SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement"), dated as of June 30,
1997, by and between SONIC AUTO WORLD, INC., a Delaware corporation (the
"Corporation"), and O. XXXXXX XXXXX, a resident of the State of North Carolina
("Xxxxx"), sets forth the terms and conditions of Xxxxx'x subscription for the
capital stock of the Corporation.
WHEREAS, subject to the filing of a Certificate of Amendment (the
"Certificate") to the Certificate of Incorporation of the Corporation, such
Certificate to be substantially in the form attached hereto as Exhibit A, with
and by the Secretary of State of the State of Delaware in accordance with
applicable law, the authorized capital stock of the Corporation consists of (i)
50,000,000 shares of Class A Common Stock with par value of $.01 per share, (ii)
15,000,000 shares of Class B Common Stock with par value of $.01 per share, (the
"Class B Common Stock"), and (iii) 3,000,000 shares of preferred stock with par
value of $.10 per share;
WHEREAS, Xxxxx is the owner of (i) certain shares of the common stock
(the "MDC Shares") of Xxxxxx Xxxxx Corporation, a North Carolina corporation
("MDC"), and (ii) certain shares of the common stock (the "FMF Management
Shares") of FMF Management, Inc., a South Carolina corporation ("FMF
Management") (the MDC Shares and FMF Management Shares, collectively, the "Xxxxx
Shares");
WHEREAS, in connection with a proposed reorganization of the operations
of the Corporation and various automobile dealerships and the entities having
interests therein substantially as outlined on Exhibit B hereto (the
"Reorganization"), the parties hereto propose to effect an exchange of the Xxxxx
Shares for Class B Common Stock as described herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties to this Agreement
hereby agree as follows:
1. SUBSCRIPTION FOR SHARES. Xxxxx hereby subscribes to and agrees to
purchase 1,657 shares of the Class B Common Stock in consideration for the
transfer to the Corporation of all of the Xxxxx Shares (the "Xxxxx Transfer").
Xxxxx hereby agrees to take all actions necessary to effect the Xxxxx Transfer.
The Corporation hereby accepts the subscription by Xxxxx for 1,657 shares of the
Class B Common Stock and agrees that, upon consummation of the Xxxxx Transfer,
the Corporation will issue Xxxxx a stock certificate representing 1,657 shares
of the Class B Common Stock and that upon issuance such shares will be validly
issued, fully paid and non-assessable.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF XXXXX. Xxxxx
hereby represents, warrants and covenants that:
(a) Xxxxx has good and valid title to all of the Xxxxx Shares,
free and clear of all liens, pledges, encumbrances, claims, security
interests, charges, voting trusts, voting agreements, other agreements,
rights, options, warrants or restrictions or claims of any kind, nature
or description (except for any of the foregoing to be released or
otherwise terminated pursuant to the Reorganization), and that all such
Xxxxx Shares, in respect of each of MDC and FMF Management, as
applicable, are validly issued, fully paid and non-assessable;
(b) He is purchasing the Class B Common Stock hereby
subscribed for investment only, for his own account, and not with a
view to the distribution thereof;
(c) He understands that the Class B Common Stock hereby
subscribed will be issued without registration with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as
amended (the "Act"), and will be issued under one or more exemptions
from registration in the Act and state securities laws that depend upon
the intent hereby represented and that the Corporation will rely on
such representation in issuing such Class B Common Stock without
registration;
(d) He will make no transfer of his securities acquired
hereunder in violation of the Act, any rules of the SEC, any state
securities law or statute or this Agreement, and will not offer, sell,
mortgage, pledge or otherwise dispose of the securities he acquires
hereunder, unless, in the opinion of counsel satisfactory to the
Corporation, registration under applicable federal or state securities
laws is not required; and
(e) He agrees that the stock certificate issued pursuant to
this Agreement, and any replacements thereof, may be marked with a
legend to the effect that such Class B Common Stock cannot be sold or
transferred without either (i) registration under federal and state
securities laws, or (ii) an opinion of counsel satisfactory to the
Corporation that neither the sale nor the proposed transfer constitutes
a violation of any federal or state securities law.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION.
The Corporation hereby represents, warrants and covenants that:
(a) It is purchasing the stock of MDC and FMF Management
hereby for investment only, for its own account, and not with a view to
the distribution thereof;
(b) It understands that the stock of MDC and FMF Management
will be transferred without registration with the SEC under the Act,
and will be transferred under one or more exemptions from registration
in the Act and state securities laws that depend upon the intent hereby
represented and that Xxxxx will rely on such representation in
transferring such stock without registration;
(c) It will make no transfer of the securities acquired by it
hereunder in violation of the Act, any rules of the SEC, any state
securities law or statute or this Agreement, and will not offer, sell,
mortgage, pledge or otherwise dispose of the
securities it acquired hereunder, unless, in the opinion of counsel
satisfactory to Xxxxx, registration under applicable federal or state
securities laws is not required;
(d) The execution and delivery of this Agreement and the
issuance of the Class B Common Stock by the Corporation have been duly
and validly authorized by the Corporation and no other action or
proceeding on the part of the Corporation is necessary to authorize
this Agreement or to consummate the transactions contemplated hereby;
and
(e) The stock certificates issued to it pursuant to this
Agreement, and any replacements thereof, may be marked with a legend to
the effect that such securities cannot be sold or transferred without
either (i) registration under federal and state securities laws, or
(ii) an opinion of counsel satisfactory to Xxxxx that neither the sale
nor the proposed transfer constitutes a violation of any federal or
state securities law.
4. DETERMINATION OF THE VALUE OF THE XXXXX SHARES. The parties
acknowledge that the Board of Directors of the Corporation has determined in the
exercise of its reasonable business judgment as of the date hereof the values of
the consideration provided Xxxxx hereunder in relation to the consideration
provided by other subscribers for the Class B Common Stock as of the date hereof
and giving effect to the Reorganization. Therefore, it is understood and agreed
that, after the Xxxxx Transfer and giving effect to the Reorganization, Xxxxx
will own 16.57% of the Class B Common Stock of the Corporation.
5. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to Xxxxx'x subscription for
Class B Common Stock of the Corporation and with respect to the Xxxxx Transfer.
6. MODIFICATION. No modification of or amendment to this
Agreement shall be binding unless executed in writing by both parties.
7. GOVERNING LAW. This Agreement shall be governed by the laws
of the State of Delaware.
8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument, and this Agreement
shall be effective when at least one counterpart hereof has been executed by
each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
SONIC AUTO WORLD, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx, Vice President
/s/ O. Xxxxxx Xxxxx
O. Xxxxxx Xxxxx
