As filed with the Securities and Exchange Commission on June 10, 2002
Registration No. 333-86672 and
Registration Nos. 333-86672-01 through 333-86672-208
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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
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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.
Delaware 56-2010790
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5401 East Independence Boulevard, P. 0. Box 18747
Charlotte, North Carolina 28212-5401
Telephone: (704) 532-3320
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Stephen K. Coss, Esq.
Vice President and General Counsel
5401 East Independence Boulevard, P. 0. Box 18747
Charlotte, North Carolina 28212-5401
Telephone: (704) 532-3320
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-----------------
Copies to:
Brian T. Atkinson, Esq.
Thomas H. O'Donnell, Esq.
Moore & Van Allen PLLC
100 North Tryon Street, Suite 4700
Charlotte, North Carolina 28202-4003
Telephone: (704) 331-1000
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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. [_]
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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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:
State of IRS Employer
Subsidiary Organization ID No.
---------- -------------- ------------
Arngar, Inc...................................................... North Carolina 56-1063712
Autobahn, Inc.................................................... California 94-3124481
Avalon Ford, Inc................................................. Delaware 93-3560286
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 F, Inc............................................... California 94-3350030
FAA Capitol N, Inc............................................... California 94-3279958
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 94-3345066
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, Inc.............................................. California 94-3264554
FAA Serramonte H, Inc............................................ California 94-3293588
FAA Serramonte L, Inc............................................ California 94-3264555
FAA Stevens Creek, Inc........................................... California 94-3264553
FAA Torrance CPJ, Inc............................................ California 98-4746385
FirstAmerica Automotive, Inc..................................... Delaware 88-0206732
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
Massey Cadillac, Inc............................................. Tennessee 62-1434905
Massey Cadillac, Inc............................................. Texas 75-2651186
Philpott Motors, Ltd............................................. Texas 76-0608365
Riverside Nissan, Inc............................................ Oklahoma 73-1079837
Royal Motor Company, Inc......................................... Alabama 63-1012554
Santa Clara Imported Cars, Inc................................... California 94-1705756
State of IRS Employer
Subsidiary Organization ID No.
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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 76-0586658
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
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 - Bethany H, Inc........................................... Oklahoma 73-1620712
Sonic - Buena Park H, Inc........................................ California 33-0978079
Sonic - Cadillac D, L.P.......................................... Texas Not Available
Sonic - Camp Ford, L.P........................................... Texas 76-0613472
Sonic - Capital Chevrolet, Inc................................... Ohio 31-0743366
Sonic - Capitol Cadillac, Inc.................................... Michigan 38-3642334
Sonic - Carrollton V, L.P........................................ Texas 75-2896744
Sonic - Carson F, Inc............................................ California 75-2989450
Sonic - Carson LM, Inc........................................... California 73-1626525
Sonic - Classic Dodge, Inc....................................... Alabama 56-2139902
Sonic - Coast Cadillac, Inc...................................... California 95-4711579
Sonic - Crest Cadillac, LLC...................................... Tennessee 62-1708483
Sonic - Crest H, LLC............................................. Tennessee 62-1708487
Sonic - Development, LLC......................................... North Carolina 56-2140030
State of IRS Employer
Subsidiary Organization ID No.
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Sonic - Downey Cadillac, Inc..................................... California 73-1626782
Sonic - Englewood M, Inc......................................... Colorado 73-1627281
Sonic eStore, Inc................................................ North Carolina 69-0002322
Sonic - Fort Mill Chrysler Jeep, Inc............................. South Carolina 56-2044964
Sonic - Fort Mill Dodge, Inc..................................... South Carolina 58-2285505
Sonic - FM Automotive, LLC....................................... Florida 59-3535971
Sonic - FM, Inc.................................................. Florida 65-0938819
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 - Harbor City H, Inc....................................... California 95-4876347
Sonic - Houston V, L.P........................................... Texas 76-0684038
Sonic - Integrity Dodge LV, LLC.................................. Nevada 88-0430677
Sonic - Lake Norman Chrysler Jeep, LLC........................... North Carolina 56-2044997
Sonic - Lake Norman Dodge, LLC................................... North Carolina 56-2044965
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 - Lone Tree Cadillac, Inc.................................. Colorado 75-2994986
Sonic - LS Chevrolet, LLC........................................ Delaware Not Available
Sonic - LS, L.P.................................................. Texas 76-0594652
Sonic - Lute Riley, L. P......................................... Texas 75-2812871
Sonic - Manhattan Fairfax, Inc................................... Virginia 52-2173072
Sonic - Manhattan Waldorf, Inc................................... Maryland 52-2172032
Sonic - Massey Cadillac, L.P..................................... Texas 46-0465823
Sonic - Massey Chevrolet, Inc.................................... California 73-1626792
Sonic - Massey Pontiac Buick GMC, Inc............................ Colorado 71-0868348
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 Cadillac, Inc...................................... Florida 65-0938818
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 - Plymouth Cadillac, Inc................................... Michigan 30-0040929
Sonic - Reading, L.P............................................. Texas 76-0605765
Sonic Resources, Inc............................................. Nevada Not Available
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 - Sanford Cadillac, Inc.................................... Florida 01-0595473
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 76-0586661
Sonic - University Park A, L.P................................... Texas 75-2963437
State of IRS Employer
Subsidiary Organization ID No.
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Sonic - Volvo LV, LLC............................................ Nevada 88-0437180
Sonic - West Covina T, Inc....................................... California 95-4876089
Sonic - West Reno Chevrolet, Inc................................. Oklahoma 73-1618268
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
SRE California - 1, LLC.......................................... California Not Available
SRE California - 2, LLC.......................................... California Not Available
SRE California - 3, LLC.......................................... California Not Available
SRE California - 4, LLC.......................................... California Not Available
SRE California - 5, LLC.......................................... California Not Available
SRE California - 6, LLC.......................................... California Not Available
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
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 Michigan - 1, LLC............................................ Michigan Not Available
SRE Michigan - 2, LLC............................................ Michigan Not Available
SRE Michigan - 3, LLC............................................ Michigan Not Available
SRE Nevada - 1, LLC.............................................. Nevada 88-0468209
SRE Nevada - 2, LLC.............................................. Nevada 88-0465280
SRE Nevada - 3, LLC.............................................. Nevada 88-0465279
SRE Nevada - 4, LLC.............................................. Nevada Not Available
SRE Nevada - 5, LLC.............................................. Nevada Not Available
SRE South Carolina - 2, LLC...................................... South Carolina 58-2560892
SRE South Carolina - 3, LLC...................................... South Carolina Not Available
SRE South Carolina - 4, LLC...................................... South Carolina Not Available
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 Texas - 4, L.P............................................... Texas Not Available
SRE Texas - 5, L.P............................................... Texas Not Available
SRE Texas - 6, L.P............................................... Texas Not Available
SRE Texas - 7, L.P............................................... Texas Not Available
SRE Texas - 8, L.P............................................... Texas Not Available
SRE Virginia - 1, LLC............................................ Virginia 52-2252370
Stevens Creek Cadillac, Inc...................................... California 77-0093380
Town and Country Ford, Incorporated.............................. North Carolina 56-0887416
State of IRS Employer
Subsidiary Organization ID No.
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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
The primary standard industrial classification of all of the additional
registrants is 5511. The principal executive offices of all of the additional
registrants is 5401 East Independence Boulevard, Charlotte, North Carolina
28212. Their telephone number is (704) 532-3320.
PROSPECTUS
SONIC AUTOMOTIVE, INC.
Debt Securities, Preferred Stock,
Class A Common Stock, Warrants to
Purchase Class A Common Stock,
Guarantees of Debt Securities
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Through this prospectus, we may periodically offer and sell:
. debt securities;
. shares of preferred stock;
. shares of Class A common stock;
. warrants to purchase Class A common stock; and
. guarantees by our subsidiaries of debt securities.
The aggregate 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.
Our Class A common stock trades on the New York Stock Exchange under the
symbol "SAH." We expect to 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 June 6, 2002 was $30.61 per share. You are urged to obtain current
market data.
Investing in our securities involves risks that are described under the
heading "Risk Factors" beginning on page 1 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.
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This prospectus is dated , 2002.
TABLE OF CONTENTS
Page
----
About this Prospectus.......................... i
The Company.................................... 1
Risk Factors................................... 1
Use of Proceeds................................ 15
Ratios of Earnings to Fixed Charges............ 15
Description of Debt Securities................. 18
Description of Capital Stock................... 27
Description of Warrants........................ 33
Certain Manufacturer Restrictions.............. 34
Plan of Distribution........................... 35
Legal Matters.................................. 36
Experts........................................ 36
Where you can find more information about Sonic 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. 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." Except as otherwise indicated, all references in this prospectus
to the "Company," "we," "us,", "our," or "Sonic" mean Sonic Automotive, Inc.
and its subsidiaries.
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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 provided to us by third party sources is accurate or complete. For
example, in preparing estimates of market share and industry data, we utilized
third party sources when possible, including filings made by other companies
with the Securities and Exchange Commission, 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
our securities.
i
You should base your decision to invest in our 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 obtained from third party sources
and set forth herein, and nothing contained in this prospectus is, or shall be
relied upon as, a promise or representation, whether as to past or future
performance.
ii
THE COMPANY
Sonic is one of the largest automotive retailers in the United States, as
measured by total revenue. We operate dealerships and collision repair centers
in several metropolitan areas of the Southeast, Southwest, Midwest and
California. Sonic sells new and used cars, light trucks and replacement parts
and provides 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 Boulevard, Charlotte, North Carolina 28212, Telephone (704)
532-3320. We were incorporated in Delaware in 1997.
RECENT DEVELOPMENTS
Sonic adopted the provisions of Statement of Financial Accounting Standards
("SFAS") No. 142: GOODWILL AND OTHER INTANGIBLE ASSETS on January 1, 2002. This
resulted in the elimination of approximately $22.1 million of annual goodwill
amortization. The following table shows the adjusted effect on net income and
net income per share for the years ended December 31, 1999, 2000 and 2001, as
if the provisions of SFAS No. 142 eliminating goodwill amortization had been
applied as of January 1, 1999.
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1999 2000 2001
------- ------- -------
Reported net income.................. $44,649 $74,172 $79,329
Goodwill amortization, net of tax.... 6,253 12,035 14,007
------- ------- -------
Adjusted net income.................. $50,902 $86,207 $93,336
======= ======= =======
Basic earnings per share:
Reported net income............... $ 1.41 $ 1.74 $ 1.96
Goodwill amortization, net of tax. .19 .29 .34
------- ------- -------
Adjusted net income............... $ 1.60 $ 2.03 $ 2.30
======= ======= =======
Diluted earnings per share:
Reported net income............... $ 1.27 $ 1.69 $ 1.91
Goodwill amortization, net of tax. .17 .28 .33
------- ------- -------
Adjusted net income............... $ 1.44 $ 1.97 $ 2.24
======= ======= =======
RISK FACTORS
THE PURCHASE OF OUR SECURITIES INVOLVES RISK. BEFORE INVESTING IN OUR
SECURITIES, YOU SHOULD CONSIDER CAREFULLY ALL OF THE INFORMATION CONTAINED IN,
AND INCORPORATED BY REFERENCE INTO, THIS PROSPECTUS INCLUDING THE RISK FACTORS
IDENTIFIED BELOW.
RISKS RELATED TO OUR INDEBTEDNESS
OUR SIGNIFICANT INDEBTEDNESS COULD MATERIALLY ADVERSELY AFFECT OUR FINANCIAL
HEALTH, LIMIT OUR ABILITY TO FINANCE FUTURE ACQUISITIONS AND CAPITAL
EXPENDITURES AND PREVENT US FROM FULFILLING OUR FINANCIAL OBLIGATIONS.
As of March 31, 2002, our total outstanding indebtedness was approximately
$1,419.0 million, including the following:
. $405.5 million under a revolving credit facility;
. $796.1 million under standardized secured inventory floor plan facilities;
1
. $195.8 million in 11% senior subordinated notes due 2008 representing
$200.0 million in aggregate principal amount less unamortized discount of
approximately $4.2 million; and
. $21.6 million of other secured debt, including $11.5 million under a
revolving real estate acquisition and new dealership construction line of
credit and a related mortgage refinancing facility.
As of March 31, 2002, we had approximately $107.7 million available for
additional borrowings under the revolving credit facility. We also had
approximately $88.5 million available under the mortgage facility for real
estate acquisitions and new dealership construction. We also have significant
additional capacity under the floor plan facilities. In addition, the
indentures relating to our senior subordinated notes, convertible senior
subordinated notes and other debt instruments allow us to incur additional
indebtedness, including secured indebtedness.
On May 7, 2002, we issued $149.5 million in aggregate principal amount of 5
1/4% convertible senior subordinated notes due 2009 at a discount of 3%. We
received net proceeds, before expenses, of approximately $145.0 million from
the offering of these notes. The net proceeds were used to repay a portion of
the amounts outstanding under our revolving credit facility.
The degree to which we are leveraged could have important consequences to
the holders of our securities, including the following:
. our ability to obtain additional financing for acquisitions, capital
expenditures, working capital or general corporate purposes may be
impaired in the future;
. a substantial portion of our current cash flow from operations must be
dedicated to the payment of principal and interest on our indebtedness,
thereby reducing the funds available to us for our operations and other
purposes;
. some of our borrowings are and will continue to be at variable rates of
interest, which exposes us to the risk of increasing interest rates;
. the indebtedness outstanding under our credit facilities is secured by a
pledge of substantially all the assets of our dealerships; and
. 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 ISSUED UNDER THIS
REGISTRATION STATEMENT MAY BE JUNIOR TO SIGNIFICANT AMOUNTS OF EXISTING
INDEBTEDNESS.
We may issue senior debt securities or subordinated debt securities under
this registration statement. Senior debt securities issued under this
registration statement will be senior in right of payment to the prior payment
in full of all unsecured and expressly subordinated indebtedness and equally
with all of our unsecured indebtedness that is not expressly subordinated and
is outstanding at the time any senior debt securities are sold. Senior debt
securities issued under this registration statement will not be secured and,
therefore, will be effectively subordinate in right of payment to all of our
secured indebtedness that is not expressly subordinated and is outstanding at
the time senior debt securities are sold under this registration statement,
including borrowings under our revolving credit facility, floor plan facilities
and mortgage facility. Our senior indebtedness will include all debt allowed
under the indenture governing any debt securities issued under this
registration statement, except for trade payables, tax obligations and any
future debt that is expressly equal with, or subordinated in right of payment
to, debt securities issued under this registration statement. The holders of our
2
senior secured indebtedness, including borrowings under our revolving credit
facility, floor plan facilities and mortgage facility, will be entitled to be
paid in full before any payment may be made on any senior debt securities
issued under this registration statement in any bankruptcy, liquidation,
reorganization or similar proceeding. In the event of such a proceeding,
holders of senior debt securities issued under this registration statement will
participate with holders of other senior debt securities or other indebtedness
that is not expressly subordinated to our senior indebtedness in the
distribution of assets remaining after all of our senior debt has been paid in
full.
Subordinated debt securities issued under this registration statement will
be subordinated in right of payment to the prior payment in full of all senior
indebtedness, including any senior secured indebtedness, senior debt securities
issued under this registration statement and any other indebtedness that is not
expressly subordinated to the subordinated debt securities issued under this
registration statement. Subordinated debt securities issued under this
registration statement will rank equally in right of payment with all of our
unsecured and expressly subordinated indebtedness. The holders of our senior
secured indebtedness, including borrowings under our revolving credit facility,
floor plan facilities and mortgage facility, and senior debt securities,
including those issued under this registration statement, will be entitled to
be paid in full before any payment may be made on any subordinated debt
securities issued under this registration statement in any bankruptcy,
liquidation, reorganization or similar proceeding. In the event of such a
proceeding, holders of any subordinated debt securities issued under this
registration statement will participate with holders of our other subordinated
debt securities and indebtedness that is expressly subordinated to our senior
indebtedness in the distribution of assets remaining after all of our senior
debt securities and senior indebtedness has been paid in full.
We may not have sufficient funds to pay all of our creditors, and holders of
any debt securities issued under this registration statement 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 issued under this registration statement, make any
deposit pursuant to defeasance provisions or purchase, redeem or otherwise
retire any debt securities issued under this registration statement, 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 issued under this registration
statement 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 the indebtedness has
been repaid in full.
Further, the subsidiary guarantees of any debt securities may be junior to
the subsidiary guarantors' existing indebtedness and possibly to all of their
future borrowings.
IN THE EVENT OF A DEFAULT ON DEBT SECURITIES ISSUED UNDER THIS REGISTRATION
STATEMENT, HOLDERS OF THOSE SECURITIES WILL NOT BE ENTITLED TO REPAYMENT UNTIL
ALL OF OUR OUTSTANDING SECURED INDEBTEDNESS IS PAID.
Debt securities issued under this registration statement may not be secured
by any of our assets. The indebtedness under our revolving credit facility,
floor plan facilities and 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, excluding subsidiaries where the
manufacturer does not permit such a pledge, (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 issued
under this registration statement 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 issued under
this registration statement. Accordingly, there may not be sufficient funds or
other assets remaining to pay amounts due on any debt securities issued under
this
3
registration statement. The indenture for any debt securities may permit us to
incur, and the indentures for our outstanding senior subordinated notes and
convertible senior subordinated notes does not prohibit us from incurring,
additional indebtedness, which may also be secured.
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID
GUARANTEES AND REQUIRE DEBT SECURITY HOLDERS TO RETURN PAYMENTS RECEIVED FROM
GUARANTORS.
Debt securities issued under this registration statement may be guaranteed
by one or more of our subsidiaries. Under the federal bankruptcy law and
comparable provisions of state fraudulent transfer laws, a subsidiary guarantee
can be voided, or claims in respect of a subsidiary guarantee could be
subordinated to all other debts of that subsidiary if, among other things, the
subsidiary, 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
. was insolvent or rendered insolvent by reason of such incurrence;
. was engaged in a business or transaction for which the subsidiary's
remaining assets constituted unreasonably small capital; or
. intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment made by that subsidiary pursuant to its guarantee
could be voided and required to be returned to the subsidiary, or to a fund for
the benefit of the creditors of the subsidiary.
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 subsidiary would be
considered insolvent if:
. the sum of its debts, including contingent liabilities, were greater than
the fair saleable value of all of its assets;
. 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
. it could not pay its debts as they became due.
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, if made, guarantees issued by our subsidiaries are valid and enforceable.
AN ACCELERATION OF OUR OBLIGATION TO REPAY ALL OF OUR OUTSTANDING INDEBTEDNESS
WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION OR
RESULTS OF OPERATIONS.
Our revolving credit facility, floor plan facilities and the indenture
governing our senior subordinated notes contain numerous financial and
operating covenants. A breach of any of these covenants could result in a
default under the applicable agreement or indenture. If a default were to
occur, we may be unable to adequately finance our operations and the value of
our common stock would be materially adversely affected. In addition, a default
under one agreement or indenture could result in a default and acceleration of
our repayment obligations under the other agreements or indentures, including
the indenture governing our outstanding convertible senior subordinated notes,
under the cross default provisions in those agreements or indentures. If a
cross default were to occur, we may not be able to pay our debts or borrow
sufficient funds to refinance them. Even if new financing were available, it
may not be on terms acceptable to us. As a result of this risk, we could be
forced to take actions that we otherwise would not take, or not take actions
that we otherwise might take, in order to comply with the covenants in these
agreements and indentures.
4
OUR ABILITY TO REPAY DEBT SECURITIES AND THE MARKET PRICE OF OUR CLASS A COMMON
STOCK COULD BE ADVERSELY AFFECTED IF WE INCUR ADDITIONAL INDEBTEDNESS, ISSUE
ADDITIONAL SECURITIES OR TAKE OTHER ACTIONS.
The covenants of the indentures governing debt securities we may issue under
this registration statement do not require us to achieve minimum financial
results relating to our financial position or results of operations. In
addition, these indentures do not restrict our ability to take certain actions
that could adversely affect our investors such as:
. incurring additional indebtedness;
. issuing additional securities, including debt securities and shares of our
Class A common stock;
. effecting a change of control of Sonic;
. acquiring additional dealerships or other businesses;
. refinancing our existing indebtedness;
. recapitalizing Sonic; or
. entering into highly-leveraged transactions.
Our ability to engage in these transactions, and others like them, could have
the effect of diminishing our ability to make payments on debt securities,
repurchase debt issued pursuant to these indentures or adversely affect the
market price of our Class A common stock.
OUR ABILITY TO MAKE INTEREST AND PRINCIPAL PAYMENTS WHEN DUE TO HOLDERS OF OUR
DEBT SECURITIES DEPENDS UPON THE RECEIPT OF SUFFICIENT FUNDS FROM OUR
SUBSIDIARIES.
Substantially all of our consolidated assets are held by our subsidiaries
and substantially all of our consolidated cash flow and net income are
generated by our subsidiaries. Accordingly, our cash flow and ability to
service debt depends to a substantial degree on the results of operations of
subsidiaries and upon the ability of our subsidiaries to provide us with cash.
We may receive cash from our subsidiaries in the form of dividends, loans or
otherwise. We may use this cash to service our debt obligations or for working
capital. Our subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to distribute cash to us or to make funds
available to service debt. In addition, the ability of our subsidiaries to pay
dividends or make loans to us are subject to contractual limitations under the
floor plan facilities, minimum net capital requirements under dealership
agreements and laws of the state in which a subsidiary is organized and depend
to a significant degree on the results of operations of our subsidiaries and
other business considerations.
RISKS RELATED TO OUR RELATIONSHIPS WITH VEHICLE MANUFACTURERS
OUR OPERATIONS MAY BE ADVERSELY AFFECTED IF ONE OR MORE OF OUR MANUFACTURER
FRANCHISE AGREEMENTS IS TERMINATED OR NOT RENEWED.
Each of our dealerships operates under a franchise agreement with the
applicable automobile manufacturer or distributor. Without a franchise
agreement, we cannot obtain new vehicles from a manufacturer. As a result, we
are significantly dependent on our relationships with these manufacturers.
Manufacturers exercise a great degree of control over the operations of our
dealerships through the franchise agreements. The franchise agreements govern,
among other things, our ability to purchase vehicles from the manufacturer and
to sell vehicles to customers. Each of our franchise agreements provides for
termination or non-renewal for a variety of causes, including any unapproved
change of ownership or management. Manufacturers may also have a right of first
refusal if we seek to sell dealerships.
Actions taken by manufacturers to exploit their superior bargaining position
in negotiating the terms of franchise agreements or renewals of these
agreements or otherwise could also have a material adverse effect on
5
our results of operations. 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.
OUR SALES VOLUME AND PROFIT MARGIN ON EACH SALE MAY BE MATERIALLY AND ADVERSELY
AFFECTED IF MANUFACTURERS DISCONTINUE OR CHANGE THEIR INCENTIVE PROGRAMS.
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 routinely modify their incentive programs in response to
changing market conditions.
Some of the key incentive programs include:
. customer rebates or below market financing on new vehicles;
. dealer incentives on new vehicles;
. warranties on new and used vehicles; and
. sponsorship of used vehicle sales by authorized new vehicle dealers.
A reduction or discontinuation of a manufacturer's incentive programs may
materially adversely affect our profitability.
WE DEPEND ON MANUFACTURERS TO SUPPLY US WITH SUFFICIENT NUMBERS OF POPULAR AND
PROFITABLE NEW MODELS.
Manufacturers typically allocate their vehicles among dealerships based on
the sales history of each dealership. Supplies of popular new vehicles may be
limited by the applicable manufacturer's production capabilities. Popular new
vehicles that are in limited supply typically produce the highest profit
margins. We depend on manufacturers to provide us with a desirable mix of
popular new vehicles. Our operating results may be materially adversely
affected if we do not obtain a sufficient supply of these vehicles.
ADVERSE CONDITIONS AFFECTING ONE OR MORE KEY MANUFACTURERS MAY NEGATIVELY
IMPACT OUR PROFITABILITY.
Approximately 85.6% of our new vehicle revenue (based on new vehicle
revenues for the three months ended March 31, 2002) is derived from the sale of
new vehicles manufactured by Ford, Honda, Chrysler, General Motors, BMW,
Toyota, Nissan and Lexus. Our success depends to a great extent on these
manufacturers':
. financial condition;
. marketing;
. vehicle design;
. publicity concerning a particular manufacturer or vehicle model;
. production capabilities;
. management; and
. labor relations.
Adverse conditions affecting these and other important aspects of
manufacturers' operations and public relations may adversely affect our ability
to sell their automobiles and, as a result, significantly and detrimentally
affect our profitability.
6
MANUFACTURER STOCK OWNERSHIP RESTRICTIONS MAY IMPAIR OUR ABILITY TO MAINTAIN OR
RENEW FRANCHISE AGREEMENTS OR ISSUE ADDITIONAL EQUITY.
Some of our franchise agreements prohibit transfers of any ownership
interests of a dealership and, in some cases, its parent. A number of
manufacturers impose restrictions on the transferability of our Class A common
stock and our ability to maintain franchises if a person acquires a significant
percentage of the voting power of our common stock. Our existing franchise
agreements could be terminated if a person or entity acquires a substantial
ownership interest in us or acquires voting power above certain levels without
the applicable manufacturer's approval. Violations of these levels by an
investor are generally outside of our control and may result in the termination
or non-renewal of existing franchise agreements or impair our ability to
negotiate new franchise agreements for dealerships we acquire. In addition, if
we cannot obtain any requisite approvals on a timely basis, we may not be able
to issue additional equity or otherwise raise capital on terms acceptable to
us. These restrictions may also prevent or deter a prospective acquiror from
acquiring control of us. This could adversely affect the market price of our
Class A common stock.
The current holders of Sonic's Class B common stock maintain voting control
over Sonic. However, 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
existing franchise agreements, the triggering of provisions in our agreements
with certain manufacturers requiring us to sell our dealerships franchised with
such manufacturers, and/or a default under our credit arrangements.
MANUFACTURERS' RESTRICTIONS ON ACQUISITIONS COULD LIMIT OUR FUTURE GROWTH.
We are required to obtain the approval of the applicable manufacturer before
we can acquire an additional dealership franchise of that manufacturer. In
determining whether to approve an acquisition, manufacturers may consider many
factors such as our financial condition and manufacturer-determined consumer
satisfaction index, or "CSI" scores. Obtaining manufacturer approval of
acquisitions also takes a significant amount of time, typically three to five
months. We cannot assure you that manufacturers will approve future
acquisitions or do so on a timely basis, which could impair the execution of
our growth strategy.
Certain manufacturers also 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. In addition, under an
applicable franchise agreement or under state law, a manufacturer may have a
right of first refusal to acquire a dealership that we seek to acquire.
A manufacturer may condition approval of an acquisition on the
implementation of material changes in our operations or extraordinary corporate
transactions, facilities improvements or other capital expenditures. If we are
unable or unwilling to comply with these conditions, we may be required to sell
the assets of that manufacturer's dealerships or terminate our franchise
agreement.
OUR FAILURE TO MEET A MANUFACTURER'S CONSUMER SATISFACTION, FINANCIAL AND SALES
PERFORMANCE 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 generally known as "CSI"
scores. The components of CSI vary from manufacturer to manufacturer and are
modified periodically. Franchise agreements also may impose financial and sales
performance standards. Under our agreements with certain manufacturers, a
dealership's CSI scores and financial performance may be considered a factor in
evaluating applications for additional dealership acquisitions. From time to
time, some of our dealerships have had difficulty meeting various
manufacturers' CSI requirements or performance standards. We cannot assure you
that our dealerships will be able to comply with these requirements 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 its CSI
requirements or performance standards, which could impair the execution
7
of our growth strategy. In addition, we receive incentive payments from the
manufacturers based, in part, on CSI scores, which could be materially
adversely affected if our CSI scores decline.
RISKS RELATED TO OUR ACQUISITION STRATEGY
FAILURE TO EFFECTIVELY INTEGRATE ACQUIRED DEALERSHIPS WITH OUR EXISTING
OPERATIONS COULD ADVERSELY AFFECT OUR FUTURE OPERATING RESULTS.
Our future operating results depend on our ability to integrate the
operations of recently acquired dealerships, as well as dealerships we acquire
in the future, with our existing operations. In particular, we need to
integrate our management information systems, procedures and organizational
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 72 dealerships in 1999, 11 in 2000, 12 in 2001 and 22 to
date in 2002.
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, due to:
. the difficulties of managing operations located in geographic areas where
we have not previously operated;
. the management time and attention required to integrate and manage newly
acquired dealerships;
. the difficulties of assimilating and retaining employees; and
. the challenges of keeping customers.
These factors could have a material adverse effect on our financial
condition and results of operations.
WE MAY NOT ADEQUATELY ANTICIPATE ALL OF THE DEMANDS THAT GROWTH THROUGH
ACQUISITIONS WILL IMPOSE.
The automobile retailing industry is considered a mature industry in which
minimal growth is expected in total unit sales. Accordingly, our ability to
generate higher revenue and earnings in future periods depends in large part on
our ability to acquire additional dealerships, manage geographic expansion,
control costs in our operations and consolidate both past and future 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:
. incurring significantly higher capital expenditures and operating expenses;
. failing to assimilate the operations and personnel of acquired dealerships;
. entering new markets with which we are unfamiliar;
. potential undiscovered liabilities and operational difficulties at
acquired dealerships;
. disrupting our ongoing business;
. diverting our limited management resources;
. failing to maintain uniform standards, controls and policies;
. impairing relationships with employees, manufacturers and customers as a
result of changes in management;
. increased expenses for accounting and computer systems, as well as
integration difficulties;
. failure to obtain a manufacturer's consent to the acquisition of one or
more of its dealership franchises or renew the franchise agreement on
terms acceptable to us; and
. incorrectly valuing entities to be acquired.
8
We may not adequately anticipate all of the demands that growth will impose
on our systems, procedures and structures.
WE MAY NOT BE ABLE TO CAPITALIZE ON ACQUISITION OPPORTUNITIES BECAUSE OUR
FINANCIAL RESOURCES AVAILABLE FOR ACQUISITIONS ARE LIMITED.
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. We may not be able to obtain additional financing by
issuing stock or debt securities due to the market price of our Class A common
stock, overall market conditions or the need for manufacturer consent to the
issuance of equity securities. Using cash to complete acquisitions could
substantially limit our operating or financial flexibility. 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 overall growth strategy.
In addition, we are dependent to a significant extent on our ability to
finance our new vehicle inventory with "floor plan financing." Floor plan
financing arrangements allow us to borrow money to buy a particular vehicle
from the manufacturer and pay off the loan when we sell that particular
vehicle. We must obtain new floor plan financing or obtain consents to assume
existing floor plan financing in connection with our acquisition of dealerships.
Substantially all the assets of our dealerships are pledged to secure our
floor plan indebtedness and the indebtedness under the revolving credit
facility. In addition, substantially all the real property and assets of our
subsidiaries that are constructing new dealerships are pledged under our
mortgage facility with Ford Motor Credit. These pledges may impede our ability
to borrow from other sources. Moreover, because Ford Motor Credit is associated
with Ford Motor Company, any deterioration of our relationship with one could
adversely affect our relationship with the other. The same is true of our
relationships with Chrysler, GM and Toyota and the floor plan financing
divisions of each of these manufacturers.
WE MAY NOT BE ABLE TO CONTINUE EXECUTING OUR ACQUISITION STRATEGY WITHOUT THE
COSTS OF FUTURE ACQUISITIONS ESCALATING.
We have grown our business primarily through acquisitions. We may not be
able to consummate any future acquisitions at acceptable prices and terms or
identify suitable candidates. 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:
. the availability of suitable acquisition candidates;
. competition with other dealer groups for suitable acquisitions;
. the negotiation of acceptable terms;
. our financial capabilities;
. our stock price; and
. the availability of skilled employees to manage the acquired companies.
OUR PROFITABILITY MAY BE ADVERSELY AFFECTED BY DEALERSHIPS WE ACQUIRE.
The operating and financial 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 and
financial 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. Similarly, many
of the dealerships we acquire, including our largest acquisitions, do not have
financial statements audited
9
or prepared in accordance with generally accepted accounting principles. We may
not have an accurate understanding of the historical financial condition and
performance of our acquired entities. Until we actually assume control of
business assets and their operations, we may not be able to ascertain the
actual value or understand the potential liabilities of the acquired entities
and their operations.
ALTHOUGH O. BRUTON SMITH, OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER, HAS
PREVIOUSLY ASSISTED US WITH OBTAINING ACQUISITION FINANCING, WE CANNOT ASSURE
YOU THAT HE WILL BE WILLING OR ABLE TO DO SO IN THE FUTURE.
Our obligations under the revolving credit facility are secured with a
pledge of shares of common stock of Speedway Motorsports, Inc., which are
beneficially owned by Sonic Financial Corporation, an entity controlled by Mr.
Smith. Presently, the $600 million borrowing limit of the revolving credit
facility is subject to a borrowing base calculation that is based, in part, on
the value of the Speedway Motorsports, Inc. shares pledged by Sonic Financial.
Consequently, a withdrawal of this pledge by Sonic Financial or a significant
decrease in the value of Speedway Motorsports, Inc. common stock could reduce
the amount we can currently borrow under the revolving credit facility.
Mr. Smith has also guaranteed additional indebtedness incurred to complete
certain dealership acquisitions. Mr. Smith may not be willing or able to
provide similar guarantees or credit support in the future. This could impair
our ability to obtain acquisition financing on favorable terms.
RISKS RELATED TO THE AUTOMOTIVE RETAIL INDUSTRY
INCREASING COMPETITION IN AUTOMOTIVE RETAILERS REDUCES OUR PROFIT MARGINS ON
VEHICLE SALES AND RELATED BUSINESSES. FURTHER, THE USE OF THE INTERNET IN THE
CAR PURCHASING PROCESS COULD MATERIALLY ADVERSELY AFFECT US.
Automobile retailing is a highly competitive business. Our competitors
include publicly and privately owned dealerships, some of which are larger and
have greater financial and marketing resources than we do. Many of our
competitors sell the same or similar makes of new and used vehicles that we
offer in our markets at competitive prices. We do not have any cost advantage
in purchasing new vehicles from manufacturers due to economies of scale or
otherwise. In addition, 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 used vehicles available in the market, which puts added pressure on
new and used vehicle margins. We typically rely on advertising, merchandising,
sales expertise, service reputation and dealership location to sell new
vehicles. Our revenues and profitability could be materially adversely affected
if manufacturers decide to enter the retail market directly.
Our financing and insurance ("F&I") business and other related businesses,
which have higher margins 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.
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 F&I services, which may further reduce margins for new and used cars
and profits for related F&I services. 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 investing heavily in
the development of their own Internet capabilities, which could materially
adversely affect our business.
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
or if existing franchised dealers increase their market share in our markets.
10
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. Our gross margins may decline over time as we expand into markets
where we do not have a leading position.
OUR BUSINESS WILL BE HARMED IF OVERALL CONSUMER DEMAND SUFFERS FROM A SEVERE OR
SUSTAINED DOWNTURN.
Our business is heavily dependent on consumer demand and preferences. Our
revenues will be materially and adversely affected if there is a severe or
sustained downturn in overall levels of consumer spending. Retail vehicle sales
are cyclical and historically have experienced periodic downturns characterized
by oversupply and weak demand. These cycles are often dependent on general
economic conditions and consumer confidence, as well as the level of
discretionary personal income and credit availability. The economic outlook
appears uncertain in the aftermath of the terrorist attacks in the U.S. on
September 11, 2001, and the subsequent war on terrorism. Future recessions may
have a material adverse effect on our retail business, particularly sales of
new and used automobiles. In addition, severe or sustained increases in
gasoline prices may lead to a reduction in automobile purchases or a shift in
buying patterns from luxury and sport utility vehicle models (which typically
provide high margins to retailers) to smaller, more economical vehicles (which
typically have lower margins).
THE SEASONALITY OF OUR BUSINESS MAGNIFIES THE IMPORTANCE OF SECOND AND THIRD
QUARTER OPERATING RESULTS.
Our business is subject to seasonal variations in revenues. In our
experience, demand for automobiles is generally lower during the first quarter
of each year. We therefore receive a disproportionate amount of revenues
generally in the second, third and fourth quarters and expect our revenues and
operating results to be generally lower in the first quarter. Consequently, if
conditions surface during the second, third and fourth quarters that impair
vehicle sales, such as higher fuel costs, depressed economic conditions or
similar adverse conditions, our revenues for the year could be
disproportionately adversely affected.
GENERAL RISKS RELATED TO INVESTING IN OUR SECURITIES
CONCENTRATION OF VOTING POWER AND ANTI-TAKEOVER 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 stockholder
or otherwise benefiting the Class B common stockholders constituting a:
. "going private" transaction;
. disposition of substantially all of our assets;
. transfer resulting in a change in the nature of our business; or
. 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 the action was
favored by holders of Class A common stock.
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. Delaware law also makes it difficult for stockholders who have
recently acquired a large interest in a company to consummate a business
combination transaction with the company against its directors'
11
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. In
addition, provisions of our lending arrangements create an event of default on
a change in control. These agreements, corporate governance documents and laws
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.
THE OUTCOME OF LEGAL AND ADMINISTRATIVE PROCEEDINGS WE ARE OR MAY BECOME
INVOLVED IN COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS, RESULTS OF OPERATIONS
AND PROFITABILITY.
In 2001, the Florida Attorney General's Office issued subpoenas to two of
our wholly-owned dealership subsidiaries located in Florida. The subpoenas
requested, among other things, documentation from the dealerships regarding
transactions with customers in the months of January 1999 and June 2000. In
subsequent discussions, the Attorney General's office informed each of these
dealership subsidiaries that it was investigating allegations of fraud against
customers by those dealerships in the sale of finance and insurance products.
In April 2002, the Florida Department of Insurance informed the same two
dealership subsidiaries that it had also initiated an investigation into
allegations similar to those underlying the Attorney General's investigation.
Our two dealership subsidiaries are cooperating with this investigation. To
date, there have been no formal charges or administrative proceedings filed
against either dealership subsidiary by the Attorney General or the Department
of Insurance. Additionally, five private civil actions have been filed against
one of the dealership subsidiaries and one private civil action has been filed
against the other dealership subsidiary stating allegations similar to those
underlying the Attorney General's investigation. Two of the private civil
actions purport to represent a class of customers as potential plaintiffs,
although no motion for class certification has been filed or granted.
We intend to vigorously defend ourselves and assert available defenses with
respect to each of the foregoing matters, and do not believe that the ultimate
resolution of these matters will have a material adverse affect on our
business, results of operations, financial condition, cash flows or prospects.
However, because the investigations by the Attorney General's office and
Department of Insurance are continuing and have not resulted in formal charges
to date, and because the private civil actions are also in the early stages of
litigation, we cannot assure you as to the outcomes of such proceedings.
In addition, we are involved, and expect to continue to be involved, in
numerous other legal proceedings arising out of the conduct of our business,
including litigation with customers, employment related lawsuits and actions
brought by governmental authorities. The results of these matters cannot be
predicted with certainty, and an unfavorable resolution of one or more of these
matters, including the matters specifically discussed above, could have a
material adverse effect on our business, financial condition, results of
operations, cash flows and prospects.
OUR BUSINESS MAY BE ADVERSELY AFFECTED BY UNFAVORABLE CONDITIONS IN OUR LOCAL
MARKETS, EVEN IF THOSE CONDITIONS ARE NOT PROMINENT NATIONALLY.
Our performance is subject to local economic, competitive and other
conditions prevailing in geographic areas where we operate. For example, our
current 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 approximately 18% of our sales for
the three months ended March 31, 2002. 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.
12
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. 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, as we expand we may need to hire additional managers. 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.
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, retail financing and
consumer protection laws and regulations, and wage-hour, anti-discrimination,
and other employment practices laws and regulations. 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. The
violation of these laws and regulations can result in administrative, civil or
criminal penalties against us or in a cease and desist order against our
operations that 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 compliance costs.
Our past and present business operations are subject to environmental laws
and regulations. 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. 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.
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., a publicly traded owner and operator of automobile
racing facilities. Accordingly, Sonic competes with Speedway Motorsports, Inc.
for the management time of Mr. Smith.
Sonic has in the past and will likely in the future enter into transactions
with Mr. Smith, entities controlled by Mr. Smith or other affiliates of Sonic.
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 the majority of such transactions have neither been
independently verified in that regard nor are likely to be so verified in the
future.
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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.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains numerous "forward-looking statements" within the
meaning of the Private Litigation Securities Reform Act of 1995. These forward
looking statements address our future objectives, plans and goals, as well as
our intent, beliefs and current expectations regarding future operating
performance, and can generally be identified by words such as "may," "will,"
"should," "believe," "expect," "anticipate," "intend," "plan," "foresee," and
other similar words or phrases. Specific events addressed by these forward
looking statements include, but are not limited to:
. future acquisitions;
. industry trends;
. general economic trends, including employment rates and consumer
confidence levels;
. vehicle sales rates and same store sales growth;
. our financing plans; and
. our business and growth strategies.
These forward-looking statements are based on our current estimates and
assumptions and involve various risks and uncertainties. As a result, you are
cautioned that these forward looking statements are not guarantees of future
performance, and that actual results could differ materially from those
projected in these forward looking statements. Factors which may cause actual
results to differ materially from our projections include those risks described
in this prospectus, as well as:
. our ability to generate sufficient cash flows or obtain additional
financing to support acquisitions, capital expenditures and general
operating activities;
. the reputation and financial condition of vehicle manufacturers whose
brands we represent, and their ability to design, manufacture, deliver and
market their vehicles successfully;
. our relationships with manufacturers which may affect our ability to
complete additional acquisitions;
. changes in laws and regulations governing the operation of automobile
franchises, accounting standards, taxation requirements and environmental
laws;
. general economic conditions in the markets in which we operate, including
fluctuations in interest rates, employment levels, and the level of
consumer spending;
. high competition in the automotive retailing industry which not only
creates pricing pressures on the products and services we offer, but on
businesses we seek to acquire; and
. our ability to successfully integrate recent and potential future
acquisitions.
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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.
RATIO OF EARNINGS TO FIXED CHARGES
The following table contains our consolidated ratios of earnings to fixed
charges for the periods indicated:
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
Ratio of earnings to fixed charges 4.1 3.3 3.4 3.0 3.3
DESCRIPTION OF INDEBTEDNESS
THE REVOLVING FACILITY
On June 20, 2001 we entered into a new revolving credit facility (the
"Revolving Facility") with Ford Motor Credit Company ("Ford Motor Credit"),
Chrysler Financial, LLC ("Chrysler Financial") and Toyota Motor Credit
Corporation ("Toyota Credit") with a borrowing limit of $600 million, subject
to a borrowing base calculated on the basis of our receivables, inventory and
equipment and the value of certain additional collateral pledged by an
affiliate of Sonic. The borrowing base was approximately $513.2 million at
March 31, 2002. The amounts outstanding under the Revolving Facility bear
interest at 2.50% above LIBOR (LIBOR was 1.88% as of March 31, 2002) and will
mature on October 31, 2004 (but may be extended for a number of additional one
year terms to be negotiated with Ford Motor Credit, Chrysler Financial and
Toyota Credit). The Revolving Facility includes an annual commitment fee equal
to 0.25% of the unused portion of the facility. This fee was approximately $0.2
million in 2001. The total outstanding balance was approximately $405.5 million
as of March 31, 2002.
We agreed under the Revolving Facility not to pledge any of our assets to
any third party with the exception of currently encumbered assets of our
dealership subsidiaries that are subject to previous pledges or liens. In
addition, the Revolving Facility contains certain negative covenants, including
covenants restricting or prohibiting the payment of dividends, capital
expenditures and material dispositions of assets as well as other customary
covenants and default provisions. Financial covenants include specified ratios
of:
COVENANT REQUIRED ACTUAL
-------- ------------------ ----------------------
(AS OF MARCH 31, 2002)
Current ratio.......... (greater than)1.23 1.25
Fixed charges coverage. (greater than)1.41 1.66
Interest coverage...... (greater than)2.00 3.62
Adjusted debt to EBITDA (less than)2.25 1.87
In addition, the loss of voting control over Sonic by O. Bruton Smith,
chairman and chief executive officer, B. Scott Smith, president and chief
operating officer, and their spouses or immediate family members or our
failure, with certain exceptions, to own all the outstanding equity, membership
or partnership interests in our dealership subsidiaries will constitute an
event of default under the Revolving Facility. We were in compliance with all
restrictive covenants as of March 31, 2002.
THE MORTGAGE FACILITY
We currently have a revolving real estate acquisition and construction line
of credit (the "Construction Loan") and a related mortgage refinancing facility
(the "Permanent Loan" and collectively with the Construction Loan, the
"Mortgage Facility") with Ford Motor Credit. Under the Construction Loan, our
dealership development subsidiaries can borrow up to $50.0 million to finance
land acquisition and dealership construction costs. Advances can be made under
the Construction Loan until December 2003. All advances will mature on
September 22, 2005, bear interest at 2.25% above LIBOR and are secured by
Sonic's guarantee and a lien on all of the borrowing subsidiaries' real estate
and other assets. Borrowings, net of repayments, under the Construction
15
Loan in 2001 were approximately $4.0 million and were primarily used in
construction of dealership facilities. The total outstanding balance under the
Construction Loan as of March 31, 2002 was approximately $7.5 million.
Under the Permanent Loan, we can refinance up to $50.0 million in advances
under the Construction Loan once the projects are completed and can finance
real estate acquisition costs to the extent these costs were not previously
financed under the Construction Loan. Advances can be made under the Permanent
Loan until June 2005. All advances under the Permanent Loan mature on June 22,
2010, bear interest at 2.00% above LIBOR and are secured by the same collateral
given under the Construction Loan. Borrowings under the Permanent Loan in 2001
were approximately $4.8 million and were used to finance the acquisition of
real estate. The total outstanding balance as of March 31, 2002 was
approximately $4.0 million.
The Mortgage Facility allows us to borrow up to $100 million in the
aggregate under the Construction Loan and the Permanent Loan. The Mortgage
Facility is not cross collateralized with the Revolving Facility; however, a
default under the Construction Loan will cause a default under the Permanent
Loan and VICE VERSA and may result in a default under the indentures governing
our senior subordinated notes and convertible senior subordinated notes. Among
other customary covenants, the borrowing subsidiaries under the Mortgage
Facility agreed not to incur any other liens on their property (except for
existing encumbrances on property acquired) and not to transfer their property
or more than 20% of their ownership interests to any third party. In addition,
the loss of voting control by O. Bruton Smith, B. Scott Smith and their spouses
or immediate family members, with certain exceptions, will result in an event
of default under the Mortgage Facility. We were in compliance with all
restrictive covenants as of March 31, 2002.
CONVERTIBLE SENIOR SUBORDINATED NOTES
On May 7, 2002, we issued $149.5 million in aggregate principal outstanding
of 5 1/4% convertible senior subordinated notes due 2009. The convertible notes
are unsecured and mature on May 7, 2009. Interest will be paid in arrears on
May 7 and November 7 beginning on November 7, 2002. These notes are convertible
into shares of our Class A common stock at the option of the holder in any
fiscal quarter commencing after June 30, 2002 if, as of the last day of the
preceding fiscal quarter, the closing sale price of our Class A common stock
for at least 20 trading days in a period of 30 consecutive trading days ending
on the last trading day of the preceding fiscal quarter is more than 110% of
the conversion price per share on the last day of the preceding quarter. If
this condition is satisfied, then the notes will be convertible, at the option
of the holder, at any time through maturity. The initial conversion price is
$46.87, subject to adjustment for certain distributions on, or other changes
in, our Class A common stock, if any, prior to the conversion date. In
addition, on or before May 7, 2007, the notes are convertible at the option of
the holder at any time after a 10 consecutive trading day period in which the
average of the trading prices for the notes for that 10 consecutive trading day
period was less than 103% of the average conversion value for the notes during
that period. The conversion value of a note is equal to the product of the
closing sale price for shares of our Class A common stock on a given day
multiplied by the then current conversion rate, which is the number of shares
of Class A common stock into which each $1,000 principal amount of notes is
then convertible. Initially, each $1,000 principal amount of convertible notes
is convertible into 21.3379 shares of our Class A common stock, which is
subject to adjustment for certain distributions, or other changes in, our Class
A common stock, if any, prior to the conversion date.
The convertible notes are subordinated to all of our existing and future
senior indebtedness, including the revolving facility discussed above. The
convertible notes are not guaranteed by any of our subsidiaries. We may redeem
the convertible notes in whole or in part at any time after May 7, 2005 at the
following redemption prices, which are expressed as percentages of the
principal amount.
REDEMPTION
PERIOD PRICE
------ ----------
Beginning on May 7, 2005 and ending on May 6, 2006 103.00%
Beginning on May 7, 2006 and ending on May 6, 2007 102.25%
Beginning on May 7, 2007 and ending on May 6, 2008 101.50%
Beginning on May 7, 2008 and thereafter........... 100.75%
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SENIOR SUBORDINATED NOTES
As of March 31, 2002, we had $200 million in aggregate principal outstanding
of 11% senior subordinated notes due 2008. The senior subordinated notes are
unsecured and mature on August 1, 2008. Interest is paid semi-annually on
February 1 and August 1.
The senior subordinated notes are subordinated to all present and future
senior indebtedness of Sonic, including the revolving credit facility discussed
above. We may redeem the senior subordinated notes in whole or in part at any
time after August 1, 2003 at the following redemption prices, which are
expressed as percentages of the principal amount.
REDEMPTION
PERIOD PRICE
------ ----------
Beginning on August 1, 2003 and ending on July 31, 2004 105.500%
Beginning on August 1, 2004 and ending on July 31, 2005 103.667%
Beginning on August 1, 2005 and ending on July 31, 2006 101.833%
Beginning on August 1, 2006 and thereafter............. 100.000%
The indentures governing the senior subordinated notes contain certain
specified restrictive and required financial covenants. We have agreed not to
pledge our assets to any third party except under certain limited
circumstances. We have also agreed to certain other limitations or prohibitions
concerning the incurrence of other indebtedness, capital stock, guaranties,
asset sales, investments, cash dividends to shareholders, distributions and
redemptions. We were in compliance with all restrictive covenants as of March
31, 2002.
SUBSIDIARY GUARANTEES
Balances outstanding under our revolving credit facility and senior
subordinated notes are guaranteed by all of our operating subsidiaries. These
guarantees are full and unconditional and joint and several. The parent company
has no independent assets or operations and subsidiaries that are not
guarantors are minor.
FLOOR PLAN INDEBTEDNESS
We currently have in place standardized secured floor plan facilities with
either Ford Motor Credit, Chrysler Financial, Toyota Credit or General Motors
Acceptance Corporation ("GMAC") for each of our dealership subsidiaries. Each
dealership subsidiary has its own agreement for its inventory financing needs.
As of March 31, 2002, there was an aggregate of $796.1 million outstanding
under these floor plan facilities. Amounts outstanding under the Ford Motor
Credit and GMAC floor plan facilities bear interest at the prime rate, which
was 4.75% on March 31, 2002, subject to certain incentives and other
adjustments. Amounts outstanding under the Toyota Credit and Chrysler Financial
floor plan facilities bear interest at 1.25% above LIBOR, which was 1.88% on
March 31, 2002, subject to certain incentives and adjustments. The weighted
average interest rate for our floor plan facilities was 5.63% for the year
ended December 31, 2001 and 3.6% for the quarter ended March 31, 2002. Our
floor plan interest expenses are substantially offset by amounts received from
manufacturers, in the form of floor plan assistance. In 2001, we received
approximately $33.8 million in floor plan assistance, which resulted in an
effective borrowing rate under our floor plan facilities of approximately 0.3%
after netting these assistance payments against floor plan interest expense. In
the three months ended March 31, 2002, we received approximately $8.0 million
in floor plan assistance, which reduced the effective rate incurred on these
facilities to 0%. Interest payments under each floor plan facility are due
monthly, but we are not required to make principal repayments prior to the sale
of the vehicles.
The notes underlying the floor plan facilities are due when the related
vehicles are sold and are collaterialized by vehicle inventories and other
assets, excluding franchise agreements, of the relevant dealership subsidiary.
The floor plan facilities contain a number of covenants, including among
others, covenants restricting
17
us with respect to the creation of liens and changes in ownership, officers and
key management personnel. We were in compliance with all covenants as of March
31, 2002.
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 issued under
this registration statement ("Senior Debt Securities") or our subordinated debt
securities issued under this registration statement ("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 applicable
Indenture and those made part of the applicable 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 certain material provisions of the notes and Indentures
below. The summary is qualified in its entirety by reference to the form of
notes and Indentures. The forms of the notes and Indentures have been filed as
exhibits to the registration statement of which this prospectus forms a part.
You should read the notes and 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 Indentures, 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.
The Senior Debt Securities will be senior in right of payment in full of all
unsecured and subordinated indebtedness and equally with all of our unsecured
and subordinated indebtedness outstanding at the time Senior Debt Securities
are sold as will be described in the prospectus supplement applicable to any
Senior Debt Securities. Senior Debt Securities will not be secured and,
therefore, will be effectively subordinate in right of payment to all of our
secured and unsubordinated indebtedness outstanding at the time Senior Debt
Securities are sold as will be described in the prospectus supplement
applicable to any Senior Debt Securities.
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.
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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:
. the title of the Debt Securities;
. whether the Debt Securities are Senior Debt Securities or Subordinated
Debt Securities and, if Subordinated Debt Securities, subordinated terms
relating thereto;
. whether the Guarantors will provide Subsidiary Guarantees of the Debt
Securities;
. the aggregate principal amount of the Debt Securities or any limit thereon;
. the dates on which the principal of the Debt Securities will be payable;
. the interest rate of the Debt Securities and the interest payment dates
for the Debt Securities;
. the places where payments on the Debt Securities will be payable;
. any terms upon which the Debt Securities may be redeemed at our option;
. any sinking fund or other provisions that would obligate us to repurchase
or otherwise redeem the Debt Securities;
. 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;
. if convertible into our Class A common stock or any of our other
securities, the terms on which such Debt Securities are convertible;
. whether the Debt Securities are secured and the terms of such security;
. whether the Debt Securities are defeasible;
. any addition to or change in the Events of Default;
. any addition to or change in the covenants in the applicable Indenture; and
. 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 and the supplemental indenture
applicable 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 and supplemental indenture applicable to that series
including:
. 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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. 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
. 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:
. 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,
20
. be binding upon each Guarantor, and
. 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.
REDEMPTION RIGHTS; SINKING FUNDS
The Debt Securities issued under this registration statement may be
redeemable at our option or may be subject to mandatory redemption by us as
required by a sinking fund or otherwise. In addition, Debt Securities issued
under this registration statement may be subject to repurchase by us at the
option of the holders. We will describe any applicable redemption rights and
sinking fund requirements in a prospectus supplement related to a series of
Debt Securities being offered under this registration statement.
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)
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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:
. the Depositary is unwilling or unable to continue as depositary;
. an Event of Default has occurred and is continuing under the Debt
Securities represented by the Global Security; or
. 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 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.
22
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:
. 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;
. 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
. 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:
. failure to pay principal or premium on any Debt Security of that series
when due;
. failure to pay any interest on any Debt Security of that series when due,
continued for 30 days;
. failure to deposit any sinking fund payment, when due, on any Debt
Security of that series;
. failure to perform or comply with the provisions described under "
--Consolidation, Merger and Sale of Assets";
. 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;
23
. 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;
. 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;
. 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
. 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:
. the Holder previously gave written notice to the Trustee of an Event of
Default;
. 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
. 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)
24
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,
(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
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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.
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
26
(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 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)
DESCRIPTION OF CAPITAL STOCK
Sonic's authorized capital stock consists of (a) 100,000,000 shares of Class
A common stock, $.0l par value, (b) 30,000,000 shares of Class B common stock,
$.0l par value and (c) 3,000,000 shares of preferred stock, $.l0
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par value. As of May 31, 2002, Sonic had 30,766,561 outstanding shares of Class
A common stock, 12,029,375 outstanding shares of Class B common stock and no
outstanding shares of preferred stock.
The following is a summary of the material provisions of Sonic's capital
stock. This summary 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-l (File No. 333-33295)),
Sonic's amendment to its Amended and Restated Certificate of Incorporation
(which is filed as an exhibit to our Annual Report on Form 10-K for the year
ended December 31, 1999) and 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 l0-Q for the quarter ended March 31, 1998). We
urge you to read these exhibits for a detailed description of the provisions
thereof summarized below.
PREFERRED STOCK
As of the date of this prospectus, no shares of preferred stock are
outstanding. Our board of directors may authorize the issuance of preferred
stock in one or more series and 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:
. 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);
. whether dividends, if any, will be cumulative or noncumulative and the
dividend rate of the series;
. 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;
. the redemption rights and price or prices, if any, for shares of the
series;
. the terms and amounts of any sinking fund provided for the purchase or
redemption of shares of the series;
. 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;
. 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;
. restrictions on the issuance of shares of the same series or of any other
class or series; and
. 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
28
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 acquirer 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.
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
. "going private" transaction;
. sale or other disposition of all or substantially all of Sonic's asset; or
. 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 l3e-3 Transaction," as
such term is defined in Rule l3e-3 promulgated under the Securities Exchange
Act of 1934. An "affiliate" is defined as (a) any individual or
29
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:
. Mr. O Bruton Smith and his guardian, conservator, committee, or
attorney-in-fact;
. William S. Egan and his guardian, conservator, committee, or
attorney-in-fact;
. each lineal descendant of Messrs. Smith and Egan (a "Descendant") and
their respective guardians, conservators, committees or attorneys-in-fact;
and
. 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 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,
30
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 filling 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 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'
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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
. for any breach of the officer's or director's duty of loyalty to us or our
stockholders,
. for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
. for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation
law, or
. 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 Wachovia Bank, N.A.
32
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.
The following description summarizes the material 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:
. the title of the Warrants;
. the offering price;
. the currency or currency units in which the purchase price for offered
Warrants may be payable;
. the number of shares of Class A common stock purchasable upon the exercise
of a Warrant;
. the redemption or call provisions, if any, applicable to the Warrants:
. 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;
. 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;
. the date on which the right to exercise the Warrants begins and the date
on which the right to exercise expires (the "expiration date");
. the minimum and maximum amount of Warrants that may be exercised at any
one time;
. the antidilution provisions of the Warrants, if any;
. United States federal income tax consequences applicable to that Warrant;
. whether the Warrants represented by the warrant certificates will be
issued in registered or bearer form;
. procedures for cashless exercise, if any, for the Warrants; and
. 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
33
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.
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 l3D and l3G, 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 l3D 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 stockholder action,
proposes or if any person, entity or group sends Sonic a Schedule l3D, 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 stockholder
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 stockholder s action, to change
34
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 l3D 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.
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.
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. In this case, no underwriters or
agents would be involved. We may sell offered securities upon the exercise of
rights that may be issued to our security holders.
DELAYED DELIVERY ARRANGEMENTS
We 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
35
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 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. Sonic cannot presently estimate the amount of such
compensation.
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 Moore & Van Allen PLLC, Charlotte, North Carolina.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from Sonic Automotive, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 2001 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
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 (the "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. You may obtain information on the operation of
the Commission's Public Reference Room in Washington, D.C. by calling the
Commission at l-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 to terminate this
offering earlier.
36
(1) Our Annual Report on Form 10-K for the fiscal year ended December 31,
2001 (excluding Exhibit 99.1 to such report)(File No. 001-13395);
(2) Our Current Report on Form 8-K dated January 15, 2002 (File No.
001-13395);
(3) Our Current Report on Form 8-K dated April 15, 2002 (File No. 001-13395);
(4) Our Current Report on Form 8-K dated May 3, 2002 (File No. 001-13395);
(5) Our Amendment to Current Report on Form 8-K dated May 6, 2002 (File No.
001-13395);
(6) Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2002 (excluding Exhibit 99.1 to such report) (File No. 001-13395); and
(7) 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 (File No.
001-13395).
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. Summaries of the material provisions of material contracts or other
material documents that are required to be described in this prospectus or in
any other filing to which we refer you are qualified in their entirety by
reference to copies of these contracts or documents, which have been filed with
the Commission. 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.
37
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.............. $ 27,600
Fees and expenses of accountants.. $ 20,000
Fees and expenses of legal counsel $ 25,000
Fees and expenses of Trustee...... $ 25,000
Printing and engraving expenses... $ 2,500
Miscellaneous..................... $ 10,900
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Total.......................... $111,000
========
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, officers 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.
II-1
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(1) Form of Underwriting Agreement (for equity securities).
1.2(1) Form of Underwriting Agreement (for debt securities).
1.3(1) Form of Selling Agency Agreement.
2.1(2) Asset Purchase Agreement dated as of January 11, 2002 by and among Sonic and The Donald E.
Massey Revocable Trust (the "Trust") (incorporated by reference to Exhibit 2.1 to Sonic's
Current Report on Form 8-K dated April 15, 2002 (the "Form 8-K")).
2.2(2) Stock Purchase Agreement dated as of January 11, 2002 by and among Sonic and the Trust
(incorporated by reference to Exhibit 2.2 to the Form 8-K).
2.3(2) Stock Purchase Agreement dated asof January 11, 2002 by and among Sonic and the Trust
(incorporated by reference to Exhibit 2.3 to the Form 8-K).
4.l 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 Annual Report on Form 10-K
for the year ended December 31, 1999).
4.3 Bylaws of Sonic (incorporated by reference to Exhibit 3.4 to Sonic's Annual Report on Form 10-K
for the year ended December 31, 2001).
4.4 Specimen Certificate representing Class A common stock (incorporated by reference to
Exhibit 4.1 to the Form S-1).
4.5 Form of Senior Indenture (incorporated by reference to Exhibit 4.6 to Sonic's Registration
Statement on Form S-3 (Reg. No. 333-50430 and Reg. Nos. 333-50430-01 through
333-50430-G7) (the "Form S-3")).
4.6 Form of Subordinated Indenture (incorporated by reference to Exhibit 4.7 to the Form S-3).
4.7 Form of Senior Debt Securities (incorporated by reference to Exhibit 4.8 to the Form S-3).
4.8 Form of Subordinated Debt Securities (incorporated by reference to Exhibit 4.9 to the Form S-3).
5.1 Opinion of Moore & Van Allen PLLC 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.
23.3 Consent of Moore & Van Allen PLLC (included in Exhibit 5.1).
24.l* Powers of Attorney (included in Signature Pages of Registration Statement).
25.l(3) Form T-1 Statement of Eligibility and Qualification Under Trust Indenture Act of 1939 of Trustee.
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* Previously filed.
(1) 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.
(2) Certain portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed with the Commission.
(3) To be filed in accordance with the requirements of Section 305(b)(2) of the
Trust Indenture Act and Rule 5b-3 promulgated thereunder.
II-2
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)(1)(i) and (a)(1)(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 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.
II-3
(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-4
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
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 Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* Chairman, Chief Executive Officer and June 7, 2002
---------------------- Director (principal executive officer)
O. Bruton Smith
---------------------- Vice Chairman and Director , 2002
Thomas A. Price
* President, Chief Operating Officer and June 7, 2002
---------------------- Director
B. Scott Smith
/s/ THEODORE M. WRIGHT Chief Financial Officer (principal June 7, 2002
---------------------- financial and accounting officer), Vice
Theodore M. Wright President, Treasurer and Director
* Executive Vice President of Retail June 7, 2002
---------------------- Operations and Director
Jeffrey C. Rachor
* Director June 7, 2002
----------------------
William R. Brooks
II-5
* Director June 7, 2002
-----------------
William P. Benton
----------------- Director , 2002
William I Belk
* Director June 7, 2002
-----------------
H. Robert Heller
----------------- Director , 2002
Maryann N. Keller
* Director June 7, 2002
-----------------
Robert L. Rewey
----------------- Director , 2002
Thomas P. Capo
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
ARNGAR, INC.
AUTOBAHN, INC.
AVALON FORD, INC.
CAPITOL CHEVROLET AND IMPORTS, INC.
COBB PONTIAC CADILLAC, INC.
FA SERVICE CORPORATION
FAA AUTO FACTORY, INC.
FAA BEVERLY HILLS, INC.
FAA CAPITOL F, 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.
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 - 3700 WEST BROAD STREET,
COLUMBUS, INC.
II-7
SONIC AUTOMOTIVE - 4000 WEST BROAD STREET,
COLUMBUS, INC.
SONIC AUTOMOTIVE 2424 LAURENS RD.,
GREENVILLE, INC.
SONIC AUTOMOTIVE 2752 LAURENS RD.,
GREENVILLE, INC.
SONIC - BETHANY H, INC.
SONIC - BUENA PARK H, INC.
SONIC - CAPITAL CHEVROLET, INC.
SONIC - CARSON F, INC.
SONIC - CARSON LM, INC.
SONIC - CLASSIC DODGE, INC.
SONIC - COAST CADILLAC, INC.
SONIC - DOWNEY CADILLAC, INC.
SONIC - ENGLEWOOD M, INC.
SONIC ESTORE, INC.
SONIC - FORT MILL CHRYSLER JEEP, INC.
SONIC - FORT MILL DODGE, INC.
SONIC - GLOVER, INC.
SONIC - HARBOR CITY H, INC.
SONIC - LONE TREE CADILLAC, INC.
SONIC - MANHATTAN FAIRFAX, INC.
SONIC - MANHATTAN WALDORF, INC.
SONIC - MASSEY CHEVROLET, INC.
SONIC - MASSEY PONTIAC BUICK GMC, 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.
SONIC - RIVERSIDE AUTO FACTORY, INC.
SONIC - ROCKVILLE IMPORTS, INC.
SONIC - ROCKVILLE MOTORS, INC.
SONIC - STEVENS CREEK B, INC.
SONIC - WEST COVINA T, INC.
SONIC - WEST RENO CHEVROLET, INC.
SONIC - WILLIAMS BUICK, INC.
SONIC - WILLIAMS CADILLAC, INC.
SONIC - WILLIAMS IMPORTS, INC.
SPEEDWAY CHEVROLET, INC.
STEVENS CREEK CADILLAC, INC.
TOWN AND COUNTRY FORD, INCORPORATED
TRANSCAR LEASING, INC.
VILLAGE IMPORTED CARS, INC.
WINDWARD, INC.
By: /s/ THEODORE M. WRIGHT
--
Theodore M. Wright
Vice President
II-8
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Name Title Date
---- ----- ----
* President and Director (principal June 7, 2002
----------------------- executive officer)
O. Bruton Smith
* Vice President and Director June 7, 2002
-----------------------
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer, and Director June 7, 2002
-----------------------
Theodore M. Wright
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
FIRSTAMERICA AUTOMOTIVE, INC.
By: /s/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Name Title Date
---- ----- ----
* Chairman, Chief Executive Officer and June 7, 2002
----------------------- Director (principal executive officer)
O. Bruton Smith
* President and Director June 7, 2002
-----------------------
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer, and Director June 7, 2002
-----------------------
Theodore M. Wright
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
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 VW, INC.
SONIC - FREELAND, INC.
SONIC - LLOYD NISSAN, INC.
SONIC - LLOYD PONTIAC - CADILLAC, INC.
SONIC - NORTH CADILLAC, INC.
SONIC - SANFORD CADILLAC, INC.
SONIC - SHOTTENKIRK, INC.
By: /s/ THEODORE M. WRIGHT
-----------------------------------
Theodore M. Wright
Vice President
II-11
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* Director June 7, 2002
----------------------
O. Bruton Smith
* President and Director (principal June 7, 2002
---------------------- executive officer)
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer, and Director June 7, 2002
----------------------
Theodore M. Wright
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-12
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE,
NC, LLC
SONIC DEVELOPMENT, LLC
SONIC - LAKE NORMAN CHRYSLER JEEP, LLC
SONIC - LAKE NORMAN DODGE, 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-2, LLC
SRE SOUTH CAROLINA-3, LC
SRE SOUTH CAROLINA-4, LLC
SRE TENNESSEE-1, LLC
SRE TENNESSEE-2, LLC
SRE TENNESSEE-3, LLC
SRE VIRGINIA-1, LLC
By: /s/ THEODORE M. WRIGHT
---------------------------------------
Theodore M. Wright
Vice President
II-13
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* President and Manager June 7, 2002
---------------------- (principal executive officer)
O. Bruton Smith
* Vice President and Manager June 7, 2002
----------------------
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer, and Manager June 7, 2002
----------------------
Theodore M. Wright
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-14
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC AUTOMOTIVE - 1720 MASON AVE.,
DB, LLC
SONIC - FM AUTOMOTIVE, LLC
SRE FLORIDA-1, LLC
SRE FLORIDA-2, LLC
SRE FLORIDA-3, LLC
SRE NEVADA-1, LLC
SRE NEVADA-2, LLC
SRE NEVADA-3, LLC
SRE NEVADA-4, LLC
SRE NEVADA-5, LLC
By: /s/ THEODORE M. WRIGHT
-----------------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* Manager June 7, 2002
----------------------
O. Bruton Smith
* President and Manager (principal June 7, 2002
---------------------- executive officer)
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer, and Manager June 7, 2002
----------------------
Theodore M. Wright
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-15
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC AUTOMOTIVE OF GEORGIA, INC.
On behalf of itself and the
following entities as General
Partner:
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: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* President (principal executive officer) June 7, 2002
----------------------
O. Bruton Smith
* Vice President and Director June 7, 2002
----------------------
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer, and Director June 7, 2002
----------------------
Theodore M. Wright
* Assistant Secretary, Assistant June 7, 2002
---------------------- Treasurer and Director
Peggy McFarland
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-16
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC OF TEXAS, INC.
On behalf of itself and the
following entities as General
Partner:
PHILPOTT MOTORS, LTD
SONIC AUTOMOTIVE OF TEXAS, L.P.
SONIC AUTOMOTIVE - 3401 N.
MAIN, TX, L.P.
SONIC AUTOMOTIVE - 4701 I-10
EAST, TX, L.P.
SONIC AUTOMOTIVE - 5221 I-10
EAST, TX, L.P.
SONIC - CADILLAC D, L.P.
SONIC - CAMP FORD, L.P.
SONIC - CARROLLTON V, L.P.
SONIC - FORT WORTH T, L.P.
SONIC - HOUSTON V, L.P.
SONIC - LUTE RILEY, L.P.
SONIC - MASSEY CADILLAC, L.P.
SONIC - READING, L.P.
SONIC - RICHARDSON F, L.P.
SONIC - SAM WHITE NISSAN, L.P.
SONIC - UNIVERSITY PARK A, L.P.
SRE TEXAS-1, L.P.
SRE TEXAS-2, L.P.
SRE TEXAS-3, L.P.
SRE TEXAS-4, L.P.
SRE TEXAS-5, L.P.
SRE TEXAS-6, L.P.
SRE TEXAS-7, L.P.
SRE TEXAS-8, L.P.
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
II-17
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* President (principal executive officer) June 7, 2002
----------------------
O. Bruton Smith
* Vice President and Director June 7, 2002
----------------------
B. Scott Smith
/S/ THEODORE M. WRIGHT Vice President, Treasurer, and Director June 7, 2002
----------------------
Theodore M. Wright
* Assistant Secretary, Assistant June 7, 2002
---------------------- Treasurer and Director
Roger A. Elswick
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-18
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC - VOLVO LV, LLC
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* Chief Executive Officer June 7, 2002
---------------------- (principal executive officer)
O. Bruton Smith
* President and Manager June 7, 2002
----------------------
B. Scott Smith
/S/ THEODORE M. WRIGHT Vice President, Treasurer June 7, 2002
---------------------- and Manager
Theodore M. Wright
* Manager June 7, 2002
----------------------
Jeffrey C. Rachor
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-19
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC - INTEGRITY DODGE LV, LLC
SONIC - LAS VEGAS C EAST, LLC
SONIC - LAS VEGAS C WEST, LLC
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* Chief Executive Officer June 7, 2002
---------------------- (principal executive officer)
O. Bruton Smith
* President and Manager June 7, 2002
----------------------
B. Scott Smith
/S/ THEODORE M. WRIGHT Vice President, Treasurer June 7, 2002
---------------------- and Manager
Theodore M. Wright
* Manager June 7, 2002
----------------------
Jeffrey C. Rachor
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-20
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC AUTOMOTIVE OF TENNESSEE,
INC.
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* President, Chief Executive Officer June 7, 2002
---------------------- and Director (principal executive
B. Scott Smith officer)
/S/ THEODORE M. WRIGHT Vice President, Treasurer and June 7, 2002
---------------------- Director
Theodore M. Wright
* Director June 7, 2002
----------------------
Jeffrey C. Rachor
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-21
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC AUTOMOTIVE - 3741 S. NOVA
RD., PO, INC.
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* President and Director (principal June 7, 2002
---------------------- executive officer)
B. Scott Smith
/S/ THEODORE M. WRIGHT Vice President, Treasurer and June 7, 2002
---------------------- Director
Theodore M. Wright
* Director June 7, 2002
----------------------
Jeffrey C. Rachor
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-22
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
FAA CAPITOL N, INC.
FAA CONCORD T, INC.
FAA POWAY T, INC.
FAA SAN BRUNO, INC.
FAA SERRAMONTE L, INC.
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* President and Director (principal June 7, 2002
---------------------- executive officer)
O. Bruton Smith
* Vice President and Director June 7, 2002
----------------------
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer, and June 7, 2002
---------------------- Director
Theodore M. Wright
* Vice President and Director June 7, 2002
----------------------
Thomas A. Price
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-23
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
FAA LAS VEGAS H, INC.
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* Chairman, Chief Executive Officer June 7, 2002
---------------------- and Director (principal executive
O. Bruton Smith officer)
/S/ THEODORE M. WRIGHT Vice President, Treasurer, and June 7, 2002
---------------------- Director
Theodore M. Wright
* Assistant Secretary and Director June 7, 2002
----------------------
David Plummer
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-24
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC AUTOMOTIVE OF NEVADA, INC.
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* Chief Executive Officer and Director June 7, 2002
------------------ (principal executive officer)
O. Bruton Smith
* Vice President and Director June 7, 2002
------------------
Theodore M. Wright
* Assistant Secretary, Treasurer June 7, 2002
------------------ and Director
David Plummer
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-25
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC RESOURCES, INC.
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* President and Director (principal June 7, 2002
---------------------- executive officer)
B. Scott Smith
/S/ THEODORE M. WRIGHT Vice President, Treasurer, and June 7, 2002
---------------------- Director
Theodore M. Wright
* Assistant Secretary, Assistant June 7, 2002
---------------------- Treasurer and Director
David Plummer
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-26
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC AUTOMOTIVE F&I, LLC
SONIC AUTOMOTIVE WEST, LLC
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* Chairman and Chief Executive June 7, 2002
---------------------- Officer (principal executive officer)
O. Bruton Smith
/S/ THEODORE M. WRIGHT Vice President, Treasurer, and June 7, 2002
---------------------- Manager
Theodore M. Wright
* Assistant Secretary, Assistant June 7, 2002
---------------------- Treasurer and Manager
Gail M. Syfert
* Assistant Secretary, Assistant June 7, 2002
---------------------- Treasurer and Manager
David Plummer
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-27
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
MASSEY CADILLAC, INC.
SONIC - CAPITOL CADILLAC, INC.
SONIC - PLYMOUTH CADILLAC, INC.
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* President and Director (principal June 7, 2002
---------------------- executive officer)
B. Scott Smith
/S/ THEODORE M. WRIGHT Vice President, Treasurer, June 7, 2002
---------------------- and Director
Theodore M. Wright
* Assistant Secretary and Director June 7, 2002
----------------------
David Plummer
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-28
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
MASSEY CADILLAC, INC.
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* President and Director (principal June 7, 2002
---------------------- executive officer)
B. Scott Smith
/S/ THEODORE M. WRIGHT Vice President, Treasurer, June 7, 2002
---------------------- and Director
Theodore M. Wright
* Director June 7, 2002
----------------------
Roger Elswick
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-29
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SRE CALIFORNIA-1, LLC
SRE CALIFORNIA-2, LLC
SRE CALIFORNIA-3, LLC
SRE CALIFORNIA-4, LLC
SRE CALIFORNIA-5, LLC
SRE CALIFORNIA-6, LLC
SRE MICHIGAN-1, LLC
SRE MICHIGAN-2, LLC
SRE MICHIGAN-3, LLC
SRE SOUTH CAROLINA-3, LLC
SRE SOUTH CAROLINA-4, LLC
By: /S/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* Chief Executive Officer and Manager June 7, 2002
---------------------- (principal executive officer)
O. Bruton Smith
* President and Manager June 7, 2002
----------------------
B. Scott Smith
/S/ THEODORE M. WRIGHT Vice President, Treasurer and June 7, 2002
---------------------- Manager
Theodore M. Wright
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-30
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
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 ROAD,
CHATTANOOGA, LLC
SONIC - CREST CADILLAC, LLC
SONIC - CREST H, LLC
SONIC - SUPERIOR OLDSMOBILE, LLC
TOWN AND COUNTRY FORD OF
CLEVELAND, LLC
TOWN AND COUNTRY JAGUAR, LLC
By: /s/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Name Title Date
---- ----- ----
* Chief Manager and Governor June 7, 2002
-----------------------
Jeffrey C. Rachor
* President June 7, 2002
-----------------------
O. Bruton Smith
* Vice President and Governor June 7, 2002
-----------------------
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer and Governor June 7, 2002
-----------------------
Theodore M. Wright
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-31
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC - LS, LLC
On behalf of itself and the
following entity as General
Partner
SONIC - LS CHEVROLET, L.P.
SRE SOUTH CAROLINA-2, LLC
SRE TENNESSEE-1, LLC
SRE TENNESSEE-2, LLC
SRE TENNESSEE-3, LLC
SRE VIRGINIA-1, LLC
By: /s/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Name Title Date
---- ----- ----
* President and Manager (principal June 7, 2002
----------------------- executive officer)
O. Bruton Smith
* Vice President and Manager June 7, 2002
-----------------------
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer and June 7, 2002
----------------------- Manager
Theodore M. Wright
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrants' Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-32
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC AUTOMOTIVE 5260
PEACHTREEINDUSTRIAL BLVD., LLC
By: /s/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Name Title Date
---- ----- ----
* President and Governor June 7, 2002
----------------------- (principal executive officer)
O. Bruton Smith
* Vice President and Governor June 7, 2002
-----------------------
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer and June 7, 2002
----------------------- Governor
Theodore M. Wright
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-33
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC AUTOMOTIVE - 5585
PEACHTREEINDUSTRIAL BLVD., LLC
By: /s/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Name Title Date
---- ----- ----
* President (principal executive June 7, 2002
----------------------- officer)
O. Bruton Smith
* Vice President and Governor June 7, 2002
-----------------------
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer and June 7, 2002
----------------------- Governor
Theodore M. Wright
* Assistant Secretary, Assistant June 7, 2002
----------------------- Treasurer and Governor
Peggy McFarland
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-34
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Charlotte,
state of North Carolina, on June 7, 2002.
SONIC AUTOMOTIVE
SERVICINGCOMPANY, LLC
By: /s/ THEODORE M. WRIGHT
-----------------------------
Theodore M. Wright
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Name Title Date
---- ----- ----
* Chairman and Chief Executive June 7, 2002
----------------------- Officer (principal executive officer)
O. Bruton Smith
* President June 7, 2002
-----------------------
B. Scott Smith
/s/ THEODORE M. WRIGHT Vice President, Treasurer and June 7, 2002
----------------------- Manager
Theodore M. Wright
* Assistant Secretary, Assistant June 7, 2002
----------------------- Treasurer and Manager
Gail M. Syfert
* Assistant Secretary, Assistant June 7, 2002
----------------------- Treasurer and Manager
David Plummer
Theodore M. Wright, by signing his name below, signs this document on behalf
of each of the above-named persons specified with an asterisk (*), pursuant to
a power of attorney duly executed by such persons, filed with the Securities
and Exchange Commission in the Registrant's Registration Statement on Form S-3
on April 19, 2002.
/s/ THEODORE M. WRIGHT
------------------
Attorney-in-fact
II-35
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
1.1(1) Form of Underwriting Agreement (for equity securities).
1.2(1) Form of Underwriting Agreement (for debt securities).
1.3(1) Form of Selling Agency Agreement.
2.1(2) Asset Purchase Agreement dated as of January 11, 2002 by and among Sonic and The Donald E.
Massey Revocable Trust (the "Trust") (incorporated by reference to Exhibit 2.1 to Sonic's
Current Report on Form 8-K dated April 15, 2002 (the "Form 8-K")).
2.2(2) Stock Purchase Agreement dated as of January 11, 2002 by and among Sonic and the Trust
(incorporated by reference to Exhibit 2.2 to the Form 8-K).
2.3(2) Stock Purchase Agreement dated as of January 11, 2002 by and among Sonic and the Trust
(incorporated by reference to Exhibit 2.3 to the Form 8-K).
4.l 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 Annual Report on Form 10-K
for the year ended December 31, 1999).
4.3 Bylaws of Sonic (incorporated by reference to Exhibit 3.4 to Sonic's Annual Report on Form 10-K
for the year ended December 31, 2001).
4.4 Specimen Certificate representing Class A common stock (incorporated by reference to
Exhibit 4.1 to the Form S-1)).
4.5 Form of Senior Indenture (incorporated by reference to Exhibit 4.6 to Sonic's Registration
Statement on Form S-3 (Reg. No. 333-50430 and Reg. Nos. 333-50430-01 through
333-50430-G7) (the "Form S-3").
4.6 Form of Subordinated Indenture (incorporated by reference to Exhibit 4.7 to the Form S-3).
4.7 Form of Senior Debt Securities (incorporated by reference to Exhibit 4.8 to the Form S-3).
4.8 Form of Subordinated Debt Securities (incorporated by reference to Exhibit 4.9 to the Form S-3).
5.1 Opinion of Moore & Van Allen PLLC 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.
23.3 Consent of Moore & Van Allen PLLC (included in Exhibit 5.1).
24.l* Powers of Attorney (included in Signature Pages of Registration Statement).
25.l(3) Form T-1 Statement of Eligibility and Qualification Under Trust Indenture Act of 1939 of Trustee.
--------
* Previously filed.
(1) 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.
(2) Certain portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed with the Commission.
(3) To be filed in accordance with the requirements of Section 305(b)(2) of the
Trust Indenture Act and Rule 5b-3 promulgated thereunder.