AUTOMOTIVE - 4701 I-10 EAST, TX, L.P.
M SONIC AUTOMOTIVE - 5221 I-10 EAST, TX, L.P.
SONIC - CAMP FORD, L.P.
SONIC - CARROLLTON V, L.P.
SONIC - FORT WORTH T, L.P.
SONIC - LUTE RILEY, L.P.
SONIC - READING, L.P.
SONIC - RICHARDSON F, L.P.
SONIC - SAM WHITE NISSAN, L.P.
SONIC - SAM WHITE OLDSMOBILE, L.P.
SRE TEXAS-1, L.P.
SRE TEXAS-2, L.P.
SRE TEXAS-3, L.P.
By: Sonic of Texas, Inc., their general partner
By: *
------------------------------------------------
B. Scott Smith
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* President (Principal Executive Officer) December 11, 2000
-----------------------------------------------------
O. Bruton Smith
* Vice President and Director December 11, 2000
-----------------------------------------------------
B. Scott Smith
/s/ Theodore M. Wright Vice President and Treasurer and December 11, 2000
-----------------------------------------------------Director (Principal Financial and Accounting
Theodore M. Wright Officer)
* Director December 11, 2000
------------------------------------------------------
Brian D. Reicks
* By: /s/ Theodore M. Wright
------------------------------------------
Theodore M. Wright
(Attorney-in-fact for each of the persons indicated)
</TABLE>
II-27
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description
<S> <C>
1.1* Form of Underwriting Agreement (for equity securities).
1.2* Form of Underwriting Agreement (for debt securities).
1.3* Form of Selling Agency Agreement.
4.1*** Amended and Restated Certificate of Incorporation of Sonic (incorporated by reference to
Exhibit 3.1 to Sonic's Registration Statement on Form S-1 (Reg. No. 333-33295)
(the "Form S-1").
4.2*** Certificate of Amendment to Sonic's Amended and Restated
Certificate of Incorporation effective June 18, 1999
(incorporated by reference to Exhibit 3.2 to Sonic's December 31,
1999 Form 10-K).
4.3*** Certificate of Designation, Preferences and Rights of Class A
Convertible Preferred Stock (incorporated by reference to Exhibit
4.1 to Sonic's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998).
4.4*** Bylaws of Sonic (incorporated by reference to Exhibit 3.2 to the Form S-1).
4.5*** Specimen Certificate representing Class A common stock (incorporated by reference to
Exhibit 4.1 to the Form S-1).
4.6**** Form of Senior Indenture.
4.7**** Form of Subordinated Indenture.
4.8**** Form of Senior Debt Securities (included in Exhibit 4.6).
4.9**** Form of Subordinated Debt Securities (included in Exhibit 4.7).
4.10*** Agreement and Plan of Merger and Reorganization dated as
of October 31, 1999 by and among Sonic, FAA Acquisition Corp.,
FirstAmerica Automotive, Inc. and certain stockholders of
FirstAmerica Automotive, Inc. listed on the signature pages
therein (incorporated by reference to Exhibit 10.8 to Sonic's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1999). 4.11*** Letter Agreement dated June 20, 2000 among Sonic,
TCW Leveraged Income Tract LP, TCW Shared Opportunity Fund II,
LP, Crescent/Mach I Partners, LP, TCW/Crescent Mezzanine
Partners, LP, TCW/Crescent Mezzanine Trust and TCW/Crescent
Mezzanine Investment Partners, LP.
5.1**** Opinion of Parker, Poe, Adams & Bernstein L.L.P. regarding the legality of the securities
being registered.
12.1*** Computation of Ratio of Earnings to Fixed Charges.
23.1**** Consent of Deloitte & Touche LLP.
23.2**** Consent of KPMG, LLP.
23.3**** Consent of Parker, Poe, Adams & Bernstein L.L.P. (included in Exhibit 5.1).
24.1*** Powers of Attorney (included in Signature Pages of Registration Statement).
25.1** Form T-1 Statement of Eligibility Under Trust Indenture Act of 1939 of Trustee.
</TABLE>
* To be filed as an exhibit to a Current Report on Form 8-K filed by Sonic,
from time to time as an underwritten issuance of such securities is
contemplated.
** To be filed in accordance with the requirements of Section 305(b)(2) of
the Trust Indenture Act and Rule 5b-3 promulgated thereunder.
*** Filed previously.
**** Filed herewith.
